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

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

#181

Post by legitster » Thu, Jul 13, 2023, 6:30 PM UTC

afterburner wrote: post #163

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…

Crypto assets are illegal if you try to dodge taxes. Or, as a trading institution, pretend that you have no duty to follow tax laws on reporting client transactions. They're no different than equities if you follow all the laws. This all seems weird to me in Canada. Here, it's been acknowledged for years that crypto = equities. Fraud is illegal either way though.

The tax thing is overrated. Equities have to be traded through a brokerage and that's the real death knell for crypto.

If your dream is to be able to buy a pizza with bitcoin, having to do the transaction via your respective brokerages would not work.

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

#182

Post by wpietri » Thu, Jul 13, 2023, 6:31 PM UTC

pixl97 wrote: post #172

wpietri wrote: post #143

Earlier quoted context omitted.

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".

The problem is libertarianism has always been this way. Typically when you're younger it sounds like a good idea. It would likely work if people weren't assholes. Then you grow up and realize people are assholes. Most people grow out of their libertarian phase, but the ones I worry about are those that don't. All I can think about when I see an old libertarian is "That asshole would install a toxic waste dump beside…

Could be. But for me there's a difference between "we have to limit harm, but let's do it in ways that otherwise lean toward freedom" and the maximalist "I DO WHAT I WANT! YOU'RE NOT MY REAL DAD" types. So I agree the absolutist libertarians are somewhere between dangerously naive and sociopathic. And I think the volunteer billionaire defense squad is ridiculous. But I have met reasonable ones who saw it more as a direction to lean, a counterbalance to authoritarian approaches.

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

#183

Post by pessimizer » Thu, Jul 13, 2023, 6:35 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…

I deeply disapprove of Magic and honestly think that it shouldn't be allowed to be marketed to children if cigarettes aren't allowed to be marketed towards children. But an enormous number of people actually play the (shockingly boring) game. And while there's little doubt that most of the cards being purchased now are going to end up worthless, the "long term" in Magic has already been reached because it's been around for 30 years.

Magic is being held up by the early cards having been driven up in price by millennial and young gen x players who became adults with real incomes and social lives that revolved around the game. WoC manipulates the market as much as it can manage, trying to maintain the hope that one can strike it rich, but they make their money off the new cards, not the used ones.

It's the same thing that happened with comic books and baseball cards: people who bought baseball cards in the 50s and early/mid-60s found themselves with small fortunes, because there were wealthy nostalgic baby boomers to sell to. People bought baseball cards in the 80s and 90s trying to cargo cult the price increases of those classic cards, and the people who printed baseball cards played into that. That doesn't make baseball cards a type of security where one is investing in the growth in the community that buys baseball cards any more than buying a washing machine makes you an investor in the growth of the community that buys washing machines, although washing machines also have a resale value.

Buying crypto gives you nothing but a line in the distributed accounts of the people who are coining crypto. It's nothing but an obligation. There's not even the token value that a 10 cent stock certificate might provide.

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

#184

Post by mandevil » Thu, Jul 13, 2023, 6:36 PM UTC

bottlepalm wrote: post #88

wpietri wrote: post #70

Earlier quoted context omitted.

Almost every word of that is untrue in practice. But let's focus on the core part, "successful". Let's compare with M-PESA, a money transfer solution that started around the same time. M-PESA has steadily grown, doing 26 billion transactions last year. [1] Bitcoin was somewhere around 100m transactions for the same period. [2] That's about 0.5% of the volume. And its worse than the raw numbers suggest, in that the M-…

Read my post, I said successful as a 'store of value' not 'electronic cash'. Bitcoin is more akin to gold - an inflation resistant store of value. There is a premium for transacting it which means you should convert it into a more inflation prone transactional currency if you want to spend it.

BTC seems to be very interest rate dependent- it goes up when rates go down and down when rates go up. That is pretty much the opposite of an "inflation resistant store of value". It's financial behavior over the last ten years isn't that of a "inflation resistant store of value" its that of a "speculative, very risky investment."

Ideologically, to a certain type of person, it should be inflation resistant. The math says so! But the markets have judged it to not be so. So who are you going to trust? Your ideology or the market?

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

#185

Post by Ensorceled » Thu, Jul 13, 2023, 6:36 PM UTC

jncfhnb wrote: post #167

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…

As others have pointed out this analogy is kind of bad. But… also you seem to clearly acknowledge within the hypothetical that performing an action would be a crime, and then do the action. And then you’re upset because it wouldn’t have been a crime if it hadn’t been made a crime… but it was and you knew that and you did it anyway.

