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SEC charges Kraken for operating as an unregistered securities exchange

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281–290 of 308 posts

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

#281

Earlier quoted context omitted.

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?

It's called an S-1. It turns out to involve a lot of paperwork, and there's reasons for that.

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

#282

Earlier quoted context omitted.

The SEC saying it is very different from a court saying it. The executive branch can say anything it wants to, but it's the judicial branch's job to interpret the law.

And now the SEC is going to court, what more do you want?

The outcome of the court case.

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

#283
post #256

Earlier quoted context omitted.

No, it's making the correct point. The government can't get you out of having to do the evaluation yourself because the government is broken, which is unlikely to change. In fact this is a major problem with the existence of the regulations -- they protect incumbents. Patented drugs get FDA approval, public domain drugs that could be alternatives to them don't because there is no one to pay for the approval process.…

The government is as broken as we let it be. No government is lawlessness, which is MUCH worse than a mediocre government. I'd argue that up to a point, lawlessness is worse than even a bad government. And nothing can beat a good to great government. If you don't want regulations, sure, Somalia is that way --->

> The government is as broken as we let it be.

How do "we" fix it? You can vote for two Senators and one Congressperson and even assuming that your vote in particular was the deciding vote and one of your choices on the ballot was someone actually inclined to do something, you now have a legislature in which the bad laws pass with a margin of 33 Senators and 174 members of Congress instead of 35 and 175.

The only way to fix it would be to fix the structural incentives in place, i.e. institute more checks and balances to prevent regulatory capture. But this is the chicken and egg problem -- to change the rules you have to be in power, but if you're already in power then you like the existing rules because they're the things that put you in power.

Or in times of populism, you use your power to remove the rules that were meant to constrain opportunities for corruption because they're inconvenient to your agenda, and then those constraints stay gone because they're inconvenient to the next administration's agenda too. So how do you get them back, or introduce new ones?

> And nothing can beat a good to great government.

The best form of government is a benevolent dictator. The worst form of government is a malevolent dictator. But the only difference is who is in charge, which changes over time.

> If you don't want regulations, sure, Somalia is that way

Is there some way we can get past the thing where people are unable to distinguish between the government prohibiting acts of violence and the government prohibiting informed consensual interactions between adults and imposing competition-destroying bureaucratic rules at the behest of incumbent megacorps?

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

#284

Earlier quoted context omitted.

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?

It's called an S-1. It turns out to involve a lot of paperwork, and there's reasons for that.

And you genuinely believe that crypto token projects could just take the time to fill out the S-1 form, but don't because it's too time consuming? I find that hard to believe. I'm tempted to believe that they do, but don't get approved, or that they can't, because some requirements are impossible to fulfill.

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

#285

Earlier quoted context omitted.

And now the SEC is going to court, what more do you want?

The outcome of the court case.

Are you concerned there might be some settlement instead?

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

#286
post #273

Earlier quoted context omitted.

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 tra…

We're in agreement here. The SEC is indirectly making crypto tokens illegal by making it impossible to comply with securities registration requirements. When the SEC says "you have to register", what they really mean is "we think crypto tokens should be illegal".

> register my ponzi scheme either, should I blame them when I get shut down for running it anyway

In my opinion, if the scheme was transparent and no deception was involved, I do believe consenting adults should be allowed to transact. I am not big on the idea of protecting people from themselves, when no deception is involved.

Regardless, ponzi schemes are explicitly illegal. If you think that all crypto tokens should be illegal as well, a law should be passed. Making them implicitly illegal through bureaucracy and at the whims of bureaucrats is not an ideal state of things in a democratic society.

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

#287
post #242

Earlier quoted context omitted.

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?

Miners are the only source of continuous downward pressure on the price, there are other sources of course but miners are nearly clockwork steady sellers, so the market gets accustomed to this effect. all they have to do is let up a tiny bit. the standard narrative is that they can't afford to do so because of the balance between diff rate adjusted mining costs and market price of the mined coin. What I'm pointing out is that because of the massive amount of head start they had from a decade of largely unpoliced mining wherever they found an "opportunity" to do so, legally or not, (as well as continued theft of resources to mine even today), they have plenty of extra reserves to use to cover costs, (assuming that they even pay market cost in the first place - see also: corruption) selling coins at today is prices which were mined at one, two, three+ years old cost rates or less.

This is not even getting into the circus known as tether, which I believe is a significant factor but actually quite a bit of an over-stated red herring serving (along with constant exchange clownery) as a distraction away from the much bigger influence that is the enormous subjective control miners have over the order book price of the coin.

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

#288
post #213

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,…

> 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, hoping that something would slip by.

If they tell you that you can't do it, that should give you standing to challenge their determination in court. And, of course, if they tell you that you can do it, they can't later prosecute you for the thing they officially approved. Asking them a hundred times doesn't matter; if they say yes then you're happy and if they say no you can sue them and it becomes an issue for the courts in the same way as if they charged you for it, except that you don't go to jail if the courts rule against you because you haven't done it yet.

> There would maybe need to be a new profession of counterfactual judges who decide on the legality of things that haven’t happened.

We could call them lawyers and have them work for the agency in charge of prosecuting that part of the law, so when they publish their opinion it expresses the official position of the prosecutor's office and precludes them from reinterpreting the existing law in a different way against your behavior ex post facto.

> How much should such a process cost?

They're lawyers. They get paid by the hour. The first thing they do is evaluate how many hours it will take to research your question, the estimate is free, and then you decide if you want to pay them. In most cases this will not take much; these are professionals answering questions in the specific area of their expertise. How much time does it take to answer a simple yes or no question?

The answers all get published (no secret interpretations of the law) and can be used by anyone, so large entities will often pay to have an ambiguous law clarified and then everybody knows the answer.

The only thing you're doing here is requiring them to tell you how they intend to interpret the law. That doesn't seem like too much to ask.

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

#289

Earlier quoted context omitted.

What could possibly go wrong > Bayer marketed diacetylmorphine as an over-the-counter drug under the trademark name Heroin.[91] It was developed chiefly as a morphine substitute for cough suppressants https://en.wikipedia.org/wiki/Heroin

It's perfectly legal to buy drain cleaner at any department store and if you drink it you are likely to die. But you are under no obligation to drink it. Or do heroin. So that has an obvious solution. Whereas if you have cancer and cannabis can prevent your nausea but the federal government maintains a prohibition on it for three generations, what are your options?

For something more recent, I'd recommend any of the books or documentaries on oxycontin sparking a more recent opium epidemic. As badly as the FDA failed, we'd be worse off if we didn't have one. There's good reasons people want more effective regulation instead of none.

Part of the ban on cannabis, psychedelics, etc has been to ban research on their effects as well. I think there's some clear lines that can be drawn on good laws vs bad laws here.

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

#290
post #196

Earlier quoted context omitted.

> Banks, for instance, don't just co-mingle customer funds, they invest those funds on their own behalf and reap the profits for themselves. Sometimes a bank will share a portion of its profit with its customers, in the form of intest; more often, the bank pays little or no interest, and actually charges the customer fees. A bank will risk its customers' money, and its customers will pay for that privilege. Banking h…

Is Glass Steagall still a thing?

Sadly, no. It was repealed in 1999.
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