[HN Gopher] SEC Sues Binance and CEO Zhao for Breaking US Securi...
___________________________________________________________________
SEC Sues Binance and CEO Zhao for Breaking US Securities Rules
Author : kgwgk
Score : 436 points
Date : 2023-06-05 15:13 UTC (7 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| moralestapia wrote:
| Tomorrow's Levine's Newsletter will be sweet :D
|
| Btw, is there a single bitcoin exchange who is operated by people
| that do not behave like teenagers?
| refulgentis wrote:
| Try company, ugh. The stuff I've seen at FAANG...
| el_nahual wrote:
| Bitso out of Mexico/Brazil is about as serious as any company
| can be IMHO.
| moralestapia wrote:
| Sure, that's what everyone said about Zhao when it was SBF's
| turn to be the bad guy.
|
| With re. to Bitso specifically, a couple years ago I reached
| to them to let them know about a somehow serious
| vulnerability in their API and their response was pretty much
| "yeah, whatever". Really.
| artursapek wrote:
| Kraken
| thebiglebrewski wrote:
| Does Coinbase count?
| kumarski wrote:
| Earlier today, I talked to people who are reformed criminals who
| have been thrown in Jail by the SEC and know its inner workings
| fairly well.
|
| He'll likely get a slap on the wrist with some fines.
|
| Doesn't look like anybody is going to jail.
|
| We shall see how things shake out. Would get intriguing if the
| jaws of FINCEN suddenly opened up.
| unicornmama wrote:
| The SEC brings civil charges, it doesn't "throw people in jail"
| ourmandave wrote:
| The SEC doesn't jail people. That's the DOJ that brings
| criminal charges, like with Sam Bankman-Fraud.
| tibbydudeza wrote:
| I presume he is not based or living in the US ???
| JumpCrisscross wrote:
| > _presume he is not based or living in the US_
|
| Zhao "unlawfully solicited U.S. investors to buy, sell, and
| trade crypto asset securities through unregistered trading
| platforms" while "raising approximately $200 million from
| private investors" and "direct[ing] Binance to assist certain
| high-value U.S. customers in circumventing...controls and to do
| so surreptitiously" [1].
|
| [1] https://www.sec.gov/files/litigation/complaints/2023/comp-
| pr...
| rkagerer wrote:
| If he's outside the US and the country he is in had an
| extradition treaty with the US, but has no comparable law in
| the books, wouldn't that impede extradition?
| anonymousab wrote:
| That would depend on the contents of that extradition
| treaty.
| JumpCrisscross wrote:
| > _wouldn 't that impede extradition_
|
| This is a civil complaint. Nobody is demanding extradition
| as no crimes are alleged. If Zhao is dumb enough to blow
| off the courts, the DoJ will get involved.
| c2h5oh wrote:
| This is a civil complaint, but it describes things that
| can be criminal, e.g:
|
| a failure to do KYC required to block transactions with
| sanctioned people/entities - that can very much be
| criminal with a max of 20 years iirc.
| JumpCrisscross wrote:
| > _it describes things that can be criminal_
|
| There is probably a case, but I don't see anything that
| would make Zhao a priority for the DoJ. Maybe that will
| surface as he responds (or refuses to).
| ingenieros wrote:
| That didn't stop Montenegro from finding some other
| probable causes (fake passports) to arrest Do Kwon. They
| are now trying to decide where to extradite him. US, South
| Korea and Singapore all want a piece of him.
| https://www.rferl.org/a/montenegro-korea-kwon-
| terraform/3234...
| JumpCrisscross wrote:
| > _some other probable causes (fake passports)_
|
| Forging passports is a serious crime.
| WJW wrote:
| That does not matter for being sued, though perhaps it does for
| being punished if he gets convicted. A quick google shows he
| lives in Dubai though. The UAE do not have a formal extradition
| treaty with the US, but given their close relations I would not
| be super comfortable about it if I were CZ.
| fallingknife wrote:
| I can't see this enforcement spree by the SEC as anything other
| than malicious when Gensler himself said that 3/4ths of the
| market is not securities in 2018.
| https://twitter.com/ZK_shark/status/1650689125580668931
|
| Yes this was before he was head of the SEC, but the fact that
| this was going on right out in the open for 10 years and the SEC
| took exactly no action tells me that the entire agency shared
| this opinion too. It doesn't take a decade to shut down an
| unregistered securities exchange.
| misnome wrote:
| Ah yes, the "offhand comment by someone years before they took
| a position indemnifies you business for all behaviour
| infinitely into the future no backsies" law
| fallingknife wrote:
| If by "offhand" you mean the former head of the CFTC giving a
| lecture in the class he teaches on the subject at MIT while
| at the same time the SEC is also not taking any actions
| against crypto exchanges.
|
| There isn't a "no backsies" rule, but then you will have to
| tell me what changed about crypto between 2018 and now that
| made it pass the Howey test then and fail it now if you want
| me to believe that the government is acting in good faith.
| misnome wrote:
| I cant think of anything changing in crypto in the past
| five years! No markets, products, chains, methods of
| operation. It's all exactly the same as it was in 2018.
|
| Presumably you are correct and this will be thrown out as
| soon as it gets in front of a judge then!
| refulgentis wrote:
| This is off-topic unless you're aware of someone being
| charged for cash trading Bitcoin or Ethereum.
|
| It's degrading to yourself to pretend in public anyone
| expected the SEC was cool with coins.
| JumpCrisscross wrote:
| Has any crypto exchange been sued by the SEC for solely
| providing Bitcoin and Ethereum trading? That might be the
| vast majority of the market Gensler references, which would
| make his 2018 statement both remarkably prescient as well
| as consistent with this complaint.
| _fizz_buzz_ wrote:
| > 3/4ths of the market is not securities in 2018
|
| But that means even back in 2018 1/4 of the market was
| securities.
| JumpCrisscross wrote:
| > _this was going on right out in the open for 10 years and the
| SEC took exactly no action_
|
| Ripple was sued in 2020 [1]. That's two years from Gensler's
| 2018 statement and 1 year _preceding_ his becoming chair of the
| SEC [2].
|
| Note, too, that when Gensler made those statements he was the
| former chair of the CFTC. And nobody is being charged for cash
| trading Bitcoin or Ethereum.
|
| [1] https://www.sec.gov/news/press-release/2020-338
|
| [2] https://www.sec.gov/about/commissioners/gary-gensler
| teh64 wrote:
| Does this somehow mean that in 2023 3/4ths of the market is
| still not securities?
| swamp40 wrote:
| Whistleblowers get a percentage of the fine. They were sabotaged
| from within.
|
| But all the bigwigs are offshore.
| smart_jackal wrote:
| [flagged]
| jaywalk wrote:
| Come on. I'm no fan of Biden, but your comment doesn't even
| make sense. SBF is going to jail.
| SamReidHughes wrote:
| That was after the company collapsed.
| mrguyorama wrote:
| Yes and everyone thought Enron was the greatest until their
| fraud was exposed. When you have minimal transparency it's
| really easy to cook the books and look good. That's like
| half the point of regulations around public companies.
| SamReidHughes wrote:
| That is completely irrelevant.
| Octoth0rpe wrote:
| I don't doubt that quite a few politicians were being all warm
| and fuzzy with various FTX people pre-collapse, but SBF is
| currently awaiting a long list of expected charges and I don't
| think anyone doubts that he's headed for jail (excluding some
| dramatic escape funded by hidden monies). Justice may not have
| been served, but it's most definitely in progress. Biden's SEC
| seems to be doing its job in both cases and without prejudice,
| albeit belatedly.
| JumpCrisscross wrote:
| > _Biden 's SEC is doing it merely because of his South Asian
| origin_
|
| Zhao is a "Chinese-born Canadian" [1]. Not South Asian [2].
|
| [1] https://en.m.wikipedia.org/wiki/Changpeng_Zhao
|
| [2] https://en.m.wikipedia.org/wiki/South_Asia
| [deleted]
| Animats wrote:
| _" The S.E.C. said the world's largest cryptocurrency exchange
| mixed "billions of dollars" in customer funds and secretly sent
| them to a separate company controlled by Binance's founder,
| Changpeng Zhao."_
|
| That's a criminal offense.
|
| Here's the court filing.[1] This is just a civil case for now,
| but expect criminal charges. _" Between October 2022 and January
| 2023, Zhao personally received $62.5 million from one of the
| Binance bank accounts."_
|
| The court filing shows the structure of Zhao's companies. The SEC
| has figured out how Binance works.
|
| [1] https://www.sec.gov/files/litigation/complaints/2023/comp-
| pr...
| janmo wrote:
| The DOJ probably already has a sealed indictment and is waiting
| for CZ to visit an extradition friendly country, but I doubt CZ
| will ever do it.
| samsolomon wrote:
| The map linking companies is on page 12 for those interested.
| api wrote:
| That all looks very decentralized.
| linusg789 wrote:
| Correct original link:
| https://www.bloomberg.com/news/articles/2023-06-05/sec-sues-...
|
| Archive: https://ghostarchive.org/archive/TiwuL
| kgwgk wrote:
| In what sense is the link submitted incorrect?
| misnome wrote:
| There was a second thread, since merged, where the link was
| moved so 404'd
| kgwgk wrote:
| Thanks! I missed that - and I thought that maybe removing
| the #blahblah at the end of the URL had some effect I was
| not aware of.
| wslh wrote:
| I remember the last post from Fred Wilson: "The Freedom To
| Innovate" [1]. Even if the SEC is right about Binance and others,
| and there are without doubt blatant and huge frauds in Web3,
| there are huge problems with the financial modernization within
| the US (and the world). Domestic wire transfers in US takes
| longer and are more expensive than in Europe and developing
| countries such as Brazil and Argentina. The SEC is not showing a
| neutral point of view and any special concerns with innovation
| and legacy system frauds.
|
| It doesn't matter if it is call Web3, blockchain, or whatever
| buzzword you like, banks have real power and a clash is
| inevitable now or in the near future. It took a century to
| dethrone Bell System [2]. It is a political and economical issue,
| not just an industry.
|
| [1] https://news.ycombinator.com/item?id=36199584
|
| [2] https://en.wikipedia.org/wiki/Bell_System
| mtrycz2 wrote:
| > banks have real power and a clash is inevitable now or in the
| near future
|
| Bitcoin was derailed from being peer to peer electronic cash to
| this strange "store of value" that doesn't store value. It
| heppened almost six years ago, back in 2017.
| mtrycz2 wrote:
| > banks have real power and a clash is inevitable now or in the
| near future
|
| Bitcoin was derailed from being peer to peer electronic cash to
| this strange "store of value" that doesn't store value. It
| happened almost six years ago, back in 2017.
| ARandumGuy wrote:
| Just because the current system sucks doesn't mean a
| replacement will be better. Its the responsibility of people
| advocating for a replacement system to explain and demonstrate
| why it will be better.
|
| Banks suck. But that doesn't mean crypto companies should have
| free reign to do whatever they want for the sake of
| "innovation."
| rodgerd wrote:
| > Banks suck.
|
| Banks in Singapore provide 5 minute inter-bank settlement.
| Banks in NZ provide multiple intra-day settlements seven days
| a week. Australia's NPP settles within one minute as a
| typical target.
|
| Banks are perfectly capable of this. _US_ banks may not be.
| everfree wrote:
| > that doesn't mean crypto companies should have free reign
| to do whatever they want for the sake of "innovation."
|
| As a company, you're allowed to do anything that is not
| illegal. Law is not a whitelist of what you're allowed to do,
| it's a blacklist of what you're not allowed to do. And while
| it makes sense to create laws that protect consumers, it
| doesn't make sense to create laws that blanket ban
| experimentation with a new system until someone "explains and
| demonstrates why it will be better" to the satisfaction of
| some authority figure.
|
| > Its the responsibility of people advocating for a
| replacement system to explain and demonstrate why it will be
| better.
|
| No, it's society's responsibility to not create and to repeal
| laws that drive innovation offshore. Because ultimately it's
| a country's citizens, not the innovators, who lose out if a
| valuable piece of technology moves offshore. If Steve Jobs
| had to "explain and demonstrate" why the iPhone would be
| better than flip phones and blackberries to the satisfaction
| of Congress before being allowed to experiment with its
| design, Apple probably would have just moved their HQ to
| China, and Americans would be the ones missing out.
|
| So just because Binance is committing fraud and breaking the
| law doesn't mean that in general we should be blocking the
| ability of companies from experimenting with new technology,
| whether or not you personally believe a particular technology
| will amount to anything.
| JumpinJack_Cash wrote:
| > > So just because Binance is committing fraud and
| breaking the law doesn't mean that in general we should be
| blocking the ability of companies from experimenting with
| new technology, whether or not you personally believe a
| particular technology will amount to anything.
|
| This is not new technology, it's moving the money around
| under the guise of new technology.
|
| And all the same crypto-bros are very proud of the
| valuation of the company they are at the helm of ....and
| they always tout it expressed in US Dollars...not bitcoin,
| not ethereum, not Binance coin.
|
| And the same crypto-bros are very proud of their net worth
| expressed in US Dollars
|
| While you are here writing "let them experiment with
| technology dude" they concern with technology is zero, it's
| all about driving up the valuation and driving up the net
| worth (always expressed in US Dollars)
| everfree wrote:
| Gatekeeping which widely-used new software counts as
| "technology" and which doesn't seems like a strange hill
| to die on.
| ARandumGuy wrote:
| > If Steve Jobs had to "explain and demonstrate" why the
| iPhone would be better than flip phones and blackberries to
| the satisfaction of Congress before being allowed to
| experiment with its design, Apple probably would have just
| moved their HQ to China, and Americans would be the ones
| missing out.
