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Coinbase issued Wells notice by SEC

reuters.com

31–40 of 327 posts

Re: Coinbase issued Wells notice by SEC

#31

In case you're wondering if the system is rigged, she obviously knew this was coming... https://www.coindesk.com/business/2023/02/23/cathie-woods-ar... and then yesterday... so convenient... https://www.businessinsider.in/stock-market/news/cathie-wood... Down 8.16% today... https://finance.yahoo.com/quote/COIN/

Hmm her fund has gotten totally clobbered since early 2021. If she were truly privy to insider info, why would her fund do so bad? Or put it another way, after being wrong so often, maybe she is bound to get something right by chance (stopped clock theorem)?

IMHO, the timing is far too convenient for someone who has had a terribly performing fund. You'd think she would have sold tomorrow instead.

Re: Coinbase issued Wells notice by SEC

#32

Earlier quoted context omitted.

It's different in that nobody can control it. Everything since bitcoin has had some form of leadership, including Ethereum, that can reasonably consistently get the network to fork and cause things to happen. Bitcoin struggled for years to get a change adopted that most of the community thought was a good one, because nobody, not even Satoshi if they are still around, could change it.

This is a silly argument. A community forks, not 'leadership'. The mechanism for forking the project is literally the same in both cases. Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way. This is just typical crypto tribalism and not rooted in a technical basis in any way.

> Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way.

The presale.

Re: Coinbase issued Wells notice by SEC

#33

Earlier quoted context omitted.

It's different in that nobody can control it. Everything since bitcoin has had some form of leadership, including Ethereum, that can reasonably consistently get the network to fork and cause things to happen. Bitcoin struggled for years to get a change adopted that most of the community thought was a good one, because nobody, not even Satoshi if they are still around, could change it.

This is a silly argument. A community forks, not 'leadership'. The mechanism for forking the project is literally the same in both cases. Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way. This is just typical crypto tribalism and not rooted in a technical basis in any way.

> Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way.

Difficulty bombs. https://twitter.com/level39/status/1554174864600227843

Re: Coinbase issued Wells notice by SEC

#34

Earlier quoted context omitted.

It's different in that nobody can control it. Everything since bitcoin has had some form of leadership, including Ethereum, that can reasonably consistently get the network to fork and cause things to happen. Bitcoin struggled for years to get a change adopted that most of the community thought was a good one, because nobody, not even Satoshi if they are still around, could change it.

This is a silly argument. A community forks, not 'leadership'. The mechanism for forking the project is literally the same in both cases. Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way. This is just typical crypto tribalism and not rooted in a technical basis in any way.

I don't think it's silly. Network effects are why Parler failed and Twitter succeeded (thus far at least!), or betamax failed, etc. These things don't succeed or fail for technical reasons, and develop into distinctly different complex systems as a result of in some cases trivial technical differences (or even none) when the people using them are taken into account. And in the case of cryptocurrency in particular, the network effects (even outside of simple success or failure) are ultimately what make it secure/trustworthy or not. Some of the network effects are incentivized by technical measures, like mining rewards, but the stuff I'm talking about here is incidental.

The point is that the community/network/whatever that formed around bitcoin isn't centralized, so even for relatively "tame" changes like taproot, nobody could agree and it took years to merge regardless of technical merit. For better or worse and for a wide number of reasons I can speculate about, the equivalent social structure around Ethereum is far more centralized around the will of Vitalik and a handful of others, and they've demonstrated repeatedly (except around the ETC debacle which has mostly fizzled) that they can get the whole network to adopt even fairly complex and risky changes. Monero regularly forks, and even though it doesn't have a formalized leadership structure, is able to get changes rolled out. Same with ZEC and the electric coin company. Be it a single person, a pseudonym, an organization, or whatever, everything but bitcoin has forked repeatedly, which indicates a degree of central control (and thus central benefit, from the POV of regulators). In most cases outside of bitcoin, the founders have also enriched themselves enormously by remaining in control.

Contrast with the attempted forks of bitcoin: BCH was a huge mess and has been slowly fizzling out for years. BSV is a joke. Yes you could create a new fork today, but the whole point is that the difference isn't technical, it's a network. The network is partially technical (there are still lots of miners that won't mine your new fork) but is also cultural, and bitcoin users/miners/exchanges don't look up to the "dev team" as an authority. That's the key difference IMO. If you just focused on the technical you'd still be arguing that betamax was a better format.

Re: Coinbase issued Wells notice by SEC

#35
post #5

> "We asked the SEC specifically to identify which assets on our platforms they believe may be securities, and they declined to do so." Sums up the case quite well.

