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“But the SEC let us go public” and other flawed arguments in Coinbase's defense

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Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#461

Post by JohnFen »

semiquaver wrote: post #124
JohnFen wrote: post #7

Earlier quoted context omitted.

The SEC is not part of the executive branch. It is an independent agency. While it is also not part of the legislative branch, the legislative branch is the one that effectively controls it.

> The SEC is not part of the executive branch. You are mistaken. The SEC is very much a part of the executive branch. > It is an independent agency So is the CIA. This just is a term of art for a particular type of executive agency distinct from a cabinet department with additional insulation from political control. SEC commissioners are nominated by POTUS and confirmed by the senate, a characteristic unique to the l…

> The SEC is very much a part of the executive branch.

Not according to the government, and they're the horse's mouth on this.

> SEC commissioners are nominated by POTUS and confirmed by the senate

This is correct, but not really to the point.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#462

Post by JohnFen »

pylua wrote: post #36
JohnFen wrote: post #23

Earlier quoted context omitted.

It's also useful to know that Congress created the SEC in response to the 1929 stock market crash. Their primary purpose is to prevent the conditions that caused that. > There should just be a letter of the law , analytical meaning branch of government. I don't think that's a thing that is possible. You can't write laws to cover every possible case, and writing them to be "self-interpreting" would be an extraordinari…

That’s why it’s a systemic failure . Years of law study to interpret laws with context long dropped. The fact that the sec let Coinbase last this long is proof the system is over complicated and cannot be maintained efficiently.

> The fact that the sec let Coinbase last this long is proof the system is over complicated and cannot be maintained efficiently.

I disagree with this assessment, but reasonable people can hold differing opinions on this.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#463

Post by FabHK »

nickff wrote: post #32
RestlessMind wrote: post #25

I like reasoned critiques of crypto. Heck, I think many crypto actors are scammers and should be punished. However, a lot of crypto is legit and this piece reeks of bias. Some examples: - comparison with heroin - wtf? To extend that ridiculous analogy, it would be akin to FDA approving heroin based products (similar to how SEC approved Bitcoin ETF in 2021) and then going after heroin. What message is SEC trying to de…

I suspect that Gensler was obfuscating intentionally when asked about cryptocurrency. Modern regulators seem to prefer retrospective punishment over prospective advice and regulation.

> Modern regulators seem to prefer retrospective punishment over prospective advice and regulation.

The pertinent laws have been in force since 1933 and 1934, and the Howey Test since 1946. I'd call that regulation prospective enough. Not the SEC's fault that Coinbase preferred wishful thinking (I mean, it sort of worked for Uber).

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#464

Post by amluto »

jongjong wrote: post #415
cr__ wrote: post #391

Earlier quoted context omitted.

If there’s no way to register, why did they proceed?

Someone once told me it costs like $60K to register a crypto as a security... A chicken and egg problem. How will you get $60K without an ITO? Yet if you have an ITO in order to raise the $60K that you need to register your ITO legally, you're already in breach. It has similar vibes as the US law which only allows accredited investors to invest in fast growing startups... 'To protect mom and pop investors' yeah right…

Suppose you want to turn your business into a publicly traded company. If you don’t already have enough cash to pay for the process, you raise money from accredited investors (VC funds, angels, whatever). Then you do the paperwork. Then, when everything is approved, you get to sell shares to the general public. The overall process has been well established for a long time.

For some reason, people seem to think an ITO should change all the rules, and that first you sell to the general public, and then you figure everything else out (assuming you don’t just take the money and run). This is IMO nonsense.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#465

Post by miracle2k »

JeremyNT wrote: post #451
miracle2k wrote: post #378

When approving the S-1, the SEC was asked to review a business, not one selling filtration technology, but one selling illegal securities , well within their area of expertise. I think Americans should fairly expect their regulators to be clear enough about the rules that the very securities regulator, whose job in large part it is to protect retail investors, not allow a company who is in the business of selling ill…

> Any crypto sceptic who does not see a problem with this is tainted by their priors. Who is this addressed at? I think most (any?) crypto skeptic would see the problems here and suggest that these exchanges should have been shut down much earlier. The fact that they were allowed to operate so long gave them the veneer of respectability which just brought in more suckers. Coinbase et al knew (or should have known) ex…

> Who is this addressed at?

People who want to ridicule complaints of a lack of 'regulatory clarity'. You can hold the view that crypto should have been aggressively regulated against much earlier, while also recognizing that regulators / the state have a due process obligations.

The state should not be allowed to take away your residency permit even if it was issued incorrectly 10y ago due to an oversight on their part. Similarly, it is reasonable to argue that the state should not be allowed to punish a business for behaviour it has tacitly approved of by doing nothing for a decode. It's not like Coinbase was doing this under the radar and the SEC just noticed recently.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#466

Post by mattdesl »

JumpCrisscross wrote: post #410
mattdesl wrote: post #393

Earlier quoted context omitted.