|
| Apple had to comply with a ton of regulations and laws when
| making the iPhone. Off the top of my head, they had to
| comply with various product safety laws, FCC frequency
| allocations, and consumer protection rules.
|
| The US (and most other countries) have a lot of regulations
| for managing money and investments. These apply regardless
| of the underlying technology being used. Legally, the only
| thing cryptocurrencies brought is that they didn't
| obviously fit into any existing legal framework. This was
| mostly due to a lack of judicial precedence, not because
| cryptocurrencies were fundamentally different.
|
| This isn't writing laws to stifle innovation. This is using
| laws that already exist to actually regulate companies that
| have managed to avoid it before now.
| wslh wrote:
| The point of my comment is about a political issue in
| financial systems. I don't specially care if the replacement
| is crypto or whatever other decentralized or centralized
| technologies move things forward.
| mikem170 wrote:
| > The Freedom To Innovate
|
| I'm not sure that innovation in finance has always been a good
| thing. Over the last 50 years we've seen increased levels of
| debt, increased college costs, increased housing prices, a
| bigger and more powerful rentier class, growing income
| inequality, leveraged buyouts, big business eliminating small
| businesses, hedge funds buying housing and hospitals, big tech
| buying up the competition, profit is the name of the game, all
| of these rich people buying politicians, etc. Who came out
| ahead after all this?
|
| Much of the applied innovation in crypto hasn't been good,
| either. Block chain is an amazing technology, but the
| innovators in this space didn't stop at a decentralized money
| transfer system, they wanted to get rich and they scammed
| people.
|
| So what kind of innovation are we talking about? Who would be
| helped?
|
| > Domestic wire transfers in US takes longer and are more
| expensive than in Europe and developing countries such as
| Brazil and Argentina
|
| A small aside on this topic: I assume/hope that the new FedNow
| payment system coming online in a month or so will help with
| transfers like this.
| wslh wrote:
| We don't know if innovation, in general, is a bad or good
| thing. We assume it is generally a really great thing.
| Innovation requires time, fifty years is nothing to conclude
| that the financial system should exist in the same way as
| existed before.
| JumpCrisscross wrote:
| > _Domestic wire transfers in US takes longer and are more
| expensive than in Europe and developing countries such as
| Brazil and Argentina_
|
| Fedwires take minutes and cost nickels [1]. If you use wires
| frequently, get an account that doesn't charge anything for
| them. (The Fed is launching FedNow [2]. It will cost 4.5C/ per
| transfer [3].)
|
| [1] https://www.frbservices.org/resources/fees/wires-2023
|
| [2]
| https://www.federalreserve.gov/newsevents/pressreleases/othe...
|
| [3] https://www.frbservices.org/resources/fees/fednow-2023
| peyton wrote:
| Fedwire operates during extended banking hours only. Some
| people prefer to use crypto. It's okay.
| wslh wrote:
| I am aware of this option but it happen than not every
| financial service use them. Also, it is wondering than other
| countries where faster. Immediate payment account in
| Argentina exists since the late 90s and we are not talking
| precisely about a country with a good economy and financial
| system. Also take a look at the Brazilian Pix payment system
| [1] that provides a neutral code for payment where other
| services built on top.
|
| [1] https://en.wikipedia.org/wiki/Pix_(payment_system)
| JumpCrisscross wrote:
| FedNow and Pix were announced around the same time, the
| American one just took longer. Given the latter has done in
| three years what volume Fedwire does in months, the lag
| seems reasonable.
| KptMarchewa wrote:
| >Immediate payment account in Argentina exists since the
| late 90s and we are not talking precisely about a country
| with a good economy and financial system.
|
| It actually helps that the country does not have a good
| economy and financial systems. It's called Leapfrogging.
|
| The same concept applies to internet access and speed in
| Romania. They never had widespread copper telecom system,
| so they went straight into fiber.
| 300bps wrote:
| _Domestic wire transfers in US takes longer and are more
| expensive than in Europe and developing countries such as
| Brazil and Argentina_
|
| Do you think the US is incapable of sending an immediate
| message transferring money? Of course the US has that technical
| capability.
|
| AML, BSA, KYC, Anti-Fraud. These are a few of the things that
| slow down the transfers and add to the cost. A lot of people
| think they're a feature, not a bug.
|
| Then along come money transfer services that don't have these
| features. They'll all either get these features or they will be
| shutdown. There isn't a third option.
| KptMarchewa wrote:
| > AML, BSA, KYC, Anti-Fraud. These are a few of the things
| that slow down the transfers and add to the cost. A lot of
| people think they're a feature, not a bug.
|
| This is why you have to harden system at the fringes, not in
| the middle as old clearing systems did.
| misnome wrote:
| Plenty of countries around the world have all of that _and_
| instant payments.
|
| But that takes cooperation, which is incompatible with The
| American Way of "Winner takes all and the more people you can
| downtread on the way to the top, the better"
| wslh wrote:
| Technical capabilities could be shadow by political
| capabilities.
| _Tev wrote:
| AML and KYC got more intense in my EU country at the same
| time as instant payments became a thing. Between regular
| banks. I don't think those are the problem.
| [deleted]
| gadnuk wrote:
| > In one instance, the Binance chief compliance officer messaged
| a colleague that, "[w]e are operating as a fking unlicensed
| securities exchange in the USA bro."
|
| Source:
| https://twitter.com/JohnReedStark/status/1665748594421297152
|
| This is a legendary quote from the filing.
| ryan69howard wrote:
| Chief Compliance Brofficer?
| optimalsolver wrote:
| Admissible in court, bro:
|
| https://www.youtube.com/watch?v=14WE3A0PwVs
| ZephyrBlu wrote:
| All I can say is, wen movie?
| civilitty wrote:
| Is you takin' notes on a criminal fuckin' conspiracy?
|
| https://www.youtube.com/watch?v=Ly82nabRRYc&t=80
|
| Robert Rules would be proud
| EA-3167 wrote:
| You'd think at some point people would learn, but I suppose
| human nature and selection bias are at play.
| pcbro141 wrote:
| https://twitter.com/SECGov/status/1665779371108335618
|
| SEC just tweeted the quote
| throwaw12 wrote:
| is "[w]e ...." literal text from a message?
|
| when this kind of wording is used usually in english? For me
| typing "we" is much easier.
|
| reason I am asking is, if text was written "e are operating as
| fk....." then it's very easy to claim: "oh I wanted to write
| "they are", when talking about FTX" and blame them for
| everything (IANAL)
| sowbug wrote:
| Setting aside whether the original letter was actually
| capitalized, the rule is common in English writing:
| https://style.mla.org/capitalizing-start-of-quotation/ ("If
| the first letter of the first word you quote is capitalized
| in your source, use a lowercase letter enclosed in square
| brackets").
|
| More specifically, _The Bluebook: A Uniform System of
| Citation_ provides one of many sources of angst for first-
| year law school students in the United States. Its secondary
| purpose is to prescribe much of the structure and formatting
| of U.S. legal writing, down to whether there 's a space
| between the period and the capital S in something like "314
| F. Supp. 1217 (N.D. Tex. 1970)" (there is), and whether there
| is one between the period and the 3 in "945 F.3d 265 (5th
| Cir. 2019)" (there isn't).
|
| The most important Bluebook rule when altering quotations is
| not to change the meaning of the original text. The second
| most important rule is to explain the purpose of each
| alteration through a long set of rules (whether emphasis was
| in the original, whether a typo existed in the original,
| etc.). That covers your concern.
| nightpool wrote:
| In legal context it almost always means "We" quoted as "we"
| or vice versa to match the capitalization required for the
| context it's quoted in. if it was "e are operating" then they
| probably would have notated it differently.
| TylerE wrote:
| It's an editorial correction. E.g. fixing a typo to what was
| obviously intended, while indicating it isn't an exact quote.
| [deleted]
| ZephyrBlu wrote:
| I don't know why he quoted it like that because in the actual
| filing it's literally quoted as "we are operating as a fking
| unlicensed securities exchange in the USA bro.".
|
| Not capitalized or missing the "w". Page 29 if you're
| curious. Ctrl + F also works.
| smeyer wrote:
| I'm not sure why the tweet adds the brackets around the w,
| since I don't see it in the SEC complaint. Here's what's in
| the linked complaint. For clarity, the "emphasis added" part
| is from the SEC bolding the text inside the quote, not
| something I added.
|
| 111. As Binance's CCO bluntly admitted to another Binance
| compliance officer in December 2018, "we are operating as a
| fking unlicensed securities exchange in the USA bro."
| (Emphasis added.)
| jeroenhd wrote:
| I get why you would say something like that in astonishment.
|
| By why would you ever send that out over a medium that'll leave
| a paper trail?
|
| Thank goodness that criminals aren't very smart. Their idiocy
| is doing society a huge favor.
| tedivm wrote:
| Oh that's easy- this was the compliance officer, and by
| showing that he raised concerns over this he may be able to
| claim that he did his job as best he could under the
| circumstances. I'd need to see the rest of the context, but
| this could very well be a "cover your ass" message.
|
| Imagine if you're a security officer at a company and were
| just overridden on a decisions- you'd definitely want to
| shoot off an email describing the issue so that later on you
| aren't held responsible for it (of course depending on the
| severity quitting may also be desirable, but not everyone is
| in a position to immediately drop a job).
| nafey wrote:
| I am wondering if raising objections internally will be
| sufficient in this case. As a leading executive at Binance
| shouldn't he be expected to report any malicious activity
| to the authorities?
| dsr_ wrote:
| Yes, and the SEC mandates that.
| notahacker wrote:
| If you're covering your ass, you write something with
| cautious "could be interpreted as..." wording that
| distances yourself from it, not "we're doing a fking crime
| bro!"
| [deleted]
| baby wrote:
| Because that's his job? He's the compliance officer
| [deleted]
| [deleted]
| unity1001 wrote:
| > Thank goodness that criminals aren't very smart
|
| No, the criminals are extremely smart. Its just that these
| were amateurs who didnt know that in Anglosaxon common law,
| you have to avoid being honest about anything and even deny
| any wrongdoing even if you get caught the act of murdering
| someone. Then you can exercise plausible deniability, claim
| incompetence or mental incapacity and you can negotiate your
| sentence. Any kind of honesty works against you in the US law
| as a result. That's how you end up with people who are total
| experts in their field testifying in courts that they "didnt
| know" that something they did would cause so much harm to
| something or somebody or the society.
|
| As of this very moment, thousands of much, much bigger
| corporations are actually destroying the entire US society in
| a real way and not like these amateurs who were just
| shuffling some funny money. But the real psychos know how
| common law works. There wont be any trail of their
| wrongdoing, and when there is, there will always be plausible
| deniability in that trail...
| w7 wrote:
| > these were amateurs who didnt know that in Anglosaxon
| common law, you have to avoid being honest about anything
| and even deny any wrongdoing even if you get caught the act
| of murdering someone
|
| Ignoring the "Anglosaxon" buzzword here, none of this is
| unique conceptually to US law, or foreign conceptually to
| anyone who's told a lie when younger. It's instinctual for
| many when they know they've done something wrong. Trying to
| paint human nature as a unique problem that US law faces,
| or promotes, is itself dishonest.
|
| > claim incompetence or mental incapacity
|
| Neither of these get you "off the hook"; that's a
| misconception.
|
| > That's how you end up with people who are total experts
| in their field testifying in courts that they "didnt know"
| that something they did would cause so much harm to
| something or somebody or the society.
|
| It can be either dishonesty, or lack of omniscience by the
| expert in question. Unless you're a mind reader, you have
| no idea. This is why testimony is evaluated along with
| other aspects of a case, and not alone.
|
| > There wont be any trail of their wrongdoing, and when
| there is, there will always be plausible deniability in
| that trail...
|
| Plausible deniability does not shield you from all
| liability.
| unity1001 wrote:
| > Ignoring the "Anglosaxon" buzzword
|
| The 'Anglosaxon' term is a long-standing political
| science, history and diplomacy term. Its not something
| that can be ignored, especially because...
|
| > none of this is unique conceptually to US law
|
| ... it is.
|
| The common law derives from the medieval !Anglosaxon!
| feudal law, which is based on contracts, agreements,
| negotiations and precedents. It can be 'interpreted' by
| the judge, who takes on the role of the feudal lord of
| the earlier times, and he or she can 'interpret' the law
| or precedents. The persecution or the defendant can
| negotiate any outcome. This trait of the common law
| system causes all the parties to open the 'bargain' from
| the maximum bets that they can imagine, assuming that it
| will be 'negotiated down' eventually. Which obligates the
| need for lying and denying that was mentioned earlier -
| if you deny any kind of wrongdoing even when caught red
| handed, you have a better chance of negotiating something
| better than if you were honest. The only sizable
| countries that use this law system are the UK, the US,
| Canada, Australia, and NZ if you count as sizable. Along
| with a number of smaller island states.
|
| The ENTIRE rest of the world uses the civil law system
| that descended from the Napoleonic law, which descended
| in turn from the French Revolutionary principles. It does
| not rely on agreements, contracts, negotiations or
| precedents. It cannot be 'interpreted' The law is made by
| the democratic parliamentary authority and it clearly
| outlines crimes and punishments and there can be no
| negotiation made. Even the reductions in sentencing or
| the modifications that can be done to the final decision
| on anything are clearly outlined. Including the benefits
| that confessing a crime brings. Whereas lying is
| penalized further. There is no 'negotiation' that can be
| done in any way. That is why civil law encourages
| confessions and telling the truth in contrast to the
| common law which allows you to negotiate.
