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SEC charges Kraken for operating as an unregistered securities exchange

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Re: SEC charges Kraken for operating as an unregistered securities exchange

#241

Post by mattdesl »

pjc50 wrote: post #227
mattdesl wrote: post #214

Earlier quoted context omitted.

How do you propose Bitcoin, or Ethereum, or any other decentralized & peer-to-peer asset be registered as a security? Coinbase and Kraken argue that there is no clear path toward registering these assets within the current framework. For an example, some of the stringent per-transaction KYC/AML reporting requirements in traditional financial systems are often incompatible with today’s mechanisms of distributed ledger…

> some of the stringent per-transaction KYC/AML reporting requirements in traditional financial systems are often incompatible with today’s mechanisms of distributed ledgers Yes - which makes the ledgers illegal.

Laws change as society and technology progresses. At one point it was illegal to drive a motor vehicle faster than 4mph.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#242

Post by FabHK »

ChainOfFools wrote: post #109
kylebenzle wrote: post #53

Earlier quoted context omitted.

Isn't BTC controlled by one single very centralized group, Blockstream? I could be wrong but I thought Adam Back's Blockstream long ago hijacked the GitHub repo and took full control of that project.

Bitcoin along with most cryptocurrencies (broadly priced in it), is controlled by a small cartel of deeply entrenched miners and large wallet stakeholders who were involved early on and have constantly consolidated their positions both over infrastructural custody, that is, mining, and control of liquidity. There's a staggering amount of illegal mining that is never accounted for in the economic models used to determ…

> crypto cartel [...] ability to move the last trade price almost at will

I think there is lots of manipulation, but could you elaborate on how you can, for example, pump the BTC price up when you hold lots of BTC, but no USD? Leveraged futures on crypto-only exchanges?

Re: SEC charges Kraken for operating as an unregistered securities exchange

#243

Post by furyg3 »

AnthonyMouse wrote: post #184
jcranmer wrote: post #73

Earlier quoted context omitted.

Matt Levine I think put it best: if Bernie Madoff were to go to the SEC and ask them "I don't know how to run a Ponzi scheme legally, can you please update the guidelines to make it easier", of course the SEC is going to refuse. And the situation with cryptocurrencies seems to be broadly similar: there's actually a pretty clear answer as to what would need to be done to be fully above-the-board and legal, it's just n…

> if Bernie Madoff were to go to the SEC and ask them "I don't know how to run a Ponzi scheme legally, can you please update the guidelines to make it easier", of course the SEC is going to refuse. The actual problem is that no part of the government wants to be the one to tell you if something is legal, because whoever actually makes the decision takes the blame for the consequences one way or the other. So Congress…

> The actual problem is that no part of the government wants to be the one to tell you if something is legal, because whoever actually makes the decision takes the blame for the consequences one way or the other.

One really interesting thing I found about moving out of the US is that this is not always the case around the world. At a startup in the Netherlands we were discussing whether or not we could use a particular tax deduction in a particular way. The wording was really unclear. A colleague called the tax authority, and the person on the line agreed that the wording was not clear. They put us on hold, discussed, and came back that they thought we could, indeed, do what we wanted to do. Upon asking they sent us a letter clarifying.

I could not imagine this ever happening when dealing with the IRS.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#244

Post by modeless »

lmm wrote: post #192
donmcronald wrote: post #159

Earlier quoted context omitted.

> “calculated for maximum publicity and political impact.” I'm not a fan of crypto currency, but a big part of my dislike for it is how difficult it is to actually use it. I don't mean technically though. I mean legally. In Canada, all crypto transactions are considered taxable events. Did you sell a couch on Facebook Marketplace using Bitcoin? Time to calculate your capital gain or loss from a vaguely worded set of…

> In Canada, all crypto transactions are considered taxable events. Did you sell a couch on Facebook Marketplace using Bitcoin? Time to calculate your capital gain or loss from a vaguely worded set of guidelines. Even if it were a real honest-to-god currency it would be the same though, right? That's how it works here in Japan at least - buy a couch in dollars, now you have to calculate capital gains against your ave…

No, transactions in national currencies are exempt if under a reasonable cap. So you don't have to separately declare every time you bought Starbucks overseas or whatever.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#245

Post by NoboruWataya »

pavlov wrote: post #213
AnthonyMouse wrote: post #184

Earlier quoted context omitted.

> if Bernie Madoff were to go to the SEC and ask them "I don't know how to run a Ponzi scheme legally, can you please update the guidelines to make it easier", of course the SEC is going to refuse. The actual problem is that no part of the government wants to be the one to tell you if something is legal, because whoever actually makes the decision takes the blame for the consequences one way or the other. So Congress…

> “Somebody should have to officially tell you if you're allowed to do something or not, ahead of time.” And how would this process actually work in practice? Would making such a request be free? Probably not, since they would consume a lot of lawyer time at the relevant agencies. If it were free, people could file thousands of slightly different requests for all imaginable variations of their dubious business plan,…

I think you're overcomplicating this. In reality, people ask their lawyers whether they are allowed to do something, and those lawyers research the law in conjunction with any interpretive guidance published by the regulators, and sometimes they do consult with regulators directly on behalf of their clients. Where the law is unclear and the regulator refuse to publish guidance or discuss their approach with market participants, lawyers are unable to give a strong opinion. If the SEC were to publish comprehensive guidance on this (clearly a question that a lot of people are asking), it would probably remove any need for people to go asking them, and would also help people to comply with the law and make any enforcement actions easier as a less risky.

