Founder of crypto lender Celsius Network arrested, charged with fraud • Hacker News Board

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#131

Post by [deleted] » Thu, Jul 13, 2023, 5:53 PM UTC

saurik wrote: post #113

wpietri wrote: post #87

Earlier quoted context omitted.

The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp So yes, if finance were unregulated, then he wouldn't have been violating the securities regulations that didn't exist. But they did exist, and the Howey Test is from 1946, so it shouldn't have been a surprise. A lot of people tried to pretend that the existing financial regulations, many o…

Which point of the Howey Test do you feel is not satisfied by Pokémon cards? (If your answer has anything to do with the existence of the game, I am curious what you think of baseball cards.) You state that they don't satisfy the test with quite some certainty but left the reasoning to the reader; but, it would seem, to me, like Pokémon cards are no different from many of these cryptocurrencies the SEC is interested…

[deleted]

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#132

Post by saurik » Thu, Jul 13, 2023, 5:53 PM UTC

RC_ITR wrote: post #99

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

Playing Devil's Advocate - The Pokémon card is a thing. I'm not buying it because I think it is a fungible asset that I can use to transact with (the thing I bought has a physical condition that can be graded, it is unique). No one was collecting crypto to complete their collection, they were buying crypto (not caring even a little bit about which particular unique token they bought) because they thought it would be…

People aren't buying Pokémon cards to "complete their collection": they are buying them because they think someone else will pay more for them later, presumably because they want to "complete their collection", but that makes just as little sense... they too will be buying it from the first person in order to sell it to a third person. There is supposedly a game attached to Pokémon cards, but that excuse to establish "utility" is pretty flimsy: even the 10 year old I know who is obsessed with these cards is only in it as an amateur investor and it isn't clear to me he even knows the results; he's simply fallen for the marketing efforts of this company shilling their shitcards on an unsuspecting populace, many of whom will lose thousands of dollars by the time this particular collectible bubble is over.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#133

Post by majormajor » Thu, Jul 13, 2023, 5:53 PM UTC

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

The physical collectibles market is over a century old for baseball cards. So far the SEC hasn't stepped in for places trading baseball cards, magic cards, pokemon cards, sneakers, etc.

So the burden of proof seems to be on the claim that they're the same, or that it's a meaningful analogy.

But hey, let's look at the this case - the accused did the following:

* created their own token (ok, so they aren't just a card swap meet or trading site like your analogy)

* pumped and dumped that token

* paid ridiculous interest rates (I sure haven't seen that from the places I get my Pokemon cards...) and advertised that the principal was safe (these are wildly mutually contradictory, and many people knew it at the time)

* lent money...

ok let's stop there, we're already clearly in a different universe of financial activity.

EDIT: misattributed a followup comment

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#134

Post by wpietri » Thu, Jul 13, 2023, 5:54 PM UTC

jjulius wrote: post #123

wpietri wrote: post #87

Earlier quoted context omitted.

The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp So yes, if finance were unregulated, then he wouldn't have been violating the securities regulations that didn't exist. But they did exist, and the Howey Test is from 1946, so it shouldn't have been a surprise. A lot of people tried to pretend that the existing financial regulations, many o…

>The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp ... Pokemon cards were only used as an example to explain what happened, almost like an ELI5. Whether they'd pass they Howey Test or not is irrelevant.

It's not irrelevant. It's a bad example because it creates an intuition that what was done was something very different than what was actually done.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#135

Post by angry_albatross » Thu, Jul 13, 2023, 5:54 PM UTC

bottlepalm wrote: post #94

angry_albatross wrote: post #59

Earlier quoted context omitted.

The value will deflate at some point, it's kind of a mathematical certainty. We cannot extract more money from the system than we put in, since Bitcoin is a non-productive asset. It does not generate revenue the way that a business/company does. And someone has to pay for the electricity of the miners, so money is draining out of the system, making it a negative sum game that people are playing. I would also disagree…

Private as in independent of going through any bank or institution like you would have to do to move money internationally in any other form. A store of value like gold, the dollar, or Bitcoin has nothing to do with generating revenue - only the intrinsic value of how hard is it to create more - dollars can be printed, a gold vein can be discovered tomorrow that would crash the price, Bitcoin on the other hand there'…

One nice thing about gold is that we don't have to keep paying money for gold to continue to exist. It will sit on a shelf and not charge us any money for sitting there. Bitcoin exists on a network of computers that need electricity to run. If we stopped paying for this network to run, the bitcoin would stop existing, since the ownership of bitcoin really is solely determined by the ownership records on this computer network.

