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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

#211

Post by lumost »

ascendantlogic wrote: post #16
lumost wrote: post #6

Earlier quoted context omitted.

Are virtual currencies actually being used as currencies? I've been long BTC for ~10 years, I've only made a few small novelty purchases through BTC. Based on any ads I've seen for crypto from coinbase, along with the tools they've built into their app - the primary use case for crypto appears to be as a security.

Bitcoin was originally meant to be used as a currency. Ethereum was meant to be the oil that powered the smart contract network. I guess the question is, what matters more: the intent by the creators or what the end users choose to do with it?

I have yet to see any coin be used in a manner that doesn’t devolve to a security. While there were many projects to do other things with crypto - they all still sell tokens on exchanges. I’d find the claim that crypto isn’t meant as a security more convincing if the crypto traded at 0 dollars.

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

#212

Post by tehlike »

humanizersequel wrote: post #209
tehlike wrote: post #200

Earlier quoted context omitted.

Then read also this: https://archive.ph/KueXO PArt of Coinbase earn is defi yield(aka lending), part of it is crypto staking. I also suggest you to read howey yest and make your own conclusions.

>PArt of Coinbase earn is defi yield(aka lending), part of it is crypto staking. Wrong. Nothing currently implemented in Coinbase Earn could be reasonably considered "lending". The article you linked is 2 years old and about Coinbase's prospective "Lend" product — which, as I understand it, never launched, perhaps because of a Wells notice submitted in 2021. This statement is about the one they've received more recen…

> regarding an unspecified portion of our listed digital assets

I believe that's the first link. Most (if not exactly 100% of them) cryptocurrencies are securities as per howey test. Tron in particular, matt levine calls out, is clearly securities, among other things. Coinbase also listed a lot of other tokens that were also clearly securities.

I don't know why this is not clear.

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

#213

Post by humanizersequel »

tehlike wrote: post #212
humanizersequel wrote: post #209

Earlier quoted context omitted.

>PArt of Coinbase earn is defi yield(aka lending), part of it is crypto staking. Wrong. Nothing currently implemented in Coinbase Earn could be reasonably considered "lending". The article you linked is 2 years old and about Coinbase's prospective "Lend" product — which, as I understand it, never launched, perhaps because of a Wells notice submitted in 2021. This statement is about the one they've received more recen…

> regarding an unspecified portion of our listed digital assets I believe that's the first link. Most (if not exactly 100% of them) cryptocurrencies are securities as per howey test. Tron in particular, matt levine calls out, is clearly securities, among other things. Coinbase also listed a lot of other tokens that were also clearly securities. I don't know why this is not clear.

Whether or not Coinbase is operating a securities exchange (they obviously are, despite the fact that I don't necessarily agree that "most" cryptocurrencies they list being securities by any reasonable application of the Howey test), and whether Coinbase Earn ("the product") is a security, are two distinct questions.

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

#214

Post by j0hnyl »

elliekelly wrote: post #79
j0hnyl wrote: post #42

Earlier quoted context omitted.

How can it be proved that people are buying tokens like Eth/Solana because they expect those tokens to go up in value? Plenty of people are buying those tokens so that they can participate in their respective ecosystems as developers.

And some Howey-in-the-Hills investors may have just wanted to eat their oranges. First and foremost they’ll look to what was said in selling the tokens: “join a crypto community!” vs “start your crypto portfolio”.

You have a point however, I don't think anyone is buying Eth now based on the initial ICO messaging.

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

#215

Post by tehlike »

humanizersequel wrote: post #213
tehlike wrote: post #212

Earlier quoted context omitted.

> regarding an unspecified portion of our listed digital assets I believe that's the first link. Most (if not exactly 100% of them) cryptocurrencies are securities as per howey test. Tron in particular, matt levine calls out, is clearly securities, among other things. Coinbase also listed a lot of other tokens that were also clearly securities. I don't know why this is not clear.

Whether or not Coinbase is operating a securities exchange (they obviously are, despite the fact that I don't necessarily agree that "most" cryptocurrencies they list being securities by any reasonable application of the Howey test), and whether Coinbase Earn ("the product") is a security, are two distinct questions.

Which part of howey do you think Coinbase earn(not staking, but the product offered by Coinbase themselves) doesn't satisfy and is therefore not a security?

I made it explicit between staking (you staking your own money) and doing it through Coinbase.

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

#216

Post by humanizersequel »

tehlike wrote: post #215
humanizersequel wrote: post #213

Earlier quoted context omitted.

Whether or not Coinbase is operating a securities exchange (they obviously are, despite the fact that I don't necessarily agree that "most" cryptocurrencies they list being securities by any reasonable application of the Howey test), and whether Coinbase Earn ("the product") is a security, are two distinct questions.

Which part of howey do you think Coinbase earn(not staking, but the product offered by Coinbase themselves) doesn't satisfy and is therefore not a security? I made it explicit between staking (you staking your own money) and doing it through Coinbase.

