[HN Gopher] Founder of crypto lender Celsius Network arrested, c...
___________________________________________________________________
Founder of crypto lender Celsius Network arrested, charged with
fraud
Author : caust1c
Score : 350 points
Date : 2023-07-13 15:16 UTC (7 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| bertil wrote:
| I haven't followed crypto very closely, but I noticed a few
| names. I've read the headlines for the last few weeks. It seems
| like most prominent players are now in legal trouble, enough to
| force them to cease operations.
|
| Who are the most prominent players who are operating?
| latchkey wrote:
| Brian Armstrong
|
| CZ
| worstestes wrote:
| > CZ
|
| hopefully not for much longer
| gdsdfe wrote:
| it's kinda ironic that crypto started as a rebellion against the
| banks that are stealing our money and all that
| wmf wrote:
| Bear with me here, but what if that "rebellion" ended in 2010
| before people even heard of crypto.
| anaganisk wrote:
| You aren't a rebel if you go mainstream, either die a hero or
| live long enough to see yourself become the villain.
| elforce002 wrote:
| And now "crypto" bros are moving to AI. The never ending story.
| alangibson wrote:
| AI has real use cases besides just doing crimes. I mean AI's
| most profitable use case right now is definitely crimes, but it
| can also be used to put people out of work.
| angry_albatross wrote:
| AI is not in the same category in my book. Both may be
| overhyped in some ways, but blockchain technology was
| fundamentally a bad idea with no legitimate use cases.
| bottlepalm wrote:
| Bitcoin has proven to be an inflation resistant store of
| value enabling private and fast transactions to anywhere in
| the world - seems pretty successful to me despite being
| constantly derided by hacker news for over 10 years now.
| angry_albatross wrote:
| The value will deflate at some point, it's kind of a
| mathematical certainty. We cannot extract more money from
| the system than we put in, since Bitcoin is a non-
| productive asset. It does not generate revenue the way that
| a business/company does. And someone has to pay for the
| electricity of the miners, so money is draining out of the
| system, making it a negative sum game that people are
| playing.
|
| I would also disagree that the transactions are fast or
| private.
| bottlepalm wrote:
| Private as in independent of going through any bank or
| institution like you would have to do to move money
| internationally in any other form.
|
| A store of value like gold, the dollar, or Bitcoin has
| nothing to do with generating revenue - only the
| intrinsic value of how hard is it to create more -
| dollars can be printed, a gold vein can be discovered
| tomorrow that would crash the price, Bitcoin on the other
| hand there's no chance of creating more than what's
| planned - which makes it a great store of value in turn
| valuable.
| angry_albatross wrote:
| One nice thing about gold is that we don't have to keep
| paying money for gold to continue to exist. It will sit
| on a shelf and not charge us any money for sitting there.
| Bitcoin exists on a network of computers that need
| electricity to run. If we stopped paying for this network
| to run, the bitcoin would stop existing, since the
| ownership of bitcoin really is solely determined by the
| ownership records on this computer network.
|
| That is my argument, that Bitcoin cannot maintain its
| value long term because the value is leaking out of the
| system in the form of electricity bills. Furthermore, we
| cannot let these bills become too small, or else the
| network becomes vulnerable to a 51% attack, so as a
| society we collectively must pay a large amount of "rent"
| on this store of value, which causes the value in this
| value pool to slowly deflate over time.
|
| We have been overcoming this drain so far by "investors"
| continuing to pour money into the system, but those
| investors cannot possibly get all of their money back,
| because it's been spent on electricity.
| bottlepalm wrote:
| By your own argument gold is expensive - expensive to
| secure, expensive to transport, slow to transport (time
| is money), expensive to verify. So yes it does cost money
| to hold and transact gold. So your same 'leaky' argument
| applies. Maintaining any store of value or currency is
| never free, but the benefits far outweigh the costs as
| now we have an inflation resistant medium on which to
| trade goods and services with.