That is my argument, that Bitcoin cannot maintain its value long term because the value is leaking out of the system in the form of electricity bills. Furthermore, we cannot let these bills become too small, or else the network becomes vulnerable to a 51% attack, so as a society we collectively must pay a large amount of "rent" on this store of value, which causes the value in this value pool to slowly deflate over time.

We have been overcoming this drain so far by "investors" continuing to pour money into the system, but those investors cannot possibly get all of their money back, because it's been spent on electricity.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#136

Post by empath-nirvana » Thu, Jul 13, 2023, 5:54 PM UTC

saurik wrote: post #113

wpietri wrote: post #87

Earlier quoted context omitted.

The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp So yes, if finance were unregulated, then he wouldn't have been violating the securities regulations that didn't exist. But they did exist, and the Howey Test is from 1946, so it shouldn't have been a surprise. A lot of people tried to pretend that the existing financial regulations, many o…

Which point of the Howey Test do you feel is not satisfied by Pokémon cards? (If your answer has anything to do with the existence of the game, I am curious what you think of baseball cards.) You state that they don't satisfy the test with quite some certainty but left the reasoning to the reader; but, it would seem, to me, like Pokémon cards are no different from many of these cryptocurrencies the SEC is interested…

1) An investment of money 2) In a common enterprise 3) With the expectation of profit 4) To be derived from the efforts of others

It fails on points 2 and 4.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#137

Post by timy2shoes » Thu, Jul 13, 2023, 5:54 PM UTC

jjulius wrote: post #123

wpietri wrote: post #87

Earlier quoted context omitted.

The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp So yes, if finance were unregulated, then he wouldn't have been violating the securities regulations that didn't exist. But they did exist, and the Howey Test is from 1946, so it shouldn't have been a surprise. A lot of people tried to pretend that the existing financial regulations, many o…

>The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp ... Pokemon cards were only used as an example to explain what happened, almost like an ELI5. Whether they'd pass they Howey Test or not is irrelevant.

> Whether they'd pass they Howey Test or not is irrelevant.

Not if you're the SEC enforcing securities laws, which only apply if they pass the Howey test.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#138

Post by rondini » Thu, Jul 13, 2023, 5:55 PM UTC

saurik wrote: post #113

wpietri wrote: post #87

Earlier quoted context omitted.

The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp So yes, if finance were unregulated, then he wouldn't have been violating the securities regulations that didn't exist. But they did exist, and the Howey Test is from 1946, so it shouldn't have been a surprise. A lot of people tried to pretend that the existing financial regulations, many o…

Which point of the Howey Test do you feel is not satisfied by Pokémon cards? (If your answer has anything to do with the existence of the game, I am curious what you think of baseball cards.) You state that they don't satisfy the test with quite some certainty but left the reasoning to the reader; but, it would seem, to me, like Pokémon cards are no different from many of these cryptocurrencies the SEC is interested…

In a 50 mile radius around me there are 44 officially sanctioned Pokemon tournaments happening this month. If you look outside your social circle you'll find that a lot of people play the #2 TCG in the world

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#139

Post by bottlepalm » Thu, Jul 13, 2023, 5:55 PM UTC

alangibson wrote: post #108

bottlepalm wrote: post #84

Earlier quoted context omitted.

The nice thing about Bitcoin is that it's success is not based on good/bad PR. Bitcoin has a solid technical foundation and practical use cases that has weathered every kind of criticism for over 10 years now and is still on top. Celsius and earn programs/scams like it is just another trial Bitcoin has passed through and is stronger for it.

> practical use cases This is satire right?

Moving large amounts of money 24/7 worldwide, outside of any bank, quickly, low transaction fee - pure P2P, and then being able to store it securely outside of a bank in your pocket.

Have you dealt with wiring money before? How about holding large amounts of currency or gold outside of a bank? It sucks.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#140

Post by wpietri » Thu, Jul 13, 2023, 5:56 PM UTC

legitster wrote: post #129

wpietri wrote: post #87

Earlier quoted context omitted.

The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp So yes, if finance were unregulated, then he wouldn't have been violating the securities regulations that didn't exist. But they did exist, and the Howey Test is from 1946, so it shouldn't have been a surprise. A lot of people tried to pretend that the existing financial regulations, many o…

> It's a good question for philosophers and spectators, but personally I don't care at all Please don't be so narrow sighted. Have you ever been charged with a crime you didn't know was a crime? You don't think overzealous sheriffs or prosecutors love pulling out old statutes on people? Holding people accountable for laws they had no reasonable way of knowing is a miscarriage of justice. Our criminal system absolutel…

Mashinsky definitely has a "reasonable way of knowing" about these laws. More than that, anybody starting a company has a positive duty to clients and investors to make sure that it's legal before things get too far.