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The SEC has told us it wants to sue us over Lend. We don’t know why

blog.coinbase.com

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Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#181

Post by ac29 »

kybernetikos wrote: post #166
arisAlexis wrote: post #140

Earlier quoted context omitted.

What you are saying is totally debunked by the sheer number of Defi hacks,rug pulls and exoloits the previous year resulting in billions of lost money. That defi has no counterparty risk is probably one of thr all time wrong sentences on HN.

> That defi has no counterparty risk is probably one of thr all time wrong sentences on HN Which is why I didn't say it. One of the nice features of smart contract platforms is that any two people can quickly set up a transaction where they swap a basket of assets for another basket of assets atomically and without counterparty risk. To get similar guarantees in tradfi requires either an underwriter (that we assume c…

> they swap a basket of assets for another basket of assets atomically and without counterparty risk.

Of course there is counterparty risk - the contract writer could be adversarial. People dont always audit smart contracts (or may not realistically be able to, especially if the contract writer is attempting to obfuscate a subtle bug they can use for their own advantage). Thats the point of the above comment.

If the traditional world, courts would interpret such a contract as not valid. In the DeFi world, code is law - at least until law enforcement and regulatory agencies catch up to it.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#182

Post by wonnage »

yunohn wrote: post #139
seibelj wrote: post #119

Earlier quoted context omitted.

The SEC can and does provide candid advice. I know entrepreneurs who have had lengthy calls with both state and federal SEC reps who will give straight talk. This is not that. This is preparation to make a court case to use as precedent to attack the industry. I feel the SEC is being a bad actor - stifling innovation rather than encouraging it. Over the last 10 years the HN chattering class has dismissed crypto endle…

> I laugh all the way to the bank… You ran an ICO that settled with the SEC. I’m not clear on what value you offered to the public, or how you justify “making bank”?

s/ICO/exit scam

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#183

Post by [deleted] »

chitowneats wrote: post #72
seibelj wrote: post #31

Earlier quoted context omitted.

Coinbase wants to know the legal rationale as to why it's a security, but SEC is stonewalling them and goading them to get into a legal fight. The opposite of "talk to us, come in" that the SEC claims the crypto industry refuses to do.

Presumably this has been explained. Threatening a lawsuit is not an action the SEC takes lightly. Coinbase will have plenty of opportunity to contest it in court.

[deleted]

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#185

Post by mthoms »

tobias3 wrote: post #144

Maybe they should have asked Brett Redfearn (former SEC director working at Coinbase) about the SECs reasoning. He left Coinbase in July? I guess the revolving door corruption failed (and/or he figured out where the wind is blowing)... This is really all too transparent and obvious. A risk-free investment with 4% APY. What-aboutism about other exchanges (which are unregulated and off-shore). Not "understanding" the p…

As a kid I made over 4% APY interest on my savings account. Risk free.

Yes, I realize their are important differences here but I don't think that getting a 4% risk-free return should be seen as an "obvious" problem.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#186

Post by TameAntelope »

mthoms wrote: post #175
dustintrex wrote: post #71

Earlier quoted context omitted.

Agreed, and this line pretty much sums it up: > Customers won’t be “investing” in the program, but rather lending the USDC they hold on Coinbase’s platform in connection with their existing relationship. "Give me money for a fixed period of time and I'll pay a guaranteed return on your principal. No, it's not an "investment", you're just lending it in connection with our existing relationship!"

Excuse my ignorance but how is that any different from "interest"?

The Howey Test, I believe, is that Coinbase is taking the money being given to it by "account holders" and performing some "thing" to that money to generate value.

I don't understand it nearly well enough to explain it, but the wonderful Matt Levine has given it a shot: https://www.bloomberg.com/news/newsletters/2021-08-09/money-...

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#187

Post by itogglebits »

dehrmann wrote: post #129
ternaryoperator wrote: post #105

Earlier quoted context omitted.

That's a very poor analogy. It's inflammatory and disrespectful to put a trivial disagreement over investment classification on the same footing as the slave trade, and it's not factual either. Slave trade was not abolished by the Supreme Court, but by an act of Congress [0] and later by presidential decree [1]. [0] https://www.history.com/this-day-in-history/congress-abolish... [1] Emancipation Proclamation

Reductio ad absurdum is a valid argument.

That's not reduction ad absurdum. [0]

[0] https://en.wikipedia.org/wiki/Reductio_ad_absurdum

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#189

Post by Asparagirl »

In just the past month, insiders at Coinbase dumped millions and millions of dollars of their stock in the company.

How many of them knew about the Wells Notice from the SEC before they sold, but before the news was public?

(Among the major sellers were not just the usual VC’s but also their General Counsel and their chief accountant.)

https://protos.com/coinbase-stock-250-million-in-one-month-s...

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#190

Post by thaumasiotes »

mthoms wrote: post #175
dustintrex wrote: post #71

Earlier quoted context omitted.

Agreed, and this line pretty much sums it up: > Customers won’t be “investing” in the program, but rather lending the USDC they hold on Coinbase’s platform in connection with their existing relationship. "Give me money for a fixed period of time and I'll pay a guaranteed return on your principal. No, it's not an "investment", you're just lending it in connection with our existing relationship!"

Excuse my ignorance but how is that any different from "interest"?

I'm guessing the concept is more like stock lending fees. You short a stock by borrowing shares and selling the borrowed shares. You'd short USDC the same way, if you could borrow them.

The thing is that this really isn't an investment. An investment looks like this:

- You ask me for funding for a project. I give you funding, in cash or in kind, and I get (partial) ownership of the project. If it does OK, I get some money. If it does better than that, I get more money. If it does badly, I don't get much money.

A rental looks like this:

- I need a piano for 6 months. You have several pianos. You let me have one, and every month I can either give you $50 or return the piano.

Stock borrowing works that second way, except that instead of a piano, it's a share of AAPL. There is no project involved, but the share of AAPL lives in my house instead of your house, and every month you get $0.04.

Interest is also on that second model, so in that sense it's not different from interest. But neither is the piano rental.

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