The idea of people DDOSing the regulator with thousands of slight variations of a proposal is unrealistic. These are people, not computers - if someone was blatantly abusing the system like that, the SEC would just tell them to knock it off.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#246

Post by RandomLensman »

palmfacehn wrote: post #240
RandomLensman wrote: post #233

Earlier quoted context omitted.

Both only within in limits, as most jurisdictions and also history shows (just take the draft, for example). With maybe an exemption if you manage to be totally isolated (but then at least private property is a weird concept anyway).

There's an important distinction between observing the status quo and holding or aspiring towards ideals. If we only observed what is and ignored principles and ideals, we would never be able to improve the human condition. Even so, I doubt we'll be able to see eye to eye given your starting premises about collectivism. I'd venture that the individual does own himself and that the liberal tradition starts from this p…

I don't think we are that far apart. I don't disagree that there are certain ideals to aspire to.

However, practically, we find out time and time again that these ideals are not enough to sustain themselves and that in the defense of those ideals there are trade offs to be made that compromise them to some extent. Realising some idealised version would require different humans and I don't subscribe to ideas of realities that need those (in the same way that that speaks against idealist versions of collectivism).

The real debate is then what trade offs to make and there we might not agree but that is totally fine and part of the process.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#247

Post by miohtama »

pseg134 wrote: post #237
miohtama wrote: post #235

Earlier quoted context omitted.

They are only securities in the eyes of SEC. There is no legally binding court decision that cryptocurrencies would be securities, and, for example, are not commodities.

Yes, and the SEC sued them in COURT so they can make their case that they are securities and Kraken can make the case they aren’t. Isn’t this what Kraken wanted?

It would be more efficient use of tax payers money to work with Kraken and Coinbase directly and set up rules for what tokens should be securities or not.

Like the EU, Hong Kong, Japan and other countries are doing.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#248

Post by lottin »

donmcronald wrote: post #159
TacticalCoder wrote: post #104

Earlier quoted context omitted.

My favorite part is this: > Meanwhile, groups of lawmakers from both sides of the aisle have questioned what they call SEC’s “regulation via enforcement” approach. They have asked why the agency’s actions against crypto firms seem less focused on “compliance and customer protection,” but were instead “calculated for maximum publicity and political impact.” Others have observed that the SEC’s strategy “does not protec…

> “calculated for maximum publicity and political impact.” I'm not a fan of crypto currency, but a big part of my dislike for it is how difficult it is to actually use it. I don't mean technically though. I mean legally. In Canada, all crypto transactions are considered taxable events. Did you sell a couch on Facebook Marketplace using Bitcoin? Time to calculate your capital gain or loss from a vaguely worded set of…

> The real value in crypto is having a currency that isn't subjected to the whims of governments and the people that control monetary policy alongside the massive payment networks like Visa and MasterCard. Controlling the flow of money allows pseudo bans on things the people that control those systems don't like.

Would you say the same is true of arms trafficking or contraband in general? Personally, I can't think of a reason why a society wouldn't want to control who and what goes into and out of its territory.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#249

Post by olalonde »

Nursie wrote: post #238
olalonde wrote: post #221

Earlier quoted context omitted.

> there's actually a pretty clear answer as to what would need to be done to be fully above-the-board and legal, it's just not what the cryptocurrency people want, so they want the SEC to make it easier for them. Fighting the SEC isn't easy or cheap either, raising questions about the reluctance to pursue the pathway to compliance. If there truly exists a legal route for a company to become "above-the-board and legal…

Perhaps because the 'route' to compliant trading in unregistered securities is to not trade in them?

That's kind of my point. The SEC does not have a mandate to evaluate the merits of transactions or determine whether a securities investment is "good" or "bad". However, it's possible that they are effectively doing so by making the securities registration process for crypto tokens so stringent, it becomes impossible to fulfill. If it was actually possible to register crypto token securities with the SEC, why doesn't anyone do so instead of battling the SEC in court?

Re: SEC charges Kraken for operating as an unregistered securities exchange

#250

Post by pavlov »

NoboruWataya wrote: post #245
pavlov wrote: post #213

Earlier quoted context omitted.

> “Somebody should have to officially tell you if you're allowed to do something or not, ahead of time.” And how would this process actually work in practice? Would making such a request be free? Probably not, since they would consume a lot of lawyer time at the relevant agencies. If it were free, people could file thousands of slightly different requests for all imaginable variations of their dubious business plan,…

I think you're overcomplicating this. In reality, people ask their lawyers whether they are allowed to do something, and those lawyers research the law in conjunction with any interpretive guidance published by the regulators, and sometimes they do consult with regulators directly on behalf of their clients. Where the law is unclear and the regulator refuse to publish guidance or discuss their approach with market pa…

And what if Coinbase's lawyers did all that, the SEC told them in those informal consultations that these altcoins that Coinbase wanted to list sure look a lot like securities, but Coinbase executives decided they'd rather ask forgiveness later because there was so much money to be made pushing all those VC-funded tokens onto retail investors while the good times lasted.

The fundamental problem here is that nobody in crypto is acting in good faith. They're just looking for loopholes to exploit. Publishing more guidance is pointless against such actors. Remember, this is an industry where Sam Bankman-Fried stood out as the honest guy who wants to play along with regulators.

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