Yeah, these analogies are always terrible, but this one actually includes the "hey they ruled it was a crime and I decided that was bullshit and kept criming" part.

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

#186

Post by afterburner » Thu, Jul 13, 2023, 6:36 PM UTC

legitster wrote: post #181

afterburner wrote: post #163

Earlier quoted context omitted.

Crypto assets are illegal if you try to dodge taxes. Or, as a trading institution, pretend that you have no duty to follow tax laws on reporting client transactions. They're no different than equities if you follow all the laws. This all seems weird to me in Canada. Here, it's been acknowledged for years that crypto = equities. Fraud is illegal either way though.

The tax thing is overrated. Equities have to be traded through a brokerage and that's the real death knell for crypto. If your dream is to be able to buy a pizza with bitcoin, having to do the transaction via your respective brokerages would not work.

That dream has been dead for years. BTC is all about investment now.

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

#187

Post by Analemma_ » Thu, Jul 13, 2023, 6:37 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…

"Ignorance of the law is not an excuse" is a well-established legal principle with precedent going back to Ancient Rome. It does get a bit tricky when regulatory statutes get involved, but c'mon: all these businesses save maybe Coinbase are run by criminals. We're not talking about well-meaning people acting in good faith here.

Also, that all only applies to criminal statues, not civil/regulatory ones. If you're a construction firm who doesn't know that houses have to be built to fire code, maybe you'll escape criminal prosecution, but the government is going to take an axe to your business anyway.

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

#188

Post by bottlepalm » Thu, Jul 13, 2023, 6:37 PM UTC

wpietri wrote: post #157

bottlepalm wrote: post #88

Earlier quoted context omitted.

Read my post, I said successful as a 'store of value' not 'electronic cash'. Bitcoin is more akin to gold - an inflation resistant store of value. There is a premium for transacting it which means you should convert it into a more inflation prone transactional currency if you want to spend it.

Well look at those goalposts move. Bitcoin's original purpose was precisely electronic cash: https://bitcoin.org/bitcoin.pdf But if you'd like to shift focus to why "store of value" is also wrong, I'm glad to. A store of value needs to be more stable than the thing you're moving out of. It also needs to be relatively liquid, and should have low transaction costs. But Bitcoin is very volatile compared with major fiat…

Again you're mixing up short term cash and long term store of value.

Cash you want stability, fast and low cost transactions - you pay for all those benefits with inflation.

A good long term store of value you will sacrifice a little of all those things for better inflation resistance.

Gold and index funds are also good for long term value storage, but index funds you can't really use as a medium for exchange, and gold is physical so not great for easy and quick transactions.

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

#189

Post by coolbreezetft22 » Thu, Jul 13, 2023, 6:37 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…

I play the actual card game and it is does indeed have a very popular competitive scene. In fact the most valuable modern cards are the ones that satisfy both of 1) appealing artwork and 2) high usage in competitive play.

For older cards though I disagree that the the pokemon company can just reprint more any time they want and dilute the value. The most valuable card out there is the original first edition Charizard from the 90s. They can never really reprint this card and have it be treated in the exact same way. And they do regularly "remaster" or reprint the original set from the 90s in order to cash in on the nostalgic 30-somethings who now have a disposable income (I believe there is another one coming later this year). But these are just replicas and not the "real" thing. Kind of like an original antique/book/currency/artifact vs a replica.

However I'd say at least 50% of the cards in any printed set are not useful in gameplay if you are actually trying to build as competitive a deck as possible, and are really only good for collecting a complete set. They will also print "alternate artworks" of common cards which are the exact same gameplay-wise but visually different and artificially much rarer.

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

#190

Post by ethanbond » Thu, Jul 13, 2023, 6:40 PM UTC

null0pointer wrote: post #156

wmf wrote: post #144

Earlier quoted context omitted.

They're pretty careful to never be wrong.

The parent of the comment you’re replying to literally cites a case where they were deemed to be wrong.

It looks a bit more nuanced than that. Torres is the judge in the XRP case. From the article:

——-

Torres, who is based in New York, on Thursday said the company's $728.9 million of XRP sales to hedge funds and other sophisticated buyers amounted to unregistered sales of securities.

But Torres ruled that Ripple's XRP sales on public cryptocurrency exchanges were not offers of securities under the law, because purchasers did not have a reasonable expectation of profit tied to Ripple's efforts.

Those sales were "blind bid/ask transactions," she said, in which the buyers "could not have known if their payments of money went to Ripple, or any other seller of XRP."

——-

So it seems XRP was deemed a security just the sales on public exchanges weren’t a securities offering? A bit confusing IMO.