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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

#101

Post by kadoban »

ascendantlogic wrote: post #96
kadoban wrote: post #68

Earlier quoted context omitted.

Law enforcement has no obligation to explain the laws to you.

At some point someone has to explain to you what law you broke and how you broke it. We'll see how this goes for the SEC. I'm not convinced they're going to end up on the winning side with these vague enforcement lawsuits substituting for policy/law from the legislative branch.

More to a judge or jury than to you exactly, but yeah they'll have to do that. I don't personally have a lot of doubt in their abilities to do so, but I'm very much not a lawyer. Just the legal system tends to be unsympathetic to hacker technicalities that us techies like.

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

#102

Post by ac29 »

ascendantlogic wrote: post #96
kadoban wrote: post #68

Earlier quoted context omitted.

Law enforcement has no obligation to explain the laws to you.

At some point someone has to explain to you what law you broke and how you broke it. We'll see how this goes for the SEC. I'm not convinced they're going to end up on the winning side with these vague enforcement lawsuits substituting for policy/law from the legislative branch.

> At some point someone has to explain to you what law you broke and how you broke it

The link at the top of this page is 90 pages of the SEC telling Kraken what rules and regulations they have broken. It is certainly possible the court will disagree with the SEC, but I wouldnt bet on it.

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

#103

Post by FabHK »

kylebenzle wrote: post #53
SeanAnderson wrote: post #51

Earlier quoted context omitted.

Well, I had started the conversation about BTC not BCH. Personally, I feel that BCH has more of a team associated with it than BTC. That said, none of what we're talking about addresses the fact that, in 2018, Gensler said, quote, "Bitcoin. Ether. Litecoin. Bitcoin Cash. Why did I name those four? They’re not securities." Since then, things have changed, and now Gensler only highlights BTC as not a security. If the i…

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.

Seems to me that one can make an argument that the following people, named in bitcoin/src/kernel/chainparams.cpp, control BTC:

        vSeeds.emplace_back("seed.bitcoin.sipa.be."); // Pieter Wuille, only supports x1, x5, x9, and xd
        vSeeds.emplace_back("dnsseed.bluematt.me."); // Matt Corallo, only supports x9
        vSeeds.emplace_back("dnsseed.bitcoin.dashjr.org."); // Luke Dashjr
        vSeeds.emplace_back("seed.bitcoinstats.com."); // Christian Decker, supports x1 - xf
        vSeeds.emplace_back("seed.bitcoin.jonasschnelli.ch."); // Jonas Schnelli, only supports x1, x5, x9, and xd
        vSeeds.emplace_back("seed.btc.petertodd.org."); // Peter Todd, only supports x1, x5, x9, and xd
        vSeeds.emplace_back("seed.bitcoin.sprovoost.nl."); // Sjors Provoost
        vSeeds.emplace_back("dnsseed.emzy.de."); // Stephan Oeste
        vSeeds.emplace_back("seed.bitcoin.wiz.biz."); // Jason Maurice

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

#104

Post by TacticalCoder »

KrakenEng wrote: post #89

Kraken's response: https://blog.kraken.com/news/kraken-continues-to-fight-for-i... > The complaint against Kraken alleges no fraud, no market manipulation, no customer losses due to hacking or compromised security, and no breaches of fiduciary duty. It includes big dollar amounts but does not allege a single one of those dollars is missing or misused – no ponzi scheme, no failure to maintain adequate reserves, and no…

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 protect the public.” Indeed, this suit does nothing to protect the public. Like those in complaints that have come before, its allegations are factually incorrect, contrary to law, and the wrong way to create policy in the United States.

To me the SEC and Gary Gensler are going to get their arses handed to themselves once again.

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

#105

Post by nvy »

jongjong wrote: post #80
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…

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…

Regulators keep big fish from engaging in predatory behavior. Is the SEC flawed? Absolutely.

But the SEC makes markets more free, not less.

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

#106

Post by knlam »

jcranmer wrote: post #73
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.

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…

At least in the case of Bernie Madoff, the SEC can say "no, it is illegal to run a ponzi scheme and in this case it should say what law the exchange broke to make it valid

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

#107

Post by [deleted] »

jcranmer wrote: post #73
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.

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…

[deleted]

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

#108

Post by westurner »

hanniabu wrote: post #54
ketzo wrote: post #37

Earlier quoted context omitted.

I mean, Kraken is not a registered securities exchange. They offer many cryptocurrencies. The SEC has indicated that it considers most, probably all, cryptocurrencies to a be securities. The writing has been on the wall for a while -- Coinbase got a Wells letter, basically a "lawsuit is coming" warning, months ago.

The Coinbase Wells letter was in reference to their interest bearing offerings

Presumably Coinbase and Kraken had to register as banks to offer FDIC-insured accounts (and debit cards)?

Non-Security Deposits are interest-bearing products that are not securities.

Non-Security Deposits: CD Certificates of Deposit, MMA Money Market Accounts, Treasury Bills, Savings accounts, Checking Accounts

Do banks require SEC registration to offer interest-bearing Non-Security Deposit products?

Have banks ever been required to qualify interest-bearing products as securities contracts, after qualifying each product for list in each US State of operation?

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

#109

Post by ChainOfFools »

kylebenzle wrote: post #53
SeanAnderson wrote: post #51

Earlier quoted context omitted.

Well, I had started the conversation about BTC not BCH. Personally, I feel that BCH has more of a team associated with it than BTC. That said, none of what we're talking about addresses the fact that, in 2018, Gensler said, quote, "Bitcoin. Ether. Litecoin. Bitcoin Cash. Why did I name those four? They’re not securities." Since then, things have changed, and now Gensler only highlights BTC as not a security. If the i…

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 determine how much control these folks have over liquidity; this entire conversation is just broadly discouraged and for whatever reason seems to have attracted very little interest even from the crypto critics out there.

The number one weapon the crypto cartel uses to shut down dangwrous critical turns developing in the story, is their ability to move the last trade price almost at will, completely opposed to any building critical narrative in order to undermine it, knowing full well that the sympathy of the media reliably lies with "number go up", not "number made up." And they can do this because they're sitting on an enormous warchest of unsold coins mined when prices were far cheaper, which they can use to fund their operations while they throttle back current coinbase sales at current prices to prop up the price.

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

#110

Post by ranger207 »

jongjong wrote: post #80
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…

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…

> The SEC has no place in a free market.

You're right. This is why we don't want a completely _free_ market, we want a _competitive_ market that has actors to prevent and punish fraud and abuse.

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