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Coinbase issued Wells notice by SEC

reuters.com

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Re: Coinbase issued Wells notice by SEC

#51

Post by cududa »

Alex3917 wrote: post #39
yokem55 wrote: post #20

Earlier quoted context omitted.

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 s…

Or Nasdaq claiming that moving orders from paper ledgers to computers means they’re no longer a securities exchange. Because reasons.

Re: Coinbase issued Wells notice by SEC

#53

Post by jMyles »

meowkit wrote: post #16
arcticbull wrote: post #13

Earlier quoted context omitted.

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

This begs the question of what differentiates Bitcoin? Besides being the first, there aren’t really any structural differences for the functionality or the development and marketing of BTC than other coins. The only sufficient argument I see is the naivety around the distribution method which implies a metric of decentralization. To me that implies other coins should not be considered securities if they pass some dec…

> This begs the question of what differentiates Bitcoin?

I don't agree with the thrust of the argument either, but I think it's a genuine assertion and not begging the question.

> Now I’m also of the radical opinion that securities are actually a type of token (tokens being a general class of financial instruments like coins, securities, currency, or any asset) - not the other way around, and the law needs to be rewritten to accommodate this.

I broadly agree with this view! However, I think the law is better suited to get out of the way and gracefully allow the inevitable separation of token and state.

Re: Coinbase issued Wells notice by SEC

#54

Post by nonethewiser »

cududa wrote: post #14
tzm wrote: 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.

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…

If the SEC won’t identify the alleged security then I think it’s different than what you’d characterize.

The SEC should have a more collaborative spirit and share so that Coinbase can follow regulations or make their case. If the SEC is actually withholding this information they are acting in bad faith and operating more like a mob shaking someone down.

Re: Coinbase issued Wells notice by SEC

#55

Post by humanizersequel »

cududa wrote: post #44
Animats wrote: post #38

Earlier quoted context omitted.

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

Based on comments here, because they called it “staking as a service”. But apparently that nomenclature bypasses this very clear and explicit definition “The term ‘‘exchange’’ means any organization, associa- tion, or group of persons, whether incorporated or unincor- porated, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or for other…

>Based on comments here, because they called it “staking as a service”.

You could reply to my comment instead of obliquely referencing it here.

>this very clear and explicit definition

This is a definition of an exchange (specifically a securities exchange), but nobody is contesting that Coinbase has an exchange product, just whether the assets for which they operate the exchange are securities or not.

Coinbase Earn is not "bringing together purchasers and sellers", because people staking their crypto are doing neither. Putting up some collateral in exchange for the privilege to validate blocks and collect a reward for doing so cannot possibly fall under a reasonable function "commonly performed by a stock exchange".

Re: Coinbase issued Wells notice by SEC

#56

Post by codehalo »

overthrow wrote: post #33
idiotsecant wrote: post #24

Earlier quoted context omitted.

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

Anyone can create a fork that removes the difficulty bomb. You just need people to use your fork.

Re: Coinbase issued Wells notice by SEC

#57

Post by nonethewiser »

bardworx wrote: post #37
onlyrealcuzzo wrote: post #22

Earlier quoted context omitted.

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.

Does this address forking it making it a security? It doesn’t seem like it but I’m trying not to jump to conclusions.

Re: Coinbase issued Wells notice by SEC

#58

Post by codehalo »

adastra22 wrote: post #32
idiotsecant wrote: post #24

Earlier quoted context omitted.

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.

There is no "presale" in the Ethereum code.

Re: Coinbase issued Wells notice by SEC

#59

Post by nonethewiser »

paulpauper wrote: post #28
latchkey wrote: post #25

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)?

> 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?

The claim is she knew about this information based off the timing of the trade. It’s not evidence but it’s certainly suspicious.

It does not follow that she would necessarily know enough other information to perform well. That’s a much higher bar, especially when tech has been pretty deep in the red.

Re: Coinbase issued Wells notice by SEC

#60

Post by darksaints »

cududa wrote: post #30
stickfigure wrote: post #21

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…

If that were the whole definition of a security, then interest-bearing savings accounts would be considered a SEC-regulated security. But they aren’t, for a very simple reason also outlined in securities law: They have no term nor maturity. Money can be withdrawn at will. There is no obligation to keep your money deposited in order to get paid for the time it has already been deposited.

It isn’t clear to me how this is different from a savings account, which are not even in the legal jurisdiction of the SEC.

This honestly smells of the usual turf war bullshit between the CFTC and SEC, just like the one that cause forex brokerages to completely separate from securities brokerages. The SEC wanted control over forex but they couldn’t have it, so they regulated the shit out of securities brokerages in order to twist the CFTCs arms.

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