|
| Which is also the reason why the lawyers get upper middle
| class salaries and income in entire rest of the world but
| make obscene, irrational income in the US - when the
| legal system allows outrageous decisions, reparations,
| sentences that can only be negotiated through
| professional lying, posturing, playing down or up,
| personal relations in between the lawyers, prosecutors
| and judges, it encourages the mess that one can see in
| the US to happen.
|
| In Europe, judges and lawyers and prosecutors function
| more like clerks - the law is clear and solid. The
| rewards and punishments are the same. Has someone done
| what he or she shouldnt have done? Yes. What is the
| penalty for this? This particular thing. That is applied.
| There is no 'negotiation' anywhere in the process.
|
| This difference not only makes the Anglosaxon legal
| system quite different from entire rest of the world, but
| it also causes the social, economic and political life in
| the Angloamerican world and the rest of the world to be
| very different. A corporation can get away with
| destroying the environment or killing hundreds of
| thousands people with their product or the new drug. Even
| if they know beforehand what will happen and start to
| repress information and bribe experts to lie on their
| behalf to sell their product. Because, when they get
| caught, what will happen will be an eventual negotiation.
| In the rest of the world that does not happen - there is
| no way to negotiate down any sentence that may befall on
| your corporation, but most importantly, you, the
| perpetrator...
| w7 wrote:
| Long standing in what circles? I've only seen it in
| Russian derived or connected media, political think, and
| institutions. The primary source of papers using that
| term to refer to US law seems to be the Russian State
| University of Justice.
|
| I don't think I've seen an authoritative source elsewhere
| use it, because it would be like pretending the Norman
| conquest never had an effect on legal proceedings. As if
| there is some unbroken historical lineage.
|
| This is why I labeled it a buzz word, it's a phrase with
| a specific (negative) connotation attached to it, used by
| specific media, as a catch-all for describing
| institutions in the US.
|
| https://euvsdisinfo.eu/what-do-the-pro-kremlin-media-
| mean-by...
| unity1001 wrote:
| > Long standing in what circles?
|
| Long standing in history, long standing in diplomacy,
| long standing in actual freaking Louis XIV administration
| communique, long standing in practically everything.
|
| No offense but just because you people have a beef with
| Russia at the moment and they are using the term, the
| rest of the world is not going to change how they speak
| so that you dont get offended.
|
| > I don't think I've seen an authoritative source
| elsewhere use it
|
| Obviously you are not a student of history.
| w7 wrote:
| > Long standing in history, long standing in diplomacy,
| long standing in actual freaking Louis XIV administration
| communique, long standing in practically everything.
|
| That's neat, the dead are welcome to their opinions. That
| doesn't change where or why it's used primarily by
| certain parties in their English facing media.
|
| > No offense but just because you people have a beef with
| Russia at the moment and they are using the term, the
| rest of the world is not going to change how they speak
| so that you dont get offended.
|
| I never asked them to-- if that's the phrasing in their
| native language, then so be it. Same reason why we can
| call Germany the name "Germany".
|
| But it clearly has a different meaning in English.
|
| > Obviously you are not a student of history.
|
| I'll admit error if you can find a source, that's not
| Russian, that uses it to refer to modern US law-- even if
| it's just a translation from another language.
|
| The problem is I'm having a hard time finding one on my
| own.
| unity1001 wrote:
| > That's neat, the dead are welcome to their opinions.
| That doesn't change where or why it's used primarily by
| certain parties in their English facing media.
|
| How does this justify removing an actual historic term
| from the vocabulary.
|
| > But it clearly has a different meaning in English.
|
| It doesnt:
|
| > I'll admit error if you can find a source, that's not
| Russian
|
| It amazes me how someone that claims any insight in the
| matters of law can ask for 'sources' for such a thing. It
| just feels crazy. Here you go:
|
| https://www.jstor.org/stable/24517581
|
| Its not about the law, its not about the history, its the
| actual term used in an Anglosaxon source about how French
| saw the !rise of Anglosaxons! in 20th century.
|
| This paper of the actual university of Cambridge is
| actually named "The Rise of the Anglo-Saxon: French
| Perceptions of the Anglo-American World in the Long
| Twentieth Century". It is the Anglosaxons using the
| actual scientific term to refer to the actual historic
| and political science concept.
|
| > The problem is I'm having a hard time finding one on my
| own.
|
| Thats amazing now. The above was the first google result
| for me, an avid student of history. You were unable to
| find anything maybe its because you dont have much
| interest in that direction. Or, more likely, you were
| totally inundated with the actual propaganda war that
| very Anglosaxon establishment is waging against the
| actual historic term just because its current enemy used
| it to describe, well, itself...
| notahacker wrote:
| The problem with writing that your company is knowingly
| committing a crime in an instant message to colleagues
| has little do with "negotiation" and everything to do
| with _evidence_ , which funnily enough is taken into
| account in most legal systems influenced by Napoleonic
| codes...
|
| It may surprised you to learn that criminals also commit
| crimes and lie about them in countries whose legal system
| is not based on common law.
| w7 wrote:
| Their entire statement of
|
| > civil law system ... does not rely on agreements,
| contracts, negotiations or precedents. It cannot be
| 'interpreted'
|
| betrays that they've never examined legal proceedings in
| either system.
|
| Contracts apparently don't exist in civil law, and when
| asked to explain the differences between "Jurisprudence
| Constante" and "Stare Decisis", I guess "Jurisprudence
| Constante" means precedent doesn't exist!
|
| I think they're confused on the differing weight and
| roles of case law in rendering decisions between the two
| systems, and over corrected.
| unity1001 wrote:
| > Contracts apparently don't exist in civil law
|
| This does sound like insincere debate. Where does in my
| comments it says that contracts dont exist in civil law.
| It says civil law is not BASED on contracts, agreeements
| and precedents. The common law is.
|
| And no, the complications that are so beautifully and
| 'respectably' named in the common law dont exist in civil
| law. The law is always clear - if something is not
| covered by an immediate law, it is covered by a broader
| law that affects those cases.
| w7 wrote:
| Do we have a different understanding of the word "rely"?
|
| You didn't even use the word "BASED".
|
| When you say:
|
| > It does not rely on agreements, contracts, negotiations
| or precedents.
|
| Why would they exist conceptually if they're not relied
| upon?
|
| They're obviously relied upon when.. something related to
| contracts is in dispute.
| unity1001 wrote:
| Nowhere in my comment it says that criminals in other
| countries do not lie. Or the admission of guild is not
| considered evidence. It clearly outlines the differences
| in the legal systems and how the competent criminals
| navigate the former. If Binance people had any
| experience, they would be talking by using well rounded
| and vague words even among each other like how any exec
| in the US does, and they would avoid providing any such
| evidence. Moreover, they would easily be able to claim
| ignorance and deny any wrongdoing.
|
| I recommend you read my comment again.
| mytailorisrich wrote:
| It's a global phenomenon. People can't abstain from posting
| online and from sharing on messaging platforms these days.
|
| It's even been noticed by contemporary philosophers:
|
| https://youtube.com/shorts/Blw2dNZwZzg?feature=share
| hef19898 wrote:
| Just imagine the paper trail this new breed of criminals
| will leave!
| saiya-jin wrote:
| we don't hear from the smart ones, do we
| koolba wrote:
| There's clearly some extreme selection bias when it comes
| to leaving a paper trail admitting to crimes.
| webXL wrote:
| I'd give some benefit of the doubt like perhaps it was taken
| out of context, but... "bro"!? roflmao at the brazenness
| Analemma_ wrote:
| I would love to know what context could surround the sentence
| "we are operating as a fking unlicensed securities exchange
| in the USA" that makes it not an admission that they are
| operating as an unlicensed securities exchange in the USA.
| nubb wrote:
| sarcasm and hyperbole soon to become illegal. thanks. good
| work.
| lotsofpulp wrote:
| Does the context that it was written by the chief
| compliance offer in a work email make any difference?
| Should people be held to account for what they express at
| any time, or is "sarcasm" a valid cover your ass for any
| situation?
| mrguyorama wrote:
| Can't wait for a CEO to announce that their child labor
| was "Just a prank bro"
| HWR_14 wrote:
| There's a ton of context that could work. Anything where
| it's framed as either (a) untrue or (b) temporary and about
| to be mitigated.
|
| "What we are being falsely accused of is: 'we are
| operating...'"
|
| "We are operating... To fix this we must xyz"
|
| But I consider the second one to make the most sense.
| Saying "we have a problem" is a common first step of fixing
| it. Saying "we will be committing a felony if I don't win
| this argument" is usually a good card to play.
| freejazz wrote:
| those are both admissions, with (a) being an admission
| against interest. they could try and say that it was
| untrue or temporary (the latter being an admission of
| guilt, so not a smart move) but that'd be for a jury to
| determine, most likely.
|
| you can't just go to court and disavow all statements
| you've made as being ironic or untrue, facially, as a
| means of end-running the claims against you. you have to
| litigate your defense.
| woah wrote:
| Bro, if you don't file those fcking papers I told you to
| file last week "we are operating as a fking unlicensed
| securities exchange in the USA bro", and that would really
| suck
| setgree wrote:
| My theory is that Binance execs were having these chats in an
| encrypted medium (e.g. WA or Signal) but didn't secure
| themselves against a defector.
|
| I think someone on the inside took screenshots and went to the
| feds (or started cooperating under legal pressure). There's
| even a leading candidate [0].
|
| What's funny about this is it's a fine metaphor for what ails
| crypto as a whole. The technology is cryptographically secure,
| but not at all robust to much simpler betrayals, hacks, etc. If
| you trust overmuch in the tech and don't focus on less
| technically interesting but more fundamental threats, you're
| apt to get rekt.
|
| [0]https://decrypt.co/124999/ex-binance-us-ceo-catherine-
| coley-...
| mytailorisrich wrote:
| The main purpose of not to put things in writing and instead
| to discuss face to face has always been not to create
| incriminating evidence rather than avoiding and "unsecured
| channel".
|
| When you're using Signal or WhatsApp or whatever you're still
| putting things in writing to someone else and the risk, as we
| see again and again, is that this is leaked by the
| receipient(s). Plus ca change...
|
| This is almost the raison-d'etre of posh private members
| clubs.
| arcticbull wrote:
| Ahh yes Coley! So we finally find out where she's been
| stashed for the last two years.
| Melting_Harps wrote:
| > What's funny about this is it's a fine metaphor for what
| ails crypto as a whole. The technology is cryptographically
| secure, but not at all robust to much simpler betrayals,
| hacks, etc. If you trust overmuch in the tech and don't focus
| on less technically interesting but more fundamental threats,
| you're apt to get rekt.
|
| That applies to all things within technology, OPSEC/INFOSEC
| is the very study of how to mitigate those very leaky
| channels, which are impossible tasks to accomplish entirely
| because of Human nature. I recall a post here some time ago
| that says that most non-leak related hacks are mainly due to
| social engineering, as that is the most viable way to take
| down an asset/target.
|
| Honestly, CZ will likely brush this off; the US is being
| incredibly hostile to all things that threaten the USD; it
| make sense, and those that thought the USD and BTC could co-
| exist in the US were disillusion because of things like this.
|
| Even that scrub Armstrong is starting to see why his pursuits
| to cozy up to the VC crowds and US regulators only prolonged
| the inevitable wherein this will return to a regulatory
| nightmare that favours other nations; mainland China under
| the CCP will continue to ban it (for nth time) in order to
| stifle the immense amount of capital flight out of China but
| it will remain legal in Hong Kong with favourable and relaxed
| regulations. Once again favouring the afflurent and
| political;ly connected who can incorporate in an absurdly HCL
| safe-haven like HK and excluding the poors from utilizing
| financial services that could help them from the exposure to
| the collapsing banking sector.
|
| And thus proving again that unless its a situation like El
| Salvador where it becomes a national currency there is
| nothing to indicate that politicians have the will or ability
| to actually put clear regulation in place for Capital and
| innovation to progress in Fintech.
|
| Which would be obvious if you have any semblance of why
| Cypherpunks and renowned economist like Hayek considered a
| free-floating, non-state issued currency the most critical
| thing for a free Society.
|
| National Fiat currencies have a limited life-span, typically
| 35-40 years, and this always leads to economic turmoil and
| inevitably war; which always favours nations who can impose
| their neo-bondage via entities like the IMF and World Bank
| when the dust settles and then gain access to cheap
| resources, and Human capital.
|
| Anyhow, I'm not surprised this happened, but it's a nothing-
| burger that will be good for those DCA there way back into
| this market (myself included).
|
| [0]: https://cointelegraph.com/news/china-gains-from-strict-
| us-cr...
| whiskeytuesday wrote:
| insert XKCD five dollar wrench comic here
| max_hammer wrote:
| https://xkcd.com/538/
| PheonixPharts wrote:
| > but didn't secure themselves against a defector
|
| Still a surprisingly amateur move. Once worked for the
| Federal Government where literally everything you write is
| potentially subject to a FOIA request. The message all new
| hires were told was, very clearly: "Never put anything into
| writing you wouldn't be happy to be see published on the
| front page of the Washington Post"
|
| Anything that was even vaguely close to failing this test was
| handled exclusively by a private phone call or, preferably,
| in person conversation.
|
| And this was for an org that was doing nothing sneaky or
| underhanded in the slightest. Still if something could be
| misunderstood in a negative way, don't put it in text.
|
| I'm still surprised when I see coworkers say things in slack,
| which is clearly able to be monitors by admins, that don't
| pass this test. Far more surprised when people knowingly
| engage in criminal activity and keep any kind of unnecessary
| record.
