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Coinbase CEO: we're preparing to go to court with the U.S. SEC

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Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#171

Post by [deleted] »

mrguyorama wrote: post #151
nyolfen wrote: post #58

Earlier quoted context omitted.

i run a small retail shop that sells digital goods for btc. i bought a book with btc two months ago. more convincingly, it's widely used for remittances and as a store of value in countries with debased currencies -- this is a powerful tool for ordinary citizens in countries like venezuela, argentina etc to discipline central banks who would otherwise steal their savings.

In japan, there exist a bunch of businesses that buy your pachinko prizes and give you cash. It's a standard thing that happens pretty much anywhere with pachinko machines. Yet it would be absurd to call those toys "A currency". A currency requires more usage than occasional barter.

[deleted]

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#172

Post by nyolfen »

mrguyorama wrote: post #151
nyolfen wrote: post #58

Earlier quoted context omitted.

i run a small retail shop that sells digital goods for btc. i bought a book with btc two months ago. more convincingly, it's widely used for remittances and as a store of value in countries with debased currencies -- this is a powerful tool for ordinary citizens in countries like venezuela, argentina etc to discipline central banks who would otherwise steal their savings.

In japan, there exist a bunch of businesses that buy your pachinko prizes and give you cash. It's a standard thing that happens pretty much anywhere with pachinko machines. Yet it would be absurd to call those toys "A currency". A currency requires more usage than occasional barter.

what threshold would you find convincing? it performs all conventionally defined functions of money, it is legally recognized as money in some jurisdictions, it is useful as a store of value and medium of exchange. japanese yen might as well be 'toy' to me since i can't pay taxes with it. at this point i feel like i'm arguing about the utility of automobiles with an equestrian in 1920.

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#173

Post by danaris »

Canada wrote: post #157
arcticbull wrote: post #13

Earlier quoted context omitted.

The definition of a security is found in the application of the Howey test. The SEC has a nice long explanation of how you apply Howey to crypto. Basically every token is a security. Always has been. With the possible exception of Bitcoin due to the way it was initially distributed. [1] [1] https://www.sec.gov/files/dlt-framework.pdf

By this logic every isn't every kickstarter is also a security? Aren't tickets for concerts are securities too? Ethereum was like that. You give them bitcoins, and they promised to build this distributed computer that you can run programs on. They did, and when the computer was up and running, they gave the tokens that pay for the running of programs on the computer. They also offered additional tokens to those who p…

You're not backing a Kickstarter with an expectation of profit. Your expectation is, at most, an expectation of product.

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#174

Post by dlubarov »

VWWHFSfQ wrote: post #119
jedberg wrote: post #104

Earlier quoted context omitted.

The SEC enforces the law, and it should be totally normal for them to say "this is how we plan to enforce this law". By not saying so, they create a lot of unnecessary churn. Imagine you are outside a store, and there is a police officer outside. You ask them "If I go inside and take some bread off the shelf and walk out without paying, is that ok?". Should the officer say "talk to a lawyer" or should they say "I wou…

First of all, not everything can be reduced to the absolute most simplistic of metaphors like you're trying to do. Second, > Last month, the SEC issued Coinbase with a Wells notice, which is often one of the final steps before the regulator formally issues charges. It generally lays out the framework of the regulatory argument and offers the potentially accused an opportunity to rebut the SEC’s claims. It sounds like…

It doesn't seem like Coinbase has received such answers, they just know that some sort of enforcement action is coming. As per the article, "[Armstrong says] the company has not got any more information on the specific issues the SEC has".

E.g. here's Gensler refusing to answer whether the SEC considers ETH a security - https://twitter.com/sassal0x/status/1648338351832064003

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#175

Post by vkou »

paulddraper wrote: post #144
vkou wrote: post #89

Earlier quoted context omitted.

Why would the SEC need congressional action to regulate securities (which is what some of the crypto tokens traded on exchanges are)? Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC? Just because you've added '... But on the internet' to your business model does not require additional legislature to determine whether or not you are tradi…

Back in 2018, the SEC considered decentralization as an excluding criterion. https://corpgov.law.harvard.edu/2022/12/06/why-cryptoassets-...

Why not link to the actual SEC guidance, instead of an op-ed by a crypto CEO that is reading what she wants[1] to read from it?

https://www.sec.gov/files/dlt-framework.pdf

It's only a few pages, and nothing in it indicates that decentralization is sufficient as an excluding criterion.

> Although no one of the following characteristics of use or consumption is necessarily determinative, the stronger their presence, the less likely the Howey test is met:

You can't just cherrypick the words that you want to hear in a sentence, exclude all the other words, and claim that the SEC gave the green-light to decentralized crypto! In fact, nearly all of the exculpatory characteristics listed just below that paragraph focus on the utility value of a crypto token, as opposed to its speculative value! The real versus speculative value (Storing data on filecoin, versus trading filecoin around) is what's most important to the SEC, not how decentralized the network is!

... Also, most crypto is ridiculously centralized, and if Coinbase listed even one of the problem tokens, they are... Running an illegal securities exchange.

