Insider Trading at Coinbase • Hacker News Board

Re: Insider Trading at Coinbase

#301

Post by jchonphoenix » Wed, Apr 13, 2022, 6:15 PM UTC

matwood wrote: post #32

perihelions wrote: post #10

Is this insider trading according to the law? Nonpublic information isn't being used to trade public stocks; it's being used to trade assets that don't appear to be regulated securities.

To add to what you're saying, forex explicitly does not have insider trading rules. The problem is it's treated as a general asset. It feels like there should already be rules in place to handle if, for example, an Amazon exec went and bought property around an area prior to Amazon announcing their new HQ.

Insider trading on real estate is explicitly allowed by law.

Re: Insider Trading at Coinbase

#302

Post by bobsomers » Wed, Apr 13, 2022, 6:16 PM UTC

parkingrift wrote: post #107

Crypto fans want deregulated finance. Crypto fans get mad when deregulated finance is comically unfair. You really can’t make this up. Embrace this. It’s exactly what crypto is all about.

> Crypto fans want deregulated finance. Crypto fans get mad when deregulated finance is comically unfair.

I don't think this is a fair characterization. Most crypto fans I know want regulations, they just want them clearly defined and enforced with software and distributed consensus rather than through corrupt and ineffective organizations like the SEC.

Re: Insider Trading at Coinbase

#303

Post by kyleplum » Wed, Apr 13, 2022, 6:23 PM UTC

datadata wrote: post #206

jakelazaroff wrote: post #163

Earlier quoted context omitted.

The accredited investor rules are in place to protect people who can’t bear the losses from an extremely adversarial financial system. I promise you that even if you get rid of the rules, people with a few thousand dollars to spend still would not have access to the best investments.

I believe that every financial transaction has the potential to be adversarial, there are many ways outside of investing that the poor are disproportionately exploited (lotteries, debt interest). I think the libertarian perspective is that we shouldn't have protections that prevent people from making personal choices that result in harm to themselves, but only from harming others. I think that transparency for the co…

> I think the libertarian perspective is that we shouldn't have protections that prevent people from making personal choices that result in harm to themselves, but only from harming others.

There are a few ways that someone bankrupting themselves via bad investments does hurt others:

Dependents will be significantly harmed

They are more likely to end up homeless or in jail on the dime of society

They are less likely to be a productive member of society.

I suppose the libertarian response would be that if someone bankrupts themselves, let them die homeless on the street - but I don't think you'll get agreement from any significant portion of society on that approach and even then someone has to pay to clean up their body.

Re: Insider Trading at Coinbase

#304

Post by beaconstudios » Wed, Apr 13, 2022, 6:24 PM UTC

rabuse wrote: post #240

smackeyacky wrote: post #64

Earlier quoted context omitted.

So we can ignore that cancer used to be a guaranteed death sentence, polio was a thing, children got rickets, a septic wound could kill you, an ulcer wasn't a course of pills to get rid of, tuberculosis was rife. The gilded age was no paradise and rose tinted views of the era just don't hold up to scrutiny.

Most of this was eradicated by simple increases in hygienic ability, not some overpriced medical miracle.

Polio was solved by vaccines, and sepsis was partly solved by hygiene and partly by antibiotics. Modern medicine has helped with many conditions.

Re: Insider Trading at Coinbase

#305

Post by nybble41 » Wed, Apr 13, 2022, 6:50 PM UTC

vimy wrote: post #299

nybble41 wrote: post #295

Earlier quoted context omitted.

It's hardly "unworkable". There are already systems in place for verifying your own wallets; you just need to sign a message using your key to verify that the wallet is actually yours. So far I haven't seen any proposed rules about what you can do with the crypto once it's in your wallet, so all this means is that you need to withdraw to your own wallet first before sending the funds anywhere you want.

So how does it work? Where do I link my national ID to my wallet and how do I tell the government about it?

The national ID link happens at the exchange, via the normal KYC process. You prove your identity to the exchange, and you prove that you have the private key for the wallet by signing a challenge message. That's it. The relevant proposed regulations can be found here[0] (linked from [1]):

> (29) This Regulation applies not only to transfers of crypto-assets where both the crypto-asset service provider of the originator and beneficiary are involved but also to transfers of crypto-assets to or from a distributed ledger address not linked to a crypto-asset service provider, so called “unhosted wallets”, as long as there is at least one crypto-asset service provider involved in the transfer of crypto-assets.

> (29a) In cases of a transfer of crypto-assets made from or to a distributed ledger address not linked to a crypto-asset service provider, the crypto-asset service provider will have to obtain information both on the originator and the beneficiary, usually from their customer. However, the crypto-asset service provider will have to verify the accuracy of only the information on their customer and not on the originator or beneficiary with the distributed ledger address not linked to a crypto-asset service provider.