| angry_albatross wrote:
| Well I'm not trying to argue for gold being a good store
| of value either, it might not be. But another reason why
| I would prefer to have gold is that people make use of
| gold to make jewelry and electronics, so that creates a
| demand that helps to prop up its value.
|
| The point I was making is that in a passive state, just
| sitting on a shelf, I believe that the cost of
| maintaining ownership of all the gold in the world is
| orders of magnitude lower than the cost of maintaining
| the entire bitcoin network, and I think that must
| continue to be the case due to the threat of 51% attacks.
| (If the cost of running the bitcoin network drops below a
| certain threshold, it becomes profitable for a rogue
| actor to rent a large amount of compute power and force
| in some fraudulent transactions.) So I believe that the
| "leaky bucket" effect is stronger with bitcoin than it is
| with gold, and there isn't a similar real world use case
| of bitcoin similar to the manufacturing of jewelry like
| there is for gold to counteract this leak.
|
| Therefore, the total value held by all of the holders of
| bitcoin must be declining due to this leak, which
| counteracts the idea that it is inflation resistant in
| the long term.
| bottlepalm wrote:
| Your passive analogy doesn't work because Gold needs to
| be secured and defended, which requires energy or other
| people are going to steal it.
|
| Just like Bitcoin needs to be secured and defended with
| compute for at least new transactions. A 51% attack will
| allow you block new transactions or double spend coins
| you have, not spend or steal other people's coins on the
| ledger because you don't have the private keys for those.
| angry_albatross wrote:
| Yes, and I believe that the total energy needed to secure
| and defend all the gold in the world is still much lower
| than the total energy needed to run the entire bitcoin
| network. I don't feel motivated to do a back of the
| envelope calculation to justify that claim though, so
| maybe we disagree on that point. Still, there is the
| material usage argument for gold that helps it maintain
| its value that bitcoin does not have going for it.
|
| Even if a 51% attack only allows the attacker to double
| spend, that is stealing someone's coins, namely the coins
| of the party that you reversed the transaction on the
| first time you spent the coins. In addition, once people
| realized that double spends were occurring and were
| possible, it would cause a loss of confidence in the
| coin, causing a loss of perceived value, which then
| lowers the sale price (i.e. the "actual" value), meaning
| that the coin would not serving as a very good inflation
| resistant store of value.
| wpietri wrote:
| Almost every word of that is untrue in practice. But let's
| focus on the core part, "successful".
|
| Let's compare with M-PESA, a money transfer solution that
| started around the same time. M-PESA has steadily grown,
| doing 26 billion transactions last year. [1] Bitcoin was
| somewhere around 100m transactions for the same period. [2]
| That's about 0.5% of the volume. And its worse than the raw
| numbers suggest, in that the M-PESA transactions were
| things with positive economic impact, whereas a lot of the
| Bitcoin activity was driven by speculation or crime.
|
| And that's wildly smaller than the number of credit and
| debit transactions that happened over the same time, of
| course. Bitcoin was hoping to be "electronic cash", but the
| shift away from physical cash was toward the already
| existing digital payment mechanisms, not Bitcoin. Merchant
| adoption, always small, went into decline years ago.
|
| So no, Bitcoin was not successful in the sort of terms that
| match its initial goals or what was hyped in the early
| years.
|
| [1] https://www.statista.com/statistics/1139181/m-pesa-
| transacti...
|
| [2] based on eyeballing this:
| https://ycharts.com/indicators/bitcoin_transactions_per_day
| bottlepalm wrote:
| Read my post, I said successful as a 'store of value' not
| 'electronic cash'.
|
| Bitcoin is more akin to gold - an inflation resistant
| store of value. There is a premium for transacting it
| which means you should convert it into a more inflation
| prone transactional currency if you want to spend it.
| mandevil wrote:
| BTC seems to be very interest rate dependent- it goes up
| when rates go down and down when rates go up. That is
| pretty much the opposite of an "inflation resistant store
| of value". It's financial behavior over the last ten
| years isn't that of a "inflation resistant store of
| value" its that of a "speculative, very risky
| investment."
