Live data from Hacker News

Founder of crypto lender Celsius Network arrested, charged with fraud

reuters.com

191–200 of 379 posts

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

#191
post #113
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…

(If your answer has anything to do with the existence of the game, I am curious what you think of baseball cards.)

Yes, if you ignore the primary reason for Pokemon cards (the game), then they can magically be made to look like securities....

They then sell these things to people who are absolutely buying them with the expectation that they will go up in value.

No, completely false and this betrays a complete lack of understanding of why people buy collectibles. People buy collectibles to collect them; the value is in possessing the collectible; rare collectibles have value because it is harder to acquire them to add to one's collection.

With respect to baseball cards: they are collectibles. They have value because people collect them. To keep. They don't represent an interest in a common for-profit enterprise, and they don't derive their value from the efforts of others. The value of a card is derived from the card itself: the quality of the print, the rarity of the card in its respective printing run, and (most importantly) its physical condition. Popular players' cards are usually more valuable because more people want to own the card, not because owning the card will somehow make you more money from that player's efforts. (I still have a few baseball cards from when I was a kid. My Ken Griffey Jr card is worth about a penny because it is not in good condition; my mint Tim Belcher card is worth $1.35 because I never had a reason to look at it. But even though nobody knows who he is outside of hardcore Dodgers fans, some people out there still want to have a complete Dodgers lineup from the 1987.)

And this is why analogies to collectibles always fail for crypto bros: collectibles have value in themselves, but crypto only has value to the extent it might represent something else.

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

#192
Okay, now that I have your attention, how about a new sort of crypto investment. Let me pitch you.. A privatized prison just for crypto scammers and bros. They could be the almost free hb1-labour, but with alot more entrepreneural spirit. Get coders, managers and advertisers at very reasonable prices. Payable even bitcoin or montero.

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

#193
post #149

Earlier quoted context omitted.

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…

If a crypto token has any utility other than being a balance on an account that can be traded (which some do, or at least purport to do), I think it should be a lot harder to call them a security. As most of them are though, they don't actually exist other than as an entry in a ledger.

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

#194

Earlier quoted context omitted.

The one legitimate use case of using blockchain for decentralized digital currency ends up being used by everyone who can’t transfer funds using normal routes. So most of the people using it are either bad actors or speculators Kind of like Tor. Bad actors ruin all kinds of things. People who only see technology will only go on to repeat the mistakes of the past because they lack the necessary domain knowledge to kno…

>So most of the people using it are either bad actors or speculators It's a matter of perspective. For many people around the world, the US government is the bad actor, the bad actor preventing them transferring funds through "normal" (US controlled) routes.

Yup. The only reason blockchain has any legitimate use at all is because governments are bad actors.

Doesn't change that many of the people using the system are also bad actors of one form or another.

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

#195
post #52

Earlier quoted context omitted.

It's selfish to reject something beneficial to everyone because you won't benefit as much as others, no? Maybe jealousy is a better adjective. You continue to call it a "scheme" but it was literally invented due to the corruption and malfeasance and "schemes" of the current banking system. Do you call those schemes and scams as well or are those just the ones we've deemed acceptable and necessary for some reason? FWI…

....is it selfish to promote something with zero practical use so you can sell it for more than you bought it for?

This is exactly what I mean so thanks for demonstrating. If you can't imagine a single useful purpose for Bitcoin, you're not even trying.

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

#196

Would someone explain to me what the endgame of these fraudsters is? I mean, of course they are trying to get rich quick pulling these schemes but you would believe that they do it because they perceive that there is some sort of opportunity to cash out without inevitably going to prison some day, right? What is the thought process in the mind of these criminals when shit hits the fan? Maybe just hire very expensive…

Many of them seem to be in the grey zone between old money and new money. Born to rich but not legally untouchable parents.

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

#197

Earlier quoted context omitted.

The judge in the XRP case disagreed with you today.

> The court sided with the SEC when it came to “Ripple’s Institutional Sales of XRP to sophisticated individuals and entities,” saying they were securities transactions and constituted an investment of money. Ripple won when it came to “programmatic” sales, however, or sales made through trading algorithms, as well as other distributions. https://www.cnbc.com/2023/07/13/xrp-surges-after-judge-deliv...

Which stands to reason. Doing an ICO and promising to issue a token is a pretty clear securities transaction, but that doesn't mean that the token itself is a security.

This was the view of William Hinman of the SEC, in 2018: "the token – or coin or whatever the digital information packet is called – all by itself is not a security, just as the orange groves in Howey were not."

https://www.sec.gov/news/speech/speech-hinman-061418

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

#198

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…

This is a truly insane apologia for a firm which marketed a banking-like product with risk-free returns of up to 17%.

> Mashinsky explained that Celsius's rates were so much higher than bank deposit rates not because it was riskier than a bank, but because it passed along more of its earnings to customers. “Somebody is lying,” said Mashinsky: “Either the bank is lying or Celsius is lying.”

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

#199

Earlier quoted context omitted.

> 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.

The problem is that the use case is generally criminal, which crypto people elide by complaining about whichever country's government is currently being attacked in the media. They do this in order to make dodging taxes and government oversight sound heroic. It's also a way to transform a conversation about fraud and free-riding into easy nationalist cheerleading.

What people want is anonymity, cheap/free checking, and cheap/free money transfers. Crypto thus far has partially supplied the first, and is so bad at the second two that the only profitable reason to use it is to dodge some sort of official oversight when dealing with large amounts of money.

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

#200
post #146

Earlier quoted context omitted.

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…

The common enterprise test doesn't work for things where the primary purpose for most owners is to own the card (for playing, as with Pokemon, or for display, as with baseball cards or most other collectibles). That a small fraction of owners acquire collectibles to trade in them as valuable assets doesn't taint the fundamental character of the collectible for everyone else. (Contrast to crypto, where everyone buys crypto for the purpose of ultimately selling it for higher value since it has no other use or reason for existing.)

Axie Infinity might run afoul of the Howrey test because of deliberate design decisions in the game which make it nothing like Pokemon: the ability to cash-out in-game currency, and the ability to loan out axies to other players and make money from their in-game efforts. Unlike Pokemon cards, which can be loaned out by players without any involvement from the company printing the cards, loaning out axies and earning money from other players' playing required the active involvement of the company behind the game. Moreover, making money (and especially making money pyramid-style from loaning out your axies to other players) was marketed as the primary selling point for the game for over a year, in contrast to Pokemon and baseball cards where the printing companies have never made claims about the value of the cards or the putative income that could be derived from engaging in a career trading them.

Post reply on HN