So when a transfer is made to or from an external, non-hosted wallet the exchange is responsible for identifying the wallet's owner.

Also note this clause in the proposed text of the regulation (under Article 2 paragraph 4):

> This Regulation shall not apply to person-to-person transfer of crypto-assets as defined in Article 3(14) of this Regulation.

So transfers between two unhosted wallets are unaffected.

This regulation has been widely misreported, so don't believe everything you read, especially if it doesn't cite the actual text of the regulation.

[0] https://data.consilium.europa.eu/doc/document/ST-14259-2021-...

[1] https://www.consilium.europa.eu/en/press/press-releases/2021...

Re: Insider Trading at Coinbase

#306

Post by cuteboy19 » Wed, Apr 13, 2022, 6:58 PM UTC

nybble41 wrote: post #292

cuteboy19 wrote: post #234

Earlier quoted context omitted.

Coinbase would be frontrunning every trade you make. This would be a direct tangible loss to you. Think of it like a GME level fiasco but carried out every few weeks or so. Compared to that any insider trading Nancy does would be diffuse and unlikely to affect you personally.

Frontrunning gets you a worse price for your trade, so traders would naturally avoid exchanges which practice it in favor of others which offer a deal. There is no natural monopoly on crypto exchange services, though regulation does tend to raise artificial barriers to entry and promote centralization. The "GME level fiasco" was only possible as a one-time event. You don't get situations like that on a recurring basi…

And yet Coinbase is one of the top exchanges in the world and routinely goes down for "unplanned maintenance" everytime a dip happens. Others are worse!

Re: Insider Trading at Coinbase

#307

Post by rosndo » Wed, Apr 13, 2022, 7:03 PM UTC

tsimionescu wrote: post #210

rosndo wrote: post #111

Earlier quoted context omitted.

In a world where insider trading is legal, why would you stick to small time trades?

Because you don't want others to notice what you're doing, obviously. If the CEO of X is buying massive amounts of X stock, people will start assuming they have inside information, and the price will go up. If the CEO of X bought a few shares at market price every day, that will be less likely to alert anyone, and they will be able to continue buying at very low prices.

So you’re arguing that insider trading has no effect at all?

Re: Insider Trading at Coinbase

#308

Post by dropnerd » Wed, Apr 13, 2022, 7:10 PM UTC

valeness wrote: post #214

lawrenceyan wrote: post #164

Earlier quoted context omitted.

Feel free to call them whatever you want. They're just words meant to abstract a concept / zeitgeist. If I were to define the two respectively to someone who had never encountered the terms before, web2 would be the centralization of the early internet ecosystem in order to increase scalability + capture/generate profit funnels with web3 being the corresponding deconstruction back towards decentralization and economi…

But you have no evidence of this. You're just saying "This thing I like will be big because I like it" Web2 had a lot of stars align to become "the next big thing". (The newfound capacity for advertising, smartphones driving adoption, and the mechanisms for tracking and stealing user data). And none of those stars had to deal with privacy, decentralization, security, encryption, etc. All of these things that we have…

decentralized ownership hasnt been tried at scale before bitcoin.

most wont care about it until their digital purchases start getting sunsetted without migration, and then they notice there is an alternative.

Re: Insider Trading at Coinbase

#309

Post by jl2718 » Wed, Apr 13, 2022, 7:11 PM UTC

parkingrift wrote: post #107

Crypto fans want deregulated finance. Crypto fans get mad when deregulated finance is comically unfair. You really can’t make this up. Embrace this. It’s exactly what crypto is all about.

There is a difference between ‘unregulated’ and ‘poorly-regulated’. The more defensible position is that regulation never works as intended; it just benefits those that can hire the most lawyers, and state power is used against their weaker competitors.

Re: Insider Trading at Coinbase

#310

Post by dropnerd » Wed, Apr 13, 2022, 7:11 PM UTC

thomassmith65 wrote: post #279

TheColorYellow wrote: post #215

Most people on HN here don't have a clue of what they are talking about, whether it is financial market regulation or cryptocurrency or blockchain technology. What makes this topic difficult to approach is the degree of complex issues which surrounds it. We are looking at the intersection of technology innovation, the long-standing failure of institutional and market mechanisms, and combined with a bleak macroeconomi…

This community has been discussing crypto since 2009 (four months after 'Satoshi' mined the genesis block) https://news.ycombinator.com/item?id=599852 It may still be true that "most people" here don't have a clue about it, but it's a hollow criticism since far more have a clue here than elsewhere.

you can be epicly early and epicly wrong. in that very thread:

> Well this is an exceptionally cute idea, but there is absolutely no way that anyone is going to have any faith in this currency.