A “hypothetical blockchain” sounds useless if it cannot legally be applied in practice. It’s the sort of draconian policy that HN commenters would abhor if it were anything but blockchain. To use these networks—and to test & objectively measure them—you need to be able to acquire tokens.

> to test & objectively measure them—you need to be able to acquire tokens There is nothing in this that requires the tokens be distributed to the public, or if they are, that they be sold in exchange for cash and/or traded.

A ledger secured by a handful of researchers is not really permissionless or distributed as we have come to understand public blockchains to be.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#467

Post by pjc50 »

jongjong wrote: post #415
cr__ wrote: post #391

Earlier quoted context omitted.

If there’s no way to register, why did they proceed?

Someone once told me it costs like $60K to register a crypto as a security... A chicken and egg problem. How will you get $60K without an ITO? Yet if you have an ITO in order to raise the $60K that you need to register your ITO legally, you're already in breach. It has similar vibes as the US law which only allows accredited investors to invest in fast growing startups... 'To protect mom and pop investors' yeah right…

The basic filing fee is extremely reasonable: https://www.sec.gov/ofm/filing-fee-rate : about 0.1% of the value of the IPO.

It's the legal advice and accounting specialists required to produce an adequate prospectus that's the big cost. But again: if you're raising millions, it seems not unreasonable to front some of that, even as personal debt, in order to prove "skin in the game" and that it's not a scam.

EOS raised $4.2 billion dollars. You're telling me they can't front 60k?

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#468

Post by incogitor »

adsfgiodsnrio wrote: post #439
norswap wrote: post #383

Earlier quoted context omitted.

It's important to note that event for the projects creating new tokens, there is NO WAY to register. It exists, in theory. Many people have tried, nothing has progressed even an inch. It's not even a matter of the SEC putting out a list of clear conditions that people deem unacceptable. Instead, the applications just seem to be mired in bureaucracy. As I understand, there is deliberate gaslighting from the SEC and Ga…

There is nothing in the law that explicitly prevents the registration of a cryptocurrency. The problem is that the people making them are not able to answer the kinds of questions the SEC asks. How many cryptocurrency companies do you know of that could pass an audit? Even when ICOs aren't out-and-out scams I have never encountered one transparent enough for me to want to touch it with a ten foot pole. Why should the…

> How many cryptocurrency companies do you know of that could pass an audit?

This is, quite simply, zeitgeisty prejudice. Most well-funded cryptocurrency companies have passed audits. I've worked for or with four crypto companies and three of them were audited (also all of them still exist).

You aren't allowed to count "fraud cryptobros from miami creating an ICO" if you don't count "fraud fratbros from harvard/yale creating a hedge fund". And if you do count both, then you'll notice that the proportion of fraud is roughly the same everywhere, we just allow ourselves to notice it in some places more than others.

> Why should the SEC bend over backwards to create new rules

Because you don't apply old rules to new contexts if you're a responsible government, especially if you're claiming jurisdiction over those new contexts. Registration and filing processes created for the paper era simply don't cut it for regulating self-executing financial instruments. Why doesn't the SEC have a registration smart contract? It is the SEC's responsibility to adapt to the times.

> Would you kindly point out a company that tried and failed to register an ICO

What do you not understand about "there is not process"? I've been a part of two companies who have tried. We have had "conversations", aka we try to reach out and a different attorney occasionally gets back in touch with us and rehashes the same conversation every six months. The longest effort went nowhere in four years. There is no registration, there is no process, there are no boxes we can check on the existing forms which govern what we do.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#469

Post by jude- »

norswap wrote: post #383
crazygringo wrote: post #12

> Coinbase, as with most crypto platforms, has decided it wants to simultaneously operate as an exchange, broker-dealer, and clearing agency. These three functions — bringing together securities orders for buyers and sellers, trading securities on behalf of others, and intermediating trades — are typically required to be separate due to conflicts of interest that emerge when one entity controls all of them. Coinbase…

It's important to note that event for the projects creating new tokens, there is NO WAY to register. It exists, in theory. Many people have tried, nothing has progressed even an inch. It's not even a matter of the SEC putting out a list of clear conditions that people deem unacceptable. Instead, the applications just seem to be mired in bureaucracy. As I understand, there is deliberate gaslighting from the SEC and Ga…

> It's important to note that event for the projects creating new tokens, there is NO WAY to register.

Yes there is. You register them as securities. STX[1] did this. Other projects need to suck it up and do it legally.

[1] disclaimer: I work on the Stacks blockchain (STX)

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#470

Post by unusualmonkey »

jongjong wrote: post #415
cr__ wrote: post #391

Earlier quoted context omitted.

If there’s no way to register, why did they proceed?

Someone once told me it costs like $60K to register a crypto as a security... A chicken and egg problem. How will you get $60K without an ITO? Yet if you have an ITO in order to raise the $60K that you need to register your ITO legally, you're already in breach. It has similar vibes as the US law which only allows accredited investors to invest in fast growing startups... 'To protect mom and pop investors' yeah right…

Given how the crypto market avoids regulations to scam mum and pop... it's not so hard to believe.

Keep in mind certain crowd-funding is legal in US.

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