| WeylandYutani wrote:
| In person conversation doesn't work because Zhao doesn't
| want to enter the US.
| wpietri wrote:
| > I'm still surprised when I see coworkers say things in
| slack
|
| I was recently talking with a friend who recently left
| government. They mentioned that they has a special slack
| emoji, "JK FOIA", so they could clearly mark things as
| "just kidding" to future FOIA readers.
| civilitty wrote:
| How does one FOIA request for the written communications of
| government officials like that? Asking for a friend
| PheonixPharts wrote:
| The government has done a pretty good job of making the
| process very easy: https://www.foia.gov/
|
| But, just like with ChatGPT, you'll likely have to do a
| bit of "prompt engineering" to get a specific document.
| "Give me all the stuff you guys got on UFOS1!!" will
| likely be less fruitful then "I am requesting the email
| correspondence between X and Y related to the documented
| observation of an atmospheric event occurring on ..."
|
| In my experience these requests are taken quite
| seriously.
| civilitty wrote:
| How broad can the request get? Can I ask for any
| communications that are related to a decision made or
| drafting of something that goes into the CFR?
|
| How much should I expect to pay for these requests,
| especially while figuring out the prompt engineering?
| dragonwriter wrote:
| > Can I ask for any communications that are related to a
| decision made or drafting of something that goes into the
| CFR?
|
| The broader the request, the more expensive it is and the
| lower the likely signal-to-noise ratio of the response
| is.
|
| Also, on your specific example, there is a broad
| exemption to FOIA for internal deliberative process-
| related opinions, conclusions, and recommendations, etc.
| cavanasm wrote:
| The cost of the request is often based on how many man
| hours it will take to fulfill. Different agencies have
| different rates / different capabilities for performing
| the document search itself. Some agencies may also
| reflexively deny requests, which would require a lawyer
| to sue them to get resolution if you believe the denial
| doesn't legitimately meet legal exception requirements.
| mrguyorama wrote:
| The "API" so to speak is the relevant laws in your
| jurisdiction. You may be looking for a lawyer
| ABeeSea wrote:
| I've heard this referred to as the "green eggs and ham
| test" for written communication. [0]
|
| >Would you like this in the press?
|
| >Would you like this at Brand X?
|
| >Like to read it on the stand?
|
| >Like it in the government's hand?
|
| [0]: https://www.legalethicsforum.com/blog/2006/12/over_at_
| white_...
| theGnuMe wrote:
| Right but in court the failure to keep adequate records may
| mean that the judge may rule that the absence of records is
| evidence of guilt. I think Google is facing this issue
| specifically.
| notahacker wrote:
| Not writing down anything youd be upset another person read
| is a pretty standard instruction for people doing
| interactions with ordinary business clients anywhere that
| data protection legislation theoretically allows them to
| make a statutory request the company send records you hold
| about them (Probably other jurisdictions too, if their
| lawsuits have a discovery process)
|
| And that's "dear junior sales team members, please don't
| put your opinion of the client in writing, in the unlikely
| event they ask for a data dump they might be a bit miffed",
| not "dear compliance chief, please don't write confessions
| to breaking laws our lawyers might be able to argue we
| attempted to comply with when we inevitably have to defend
| ourselves in court..."
| JumpCrisscross wrote:
| > _that 's "dear junior sales team members, please don't
| put your opinion of the client in writing, in the
| unlikely event they ask for a data dump they might be a
| bit miffed"_
|
| One of my first moves running a trading team is reducing
| or eliminating internal chat. I don't think I've gone a
| week without at least one client receiving an
| inappropriate nickname. It's harmless. But it's not
| something you want showing up in discovery or a
| regulatory inquiry.
| dingledork69 wrote:
| You must be fun to work with
| dogmayor wrote:
| So true. Been on both sides of this coin. Lawyers,
| judges, jurors will jump on any language that gives the
| slightest impression of bad acting.
| dragonwriter wrote:
| > The message all new hires were told was, very clearly:
| "Never put anything into writing you wouldn't be happy to
| be see published on the front page of the Washington Post"
|
| > And this was for an org that was doing nothing sneaky or
| underhanded in the slightest
|
| I disagree. That culture is one of routinely doing sneaky
| and underhanded things.
|
| If it wasn't, the rule would be "don't _do_ anything you
| wouldn 't be happy to be see published on the front page of
| the Washington Post."
|
| (Outside of things that are legally cobfidential, but those
| are generally protected from FOIA even if in writing.)
|
| If you are actively preventing evidence of your actions
| from being created, that is itself evidence of
| consciousness of wrongdoing.
| refurb wrote:
| Disagree.
|
| Plenty of examples of companies that did nothing wrong,
| but some written comment, by some employee is enough to
| convince a jury that "something probably happened".
|
| I remember one pharmaceutical company was on trial for a
| drug that was suspected to have a bad side effect (later
| analysis show it didn't). They had done nothing wrong,
| all data was provided to the FDA, they diligently
| collected post-marking data, shared with the FDA, etc.
|
| A civil suit was brought and during discovery they found
| a comment that said "maybe our dose was too high?". The
| person who made the comment had nothing to do with the
| trials, didn't have the skills to interpret the data,
| didn't even have a medical background.
|
| Once that was found? Boom, the company settled because
| that was enough to convince a jury that "they probably
| knew it was wrong".
|
| It's very easy to put something in writing now that has
| no impact, but in a few years time is a smoking gun. It
| doesn't matter if you testify that around the
| circumstances when you wrote it ("oh, I didn't mean
| that"), the jury won't believe you, the prosecution will
| just flash that one sentence up and say "see, it obvious
| the company was hiding the problem".
| idopmstuff wrote:
| There are plenty of cases where you wouldn't want
| something perfectly reasonable to be published in the
| Post. The key is context - some things are complicated
| and require background and relevant information; if taken
| without that context, they'll seem bad.
|
| Seeing as we live in a world in which people in the other
| political party are highly motivated to take whatever
| they can of their opponents (and their opponents'
| appointees, etc.) and make them sound bad, it's
| understandable that folks would be cautious of what they
| write down. If someone emails you a question whose answer
| is potentially politically sensitive, you might not want
| to provide a brief answer to that email that you know
| could be misconstrued. That isn't "evidence of
| consciousness of wrongdoing" - it's just understanding
| the reality of politics.
| Rebelgecko wrote:
| Hard disagree- the _appearance_ of wrongdoing can be
| nearly as harmful for the accused and cause as much
| trouble as _actual_ wrongdoing. Both should be avoided.
| yieldcrv wrote:
| bounty program
| EGreg wrote:
| Also gun laws and drug laws. Trivial to get around. So what's
| the point of having them?
| rodgerd wrote:
| Work from home is great for preventing financial crimes
| because the criminals know not to write things down; the
| people who want you back in the office are the crooks:
| https://onlinelibrary.wiley.com/doi/full/10.1111/eufm.12426
|
| On edit: another example of the crypto world re-learning the
| rules of finance.
| johndhi wrote:
| what's stupid is that quotes like this, not actual substance of
| what their business practices are, are the only way the SEC can
| establish what is and isn't a "security." there is no real
| truth or objective test and the SEC has offered no meaningful
| guidance. so they just determine this based on subjective
| emails the CEO sent once.
| unyttigfjelltol wrote:
| The quote represents the most knowledgeable person in the
| defendant organization about the regulations, tacitly
| agreeing with the position on crypto stated by the head of
| the SEC. "Specifically, [the SEC head] claimed that
| 'everything but bitcoin' could be considered a security in
| the world of cryptocurrency, while bitcoin could be
| considered a commodity due to its stature and resolutely-
| decentralized nature." [1] The defendant entity could
| establish a bona fide defense, shut operations, or face the
| consequences. While bare crypto may or may not require
| "quotes like this" to allocated, crypto pioneers made it
| relatively trivial to determine they are acting outside the
| law, by issuing interest bearing crypto accounts and tying
| payments to the prospects of entities.[2]
|
| [1] https://www.nasdaq.com/articles/secs-gensler-warns-
| crypto-in...
|
| [2] https://www.sec.gov/oiea/investor-alerts-and-
| bulletins/inves...
| [deleted]
| CPLX wrote:
| There is like 100 years of detailed precedent and caselaw
| around what a security is. The crypto scam artist just don't
| like it.
| mgamache wrote:
| And yet there is no clear definition offered by the SEC.
|
| https://www.smitheilers.com/blog/coinbase-sues-securities-
| an...
| CPLX wrote:
| https://www.sec.gov/corpfin/framework-investment-
| contract-an...
| mgamache wrote:
| Coinbase and the Howey test
| https://www.coinbase.com/blog/coinbases-staking-services-
| are...
| jcranmer wrote:
| Coinbase is engaged in motivated reasoning here; they're
| trying to find every reason they can to not label their
| services as securities. I'd have to look up precedents to
| find more detailed guidance as to particular prongs, but
| offhand:
|
| 1. I really need to look up case law to decide if
| Coinbase is right on the investment of money part here,
| and I suspect in part it relies on technically-detailed
| arguments I have no knowledge of. But if your money is
| locked up, it's almost certainly meets this prong, and my
| understanding is that staking _does_ lock your assets for
| a time.
|
| 2. The not-"common enterprise" argument here boils down
| to "it's all down by computers, so how can it be a common
| enterprise?" Which feels like the sort of gotcha legal
| loophole that plays out poorly in courts, although I will
| admit that I don't know the case law in detail to
| evaluate this claim well.
|
| 3. Expectation of profit is derived in large part from
| how it's advertised, which... yeah, this is going to
| point towards security. I should note in particular that
| in trying to describe why Coinbase's staking service
| doesn't meet this prong sounds suspiciously like the
| original scheme in the case that provided the Howey test.
| This alone should cast significant doubt on the entire
| analysis.
|
| 4. The "efforts of others" again relies on the "it's just
| computers, so obviously it can't count, right? ...
| right?" style of argument as prong #2, but even less
| convincingly.
| imtringued wrote:
| They compare staking to mining. Cryptocurrency mining is
| a business activity that fulfills the last three criteria
| but mining on its own is not a security. The only
| confusion is whether the staked cryptocurrency counts as
| an investment of money.
| khuey wrote:
| According to a court of law or according to Coinbase?
| quickthrowman wrote:
| More accurately, Coinbase is _claiming_ their staking
| service does not count as a security under the Howey
| Test. A judge or panel of judges will be the ones making
| the actual determination, Coinbase's claim has yet to be
| tested in court.
| rcme wrote:
| Coinbase's argument hinges upon a blockchain not being a
| "common enterprise." The rest of their arguments are even
| weaker.
| CPLX wrote:
| The only way this even tries to make sense is by creating
| the idea that the obviousness of it being a security
| (you're lending something of value to an enterprise in
| hopes of generating return) doesn't count, because it's a
| computer or something.
|
| Like if the exact same thing was accomplished by people
| it's obviously a security but since it's done by code
| (which was magically and immaculately conceived,
| presumably) then it's different somehow.
|
| It's not different. Coinbase wants people to give them
| money, have them do [complicated thing] then give them a
| return on that money.
| ipaddr wrote:
| What case law do you think this falls under?
| CPLX wrote:
| Going out on a limb here but my assumption is that the
| specific one probably relies on the detailed citations of
| law and statute contained in the 136 page complaint
| written and filed by government attorneys.
| JumpCrisscross wrote:
| > _no real truth or objective test and the SEC has offered no
| meaningful guidance_
|
| The securities allegations revolve around BNB's ICO. Binance
| is being sued by the CFTC in respect of its Bitcoin and
| Ethereum trading.
| jxramos wrote:
| I love that, at most it establishes that they think that they
| engage in securities dealings but what if they're actually
| mistaken in that regard or merely speak that way as a
| shorthand for recognizing that others, namely the SEC itself,
| thinks of them as securities dealers or whatever. Leaning on
| their self identification alone does sound weak when we
| surface these points out in the open. We have no objective
| test like you say then why are they even talking about this
| stuff. Do the hard work to define and wrestle with the
| necessary concepts. Sounds like this is all cutting edge
| stuff though.
| [deleted]
| jcranmer wrote:
| The definition of "security" is pretty objective (Howey
| test), but the answer it produces tends not to be liked by
| people in the crypto space, so they argue hard about why it's
| not a definition of security.
|
| What quotes like these do is make it trivial to prove the
| mens rea (intent) requirements, and put a lie to claims that
| they didn't know it was a security or that their
| interpretation as not-a-security was reasonable.
| johndhi wrote:
| So your position is that the US Government intends to
| require every creator and trader of crypto to complete
| registration, notification, filing requirements with SEC?
| They pretty obviously don't want to enforce that or ask
| that of our populace. So we just get them enforcing
| whenever they want to (probably because Zhao is Chinese,
| basically).
| olalonde wrote:
| Some evidence that the Howey test isn't that objective and
| clear:
|
| 1) Gary Gensler, now SEC chairman, used to claim that 3/4
| of the cryptocurrency market were not securities[0]. He has
| changed his tune significantly since then.
|
| 2) The SEC chairman can't answer this simple question: "is
| Ethereum a commodity or a security?"[1].
|
| [0] https://twitter.com/ZK_shark/status/1650689125580668931
|
| [1] https://youtu.be/h_oAr4wn7M4?t=1048
| JumpCrisscross wrote:
| > _Gary Gensler, now SEC chairman, used to claim that 3
| /4 of the cryptocurrency market were not securities[0].
| He has changed his tune significantly since then._
|
| Has he? Most of the market is Bitcoin and Ethereum. To my
| knowledge, the SEC hasn't gone after anyone solely
| cashing trading those.
