Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Founder of crypto lender Celsius Network arrested, charged with fraud

reuters.com

Post reply on HN
Print view View original

81–90 of 379 posts

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#81

Post by vkou »

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

Let's say that your analogy has zero actual bearing on what actually happened in this situation, and end the conversation there.

He misrepresented Celsius. That's fraud. It doesn't matter if you do it with dollars, bitcoins, scrip, or Pokemon cards.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#82

Post by BlandDuck »

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

I think the way to understand this is that the SEC is concerned about protecting unsophisticated regular folks from being scammed.

If you started aggressively marketing your Pokemon cards, presenting them as financially sound investments, and regular people started putting their entire pension savings into them lured by false promises and being scammed, then the SEC might well take an interest in Pokemon cards as well.

In short, what qualifies as a "security" and becomes subject to regulation is fluid and endogenous. As soon it starts involving real wealth for regular folks, chances are it will be deemed subject to regulation.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#83

Post by 2OEH8eoCRo0 »

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

What about coins they created and sold?

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#84

Post by bottlepalm »

Forgeties79 wrote: post #58
bottlepalm wrote: post #44

This is great for crypto. Justice for scammers who thought crypto users could be taken advantage of without consequence. Ponzi schemes like Celsius are not exclusive to crypto and it's great to know the Justice department will prosecute scammers regardless of the unit of currency being used.

I get what you’re trying to say, but honestly? All this does is hurt the reputation of crypto further. It’s yet another headline about crypto scams/ponzi scheme/etc. projected to an audience that is weary of being easily scammed out of money they believe to be safer elsewhere. No one who is skeptical or on the fence about crypto is going to see this headline and go “oh good! They must be catching the bad guys, so now…

The nice thing about Bitcoin is that it's success is not based on good/bad PR. Bitcoin has a solid technical foundation and practical use cases that has weathered every kind of criticism for over 10 years now and is still on top.

Celsius and earn programs/scams like it is just another trial Bitcoin has passed through and is stronger for it.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#85

Post by nickphx »

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

Uhhh, two brief examples of fraud: Celsius said they had insurance to cover deposits - they did not. Celsius said customer funds are not used for high-risk loans -- they were.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#86

Post by vorpalhex »

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

> Suddenly, anyone buying and selling them becomes a criminal.

No, people buy and sell securities all the time. You simply need to follow the regulations for handling securities which includes certain types of tax and risk effort.

If you keep selling securities while not following the KYC and tax stuff for those securities, you will in fact be breaking the law.

Nor did the SEC magically throw down one day and start calling crypto a security. It is plainly and obviously a security _and has always been one_.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#87

Post by wpietri »

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp

So yes, if finance were unregulated, then he wouldn't have been violating the securities regulations that didn't exist. But they did exist, and the Howey Test is from 1946, so it shouldn't have been a surprise. A lot of people tried to pretend that the existing financial regulations, many of which were created in response to previous scams, didn't exist. Or at least didn't apply to them.

Was this intentional fraud from the start? Or was it more like the sort of Ponzi scheme where some yutz starts off a business in hope, makes big promises, fudges the books a little, and then just gets in deeper and deeper? It's a good question for philosophers and spectators, but personally I don't care at all. And I doubt federal prosecutors care much either.

I have zero sympathy for any of these people. "Move fast and break things" is a dubious ethos even when for something as trivial as a website to post selfies. But when you apply it to the foundations of our vigorously financialized capitalist economy, it's about as smart as applying it to submarine design.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#88

Post by bottlepalm »

wpietri wrote: post #70
bottlepalm wrote: post #51

Earlier quoted context omitted.

Bitcoin has proven to be an inflation resistant store of value enabling private and fast transactions to anywhere in the world - seems pretty successful to me despite being constantly derided by hacker news for over 10 years now.

Almost every word of that is untrue in practice. But let's focus on the core part, "successful". Let's compare with M-PESA, a money transfer solution that started around the same time. M-PESA has steadily grown, doing 26 billion transactions last year. [1] Bitcoin was somewhere around 100m transactions for the same period. [2] That's about 0.5% of the volume. And its worse than the raw numbers suggest, in that the M-…

Read my post, I said successful as a 'store of value' not 'electronic cash'.

Bitcoin is more akin to gold - an inflation resistant store of value. There is a premium for transacting it which means you should convert it into a more inflation prone transactional currency if you want to spend it.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#89

Post by Nextgrid »

sonicshadow wrote: post #73
angry_albatross wrote: post #46

Earlier quoted context omitted.

AI is not in the same category in my book. Both may be overhyped in some ways, but blockchain technology was fundamentally a bad idea with no legitimate use cases.

I wrong

> Plenty of great ideas and easy-to-see use cases from that first paragraph alone.

Such as?

Blockchains enable trust-less and decentralized ledgers at the expense of major trade-offs (user experience, lack of transaction reversibility, proof-of-work to secure the network, etc).

Most useful business happens off-chain in the real-world, so you need to bridge between blockchain state and real-world state using a trusted party which throws away all the decentralization and trustlessness advantages, so you may as well just let the trusted party run a conventional database directly, and avoid the major trade-offs.

I can't think of many useful & valuable use-cases that happen fully on-chain with no off-chain interactions, aside from cryptocurrencies. As soon as you have off-chain interactions (which is most of blockchain usage outside of cryptocurrency applications), the value proposition of using a blockchain goes away and a database makes more sense.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#90

Post by legitster »

vorpalhex wrote: post #86
legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

> Suddenly, anyone buying and selling them becomes a criminal. No, people buy and sell securities all the time. You simply need to follow the regulations for handling securities which includes certain types of tax and risk effort. If you keep selling securities while not following the KYC and tax stuff for those securities, you will in fact be breaking the law. Nor did the SEC magically throw down one day and start c…

The regulations for handling securities are through a brokerage. This is a HUGE deal because handling crypto through a brokerage would basically neuter it.

Imagine trying to buy a pizza with Bitcoin, but you have to go into your Charles Schwab account and wait 3 days for the Bitcoin transaction to settle. In a brokerage system you would get the ownership stake aspect of crypto, but none of the transactional ones.

Post reply on HN