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Coinbase issued Wells notice by SEC

reuters.com

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Re: Coinbase issued Wells notice by SEC

#91

Post by peyton »

choma1 wrote: post #87
iramiller wrote: post #64

Earlier quoted context omitted.

Well the SEC certainly has one point of view. Unfortunately the CFTC has another view and they both can’t be right so which part of the federal governance applies here? https://www.cftc.gov/digitalassets/index.htm This ambiguity is why clarity is needed. In the famous words of Matt Levine everything is securities fraud. It seems obvious that some legal clarity is actually required here.

Why can't they both be right? Futures aren't securities except in certain cases, and if bitcoin is a currency then bitcoin futures wouldn't be under SEC jurisdiction.

“Commodity” is shorthand for “non-security commodity” in CFTC-speak.

Re: Coinbase issued Wells notice by SEC

#92

Post by rtpg »

nonethewiser wrote: post #54
cududa wrote: post #14

Earlier quoted context omitted.

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.

If I had to guess, the SEC is actually saying "you are offering many products, and _way too many of them_ are securities. We will not list them all because it would be way too much work. We will not list one because we don't want you to overfit on the example. We want you to actually do the analysis across all of your products".

I have to imagine the SEC and Coinbase are in fact talking directly on a more off the record basis here as well... but who knows.

I think the equivalent here is the IRS saying "look, these numbers look wrong to us. Please check them. We are not in the job of doing taxes for you".

Re: Coinbase issued Wells notice by SEC

#94

Post by TheAlchemist »

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.

Yes it does !

The SEC told them already several times that their products are securities, it's just that Coinbase ignored it completely.

As for the reason why usually the SEC (although I'm no expert here) don't provide a specific definition, I suppose it's similar to regulating financial markets - especially in trading.

There are concepts like "spoofing", for which there is no exact definition provided by the regulator - for the simple reason that if they do provide it, the rational actors will push it to the limits, or try to find loopholes.

Everybody knows what they can or cannot do - it's just common sense.

Re: Coinbase issued Wells notice by SEC

#95

Post by kragen »

pazimzadeh wrote: post #93

> Feb. 9, 2023 — Kraken to Discontinue Unregistered Offer and Sale of Crypto Asset Staking-As-A-Service Program and Pay $30 Million to Settle SEC Charges https://www.sec.gov/news/press-release/2023-25 What's the difference between Coinbase and Kraken?

armstrong's iron balls

Re: Coinbase issued Wells notice by SEC

#97

Post by headsoup »

humanizersequel wrote: post #55
cududa wrote: post #44

Earlier quoted context omitted.

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…

Does Coinbase stake on the user's behalf? Do they take a cut? What is Coinbase doing with the staked crypto?

Don't regular banks turn your deposits into investments (securities) that provide returns which become your interest?

Is the idea here that Coinbase is doing nothing but passing your crypto to the 'investment banks' to trade with and earn your return, then just depositing that 'interest' back?

Re: Coinbase issued Wells notice by SEC

#98

Post by headsoup »

shukantpal wrote: post #43
cududa wrote: post #30

Earlier quoted context omitted.

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…

This Wells notice is not about Coinbase lending out money but rather about staked assets. Coinbase is not doing any lending.

Didn't they just offer ~$3Bil to Circle recently?

Re: Coinbase issued Wells notice by SEC

#99

Post by zoklet-enjoyer »

gamblor956 wrote: post #81
cududa wrote: post #30

Earlier quoted context omitted.

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…

The issue is not that Coinbase is "taking money" and loaning the money out; it is that Coinbase is taking things that the SEC has decided are securities and loaning those out. Notably, the one crypto that the SEC guidance has said is not a security, i.e., Bitcoin, is missing from the list of coins available for Coinbase Earn.

Coinbase Earn is a staking service for people who don't know how or don't want to interact with the blockchain of the particular coin they're staking. Coinbase stakes the coins for them and takes a cut of the staking rewards. They're not lending assets. Bitcoin isn't included because Bitcoin uses proof of work, not proof of stake

Re: Coinbase issued Wells notice by SEC

#100

Post by headsoup »

codehalo wrote: post #77
adastra22 wrote: post #68

Earlier quoted context omitted.

Why would that be relevant? It happened, that’s all that matters. Edit: the context of this is the question of whether Ethereum is a security. The SEC has already ruled that it is, and the ruling came down to the fact that it had a presale (via the Howey test).

It's not clear yet that the SEC has any jurisdiction over cryptocurrencies. At this point, their rulings are empty, and perhaps it will be decided in court.

I suppose so long as cryptocurrencies aren't interacting with the dollar markets at all that makes sense...
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