|
| Ideologically, to a certain type of person, it _should_
| be inflation resistant. The math says so! But the markets
| have judged it to not be so. So who are you going to
| trust? Your ideology or the market?
| bottlepalm wrote:
| What are you talking about, over the last 10 years
| Bitcoin has gone up in value substantially, while the
| Dollar has lost substantial value.
|
| Interest rates affect all asset classes as obviously
| people are going to start moving money one way or another
| when the ROI for the dollar changes.
| wpietri wrote:
| Well look at those goalposts move. Bitcoin's original
| purpose was precisely electronic cash:
| https://bitcoin.org/bitcoin.pdf
|
| But if you'd like to shift focus to why "store of value"
| is also wrong, I'm glad to. A store of value needs to be
| more stable than the thing you're moving out of. It also
| needs to be relatively liquid, and should have low
| transaction costs. But Bitcoin is very volatile compared
| with major fiat currencies, and also when compared with
| gold. Transaction costs are relatively high. The market
| is thinly traded, and is widely believed to be
| manipulated. Gold, in contrast, is more liquid, cheaper
| to trade in, and much better regulated.
|
| So no, Bitcoin doesn't make for a good store of value.
| People wanting to store value would generally be much
| better off buying index funds, which are also pretty
| inflation resistant, and also have a positive return. But
| if they want to avoid equity exposure, then the gold
| standard for this is, well, gold. Bitcoin is terrible by
| comparison.
| bottlepalm wrote:
| Again you're mixing up short term cash and long term
| store of value.
|
| Cash you want stability, fast and low cost transactions -
| you pay for all those benefits with inflation.
|
| A good long term store of value you will sacrifice a
| little of all those things for better inflation
| resistance.
|
| Gold and index funds are also good for long term value
| storage, but index funds you can't really use as a medium
| for exchange, and gold is physical so not great for easy
| and quick transactions.
| TrapLord_Rhodo wrote:
| Firstly, Transaction volume and total number of
| transactions are two different metrics. Bitcoin
| transactions are generally in the $400k-$800k range.
| Couple things that makes bitcoin more than what it
| appears:
|
| The metrics you quoted are on chain. There are no telling
| how many transactions are rolled up through the
| lightening network.
|
| With around $20B of various wrapped bitcoins being used
| in defi, you can easily put that number up to hundreds of
| millions of transactions 'a-day' because bitcoin is being
| used as collatoral.
|
| We are in a 'bear market' for crypto and it's market cap
| is $600B, which is larger than some countries let alone
| M-PESA.
| BolexNOLA wrote:
| > Bitcoin transactions are generally in the $400k-$800k
| range.
|
| What percentage of those 400k-800k transactions do you
| think are by the very banks and hedge funds that crypto
| advocates claim to be subverting and defying? For a
| currency that is supposed to help the masses that sure
| doesn't seem like the kind of money most people play
| with.
| kayodelycaon wrote:
| The one legitimate use case of using blockchain for
| decentralized digital currency ends up being used by everyone
| who can't transfer funds using normal routes. So most of the
| people using it are either bad actors or speculators
|
| Kind of like Tor. Bad actors ruin all kinds of things. People
| who only see technology will only go on to repeat the
| mistakes of the past because they lack the necessary domain
| knowledge to know better.
| logicchains wrote:
| >So most of the people using it are either bad actors or
| speculators
|
| It's a matter of perspective. For many people around the
| world, the US government is the bad actor, the bad actor
| preventing them transferring funds through "normal" (US
| controlled) routes.
| kayodelycaon wrote:
| Yup. The only reason blockchain has any legitimate use at
| all is because governments are bad actors.
|
| Doesn't change that many of the people using the system
| are also bad actors of one form or another.
