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Founder of crypto lender Celsius Network arrested, charged with fraud

reuters.com

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

#141

Post by kodah »

DennisP wrote: post #102
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 writing would definitely be on the wall if the SEC got to make the final decision. But they don't, and they just had a big loss in court with the XRP case. If XRP isn't a security, then most other things traded on exchanges aren't securities either. https://www.reuters.com/legal/us-judge-says-sec-lawsuit-vs-r...

Broader question: Given that SEC enforcement is speculative (eg: we think this might be a security) do they have to pay damages when they're wrong? If not, why? If so, how much?

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

#142

Post by [deleted] »

dmitrygr wrote: post #80
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…

Your example left out the crimes… You didn’t promise people that their Pokémon cards ARE money. You didnt promise them that they WILL NECESSARILY go up in value. That’s the difference.

[deleted]

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

#143

Post by wpietri »

bandrami wrote: post #117
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 most amusing part of crypto is watching libertarians learn in realtime why these regulations exist

Absolutely agreed. Back in college I met some very sincere, thoughtful, and kind libertarians. I occasionally imagine how horrified they'd be to learn that their considered and nuanced political philosophy had become a popular fig leaf for "I do what I want without regard to harm for others".

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

#144

Post by wmf »

kodah wrote: post #141
DennisP wrote: post #102

Earlier quoted context omitted.

The writing would definitely be on the wall if the SEC got to make the final decision. But they don't, and they just had a big loss in court with the XRP case. If XRP isn't a security, then most other things traded on exchanges aren't securities either. https://www.reuters.com/legal/us-judge-says-sec-lawsuit-vs-r...

Broader question: Given that SEC enforcement is speculative (eg: we think this might be a security) do they have to pay damages when they're wrong? If not, why? If so, how much?

They're pretty careful to never be wrong.

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

#145

Post by scottiebarnes »

growse wrote: post #18
scottiebarnes wrote: post #12

Earlier quoted context omitted.

> It's not the job of the SEC to guide companies/people on what constitutes securities Which government agency fulfills that role?

The judiciary. See the Howey test.

I guess the judiciary system will eventually rule on what is legal / not legal via a legal contest, but courts are not actively informing and guiding American companies on what the rules are.

Seems like there should be an agency that does? Furthermore, the SEC does seem to fulfill some of this role, ie. registering securities.

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

#146

Post by saurik »

empath-nirvana wrote: post #136
saurik wrote: post #113

Earlier quoted context omitted.

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.

The common enterprise here is, similar to the argument against cryptocurrencies, the efforts to make money off of these cards; and the efforts of others here is the work being put in by the company which printed these cards to market them and design this game. If the company suddenly disappeared tomorrow--or began to mismanage their product line, potentially suddenly printing a bunch of cards they previously claimed were rare--the value of these cards would plummet, as people aren't just buying them for their prior established value: they expect that this company will defend their IP portfolio, release expansions with new content, and continue the efforts to market this game in stores.

If you disagree with this analysis, maybe you can show how this is (or is not) different to, say, Axie Infinity (a crypto company even I actually do feel is a security under this test--with centralized servers managing centrally minted NFTs--and which is very similar in nature to Pokémon as it is clearly a rip-off of their IP) or (to take a more standard example) Filecoin (one which the SEC claims is a security in their lawsuit against Coinbase)?

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

#147

Post by fsckboy »

giarc wrote: post #78
dcist wrote: post #34

Earlier quoted context omitted.

Thank you! I never understand why journalists don't link to court documents.

Because 99% of readers probably don't want to/won't read them.

if news organizations did a good job of quoting/summarizing court documents, I would be happy not to read them either

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

#148

Post by CSMastermind »

sublinear wrote: post #56
angry_albatross wrote: post #46

Earlier quoted context omitted.

AI is not in the same category in my book. Both may be overhyped in some ways, but blockchain technology was fundamentally a bad idea with no legitimate use cases.

It can be argued that probabilistic generative AI is about as equally worthless from first principles.

That seems untrue to me?

There are several very obvious uses for ChatGPT. Almost everyone I've seen use it can think of something they want to use it for.

I've never had someone give me a plausible usecase for blockchains or crypto currencies. Once you push on the usecases I have heard it quickly devolves into "you just don't get it" or some kind of appeal to authority like "well all the VCs wouldn't be investing in it if it wasn't valuable, clearly they're smarter than you."

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

#149

Post by saurik »

rondini wrote: post #138
saurik wrote: post #113

Earlier quoted context omitted.

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

There were (maybe even are) a ton of people playing Axie Infinity (an NFT rip-off of Pokémon) also; does that mean it isn't a security, because some people actually play it? When I was a kid I certainly knew people (including myself) who played Magic: The Gathering, and yet most of the reason we all bought as many cards as we did was the lottery and collectible trading mechanic.

If you are willing to admit that there are "utility" to these cards, then what makes them different from cryptocurrency projects that do the same? If the game weren't so popular--maybe it is one of the numerous card games we wouldn't quickly be able to name that are all rip-offs of the concept, but didn't have the juicy IP of Pokémon--would you then suddenly consider it a security?

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

#150

Post by mschuster91 »

Workaccount2 wrote: post #75
dcist wrote: post #34

Earlier quoted context omitted.

Thank you! I never understand why journalists don't link to court documents.

They probably do but the editors remove them. It seems that rule number one of running a news site is to never have any external links. It's like a casino, they want you to come in and get lost.

That seems to be the case for US media... here in Germany, it's a bit different at least for quality media. Spiegel, Heise, Die ZEIT and T-Online all happily link to sources, even up to competing news media.
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