|
| > _2) The SEC chairman can 't answer this simple
| question: "is Ethereum a commodity or a security?_
|
| He also doesn't have to answer whether a taco is a
| sandwich. There haven't been any enforcement actions
| based solely on whether Ethereum is a security.
|
| Binance launched an ICO. Zhao raised hundreds of millions
| of dollars from investors, and then co-mingled investors'
| and clients' assets with his own. Their CCO admitted, in
| writing, to running an "unlicensed securities exchange."
| The poster child for web3 and crypto folks having no
| place near our financial system is such protestations
| that the law isn't clear. It's abundantly clear in the
| places it's being broken.
| johndhi wrote:
| The fact that there have or haven't been enforcement
| actions against X or Y shouldn't be how we're supposed to
| determine what is or isn't illegal. There should be a
| speed limit (65mph) and if you drive over the speed
| limit, you should know you're violating the law. If the
| speed limit is "if the cops pull you over, you violated
| the law" then we have no clarity for entrepreneurs. At
| least some level of clarity for entrepreneurs is critical
| to a healthy economy.
| imtringued wrote:
| Most company ICOs are clearly securities. Everything else
| is most likely not.
| Animats wrote:
| > The definition of "security" is pretty objective (Howey
| test), but the answer it produces tends not to be liked by
| people in the crypto space, so they argue hard about why
| it's not a definition of security.
|
| This. The Howey test really is clear. If there's an issuer
| behind a crypto asset, it's a common enterprise for Howey
| Test purposes. Bitcoin has no issuer at this point.
| Etherium, maybe. Just about everything else in crypto has
| an issuer raking off the profits.
| dontreact wrote:
| Putting this here in case it's useful. Please correct if
| it's wrong. What is the Howey test for whether something is
| a security?
|
| """ The Howey Test asks whether a transaction constitutes
| an "investment contract," which is a type of security. If
| it is an investment contract, it must satisfy four
| criteria:
|
| It is an investment of money. The investment is in a common
| enterprise. There is an expectation of profits from the
| investment. Any profit comes from the efforts of a promoter
| or third party.
|
| If the answer to all these questions is "yes," the
| transaction is likely an investment contract and,
| therefore, a security. However, please note that this is a
| simplified explanation. The actual determination can be
| complex and might require a detailed analysis by legal
| professionals. """
|
| To me it DEFINITELY sounds like crypto is a security, but
| it seems like it mostly hinges on whether people expect to
| make a profit by investing. Which some people do and some
| people don't. But most people do right?
| itake wrote:
| who is buying crypto and not expecting to make a profit
| from it?
| creato wrote:
| People paying ransoms.
| rcme wrote:
| You could be buying it to interact with a smart contract.
| vkou wrote:
| In theory, yes.
|
| In practice, most of the interaction with smart contracts
| consists of locking up your money in one and expecting
| yield.
| civilitty wrote:
| People buying narcotics and narcotics accessories.
| toast0 wrote:
| People using crypto for funds transfer. Buy now, transfer
| immediately, with an expectation that the other end sells
| immediately. No desire or expectation of profit.
| dagaci wrote:
| For many people inside an defintely outside the USA
| sphere, theres a lot of utility in holding some cash
| money in Crypto even as a staging point for payments.
| codetrotter wrote:
| > who is buying crypto and not expecting to make a profit
| from it?
|
| Me. I put my savings in Bitcoin because I dislike the
| tradfi system.
|
| All I want is to be in control of my savings and to be
| able to freely transact with anyone anywhere in the
| world.
|
| I am still affected by the exchange rates to USD and EUR.
| But the hope is that in the future I will be able to use
| BTC directly more often and not even have to touch USD or
| EUR.
|
| Perhaps one day even my country will get with the times
| and allow me to pay my taxes in BTC directly instead of
| having to exchange it to government funnymoney first.
| preseinger wrote:
| there is no universe in which a (edit: financially sound)
| nation will accept tax payments in a denomination over
| which it has no influence or control
|
| (edit: nations that peg their currency to the euro or the
| dollar are clearly exceptions to what i'm describing
| here)
|
| this is literally money 101 type stuff, wars have been
| fought over this stuff, and it's insane that crypto folks
| don't seem to understand any of it
| [deleted]
| KptMarchewa wrote:
| There's a lot of nations that either directly accept tax
| payments in foreign currency: for example, Montenegro
| uses Euro. Salvador, Zimbabwe, etc use US Dollar. In
| other forms, Danish Krone and Bulgarian Lev is pegged to
| Euro.
| rafaelero wrote:
| That's why Bitcoin is so powerful: they can't do anything
| about it and, if people choose to use it, the government
| has no choice other than accept it as the standard.
| preseinger wrote:
| a government that accepts tax payments in BTC would be
| abandoning its financial authority to the bitcoin
| network, over which it has no influence whatsoever
|
| this is suicidal for any nation with even a nominal
| amount of financial autonomy
|
| maybe it's something that failed states like venezuela or
| somolia would consider, but it's a complete non-starter
| for anyone else
|
| the idea that "the people" can force countries to accept
| tax receipts in BTC is absolute unhinged nonsense, read a
| fucking book
| SketchySeaBeast wrote:
| > Perhaps one day even my country will get with the times
| and allow me to pay my taxes in BTC directly instead of
| having to exchange it to government funnymoney first.
|
| Something tells me your government cares more about their
| funnymoney than yours.
|
| I can't imagine a government wanting to take on the
| volatility of bitcoin for a tax payment. What possible
| compelling argument is there for them to do that?
| EscapeFromNY wrote:
| Right now every state that lets you pay taxes with crypto
| immediately converts it into USD. So the govt is not
| taking on any volatility risk.
| mhluongo wrote:
| El Salvador is a clear counter example.
|
| I can certainly imagine why a country with a history of
| poorly managing their own currency (and that for whatever
| reason doesn't want to be aligned to USD) might choose to
| use a more "neutral" fixed supply currency.
| imtringued wrote:
| Why do you care about paying taxes in funny money? I
| never understood complaints about inflating money by gold
| bugs or cryptocurrency advocates. The presence of a
| mismanaged currency is your opportunity to profit so you
| should be cheering for its collapse. The only situation
| where you end up losing out is if you have a fixed income
| in the mismanaged currency. You want your tax bill to
| inflate away so the government accepting Bitcoin for
| taxes is not that meaningful to you.
|
| I mean, if I follow the same logic I should advocate for
| collapsing the economy with tight money policies because
| I can then work on financial innovations that undo the
| government intervention.
| tornato7 wrote:
| People buy commodities like Oil to make a profit, too.
| The question is, what cryptos are commodities and which
| are securities?
| steveBK123 wrote:
| Is it a future / forward / swap / put / call / etc?
| Security.
|
| Is it a barrel of oil / unit of BTC? Commodity/Currency.
| Ajedi32 wrote:
| Interesting. I'd answer those questions as "Yes. No.
| Maybe. No." So definitely not a security.
|
| 1. Is cryptocurrency an investment of money? Obviously
| yes, at least in the sense you have to spend money to
| purchase or mine it.
|
| 2. Is cryptocurrency investment in a common enterprise?
| No. What enterprise? Common with who? Maybe if it's a
| token issued by a company or something and tied to their
| profits somehow, but that doesn't apply to any of the
| common cryptocurrencies like Bitcoin, Etherium, Monero,
| etc.
|
| 3. Is there an expectation of profits? This depends on
| entirely on the person buying the token and what they
| intend to use it for.
|
| 4. Does any profit come from the efforts of a promoter or
| third party? No. What promoter? What third party? If the
| value fluctuates you can make a profit, but there's no
| third party involved exerting "effort" that's involved in
| that process.
|
| If you want to argue with me on 2 and 4, explain how
| cryptocurrency meets those criteria but not, say, gold.
| dontreact wrote:
| 2: The more people buy and hold Bitcoin, the more
| valuable it becomes.
|
| I asked ChatGPT about the definition of common
| enterprise:
|
| The 7th and 2nd Circuits use a "horizontal commonality"
| test, where a common enterprise is found if the profits
| of the investors are interdependent - i.e., if the
| success of the enterprise is tied to the success of other
| investors. Essentially, the investors' funds are pooled
| and they share in the profits and losses.
|
| 3: Overwhelming majority of people who buy gold buy it as
| a hedge against inflation. In the past 5 years everyone I
| personally know who has bought cryptocurrency was
| expecting it to increase massively in value (expecting
| profit). 4: There have been a huge amount of
| cryptocurrency pump and dump stories where the promoters
| have benefitted immensely. In those cases it seems pretty
| clear that those are securities. In fact pretty much
| anything that isn't a top-2 coin at this point is subject
| to this sort of behavior from what I've seen.
| Ajedi32 wrote:
| 2 is also true of gold and any other commodity.
|
| 3 I'd quibble with you about "overwhelming majority", but
| yes that's a common use of gold. It's a fairly common use
| of cryptocurrency too though, especially in countries
| with high inflation.
|
| 4 Maybe in that specific situation yes. Sounds like you
| agree that's not all cryptocurrencies though. It's also
| kinda weird that something could go from not being a
| security to being one (and back) depending on how people
| happen using it at any given moment in time. E.g. If
| someone somehow managed to orchestrate a pump and dump
| scheme with silver, would it temporarily become a
| security for that brief moment in time and then go back
| to being a commodity afterwards?
| kajaktum wrote:
| Do you seriously think that cryptocurrency becomes a
| billion dollar industry because...people use it to do
| what? exactly? Pretty much 99% of the people that put
| money in crypto expected the price to go up and sell. I
| have not seen any mention of economical use except in
| third world countries. In which case, crypto is just a
| roundabout way of charity I guess?
|
| Crypto people _say_ their technology have this and that
| use but all they _do_ is trade them.
| Melting_Harps wrote:
| > I have not seen any mention of economical use except in
| third world countries.
|
| This is peak HN, if there ever was such a thing; you do
| realize that the _Third World_ (an erroneous use of the
| term that relates to nations that were aligned with the
| Soviet Union but used to denote underdeveloped nations)
| comprises the most of the Human population; and if
| figures are correct about System D [0], it is actually
| the 2nd largest economy in the World and growing due
| currency collapses and hyper-inflation being wrought
| around the World.
|
| _In recent literature on the informal economy, System D
| is the growing share of the world 's economy which makes
| up the underground economy, which as of 2011 has a
| projected GDP of $10 trillion.The informal economy is
| usually considered as one part of a dual economy._
|
| Seriously, this is the most typical but horridly informed
| view on this matter; it's like saying that the USD (or
| any fiat currency) is really useless because the FOREX
| market (the biggest Industry in the World only after
| Agriculture) negates its utility because people only seem
| to trade it.
|
| Seriously, stick to something you actually understand.
|
| 0: https://en.wikipedia.org/wiki/System_D
| axus wrote:
| Maybe profit is the modern-day perception of why you'd
| buy crypto-currency. All I could hope for would be for
| the tokens to be kept secure and available for spending,
| that's already a high bar.
|
| I can see the argument against proof-of-stake, doesn't
| your quantity of tokens increase without doing anything?
|
| The way I see it, other crypto-currencies only have the
| payment-processing system component. There's no
| expectation that some "Bitcoin corporation" is working
| hard to increase the value of individual bitcoins. It's
| like buying Chinese currency, the promise is that you can
| spend it in some places more efficiently than dollars,
| not that China is working hard to make a yuan/renmenbi
| worth more than a dollar.
| jcranmer wrote:
| If you're really, really motivated, you can make
| facially-plausible arguments against any of the four
| factors. (Coinbase does this, for example).
|
| Common enterprise and expectation of profit are the two
| factors that are the weakest, and for a pure
| cryptocurrency like Bitcoin or Ethereum, there's probably
| not enough to meet common enterprise there. Although by
| the time you get to staking--especially an exchange
| offering to stake on your behalf--you'd probably pass the
| threshold of common enterprise, and you should assume
| your service meets the Howey test.
| mrguyorama wrote:
| Importantly, you don't have to convince yourself that you
| don't meet the Howey test. At the end of the day, if it
| comes to it, you have to convince a judge while they are
| being also courted by an adversarial party.
|
| It doesn't matter what your company's interpretation is
| if a judge says "nah dog that isn't right".
|
| What matters is whether you genuinely believe your
| interpretation is _reasonable_
|
| I don't think any of these crypto companies have ever
| believed they could convince a judge, hence all the
| hemming and hawing in the public sphere in an attempt to
| build pressure against the SEC to either give them an out
| by making a very specific statement that they can work
| around, or by getting an administration to push the SEC
| to ignore all the bad stuff in crypto land.
| HWR_14 wrote:
| You are almost correct. It doesn't matter whether most
| people make a profit. It just matters that they are
| investing believing they will make a profit. Buying my
| worthless stock or investing in my pyramid scheme are
| both securities even if I'm the only one who makes
| anything.
|
| It matters that the person buying reasonably thinks it
| could lead to profits. Not that it necessarily does.
| jdasdf wrote:
| Let's see what else is a security, how about going to a
| restaurant to have dinner with friends?
|
| >It is an investment of money.
|
| Yes, you put in cash.
|
| >The investment is in a common enterprise.
|
| You're splitting the wine bottle between the two of you.
|
| >There is an expectation of profits from the investment.
|
| Having a good time at the restaurant is one. No reason
| profits can't be something other than cash.
|
| >Any profit comes from the efforts of a promoter or third
| party.
|
| Like the chef who cooked the food!
|
| Great, so now going to dinner with a friend is a security
| andd is subject to SEC regulations. That makes sense.
| imtringued wrote:
| A dinner is a classic example of consumer spending...