| nkuttler wrote:
| > So most of the people using it are either bad actors or
| speculators
|
| "bad actors" according to their government, which could
| mean people who simply want the right to vote, or to live
| free from oppression, secret police, etc.
| kayodelycaon wrote:
| Indeed, what about all of the decent and moral people
| using digital currency for such reasons?
|
| Across all of them? A very low percentage. Fraud and
| speculation is left, right, and center.
|
| Unfortunately, only a few, like Bitcoin, can justify
| their existence on moral grounds. Hopefully the concept
| doesn't get banned completely.
| sleepybrett wrote:
| Sure but that doesn't stop the managerial and engineering
| tiers of those businesses to jump ship to the new hype
| technology.
|
| The managers didn't know shit but sales in the first place,
| sell coins or ai no difference. The engineers, just another
| new tech to learn.
| sublinear wrote:
| It can be argued that probabilistic generative AI is about as
| equally worthless from first principles.
| angry_albatross wrote:
| You are claiming that there is some sort of mathematical
| proof that this AI has no "worth"? There are a lot of
| people who are finding value from probabilistic generative
| AI, to the extent that they are willing to pay OpenAI
| $20/month to get access to the best model available, so I
| think that counteracts whatever sort of mathematical proof
| you might make.
|
| It's true that crypto has a lot of users too, but I think
| the difference is that these users are mostly being
| deceived into thinking that their involvement in crypto
| will make them rich in the future, when it will not. AI is
| giving people immediate value instead of making promises of
| future wealth.
| CSMastermind wrote:
| That seems untrue to me?
|
| There are several very obvious uses for ChatGPT. Almost
| everyone I've seen use it can think of _something_ they
| want to use it for.
|
| I've never had someone give me a plausible usecase for
| blockchains or crypto currencies. Once you push on the
| usecases I have heard it quickly devolves into "you just
| don't get it" or some kind of appeal to authority like
| "well all the VCs wouldn't be investing in it if it wasn't
| valuable, clearly they're smarter than you."
| sonicshadow wrote:
| I wrong
| Nextgrid wrote:
| > Plenty of great ideas and easy-to-see use cases from that
| first paragraph alone.
|
| Such as?
|
| Blockchains enable trust-less and decentralized ledgers at
| the expense of major trade-offs (user experience, lack of
| transaction reversibility, proof-of-work to secure the
| network, etc).
|
| Most useful business happens off-chain in the real-world,
| so you need to bridge between blockchain state and real-
| world state using a trusted party which throws away all the
| decentralization and trustlessness advantages, so you may
| as well just let the trusted party run a conventional
| database directly, and avoid the major trade-offs.
|
| I can't think of many useful & valuable use-cases that
| happen fully on-chain with no off-chain interactions, aside
| from cryptocurrencies. As soon as you have off-chain
| interactions (which is most of blockchain usage outside of
| cryptocurrency applications), the value proposition of
| using a blockchain goes away and a database makes more
| sense.
| rchaud wrote:
| AI is exactly the same to marks that don't know any better
| and think complex new technology = $$$. AI having use cases
| for megacorps doesn't mean that scammers won't leverage the
| hype to sell get rich quick scams.
| tornato7 wrote:
| For better or worse, Crypto is legitimately the easiest way
| to create a financial application, derivative, exchange
| etc... any programmer can create interesting, useful, and
| novel financial instruments like Squeeth, crvUSD,
| PoolTogether, etc in short order. Good luck recreating those
| in TradFi in under a decade, let along making them interact
| with each other in atomic transactions.
|
| Of course, some people see this as a bad thing because it
| enables scammers to create all sorts of new and improved
| ponzi schemes. Others think it's a good thing because it
| speeds up financial innovation and levels the playing field
| between big banks and small startups.
|
| Some might argue that crypto is only useful for building apps
| insofar as it avoids regulation, but you also can't convince
| me that Wells Fargo is the future of finance. Banks could
| never create a financial playground that works as well as
| Ethereum, even using their centralized database.