---

[1] Read the actual SEC guidance, and try to square it with this quote by Jai Massari, the author of that op-ed:

> First set out in a 2018 speech by SEC Corporation Finance Division Director William Hinman, and then described in more detail in 2019 staff guidance,[6] the core idea is that where a blockchain project is sufficiently decentralized, the cryptoasset associated with the project will not be or represent an “investment contract” under the so-called Howey test,

If that's what she gets out of the SEC document (linked above), Jai doesn't have the reading comprehension of a high-schooler[2], let alone one that's appropriate for a 'visiting lecturer' at Berkeley!

[2] What she seems to have is an incredibly motivated reading comprehension. The same kind of motivated reading comprehension that's currently landing Coinbase into hot water.

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#176

Post by paulddraper »

vkou wrote: post #175
paulddraper wrote: post #144

Earlier quoted context omitted.

Back in 2018, the SEC considered decentralization as an excluding criterion. https://corpgov.law.harvard.edu/2022/12/06/why-cryptoassets-...

Why not link to the actual SEC guidance, instead of an op-ed by a crypto CEO that is reading what she wants [1] to read from it? https://www.sec.gov/files/dlt-framework.pdf It's only a few pages, and nothing in it indicates that decentralization is sufficient as an excluding criterion. > Although no one of the following characteristics of use or consumption is necessarily determinative , the stronger their presence,…

> most crypto is ridiculously centralized

That is true.

IMO Bitcoin is the only crypto is that is legitimately decentralized; no single governing organization.

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#177

Post by legitster »

danaris wrote: post #166
legitster wrote: post #159

Earlier quoted context omitted.

... which would require ditching all of their customers and establishing a brokerage. We're talking about a fundamentally different business that is not distinguishable from any existing business. Coinbase as we know it would be dead.

And what's the fundamental problem with that? No business has an inalienable right to government support or sanction for their business model, least of all when their business is 100% in an area that is brand-new, poorly-understood, poorly-regulated, and absolutely rife with scams.

Sure, but I don't think it should be the government's prerogative to shut down businesses either, just on the grounds that regulators find the industry annoying. If people want to buy their silly crypto trinkets I don't see how moving it behind the curtain of a brokerage actually helps anyone.

I mean, the whole SEC thing is a bit of theater: they can't actually do anything to protect against frauds and scams and bad investments. All they can do is to push assets into the high-speed traffic of professional traders and hope that the market sorts things out for itself.

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#178

Post by danaris »

legitster wrote: post #177
danaris wrote: post #166

Earlier quoted context omitted.

And what's the fundamental problem with that? No business has an inalienable right to government support or sanction for their business model, least of all when their business is 100% in an area that is brand-new, poorly-understood, poorly-regulated, and absolutely rife with scams.

Sure, but I don't think it should be the government's prerogative to shut down businesses either, just on the grounds that regulators find the industry annoying. If people want to buy their silly crypto trinkets I don't see how moving it behind the curtain of a brokerage actually helps anyone. I mean, the whole SEC thing is a bit of theater: they can't actually do anything to protect against frauds and scams and bad…

"Find the industry annoying" is an interesting way to characterize a regulatory agency that has investigated a situation and determined that it breaks the law.

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#179

Post by dlubarov »

daedalus_f wrote: post #99
dgellow wrote: post #90

Earlier quoted context omitted.

So, you’re saying that Coinbase knowingly offered unregistered security. And acknowledged that’s not legal. The fact the SEC refuses these securities to be registered doesn’t negate the illegal offering of unregistered securities.

If you look at the recent SEC filing, they present evidence Coinbase likely knew what they were doing was illegal and coached companies wanting to list coins on the exchange on how to remove “problematic language” from their promotional material that might make it too obvious they were selling unregistered securities.

Where is this filing? Not sure what that would be since the SEC hasn't brought charges yet.

I don't see an issue with advising companies on what language to use, given that language can absolutely affect whether a token is in fact a security, e.g. based on the "expectation of profit" prong of the Howey test.

Re: Coinbase CEO: we're preparing to go to court with the U.S. SEC

#180

Post by elliekelly »

true_religion wrote: post #168
JohnFen wrote: post #96

Earlier quoted context omitted.

But this is only a "problem" for those who want to ride right on the line of what's technically legal. People who strive to stay within what the law is trying to accomplish, who are with the spirit of the law rather than the letter, have no such issues.

I’m just coming at this from a consumer point of view. I want the SEC to be effective so when I invest in some new commodity or security then I know that it at least legal and I won’t lose all my money due to the government declaring it not.

That isn’t the function of the SEC. They make sure issuers have complied with disclosure requirements so investors can make their own decisions. They make sure you get full and fair disclosure and that’s about it. They’re more like the FDA’s regulation of cosmetics (here are the rules, we’ll assume you’re following them and we’ll take action if/when we suspect you’re not) rather than the FDA’s regulation of pharmaceuticals (prove to us this works and is safe before you sell it).
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