Nah, the answer is all of them except Bitcoin. I think all parties to this Wells-based conversation know that and Coinbase is just posturing for the court of public opinion. [edit] I should say, Coinbase has been preparing for this forever. They acquired a broker-dealer license years ago, back in 2018. [1] [1] https://brokercheck.finra.org/firm/summary/151143

it goes much deeper than that, despite the parasocial relationships that crypto purchasers have with the founding teams, they are purchasing products. the product sales are booked as revenue, not capital-in like a primary market investment/security would have.

a product can simultaneously be a security, and many organizations in the collectibles market go out of their way to avoid that, organizations that sell physical goods with perceived scarcity and a vibrant aftermarket. within the crypto space, creators of digital assets go out of their way to avoid it too, and in this regard, I've never been surprised at any specific SEC enforcement action against any crypto team. The ones that behave one way, so far have not been sanctioned, the ones that behave another way have been. Its not arbitrary, but it does still leave uncertainty.

but where we are now, where the SEC pretends like "every digital asset is a security and we just haven't gotten to it yet", what we're left with are the behavior of the purchasers of digital assets. they buy tokens with the expectation of profit and rely on the issuing team to realize that. theoretically that logic could make anything a security, are sneakerheads trading nike-themed securities just because they're getting into it to make a profit?

at this point, I would be inclined to agree only if nike has to register their artificial scarcity shoe lines as securities and can only sell them to accredited investors. otherwise, the logic fails and a different capital markets structure needs to be considered.

Re: Coinbase issued Wells notice by SEC

#36

Earlier quoted context omitted.

Hmm her fund has gotten totally clobbered since early 2021. If she were truly privy to insider info, why would her fund do so bad? Or put it another way, after being wrong so often, maybe she is bound to get something right by chance (stopped clock theorem)?

IMHO, the timing is far too convenient for someone who has had a terribly performing fund. You'd think she would have sold tomorrow instead.

A broken calendar is right once a year.

Re: Coinbase issued Wells notice by SEC

#37

Earlier quoted context omitted.

Yep, Gensler has outright said that “everything else other than bitcoin is a security.”[1] There's no chance Coinbase isn't aware of this. I don't know what they hope to accomplish by pretending otherwise. [1]: https://cryptoslate.com/sec-chair-gensler-confirms-everythin...

Why is Bitcoin not a security but if I fork Bitcoin it is a security?

Predominantly, from my understanding, it’s because:

1. Bitcoin was classified as “currency” by Clayton.

2. It’s the closest to being decentralized so no “organization will benefit from the work of others”.

3. Growth of Bitcoin wasn’t initially speculative but as a use of currency, which is different from whatever token you fork as its goal would be for speculative trading, failing the Howey test.

Re: Coinbase issued Wells notice by SEC

#38
post #30

Earlier quoted context omitted.

If it's so clear to you, maybe you can answer the question?

I’m not an expert or a lawyer but it seems pretty clear. Going by what the SEC has literally told them: Coinbase taking money from depositors, loaning it out, and giving the depositors interest from the loan, is a security product. Page 1 of the Securities Exchange Act of 1934: https://www.govinfo.gov/content/pkg/COMPS-1885/pdf/COMPS-188... It… really doesn’t seem complicated. The SEC told Coinbase they’d be in viola…

Right. How could "Coinbase Earn" not be a security?

Re: Coinbase issued Wells notice by SEC

#39
post #20
post #14

Earlier quoted context omitted.

No it doesn’t. They’ve literally told them in the past when they were creating financial products that they were securities. Their entire schtik is to say “We called it something different so it’s not a security.” SEC: “Yes it is.” Coinbase: “The SEC won’t engage with us and tell us what aspects of our business is a security.” SEC: “1) that’s not how securities law works, you’re the one that has to hire lawyers 2) we…

Well, it is something of a he said/she said between Coinbase and the SEC. But the Judge in the Voyager bankruptcy case had similar concerns about the clarity provided by the SEC - https://twitter.com/BillHughesDC/status/1636069735006699523

> Well, it is something of a he said/she said between Coinbase and the SEC.

Not really. The law has been exactly the same since the 1940s. Apparently though Coinbase has decided to go all in on SBF's strategy of pretending to be too dumb to understand the law.

Coinbase arguing that they should be allowed to sell illegal unregistered securities because the SEC said they could sell securities is like CVS arguing that should be allowed to sell cocaine because the government told them they could be a drug store.

Re: Coinbase issued Wells notice by SEC

#40

Earlier quoted context omitted.

It's different in that nobody can control it. Everything since bitcoin has had some form of leadership, including Ethereum, that can reasonably consistently get the network to fork and cause things to happen. Bitcoin struggled for years to get a change adopted that most of the community thought was a good one, because nobody, not even Satoshi if they are still around, could change it.

This is a silly argument. A community forks, not 'leadership'. The mechanism for forking the project is literally the same in both cases. Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way. This is just typical crypto tribalism and not rooted in a technical basis in any way.

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