|
| IMO, so many of the projects that have come out of the crypto
| space are awesome and promising, but investment in the space
| grew faster than projects could mature. Unfortunately that
| leads to users losing $100M when Joe Schmo's cross-chain
| bridge gets hacked, when it should have never had that much
| TVL.
|
| Just my 2c.
| spamizbad wrote:
| I've seen this but AFAIK they're all just acting as hype-men
| for various fluffy AI startups. They aren't building anything
| other than mailing lists.
| bottlepalm wrote:
| Crypto was done in 2010. The bros tried to put their own dumb
| ideas on top of it like DAOs, smart contracts, NFTs, tokens,
| block chain xyz, etc..
|
| Now the bros will be moving to AI, bringing along all their
| dumb ideas for everyone to enjoy again.
| FactualOrion wrote:
| People should look into his wife's actions as well, selling merch
| making fun of victims of her husband etc. Great news to hear
| though.
| neom wrote:
| Just put her in a room alone with Tiffany Fong for a half hour,
| all will be right in the world.
|
| https://www.youtube.com/watch?v=6FONC7njr64
| basementdev wrote:
| [dead]
| harouiin wrote:
| [flagged]
| TheRealPomax wrote:
| [flagged]
| usefulCommenter wrote:
| [flagged]
| zzzeek wrote:
| I dunno it feels like there might be a pattern here
| toomuchtodo wrote:
| "Somebody is lying. Either the bank is lying or Celsius is
| lying." - Alex Mashinsky
|
| EDIT: omg at the almost $5B settlement
|
| https://www.cnbc.com/2023/07/13/former-celsius-ceo-arrested-...
| ("The FTC also announced a $4.7 billion settlement against the
| exchange, which will not be paid until creditors and investors
| have been repaid in bankruptcy proceedings.")
| TheAlchemist wrote:
| All those guys are going to end up in prison. It's fraud after
| fraud - biggest one being Tether.
|
| It's just impressive how long it all takes.
| jbverschoor wrote:
| Why not both?
| namirez wrote:
| Because it's an "or" rather than an "xor".
| angry_albatross wrote:
| But "xor" is the operation that prevents both. So maybe you
| meant that it is an implied "xor" instead of an "or"?
| mr90210 wrote:
| You didn't have to LOL
| legitster wrote:
| The FTC determined that the exchange is guilty of _defrauding
| investors_ because Celsius _defrauded customers_.
|
| And the remediation is that _investors_ get their money back.
|
| Kind of weird when you think about it. But it's a good reminder
| that the goal of the FTC is to protect investors.
| RoyGBivCap wrote:
| [dead]
| Outright0133 wrote:
| Just oligarchy things.
| seanhunter wrote:
| I think you mean the SEC. That's the agency here and yes,
| investor protection is part of the SEC's mandate.
| legitster wrote:
| No, I meant the FTC which already settled with Celcius
| today:
|
| https://www.ftc.gov/news-events/news/press-
| releases/2023/07/...
| seanhunter wrote:
| OK cool. My understanding is the FTC has a consumer
| protection mandate vs the SEC is about investor
| protection. So the FTC covers fair trade, deceptive and
| unfair business practises and that sort of thing vs the
| SEC will cover securities fraud, illegal marketing of
| securities to unqualified investors and whatnot.
|
| Feels like they both are relevant here.
| bottlepalm wrote:
| This is great for crypto. Justice for scammers who thought crypto
| users could be taken advantage of without consequence. Ponzi
| schemes like Celsius are not exclusive to crypto and it's great
| to know the Justice department will prosecute scammers regardless
| of the unit of currency being used.
| bearjaws wrote:
| I can't tell if this is a meme "This is good for Bit Coin" or
| serious.
|
| Of course the DOJ will go after anyone committing fraud?
| wmf wrote:
| Nope, the DOJ only prosecutes crypto fraud after bankruptcy
| lawyers do all the research for them. And don't get me
| started on Tether.
