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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

#31

Post by jcranmer »

VWWHFSfQ wrote: post #2

Sounds like the free lunch is over. Maybe my view is too simplistic, but Coinbase facilitates the sale of "assets" that the buyer expects to increase in value. By definition, that's a security, right?

The Howey test requires that a security be (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.

Cryptocurrencies very clearly meet (1) and (2). Many tokens are likely to meet (3), but it's not universal. But (4) is where you have the most room to argue.

I don't know what Coinbase offers for sale. But I'm certain that least some of the tokens it supports are going to be defined as securities under the Howey test. Hell, if Coinbase offers the ability to use your tokens for staking, I'm pretty sure that alone qualifies as a security, even if the token itself isn't necessarily a security. (Coinbase disagrees that staking constitutes a security, but their reasoning is extremely motivated and I do not find it persuasive.)

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

#32

Post by rekttrader »

arcticbull wrote: post #8
0zemp1c wrote: post #7

I actually agree with Armstrong here - the SEC has had plenty of time to assess the market for crypto products and offer clear rules...it almost feels like the indecisiveness is an intentional policy used to cow the industry.

That's one way of looking at it. The other way of looking at it is that everyone who went to the SEC and asked them if they could do something was told absolutely not. The people who didn't ask seemed to be getting away with it. So everyone stopped asking. However that didn't change the facts of the situation. At some point even the mightiest ostrich must get rekt.

The sec is not a supervisory agency, they’re a regulator meaning they step in after the fact for investor protections.

The sec had plenty of open sessions where folks in the industry would ask for guidance and yet it was not gotten because they don’t tell the capital or crypto markets what should be in the markets they’re here to pull down the things that shouldn’t be.

The sec allows “junk bonds” if you disclose the risk, the credit default swap maybe shouldn’t exist but it does... and is one of the most heavily traded securities.

Heck, you can buy VIX for CDS... let’s think about that for a second... that’s a mortgage, packed into a portfolio, that has a derivative, and that derivative’s volatility is tradeable.

That’s a FAAAAAAAAAAR more speculative asset than crypto and yet it still trades at higher volume than crypto does.

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

#33

Post by chomp »

There's a few people picking sides here in the comments. Just reminding everybody that it's possible for two sides to be at issue; the SEC can be trying its best to apply its mandate in a world where technology has surpassed the law, and in a void of congressional action, and as a result giving very vague guidance so that it can squeeze its mandate into the crypto realm. And Coinbase can be purposely threading the needle in an area they know could probably be interpreted as being SEC regulated. In my opinion, Congress is the problem here, and their inaction is going to cause this to get duked out in the court, when it didn't have to be so.

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

#34

Post by elliekelly »

jedberg wrote: post #24
arcticbull wrote: post #8

Earlier quoted context omitted.

That's one way of looking at it. The other way of looking at it is that everyone who went to the SEC and asked them if they could do something was told absolutely not. The people who didn't ask seemed to be getting away with it. So everyone stopped asking. However that didn't change the facts of the situation. At some point even the mightiest ostrich must get rekt.

Coinbase has asked them many times though. The article even mentions this. They met 30 times to seek clarity on the rules.

The SEC doesn’t give out legal advice.

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

#35

Post by Alex3917 »

jedberg wrote: post #24
arcticbull wrote: post #8

Earlier quoted context omitted.

That's one way of looking at it. The other way of looking at it is that everyone who went to the SEC and asked them if they could do something was told absolutely not. The people who didn't ask seemed to be getting away with it. So everyone stopped asking. However that didn't change the facts of the situation. At some point even the mightiest ostrich must get rekt.

Coinbase has asked them many times though. The article even mentions this. They met 30 times to seek clarity on the rules.

This reminds me a lot of a different Armstrong repeatedly saying that he couldn’t be doping because he was the most drug-tested athlete in history. In reality, the law is perfectly clear and hasn’t changed in decades, so what would giving clarity even mean?

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

#36

Post by arcticbull »

sebzim4500 wrote: post #18
this_user wrote: post #9

Earlier quoted context omitted.

Just because you claim something is a currency, doesn't make it one, especially if it doesn't even exhibit the properties of a currency. But the question of what is a "security" has been clearly answered in 1946: > For purposes of the Securities Act, an investment contract (undefined by the Act) means a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect pro…

A lot of people buy houses thinking they will increase in value. Good to know they've all been doing securities fraud.

You can google this stuff you know? Real estate does not fall under the securities umbrella. This is well established legal precedent, covered under Howey, the Securities Act, the Securities Exchange Act subsequent rulings.

Real estate fails the Howey test because there is no common enterprise.

https://www.compliancebuilding.com/2010/11/04/what-is-a-secu...

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

#38

Post by thesausageking »

chii wrote: post #25
thesausageking wrote: post #22

Earlier quoted context omitted.

It's "regulation-by-enforcement". Instead of defining clear rules, the SEC just waits and brings actions against the activities it doesn't want to happen. Sen Toomey and others have called out Gensler for doing this: https://www.banking.senate.gov/newsroom/minority/toomey-secs...

The problem is that you can't know what isn't good until you see evidence of bad coming out - then you rule that it shouldn't be allowed. This is how a lot of safety regulation comes about - from a disaster or a problem that previously nobody knew or understood. The SEC is likely operating under this sort of outlook.

That was a reasonable argument to make in 2013 or 2017. But Gensler's administration alone has issued more than 1,500 actions. At this point, the SEC should be able to codify their interpretations and publish guidance.

One example: a decade after the white paper was published, the SEC still won't say if Ethereum is a security or not. Gensler was literally asked this in front of congress and refused to answer:

https://twitter.com/MatthewHyland_/status/164833448714565632...

This is a project that's 10 years old, has a $250B market cap, and has had tens of thousands of other projects built on it. There's no excuse for the SEC to not have a position on it.

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

#39

Post by bannedbybros »

this_user wrote: post #9
traveler01 wrote: post #3

Earlier quoted context omitted.

Depends on what you consider a "Security". Are "Securities" meant to be used as currencies?

Just because you claim something is a currency, doesn't make it one, especially if it doesn't even exhibit the properties of a currency. But the question of what is a "security" has been clearly answered in 1946: > For purposes of the Securities Act, an investment contract (undefined by the Act) means a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect pro…

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