|
| The only way this could be considered an investment is if
| you bought a crate of wine bottles at a bulk discount and
| sold the left over wine bottles to third parties and used
| the proceeds to pay for the dinner.
| tick_tock_tick wrote:
| > No reason profits can't be something other than cash.
|
| Other then the legal definition.....
| johngladtj wrote:
| Most tax laws don't make such a distinction. Whether
| you're receiving cash, or some other asset you're taxed
| on that as income.
| srejk wrote:
| Words have definitions. Investment and profit, for two.
| You can't just handwave that away. Your conclusion is
| "anything could be anything" which is utterly devoid of
| any meaning.
| johngladtj wrote:
| Define them then, in a way that is consistent with every
| other law that makes use of those terms.
|
| Do you not get taxed on your income if your paycheck is
| paid in bars of gold?
|
| Would you not call purchasing something to enjoy a return
| from it's ownership as an investment? Whether it is a
| consumable, or it produces something that isn't cash?
| [deleted]
| EGreg wrote:
| Please tell me, how is Bitcoin a security?
|
| Speaking to various security lawyers there were two terms
| that are extremely vague in the industry:
|
| 1) "Common enterprise". What does that mean? Gary Gensler
| openly said in a speech Bitcoin isnt a security because
| there is no "common enterprise." When he was saying these
| words he made a motion with his elbows like you've got a
| buddy. That's the closest I got into his mind for what
| "common enterprise" means. But really, if you go by the
| widest definitions, "common enterprise" means anything
| where various entities are all united in winning, e.g.
| miners mine, people buy and hold, it's all a common
| enterprise. By that definition, almost everything is a
| security, including Bitcoin, despite what even a hawk
| like Gary Gensler says.
|
| 2) "Equity securities". As opposed to non-equity
| securities such as debt. Let's say all tokens are
| securities. But are they "equity securities" meaning you
| have to register with the SEC as soon as you have more
| than 2000 holders? But what makes a security an "equity
| security" specifically? Is it the ability to vote? Then
| governance tokens are "equity securities". Is it the
| ability to receive dividends from some profits? Then
| maybe Liquidity Pool tokens on Uniswap are equity
| securities.
|
| But nevermind that these terms are not well defined, even
| in the statutory law or case law. The vagueness is
| actually broader than that.
|
| All shows like Yu Gi Oh, Pokemon, etc. have been running,
| technically speaking, _unregistered securities offerings_
| throughout the world and United States, yet the SEC does
| nothing. They are textbook cases of the Howey Test:
|
| 1) People (kids, in fact!) buy Yu Gi Oh trading cards
|
| 2) There is an investment of money (either they nag their
| parents, or they actually spend a non-trivial proportion
| of their own life savings)
|
| 3) With an expectation of profit. Witness how many of
| them don't actually use the cards, but keep them in mint
| condition (and as we have seen SEC successfully argue in
| the recent case SEC vs LBRY, if even a few people buy
| with expectation of profit, then ALL those sales are
| securities).
|
| 4) There is definitely a common enterprise, that isn't
| even decentralized. The Yu Gi Oh show is produced in
| Japan and shown in the USA, and drives the sales of the
| cards. Cancel the show, and the cards fall in price. Yu
| Gi Oh Abridged series even lampooned this, to great
| comedic effect.
|
| _Oh those foreign-owned Japanese companies, preying on
| our kids selling them investment contracts! Do they
| really think the kids are sophisticated investors who
| think things through when they keep their mint-condition
| cards! Who will buy the top and be holding the bag after
| the show is canceled?_
|
| So being a textbook definition of Howey, why did the SEC
| never go after Pokemon, Yu Gi Oh and any of the other
| "merchandising" companies? How about Marvel with their
| mint-condition comics? Isn't that a "common enterprise"
| since _some_ people buy comics for their investment
| value?
|
| But vagueness actually broader than that. According to
| some experts, _everything is a security_ :
| https://www.linkedin.com/pulse/everything-security-chris-
| har...
|
| This article was shared on HN at some point, and it shows
| how the SEC has at times considered even transactions
| outside the united states, which did not have any
| character you'd normally associate a security, a security
| transaction in the USA. So at this point it starts
| bordering on the absurd.
|
| If you take Objectivism to its logical conclusion, it
| could seem that it's morally better to torture a man for
| a $100 profit, as long as you could get away with it. But
| then Ayn Rand throws in "as befits a rational being", as
| a sort of no true scotsman argument that avoids the
| logical conclusion.
|
| Similarly the SEC has been using "Sufficiently
| Decentralized" as a way to avoid the logical conclusion
| that they should go after a ton of other large
| ecosystems. For example, Hinman famously did it with
| Ethereum: https://www.sec.gov/news/speech/speech-
| hinman-061418
|
| But now after he left, the SEC is revisiting that:
| https://decrypt.co/46456/regulator-coined-term-
| sufficiently-...
|
| Today, Gensler says Bitcoin is not a security. Tomorrow,
| it could be considered one.
|
| But wait, it gets worse.
|
| Let's remember that the STATES also have their own
| definition of a security. In fact, the states on the West
| Coast (from Washington to California) consider anything a
| security that _puts capital at risk_. Yes, that 's right,
| even if it doesn't meet the Howey test, as long as you
| have _put your capital at risk_ , it's a security
| transaction! You don't need an expectation of profit.
| Wow!
|
| https://www.theselc.org/which_states_apply_the_risk_capit
| al_...
|
| I have asked securities lawyers and they have confirmed
| that MOST KICKSTARTER CAMPAIGNS ARE TECHNICALLY
| SECURITIES SALES according to these state laws, they just
| don't enforce it.
|
| Many of you live in California, so all of you who have
| done kickstarter campaigns have probably violated your
| own state's securities laws. But it's so absurd that they
| haven't bothered enforcing those.
|
| About the only things that aren't at securities
| transactions, by the way, are donations. That's when
| people simply send money with no expectation in return.
| Hex tried to leverage that with their "sacrifices".
|
| Think you can just airdrop coins to people? There's no
| "investment of money" right? Well, using human logic that
| would be correct. But there have been some precedent back
| in the 90s when people showed up to drink beer, put their
| contact info and got free stock, or something like that.
| And the SEC said that even that was a security. So now,
| although there has never been a single SEC case going
| after an airdrop, lawyers are cautious.
|
| Yes they laws are protecting you from getting free stuff
| in your wallet! Who knows kind of loss you can incur by
| getting free stuff with no obligation!
|
| Anyway, of course there are important scams to go after
| and the SEC has a job to do. I think it's an important
| job. But I'm just showing you how absurd the thing is.
|
| Remember the Infrastructure Bill? Well, it said that a
| "broker" is anyone who builds software. Now if you build
| a wallet, you might have to KYC all your users. Except
| the Treasury said they won't enforce it. How nice (what
| about under the next admin?)
|
| Oh and Europe is about to pass the Cyber Resilience Act
| that might create penalties for any open source software
| that doesn't pass a check by their cyber security
| watchdog agencies, which haven't been created yet for
| this bill.
|
| I'll just finish with a couple words about FINCEN,
| because OFAC and FINCEN are far more serious than the
| SEC. (And FATCA also enforces things like the Travel Rule
| worldwide, and soon the Travel Rule will require everyone
| to track everything).
|
| You know all of you who build marketplaces and handle
| money? Well, you might be a MONEY TRANSMITTER. According
| to the Bank Secrecy Act, you have to register and then
| the States will slap you with a lot of requirements, like
| maintaining a surety bond. But, there are exemptions,
| I'll let you read about them here:
|
| https://www.fincen.gov/sites/default/files/2019-05/FinCEN
| %20...
|
| Here's the interesting thing. These are only exemptions
| on the FEDERAL level. The individual states might have a
| DIFFERENT definition of "money transmission business" and
| they might apply their own local laws to you. It might be
| that two sided marketplace you're building, it's
| violating money transmission laws in a dozen states.
| Maybe. I've asked lawyers for a list, and very few
| actually have them.
|
| But here is a useful link, enjoy: https://abnk.assembly.c
| a.gov/sites/abnk.assembly.ca.gov/file...
|
| Alright entrepreneurs, good luck navigating that!
| jrflowers wrote:
| > Putting this here in case it's useful...
|
| ChatGPT is a text generator. It is "useful" for writing
| sentences in a context where correctness and
| understanding are less important than syntactical
| uniformity and word count.
|
| Edit: Ok, I guess people want ChatGPT responses.
|
| Risks when using ChatGPT instead of research while
| discussing financial securities:
|
| Accuracy: While AI models strive for accuracy, there can
| still be errors or misunderstandings. They might
| oversimplify complex concepts, miss nuances, or even
| provide incorrect information. It's always a good idea to
| verify information from multiple reliable sources.
|
| Bias: AI models are trained on existing data, which might
| contain inherent biases. Thus, the output of AI might
| also reflect these biases, although it is unintentional.
| Lack of deep understanding: While AI models like ChatGPT
| can process and generate language based on patterns they
| learned during training, they do not possess actual
| understanding or intuition. They are unable to think
| critically or provide expert judgment.
|
| Outdated Information: As of its last training cut-off
| (September 2021 for ChatGPT), the model might not have
| the most current information or developments in the field
| of financial securities. Regulation and legality: There
| are regulatory considerations in financial markets, and
| AI models may not be fully updated or able to provide
| guidance in line with current laws and regulations.
| ac29 wrote:
| > The definition of "security" is pretty objective (Howey
| test)
|
| It should be noted the Howey test applies to one type of
| security: investment contracts. There are other types of
| securities that the Howey test doesnt apply to.
| fisherjeff wrote:
| I could be wrong (not a lawyer) but I don't believe there's
| a scienter requirement for unregistered offerings.
| Regardless, it makes the case much tighter, and will give
| the SEC a ton more leverage to reach a settlement.
| preseinger wrote:
| it's pretty clear that almost every cryptocurrency/coin
| classifies as a security
|
| anyone arguing otherwise almost certainly has a dog in the
| hunt
| mhh__ wrote:
| First piece of advice I ever got in Finance was to never say
| anything you wouldn't want your mother seeing on the frontpage
| of tomorrow's paper.
| legitster wrote:
| Is there any indication that eventually Bitcoin and Ethereum
| don't eventually get pulled into the "unlicensed security"
| category?
| GenerWork wrote:
| My understanding may be off, but I believe that Bitcoin will be
| able to avoid it but Ethereum may have a harder time due to the
| fact that contracts are pretty much baked into ETH at a basic
| protocol level. I'm sure if I'm wrong someone will correct me.
| anonporridge wrote:
| Ethereum will have a harder time because they launched it
| with an ICO, sought out investors, and the Ethereum
| foundation explicitly allocated themselves a share of the
| initial coins. AND now after the migration to proof of stake,
| ownership of Ether effectively gives you voting rights and
| administrative control of the network, not unlike a security.
|
| Bitcoin was open and permissionless day one for anyone to
| mine, and Satoshi gave themselves no artificial privileges.
| The genesis block reward was unspendable. In practice,
| Satoshi ended up with a huge pile of the coins, but there was
| nothing that could have prevented the unavoidable obscurity
| and lack of awareness of such a novel and unproven project.
| Ownership of coins also doesn't convey any direct
| administrative privileges in the network. And of course,
| initially the coins weren't worth anything.
|
| There aren't any reasonable arguments that bitcoin is a
| security, while there are reasonable arguments that ethereum
| is.
| HWR_14 wrote:
| I believe there is some indication that the SEC allowed only
| those two to fall into commodities instead of securities. And
| that decision may be hard to undo.
| thepasswordis wrote:
| [flagged]
| lijok wrote:
| The victim is the tech illiterate grandmother who got sold fake
| money by an expensive ad, financed by cryptobros who swear up
| and down they're invested because it's real currency, and not
| so they can make a profit by indirectly scamming the tech
| illiterate grandmother
| yxhuvud wrote:
| > we've gotten to the point of
|
| It has been the case at least as long as there has been
| structured governments around.
| sneak wrote:
| The victims are the large established taxpaying vendors of
| retail luxury goods that people with disposable income are not
| squandering their money at (because they squandered it gambling
| on cryptocurrencies).
|
| There is a list of ways the state will allow you to waste your
| money. Most of the allowed ones involve taxation. Most of the
| prohibited ones do not.
| mgamache wrote:
| Operation Choke Point 2.0 Continues
|
| https://cointelegraph.com/news/nothing-is-a-coincidence-with...
| smoovb wrote:
| Here is the fuller playbook of Chokepoint 2.0 from Cooper Kirk:
| https://www.cooperkirk.com/wp-content/uploads/2023/03/Operat...
| JumpCrisscross wrote:
| > _Operation Choke Point 2.0 Continues_
|
| Would a web3 proponent getting a traffic ticket also count?
|
| We have documented evidence of clear, willful violation of the
| law. And nobody is seriously mooting a CBDC anymore. (Given
| Silvergate was (a) downed by FTX and (b) the proximate cause of
| our recent banking meltdown, it is reasonable to argue
| Chokepoint 1.0 didn't go far enough. But that's irrelevant to
| this thread.)
| lottin wrote:
| For the financial system dealing with cryptocurrencies isn't
| worth the risk. The banks would have to perform all sorts of
| AML/CFT checks on every penny that has come into contact with
| an exchange, and they just don't have the resources to do that.
| tibbon wrote:
| One thing I noticed, which always felt possibly-illegal, was how
| Binance and other exchanges would frequently freeze up funds that
| didn't meet minimum withdraws. If a coin fell to too-low of a
| price, they'd essentially just keep them. Sure, it is only $5-100
| here and there, but that all adds up. Where does it go?