| BolexNOLA wrote:
| I get what you're trying to say, but honestly? All this does is
| hurt the reputation of crypto further. It's yet another
| headline about crypto scams/ponzi scheme/etc. projected to an
| audience that is weary of being easily scammed out of money
| they believe to be safer elsewhere.
|
| No one who is skeptical or on the fence about crypto is going
| to see this headline and go "oh good! They must be catching the
| bad guys, so now I feel more secure about getting into crypto."
| Just like no one who sees an explosion in arrests of violent
| criminals in their home town thinks "good, must be a lot safer
| here now."
| bottlepalm wrote:
| The nice thing about Bitcoin is that it's success is not
| based on good/bad PR. Bitcoin has a solid technical
| foundation and practical use cases that has weathered every
| kind of criticism for over 10 years now and is still on top.
|
| Celsius and earn programs/scams like it is just another trial
| Bitcoin has passed through and is stronger for it.
| alangibson wrote:
| > practical use cases
|
| This is satire right?
| bottlepalm wrote:
| Moving large amounts of money 24/7 worldwide, outside of
| any bank, quickly, low transaction fee - pure P2P, and
| then being able to store it securely outside of a bank in
| your pocket.
|
| Have you dealt with wiring money before? How about
| holding large amounts of currency or gold outside of a
| bank? It sucks.
| pessimizer wrote:
| The problem is that the use case is generally criminal,
| which crypto people elide by complaining about whichever
| country's government is currently being attacked in the
| media. They do this in order to make dodging taxes and
| government oversight sound heroic. It's also a way to
| transform a conversation about fraud and free-riding into
| easy nationalist cheerleading.
|
| What people want is anonymity, cheap/free checking, and
| cheap/free money transfers. Crypto thus far has partially
| supplied the first, and is so bad at the second two that
| the only profitable reason to use it is to dodge some
| sort of official oversight when dealing with large
| amounts of money.
| bottlepalm wrote:
| I must be a criminal then lol. Banks are a pain in the
| ass to deal with. Bitcoin is a very practical and easy
| way to move large amounts of money around. That's why a
| lot of people use it. We pay our taxes when transacting
| it just the same. If you don't use Bitcoin, great, but
| don't make assumptions about those of us who do.
| BolexNOLA wrote:
| > Banks are a pain in the ass to deal with. Bitcoin is a
| very practical and easy way to move large amounts of
| money around.
|
| There is no way you will convince me that setting up and
| using Bitcoin for daily transactions, all on your own
| wallet with your keys etc., is "easy" or any less of a
| "pain in the ass" than using a regular modern bank is on
| a daily basis. That's even ignoring the baseline tech
| literacy one needs to have to get set up.
|
| It's a dead horse at this point but "practical" also
| comes at odds with bitcoin's volatility.
| BolexNOLA wrote:
| > Moving large amounts of money 24/7 worldwide, outside
| of any bank, quickly
|
| But who needs this every day? Most people value security
| of their money over that kind of flexibility, especially
| when modern online banking gives you 95% of the same
| benefits.
|
| Besides, one can tout all the "real" advantages they
| want, but perception is everything. If people think
| crypto is a quick way to get stolen from they simply
| won't use it. No amount of convenience will get someone
| to go through the process of setting up a wallet,
| downloading the ledger, setting up an account on an
| exchange (which requires them to link a bank account!),
| and convert their money to crypto. All so they can maybe
| get some perks a small % care about, let alone need.
|
| I can move $10,000 or less daily, all near-instantly from
| my computer with my bank. I can't imagine a world where I
| need more than that on the regular. That's something many
| go years without doing.
| bottlepalm wrote:
| Yea I guess this is where you anecdotal experience runs
| out because there are a lot of busy people and companies
| out there working in all sorts of industries moving a lot
| more than 10k around constantly. Banks are an unnecessary
| middle man not only slowing things down, but taking a a
| cut out of transactions as well.
