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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

#271

Post by jgilias »

1vuio0pswjnm7 wrote: post #234
ascendantlogic wrote: post #65

I feel like this won't end up going well for the SEC. This whole methodology of telling exchanges "I don't know, you figure it out" when they ask for clarity and then turning around and suing them for not figuring it out is extremely shaky legal ground.

You "feel" the SEC will lose against Kraken. Is that correct.

They did lose against Ripple. That’s one case law precedent right there for determining what is a security. There’s also a non-negligible chance that they are going to either lose or have a dismissed case against Coinbase. Given that this case is basically a copy-paste of that one, it’s a possible outcome.

There’s a reason why the lawmaking, executive, and judicial powers are separated in a democracy.

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

#272

Post by olalonde »

davidgerard wrote: post #269
olalonde wrote: post #254

Earlier quoted context omitted.

Perhaps the laws on penny stock registration don't translate well to crypto tokens? How do you explain that basically no one registers? Surely, "just because" is not it.

The one technical innovation is that in the olden days, a penny stock required paper and phones. You can now press a button and launch a new DeFi token, about 100% of which are unregistered penny stock scams. They don't register because they think they can get away without it, it's pretty simple. Pointing at all the other scofflaws doesn't make you not a scofflaw.

Your claim is that there is a straightforward way to register crypto tokens with the SEC but projects chose not to because they can get away with it?

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

#273

Post by Nursie »

olalonde wrote: post #249
Nursie wrote: post #238

Earlier quoted context omitted.

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…

No, it has a mandate to determine whether an investment is legal or not.

Have you considered it may be impossible to fulfill because by their very nature these things cannot pass the tests to be legal?

> why doesn't anyone do so instead of battling the SEC in court?

Because none of them meet the bar of legality. Because they do not meet the most basic requirements of consumer protection, transparency, fair market trading. It's not the SEC making requirements for crypto so stringent, it's crypto's complete failure to fulfill the necessary criteria for a registered security.

As others have said - the SEC aren't going to make it easy for me to register my ponzi scheme either, should I blame them when I get shut down for running it anyway? Cry about how they're making it difficult to figure out how to follow their guidelines? Whine that ponzi schemes are not being allowed a simple way to compliance? Or should I maybe re-evaluate what I'm trying to do?

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

#274

Post by shortsunblack »

ascendantlogic wrote: post #65

I feel like this won't end up going well for the SEC. This whole methodology of telling exchanges "I don't know, you figure it out" when they ask for clarity and then turning around and suing them for not figuring it out is extremely shaky legal ground.

Regulators are not required to consult businesses. That's what McKinsey, and Ernst & Young are for. In fact, I would like it very much that regulators would stay hostile to business as they are meant to. Not coddle with industry in events to have a chat and a coffee. Keeps the revolving door shut.

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

#275

Post by [deleted] »

lmm wrote: post #183
DennisP wrote: post #160

Earlier quoted context omitted.

Bitcoin still rolls out upgrades occasionally. At this point Ethereum doesn't really have "a dev team." There are about ten independent client teams, who have public meetings to come to agreement on upgrades, plus an open research community. When you say that an ETH buyer is "expecting to profit from the efforts of the dev team" which wasn't the case in 2018, are you talking about proof of stake? Because it's not all…

> When you say that an ETH buyer is "expecting to profit from the efforts of the dev team" which wasn't the case in 2018, are you talking about proof of stake? Not proof of stake qua proof of stake, but the fact that substantial changes to ethereum (like proof of stake) - things that change the usability of the network, and so could be reasonably expected to change the value of ethereum tokens - are still being worke…

[deleted]

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

#276

Post by jowea »

foooobaba wrote: post #100
pmulard wrote: post #94

Earlier quoted context omitted.

The FDA has no place in a free market. If people trust a company which poisons their food, they should be punished for misplacing their trust. Both the scammer and the scammed deserve a share of the punishment. Life naturally punishes the scammed already and teaches them a lesson at the same time... Without the help of the FDA... How good is that?! -- I'd much rather pool our money into a commission that does this fo…

I am also glad the FDA protects us from chemicals and ingredients that would cause processed food to be unhealthy and harmful, if they didn’t do that we would probably end up with an overweight population and tons of food related health problems.

There are governments taking action against junk food.

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

#277

Post by jowea »

RandomLensman wrote: post #210
jongjong wrote: post #80

Earlier quoted context omitted.

The SEC has no place in a free market. If people trust a company which co-mingles funds, they should be punished for misplacing their trust. Both the scammer and the scammed deserve a share of the punishment. Life naturally punishes the scammed already and teaches them a lesson at the same time... Without the help of the SEC... How good is that?! If my startup fails because I hired the wrong people, I take the full b…

Because people are not islands? If you live in a non-society then that is fine, otherwise financial schemes can pretty much bring down countries (see Albania).

Even in the US, AFAIK the reason these securities regulations exist is that companies did not disclose information before they were forced through. An efficient theoretical free market requires public information, the SEC exists to enforce that.

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

#278

Post by J_Shelby_J »

robbywashere_ wrote: post #202

So much hubbub for something completely worthless going to zero anytime and has no use for anyone but criminals. Why does the SEC even care about something so inconsequential.

There is literally people in this thread discussing how their legitimate businesses pay international employees in stable coins because it would be too difficult or costly to use traditional methods. I’m all for crypto criticism, but this blind adherence to anti-crypto tribalism is embarrassing.

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

#279

Post by nivertech »

legutierr wrote: post #161
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…

> And given that we've seen exchange after exchange fail to perform basic tasks like "don't commingle customer funds," I have a hard time feeling any sympathy for cryptocurrency companies here. There is nothing per se nefarious about co-mingling customer funds, provided that you are otherwise compliant with the law. Banks, for instance, don't just co-mingle customer funds, they invest those funds on their own behalf…

> It is not illegal to operate a spot commodities exchange without approval from the SEC

In the case of spot markets CFTC can only intervene if there is a fraud or manipulation. There is also “actual delivery rule”, I.e. if crypto “exchange” didn’t settled spot trade on underlying Blockchain or a ledger in 28 days - they effectively created a derivative, and fall under the CFTC mandate.

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

#280

Post by landemva »

lowkeyoptimist wrote: post #182
landemva wrote: post #139

Earlier quoted context omitted.

Stablecoins are supposed to be stable, and not rise or fall. There is no expectation of profit for a stablecoin like USDC. And USDC doesn't pay interest. People use it for stability and for payments.

Last I checked, you could get 5% interest on your USDC. Is that just something where the exchange is lending it out?

It is not the code of the USDC stablecoin paying 5%, so that reward is something else. Maybe the exchange wants to get many people sending coin to them so their asset base looks big for ... some purpose?
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