|
| With a real bank or exchange, I'd expect some ability to sweep up
| my accounts and get a paper check for 50 cents if needed.
| sebzim4500 wrote:
| > it is only $5-100 here and there
|
| Does anyone have withdrawal minimum that are close to $100?
| Most of the Kraken minimums are below $1.
|
| It's also not true that can always empty a bank account for
| free. HSBC wouldn't let me sweep funds out of an account with
| ~$4.00 in it, for example, since it was international and the
| transfer fee was larger than that.
| [deleted]
| LatteLazy wrote:
| The SEC and CFTC missed FTX being the worlds largest fraud. Now
| they are desperately going after Binance for... being above board
| but not getting the right license, during a period when no
| licenses were offered (and still aren't). At what point is this
| just pointless bullshit, let exchanges register, regulate them
| like other exchanges (segregated funds etc) and fuck off already.
| tornato7 wrote:
| How do we know that Binance is "above board" when they have
| never published a GAAP audit and their auditors have taken down
| their "proof of reserves"?
| shkkmo wrote:
| > being above board
|
| SEC has alleged multiple efforts to lie and deceive both
| regulators and users. It's hard to see how that qualifies as
| "above board".
| codehalo wrote:
| The burden is on SEC to prove these allegations. If they took
| YOU to court, calling YOU a thief, you would expect the
| burden to be on them, right?
| shkkmo wrote:
| Yes of course. That is why I used the word "alleged".
|
| My point stands, the SEC is not going after Binance just
| for "being above board but not getting the right license".
| codehalo wrote:
| The SEC has done nothing in good faith with regards to
| crypto in the last 8 years.
| delfinom wrote:
| >The burden is on SEC to prove these allegations. If they
| took YOU to court, calling YOU a thief, you would expect
| the burden to be on them, right?
|
| WELL, the former CEOs of Binance.US who quit after
| realizing CZ was the real CEO against what was supposed to
| be the real setup seem to have testified to the SEC...along
| with hints the SEC has a big pile of private messages.
| codehalo wrote:
| A lot of "decent" people here would testify against their
| mother if the SEC showed up. I'm not convinced. Gensler
| is a fraud who is captured by monied interests. He is on
| your side for now, given that many here share the "MIT
| crypto teacher" desire to destroy that industry. Let's
| see how it all plays out.
| jeremyjh wrote:
| " The S.E.C. said the world's largest cryptocurrency exchange
| mixed "billions of dollars" in customer funds and secretly sent
| them to a separate company controlled by Binance's founder,
| Changpeng Zhao."
| qeternity wrote:
| > during a period when no licenses were offered (and still
| aren't).
|
| Uh there's usually an important reason licenses aren't offered
| for something that might otherwise require a license...and it's
| not an excuse to do that thing anyway.
| jjulius wrote:
| Your bias is showing.
| freejazz wrote:
| how exactly was binance prohibited from registering itself as
| an exchange in the US?
| kalupa wrote:
| dupe https://news.ycombinator.com/item?id=36197712
| I_am_tiberius wrote:
| Not a Binance fan but in this context, and considering the SECs
| unwillingness of declaring when cryptocurrencies are securities
| or not, it's pretty clear that they go after Binance for
| strategic reasons. Not sure but I assume this is controlled by
| the Biden admin.
| potatototoo99 wrote:
| They have been very clear. Everything except bitcoin. Crypto
| people just don't like the response.
| eric-hu wrote:
| Have they actually cleared Bitcoin in writing?
| 2OEH8eoCRo0 wrote:
| Isn't that one of the benefits of a lawsuit? The law is tested
| and needs to hold up under scrutiny.
| I_am_tiberius wrote:
| Definitely not when the party who is suing you is the one
| that defines the rules. Thinking about the scenario of this
| lawsuit makes me really angry. It's some sort of power
| demonstration backed by a political strategy.
| 2OEH8eoCRo0 wrote:
| So they can argue in front of an independent 3rd party
| called a court.
| jeremyjh wrote:
| They are alleging the exchange comingled customer funds and
| transferred them to another company controlled by Zhao. Why
| doesn't _that_ make you angry?
| I_am_tiberius wrote:
| That makes me angry as well. It also makes me angry that
| my bank does something like this with the money I
| deposit.
|
| I doubt this is the pivotal point for that case though.
| jeremyjh wrote:
| It's illegal to do this in a brokerage account, and FTX
| is an example of why. There is no legitimate reason to do
| it.
| I_am_tiberius wrote:
| Sure, you're totally right. But look at the lawsuit. The
| item you listed is one of many. You have to see that this
| is part of a political strategy. Look at Coinbase...
| JumpCrisscross wrote:
| > _considering the SECs unwillingness of declaring when
| cryptocurrencies are securities or not_
|
| The SEC has been clear about ICOs from the start. BNB was
| launched in an ICO. Binance then traded it on its exchange. To
| the degree a security is being identified in this complaint,
| it's BNB. Nothing in this complaint is novel law.
| asciii wrote:
| Even though Binance dropped out of the Voyager deal, they still
| send out recurring email to complete the setup.
|
| Not super shady at all Zhao
| colesantiago wrote:
| This is brilliant.
|
| I really want crypto to fade away out of existence and into
| irrelevance, FedNow is coming soon and we don't need crypto or
| shady crypto exchanges like Binance.
|
| Glad to see the US taking action.
| infamouscow wrote:
| It's brilliant if you're a racist bigot that has no concept of
| the struggles of the unbanked systematically oppressed by the
| system you champion.
|
| Edit: It's interesting to see how people stupidly defend this
| or jump to the conclusion this is in bad faith because it's
| outside their window of acceptable discourse. It's behavior
| that parallels exactly how racists in the American South were
| so successful in controlling an evil narrative too. If you
| believe voter ID laws are inherently racist, you also must
| believe KYC laws (which require even more PII) are also
| inherently racist. Every defense of KYC laws is a few word
| edits away from also being a tool to oppress minorities and the
| most vulnerable in society.
| misnome wrote:
| Yeah! Casinos are never racist!
| ipaddr wrote:
| Not having a bank account is a race issue? People who are not
| white cannot get a bank account? Poor people can't get a bank
| account and all non-white are poor therefore bank accounts
| are racist?
|
| What is your message?
| misnome wrote:
| I don't know specifically what they intend their message to
| be but I would 100% bet it involves something they would
| describe as "Globalist Bankers".
| Detrytus wrote:
| yes, it is a common theme among the "woke": Black people
| score lower on school math tests, therefore math is racist.
| tick_tock_tick wrote:
| It's the same argument they make with voter ID laws; non
| whites are too stupid to successfully get an ID / open a
| bank account / etc. It's some of the most racist rhetoric
| I've ever seen but somehow it's pitched as "anti-racist".
| gopuck16 wrote:
| That your feeling without specifying any factual data
| zarzavat wrote:
| 95% of people don't have a bank account in the US.
| [deleted]
| dgfitz wrote:
| and 77.34% of statistics are made up on the spot.
|
| https://www.federalreserve.gov/publications/2019-economic-
| we...
|
| 6%
| JumpCrisscross wrote:
| Parsed generously, 94% of Americans is about 300mm people.
| That's 4% of the human population. (It's a nonsense
| argument nonetheless: it's not America's job to bank the
| world.)
| dgfitz wrote:
| I commend you taking a generous view of that, as I was
| unable to with a straight face. Agree with your second
| comment.
| misnome wrote:
| 100% of people don't have a venusian bank account in the US
| lern_too_spel wrote:
| That sentence is not saying the same thing. The equivalent
| would be 100% of people don't have a bank account on Venus.
| nickpinkston wrote:
| Most Americans have a bank account:
|
| "According to the report, 81% of adult Americans are fully
| banked, 13% are underbanked, and 6% are unbanked. The share
| of Americans with each banking status in 2021 remained almost
| constant from 2020."
|
| https://usafacts.org/articles/who-is-the-least-likely-to-
| hav...
| mtlmtlmtlmtl wrote:
| What GP is saying is that most people in the world do not
| have an account _located_ in the US specifically. I
| seriously doubt they 're saying 95% of Americans don't have
| a bank account, which would be absurd.
| Arcuru wrote:
| That accounts for the 5% of humans who live in the US, how
| about the 95% of humans who don't?
| misnome wrote:
| If you read the thread to which you are replying, it's
| about the US.
| colecut wrote:
| The bank accounts are about the U.S., not the people.
| mtlmtlmtlmtl wrote:
| Why would anyone suggest only 5% of Americans have bank
| accounts? How is it possible to believe that and still
| know English and go to HN, do you think?
| alphanullmeric wrote:
| CBDCs are exactly why crypto will always be around. Spying on
| other people's money is not a basic human right.
| bcrl wrote:
| Eh? Every single bitcoin transaction is publicly visible to
| anyone that looks for it in a way that bank account
| transactions are not. Correlating transactions with an
| individual is not exactly difficult if you're determined.
| It's downright easy if you get the other party to accept a
| payment from you.
| KptMarchewa wrote:
| CBDC won't have to do anything with "blockchain" and will be
| a regular relational database.
| angry_albatross wrote:
| FedNow is not a CBDC.
|
| https://www.federalreserve.gov/faqs/is-fednow-replacing-
| cash...
| JumpCrisscross wrote:
| > _CBDCs are exactly why crypto will always be around_
|
| CBDCs aren't on the table in America anymore. They were a
| stupid workaround to our political opposition to postal
| banking.
| Geekette wrote:
| Coincidentally, Rolling Stone just published a profile on the
| founder: _Crypto's Richest Man Is Waiting Out the Chaos_
| https://www.rollingstone.com/culture/culture-features/changp...
| api wrote:
| Fawning magazine profiles are a strong contrarian indicator.
| Time Man of the Year is basically like making a guy king for a
| day before putting him inside the wicker man and lighting it on
| fire.
| bmc7505 wrote:
| Isn't CZ already being sued by the CFTC? Is cryptocurrency a
| security or a commodity and under whose jurisdiction does Binance
| fall? Or were they trading in both types of instruments?
|
| https://news.ycombinator.com/item?id=35327996
| JumpCrisscross wrote:
| > _Is cryptocurrency a security or a commodity_
|
| The SEC complaint sidesteps what Bitcoin or Ethereum are by
| focussing on other transactions, _e.g._ the ICO and trading of
| BNB and the private placements of its own stock.
| wmf wrote:
| Some cryptocurrencies are commodities and some are securities.
| Binance was trading both kinds so they get spanked twice.
| ftxbro wrote:
| [flagged]
| Animats wrote:
| Read the court filing. There's a lot of inside information from
| "BAM CEO A" and "BAM CEO B". These were the first two CEOs of
| Binance.us. They came on board thinking they had a real job. Then
| they discovered they were just figureheads. "BAM CEO A" was
| fired. "BAM CEO B" quit after three months and started
| cooperating with US regulators.
|
| _" Upon assuming his CEO duties, however, BAM CEO B quickly
| learned that Binance, in fact, exerted and would not relinquish
| substantial control over BAM Trading and the operation of the
| Binance.US Platform. As he testified under oath, BAM CEO B did
| not "have any firsthand knowledge of exactly what [Binance]
| entity managed [Binance.US Platform's] servers," but he knew it
| "wasn't [BAM Trading]." Similarly, he also testified that the
| matching engine was "presumably owned and administered by some
| [Binance] entity, but I have no idea which one, and then there's
| other servers doing other functions." He concluded, the "biggest
| risk in this company is we are highly dependent on a bunch of
| technology that sits in Asia."_
|
| _" BAM CEO B tried to implement plans to migrate those functions
| and control of the crypto assets from Binance to BAM Trading and
| into the United States, but Zhao quickly overruled him, causing
| BAM CEO B to resign approximately three months into his tenure."_
|
| " _As BAM CEO B testified, "[W]hat became clear to me at a
| certain point was CZ was the CEO of BAM Trading, not me." He
| further explained that he spent his first 80 days as CEO trying
| "to get these core foundational things realigned," but "was
| overruled on all of them" by Zhao. BAM CEO B elaborated, "All of
| the things that we had previously agreed and had worked on for 80
| days were suddenly repudiated with no further discussion, and on
| that day, I realized, huh, I'm not actually the one running this
| company, and the mission that I believe I signed up for isn't the
| mission. And as soon as I realized that, I left." "_
| csunbird wrote:
| Very interesting... I guess the CEO's were hired to be thrown
| under the bus when it is the time.
|
| Their job was to PLEASE: Provide legal exculpation and sign
| everything. (hey HIMYM fans!)
| bornfreddy wrote:
| > I guess the CEO's were hired to be thrown under the bus
| when it is the time.
|
| It's ironic that they are now the ones feeding SEC with
| inside information. It seems like the plan backfired?
| EGreg wrote:
| Isn't that just like in HIMYM?
|
| That show was so great.
| FireBeyond wrote:
| In some domains, the golden parachute softens that.
|
| But it's unwise in finance. The SEC's whistleblower program
| is well known.
| csunbird wrote:
| Any sane person who realizes that their job is to be thrown
| under the bus has two options: Either go along with it and
| be a conspirator, secure your means of getting away, or
| start talking to the law enforcement to cover your ass.
|
| The people running Binance should have realized that the
| first option did not happen and they should have prepared
| for the second option. Although it is good that this didn't
| happen, SEC now has an easier case because of this.
| wpietri wrote:
| I suspect it's very hard for people to realize that.
| Thinking back on my career, there were jobs I stayed at
| too long because I was hoping things would turn around,
| that I could make more of a difference than I ultimately
| did.