| BolexNOLA wrote:
| Anecdotal? Most people aren't corporations. Most people
| have absolutely no need to move over 10k USD in a single
| day regularly. You can take it at face value, it's very
| obvious.
|
| You're also forgetting that businesses _already can_. The
| 10k example was for me as an individual. It sounds like
| you 're saying businesses are currently unable to
| transfer large sums of money regularly and Bitcoin is
| their solution. It's very perplexing.
| bottlepalm wrote:
| > people have absolutely no need to move over 10k USD in
| a single day regularly
|
| I guess you don't know what you don't know.
| BolexNOLA wrote:
| Well I know that I can't pay my mortgage or children's
| tuition with bitcoin (my two largest regular expenses), I
| know that transactions actually can take minutes so I
| don't want to use it to buy coffee, I know that if I
| forget my password I lose literally every cent in my
| wallet with no recourse, I know I need to convert it to
| USD to do 99% of my daily transactions, I know that the
| price it's at today is not the price it will be at
| tomorrow with margins much wider and more frequently
| occurring than with USD, and I know that most people have
| absolutely no desire to learn how to use it (as evidenced
| by over a decade of modest adoption and most vendors not
| accepting it).
| mvdtnz wrote:
| > Moving large amounts of money
|
| I can do this with any remittance company
|
| > 24/7 worldwide
|
| Table stakes for any remit company
|
| > outside of any bank
|
| This is a con, not a pro. Banks add value and protect
| your money. They are regulated, insured and backed.
|
| > quickly
|
| All remit companies are instant nowadays (except in USA
| which has stupidly slow banking)
|
| > low transaction fee
|
| Bitcoin network fees are approximately equal to fees on
| OrbitRemit, Wise, etc.
|
| > pure P2P
|
| See the "outside of banks" point above.
|
| > and then being able to store it securely
|
| If you do absolutely everything right.
|
| > outside of a bank
|
| See above.
|
| > in your pocket
|
| ??
| alangibson wrote:
| I transfer money internationally weekly. I would never
| consider using Bitcoin for this for these reasons:
|
| - volatility. This alone kills the wire transfer
| replacement use case
|
| - theft. Just read the news on this one.
|
| - speed. Instant SEPA is faster than any cryptocurrency.
|
| - fees. Many types of bank transfer are free. Crypto
| transaction fees are often high. When they're not, they
| are highly volatile.
|
| IMHO 'p2p' and 'outside any bank' are liabilities, not
| features.
| phailhaus wrote:
| Transaction fees are based on volume, and can vary wildly
| up to $50. And you can't store Bitcoin "in your pocket",
| you can only store your key, like storing your bank
| password. Except if you lose your bank password, you
| don't lose all your money.
|
| I've noticed this pattern with a lot of other crypto-
| evangelists: you put a lot of emphasis on being able to
| transact "outside of banks", but most people don't care.
| They just want convenience, and the safeguards that banks
| provide are worth it for them.
| codetrotter wrote:
| > All this does is hurt the reputation of crypto further.
|
| There is exactly one legitimate "crypto", and it is named
| Bitcoin. All else ranges from speculative promises about
| future possibilities (smart contracts etc) to straight up
| scams.
|
| Don't let the people abusing the name of "crypto" detract
| from the greatness that was the invention of Bitcoin.
| Vespasian wrote:
| It seems to me that after more than 10 years Bitcoin can be
| most accurately described as "an investment vehicle
| hopefully not correlated with the stock market".
|
| I guess that's fine and nothing out of the ordinary since
| people constantly invent new financial instruments.
|
| But since more and more trades happen on regulated
| exchanges and (as was expected) regular financial
| regulations such as KYC and AML apply it seems not that
| revolutionary to be honest.
|
| No reasonable person would (or does) use Bitcoin as an
| actual currency if they expect the value to increase in the
| future so it can't become a means of exchange for real
| world goods.