> not staking, but the product offered by Coinbase themselves

But the product Coinbase offers is staking.

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

#217

Post by arcticbull »

danaris wrote: post #173
Canada wrote: post #157

Earlier quoted context omitted.

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 .

Yep, exactly. If you were getting equity in the company then it would be a security. Pre-sale of the product isn't. There's no common enterprise.

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

#218

Post by [deleted] »

fallingknife wrote: post #187
elliekelly wrote: post #88

Earlier quoted context omitted.

That’s not even remotely the same as showing up at their office and asking them to apply the law to your specific scenario. That’s what lawyers do. And if your lawyers are unsure they can ask the SEC via the No Action letter process. For CoinBase to say “well we had a bunch of meetings and we asked them to explain the law to us” is disingenuous because of course they’re not going to get an answer that way. That’s not…

> they can ask the SEC via the No Action letter process So you admit that they do give legal advice. Thank you.

[deleted]

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

#219

Post by arcticbull »

fallingknife wrote: post #184
daedalus_f wrote: post #95

Earlier quoted context omitted.

If your coin meets the Howie test it’s a security and must be registered with the SEC. If you go to the SEC and say “hey, please register my security so I can scam some people”, and they say no, your security doesn’t stop being a security, it’s just not a registered security. Going on to cry about them then prosecuting you for operating an unregistered securities exchange is purile.

Your example is idiotic because nobody is claiming that Coinbase is a scam (if they were the FBI would handle it, not the SEC), and because they are a licensed broker dealer. If particular crypto token is a scam, then they can say "you can't register token X because it's a scam." But they aren't saying that. They are just saying you can't register any tokens at all. If they can't be registered as securities, then how…

For what it's worth their license is inactive and they are not operating in the capacity of a broker-dealer. They acquired the license in 2018, probably as a hedge just in case, but they are not using it.

After all, they are making the case that nothing they list are securities, so if that's true, they wouldn't fall under their broker-dealer license in the first place.

Parent is correct, a broker-dealer may not facilitate the trade of unregistered securities except to accredited investors. So unless the IRS accepts the registration, they would be in violation anyways. Which is why they're pushing the argument nothing they facilitate the trade in is a security at all and therefore exempt from registration.

I didn't read the parent comment as saying that coinbase was operating a scam, but rather that just because ICO A tries to register and fails doesn't make it somehow 'not a security' but instead that it remains an unregistered security. This is true. And in that case it could only be sold (with or without coinbase) to accredited investors.

> If they can't be registered as securities, then how can they be securities?

Simple. Not all securities are suitable for registration. A security that cannot be registered remains a security, it simply cannot be sold to individuals who are not accredited investors. And selling it to the general public would be a violation of the Securities Exchange Act.

Is a car that cannot be registered because it's not street legal somehow not a car? The fact your car fails its emissions check doesn't change its fundamental character. But it does make it unlawful to put on a highway. The DMV isn't bound to accept the registration of 'anything deemed to be a car' and if they refuse, it somehow becomes something else.

Similarly, the SEC isn't bound to accept the registration of 'anything that passes the Howey test' - quite the opposite. After all that would mean any company whose initial S-1 application is rejected could claim that their shares are now somehow actually a commodity so yolo. But that's not how this works. At all.

> They are just saying you can't register any tokens at all.

Yep.

And if the DMV said I couldn't register electric tricycles as street legal vehicles, well, I can't just go ahead and start driving them around can I? No matter my personal opinion on the matter, I'm still going to get pulled over.

Like Brian.

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

#220

Post by arcticbull »

wslh wrote: post #191
stonogo wrote: post #146

Earlier quoted context omitted.

> do your work if you want to change your mind The point is that scammers are so prevalent it's not worth "doing your work." The ROI on vetting every player in a given transaction just isn't high enough to make it worth engaging. We don't have to do all this shit in the actual financial industry because of regulation and insurance. Nobody's presented a compelling reason to re-evolve those protections because blockcha…

PayPal is full of scammers, it is not crypto. Even you can say that PayPal is wrongdoing in many aspects that will not resist in court. Just an example. Another example: land in NY, buy a mobile SIM there, go to the Central Park and in less than 30 minutes someone calls me telling me that I won the lottery. I am very lucky.

Do you have some data on the percentage likelihood of being scammed in crypto vs in the traditional financial markets?

Let's just cherry pick on DeFi. DeFi had something around 10% of its entire TVL lost last year to hacks and scams. I guarantee you that 10% of the entire 'TVL' of PayPal wasn't lost to hacks and scams.

PayPal has almost 79B in assets. Pretty sure they didn't lose 8B to hacks last year.

The fundamental character of crypto - a market where police and regulators look the other way, but money moves freely - whose biggest rocket ride to fame came from Silk Road - is perfectly suited to attract crime and criminality. Without crypto nobody would even remember ransomware because you can't send millions of dollars in Starbucks gift cards.

This is its niche, like it or not. Because if you're not trying to do crime, classical finance is faster, cheaper and safer.

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