|
| That was hard enough for me to realize as a low-level
| worker. It has to be a fair bit harder if you've got a
| fancy title and a fancy salary. "It is difficult to get a
| man to understand something when his salary depends on
| his not understanding it."
| anonylizard wrote:
| Learning how to code fizzbuzz is hard for most people, it
| isn't for us.
|
| Learning basic corporate politics is hard for most
| people, not for prospective CEOs.
| wmf wrote:
| I suspect Binance is prepared and they will simply not
| comply. Nothing is physically in the US to be seized
| (except maybe the binance.us domain).
| cft wrote:
| The action is definitely politics. Not sure if it's a war
| on crypto or on China.
| jfghi wrote:
| War on illegal activity
| misnome wrote:
| Finally some regulatory clarity
| sebzim4500 wrote:
| Not really, the only assets they have identified as securities
| here and the ones that were immediately obvious as securities
| (BNB etc.).
|
| They have made no statement regarding BTC, ETH, etc.
| webXL wrote:
| Gensler explicitly stated that BTC was a commodity about a
| year ago: https://www.benzinga.com/markets/cryptocurrency/22/
| 06/278669...
| [deleted]
| EMCymatics wrote:
| Good job Gary Gensler. This is extremely important.
| alphanullmeric wrote:
| [flagged]
| whateveracct wrote:
| Point one just sounds like your opinion that securities
| regulations should not exist. Seems like a little stump-box-y
| to post in a thread about high-profile, blatant securities law
| criminality lol.
| alphanullmeric wrote:
| Using "it's the law" to justify a law is a circular argument.
|
| > It should be illegal for consenting individuals to do what
| they want with their own money
|
| Agree or disagree? I'm looking for a one word answer.
| lern_too_spel wrote:
| It should be possible for non-consenting individuals to
| claw back their money when needed, by rules agreed to by
| the society they live in. Agree or disagree? More than one
| word, please. A full explanation is required to justify
| allowing DPRK and Russia to fund themselves by stealing
| from crypto-fools and innocent bystanders around the world.
| z3c0 wrote:
| Can you make the same argument without invoking
| international bogeymen? This is basically one of the
| aforementioned Patriot Act talking points.
| lern_too_spel wrote:
| I already did. DPRK and Russia aren't imaginary.
|
| https://blog.chainalysis.com/reports/2022-crypto-crime-
| repor...
|
| https://www.nytimes.com/2022/06/30/business/north-korea-
| cryp...
| alphanullmeric wrote:
| This is to the point I made on the patriot act. You
| support the redistribution of consequences and I don't,
| that's what makes us different.
| lern_too_spel wrote:
| I don't know how you call preventing DPRK and Russia from
| getting money "redistribution of consequences." That's
| what makes us different.
| brockhaywood wrote:
| Saying this needs a one word answer is pretty reductive. I
| think it's obviously more nuanced than that.
| lijok wrote:
| Disagree. I should be able to use my money to hire someone
| to kick you in the nuts.
| alphanullmeric wrote:
| What part of "consenting individuals" is so hard for you
| to understand?
| whateveracct wrote:
| I mean it sounds like the individuals involved in the
| money exchange were consenting.
| shkkmo wrote:
| Easy agree. There are all kinds of things you can do with
| money that should be (and are) illegal.
|
| Hiring a hitman should be illegal.
|
| Buying slaves should be illegal.
|
| Bribing the court system should be illegal.
|
| This is not to say that every restrictions is justified,
| but taking the stance that no restrictions are justified is
| advocating anarchy.
| alphanullmeric wrote:
| Is the implication that the victims of hits and slavery
| are consenting?
| karpierz wrote:
| Is the implication here that everyone who could be
| affected by a transaction should have to consent to it?
|
| In which case, sure. Hence why the government regulates
| transactions.
| z3c0 wrote:
| Being a hitman should be illegal.
|
| Selling a slave should be illegal.
|
| Accepting a bribery should be illegal.
|
| Chop the trunk, not the branches.
| chunky1994 wrote:
| These are all also illegal. This doesn't take way from
| the parent.
| lijok wrote:
| [flagged]
| JumpCrisscross wrote:
| > _Being a hitman should be illegal_
|
| You don't see any reason why hiring a hitman should also
| be illegal?
| shkkmo wrote:
| Both a hitman and the hirer can both be consenting
| adults, but we still shouldn't make it legal for the
| hirer to give money to a hitman to kill someone.
|
| Thus you agree that there are things that consenting
| adults should not be allowed to do with their money.
|
| Edit: There are good points about how much freedom it is
| worth giving away to make it easy to catch this crime,
| but I have a hard time seeing an argument for it not
| being illegal.
| olalonde wrote:
| An essential point to bear in mind in these crimes: each
| one involves a victim who is, crucially, not a willing
| participant. People who participate in buying or selling
| cryptocurrency are willing participants.
| shkkmo wrote:
| Yes, I listed categories where the linkage to unwilling
| victims was clear to make my point.
|
| Cryptocurrency has unwilling victims as well, but the
| linkage between cryptocurrency buyers and ransomware
| sellers is much less direct
|
| If you want a closer analogy, gambling is also something
| that happens between willing participants and is almost
| universally either regulated or outlawed.
|
| There are some good arguments that we need clearer,
| better regulations for cryptocurrency exchanges and a
| lower barrier of entry for low income/asset investors
| into securities.
|
| However, some level of regulation of cryptocurrency is
| clearly required and is not out of step how we handle
| other parts of the economy.
| JumpCrisscross wrote:
| > _Bribing the court_ >> _each one involves a victim who
| is, crucially, not a willing participant. People who
| participate in buying or selling cryptocurrency are
| willing participants._
|
| The corrupt judge and barrister are very much willing.
| The negative effect is borne by a third party. Same with
| crypto. The buyer and seller are happy as can be. Then
| the rest of us have to pay to investigate, extradite,
| charge and liquidate Bankman-Fried and FTX.
| olalonde wrote:
| SBF and FTX were charged for bribery and fraud, there
| were victims.
| chunky1994 wrote:
| More like:
|
| - It should be illegal to defraud unsuspecting individuals by
| hiding information that would necessarily clarify the riskyness
| of the contracts they are engaging in.
|
| - Businesses have way more information asymmetry advantage and
| we want to help limit this.
|
| - Financial responsibilities of business and individuals is
| something that should be looked at by a third party because
| this can be financing bad things and/or be unfair to the
| individual due to the aforementioned information asymmetry.
|
| - Various other reasonable points, while not perfect can
| certainly provide conscientious arguments for the them.
| alphanullmeric wrote:
| It should be legal for anyone to do what they want with their
| own money. If they want to throw it off a cliff that's fine
| too. What someone else chooses to risk is none of your
| business.
| lijok wrote:
| You really haven't thought this through now have you. I think
| the old engineering adage applies: "Don't remove something
| until you understand exactly what it does and why it does it"
| misnome wrote:
| I think you just found four ways to describe money laundering
| and sanctions violations.
|
| Which admittedly is a market crypto has been trying and
| succeeding for quite a while to own.
| alphanullmeric wrote:
| I'm glad we've established that you agree with those four
| things. Any other rights to other people's money or
| redistribution of consequences you want me to add to the
| list?
| JumpCrisscross wrote:
| > _other rights to other people's money or redistribution
| of consequences you want me to add to the list_
|
| Glad you mention redistribution of consequences, given
| we're burning public prosecution dollars and court time in
| the United States to deal with FTX, who were downed by the
| same sort of embezzling Zhao and Binance seem to be up to.
| alphanullmeric wrote:
| You say that like I asked for you to do it. Spoiler, I
| didn't. They took the risk, they can absorb the losses.
| Feel free to use an exchange with the level of regulation
| you prefer, this discussion is about whether you have the
| right to make it illegal for me to do the same.
| JumpCrisscross wrote:
| > _like I asked for you to do it_
|
| Plenty of crypto operates outside U.S. jurisdiction. FTX
| didn't. Binance isn't.
|
| > _this discussion is about whether you have the right to
| make it illegal for me to do the same_
|
| If you use U.S. dollars or solicit American investors
| damn right I do. For the same reason you have a say over
| whether I can open a toxic industrial plant in the plot
| adjacent to your home's.
| alphanullmeric wrote:
| Brings me back to my point. You don't believe American
| investors should be able to do what they want with their
| own money.
|
| A factory pollutes those that didn't consent to it, what
| effect does my trading on binance have on you?
| lesuorac wrote:
| Isn't money laundering just a crime because the state is to
| inept to actually catch people doing the crime that they
| gained money from?
| LatteLazy wrote:
| Still no sign of workable regulations? Better get on an sue
| everyone for not following rules that don't exist yet...
| JumpCrisscross wrote:
| > _rules that don 't exist yet_
|
| The CFTC complaint shows Zhao _et al_ were perfectly cognisant
| they were breaking the rules [1].
|
| [1] https://www.bloomberg.com/opinion/articles/2023-03-27/the-
| cf...
| inthewoods wrote:
| Binance, Coinbase, et al: "We'd like new rules from the
| SEC/CFTC to let us crime."
|
| SEC: "No."
|
| Binance et al: "You're stopping innovation!"
|
| SEC: "You're going to jail."
| [deleted]
| napierzaza wrote:
| [dead]
| gymbeaux wrote:
| The same thing will happen to Coinbase. Just look at the
| backgrounds of their CXOs. None are qualified to be leading such
| a large company IMO. I bet my life the same shit is going on over
| there.
| anonu wrote:
| And BTCUSD down sharply on the news... The crypto winter will be
| a long one.
|
| Link is broken. Here's the SEC press release:
| https://www.sec.gov/news/press-release/2023-101
|
| And the full 136 page complaint:
| https://www.sec.gov/files/litigation/complaints/2023/comp-pr...
| boring_twenties wrote:
| It's down ~2.5% to a level last seen ... a week ago.
|
| That is not "sharply" by any stretch of the imagination.
| [deleted]
| anonu wrote:
| "Sharply" is anchored on where the price was just before
| announcement. Not where it was a week ago... Price moved on
| the news...
| boring_twenties wrote:
| The price regularly moves more than 2.5% on no news at all.
| This move isn't sharp, it's negligible.
| monero-xmr wrote:
| This is good for bitcoin. CZ, Justin Sun, and all the scammers
| need to be in prison.
| gunshai wrote:
| Seems strange to say Justin Sun an CZ are even close to one
| another in terms of impropriety.
|
| Justin Sun is a snake oil salesman, CZ potentially broke the
| law while running a legitimate service. One that worked and
| was actually quite successful.
| JumpCrisscross wrote:
| > _CZ potentially broke the law while running a legitimate
| service_
|
| Intentionally broke the law, according to his own
| statements. Also, co-mingled personal and client assets
| like Bankman-Fried.
| WinstonSmith84 wrote:
| > Intentionally broke the law...
|
| It's not like there are much laws regulating
| cryptocurrency markets in the US to begin with. That's
| the whole point why most crypto companies avoid the US:
| random enforcements != clarity
|
| But I'm really curious to see whether a large country
| (e.g. China) or countries union (e.g. EU) is going to
| provide enough clarity and security as to move the
| innovation elsewhere from the US.
| ipaddr wrote:
| Bitcoin mining is banned in China, exchanges are limited
| to government connected exchanges.
|
| Curious to hear from the EU
| EscapeFromNY wrote:
| https://www.cnbc.com/2023/04/20/eu-lawmakers-approve-
| worlds-...
| misnome wrote:
| Bullshit. There are plenty of laws, just none
| specifically tailored to what the crypto companies would
| like.
|
| So, no _new_ laws. They still have to follow the old
| ones.
|
| Not outright breaking them, emailing each other about how
| much you are breaking them, making memes about how much
| you are breaking them - yeah, that tends to be pretty
| well covered.
| WinstonSmith84 wrote:
| Which laws are you talking about? The way the SEC is
| designing some coins as security, while ignoring others
| is remarkably laughable. The thing is, they clearly don't
| have a clue. Like, tagging BUSD, a stablecoin as a
| security, is truly the cherry on the cake.
| monero-xmr wrote:
| If Justin Sun didn't loot all the funds from Polo and Huobi
| I would be extremely surprised
| klyrs wrote:
| From page 29 of the complaint:
|
| > As Binance's [chief compliance officer] bluntly admitted
| to another Binance compliance officer in December 2018, "we
| are operating as a fking unlicensed securities exchange in
| the USA bro."
|
| Whoops. The press are supposed to say "allegedly" in cases
| like this, but when your people are on the record admitting
| that the business is criminal, the public tends to jump to
| the same conclusion that the courts will inevitably reach.
| gunshai wrote:
| I'm not quite sure how this addresses my point in anyway?
|
| I'm talking about the comparison of two people and what
| they are/have been accused of. Not whether any one court
| claim has legitimate evidence or not.
| lvass wrote:
| What scam are you referring to?
| monero-xmr wrote:
| Comingling customer funds with their own personal and
| corporate funds to use for their own gain
| vkou wrote:
| Note: Even when nothing bad actually happened, this
| exposes customer funds to _risk_. It 's fraudulent for me
| to promise to store your car in a garage, but then take
| it on a 140 mph joyride down the freeway.
| monero-xmr wrote:
| Even if they didn't literally use customer funds to buy
| yachts and mansions, I have heard about pledging customer
| funds as collateral or using them for an acquisition
| which is then paid back using funds and revenue of the
| acquired company. It's sketchy shit that is not allowed
| in the regulated world that crypto companies have played
| loose with. Very dangerous.
| madars wrote:
| Archive: https://archive.is/e1x4l
| hiq wrote:
| Updated: https://archive.ph/WEoa2
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