|
| Most of us have established and secure alternatives for
| that and inflation doesn't really matter for most of my
| income (which is spent within 30 days). Even people in
| countries with unstable government mostly seem to prefer
| other methods.
|
| Maybe I'm missing something but given all that the
| underlying technology of Bitcoin and friends look like an
| implementation Detail that doesn't really matter.
| codetrotter wrote:
| > No reasonable person would (or does) use Bitcoin as an
| actual currency if they expect the value to increase in
| the future so it can't become a means of exchange for
| real world goods.
|
| I take issue with this statement because it reflects a
| fundamental misunderstanding that people have about
| Bitcoin.
|
| The point is not to "HODL" the Bitcoins waiting for the
| USD or EUR value of the BTC to increase.
|
| The point is among other things:
|
| 1. to be able to freely transact with anyone, and
|
| 2. to not have a central authority adjusting the
| purchasing power of your savings
|
| As of yet we are still relegated to caring about the USD
| and EUR prices of Bitcoin, because in order to use our
| savings we have to exchange to fiat. But the ultimate
| goal is indeed to be able to use BTC directly for
| everything from buying a house to paying for groceries.
|
| For example, I receive 100% of my paycheck in bitcoin.
|
| From week to week I don't have any desire that it
| increases in value of USD or EUR.
|
| My main problem is when it _decreases_ in value, so that
| my purchasing power is worse from having gotten my
| paycheck in Bitcoin.
|
| But even then, over time it probably averages out.
|
| And if not, well at least I am still receiving my
| paycheck in the currency I believe in, and maybe some day
| more people will believe in it too. And then finally some
| day I can buy my groceries with BTC directly.
| BolexNOLA wrote:
| > The point is not to "HODL" the Bitcoins waiting for the
| USD or EUR value of the BTC to increase.
|
| This is some pretty typical "no true Scotsman" stuff if
| we're being honest. If you go to a crypto sub or forum
| any given day, they will all say "no no no bitcion isn't
| for daily use, you want ______ coin." one day. The next
| day it's "HODL, DCA in on a few cryptos, and watch it
| rise." Two days later when it crashes it's "I never
| thought it was good for currency, I just like the tech."
| tromp wrote:
| There's little illegitimate about a cryptocurrency whose
| emission averages 1 coin per second forever (not letting
| the current generation hoard nearly all the supply, or
| letting the founders get any) and otherwise simplifies many
| aspects of bitcoin.
| phyro wrote:
| People tend to forget Bitcoin is a monetary experiment
| where nobody controls the printer and the total supply over
| time converges to a certain value. There's no good reason
| not to try a different model of supply e.g. a supply
| function that emulates a clock. An asset like this could be
| named TIME and a coin could represent a second that passed
| in real life. Valuing time as money would make for an
| interesting experiment.
| pluc wrote:
| Say it with me:
|
| crypto is fraud
| FreshStart wrote:
| Okay, now that I have your attention, how about a new sort of
| crypto investment. Let me pitch you.. A privatized prison just
| for crypto scammers and bros. They could be the almost free
| hb1-labour, but with alot more entrepreneural spirit. Get coders,
| managers and advertisers at very reasonable prices. Payable even
| bitcoin or montero.
| rubyron wrote:
| Could heat the place with GPUs.
| neom wrote:
| The (block)chain gang.
| unmole wrote:
| Beautiful
| stuckkeys wrote:
| Waa looking to see if he was featured in the Forbes magazine
| front cover. He was somewhat praised in their articles. I guess
| it is true, Forbes is the honeypot for Tech scumbags haha
| mousetree wrote:
| Obligatory Matt Levine article on the topic:
| https://www.bloomberg.com/opinion/articles/2023-07-13/celsiu...
| rossdavidh wrote:
| It probably makes me a shallow person, but the only financial
| news that I find worth reading (i.e. afterwards I understand
| things a little better) is Matt Levine's column.
| progbits wrote:
| Is there an equivalent to https://chainsec.io/defi-hacks/ which
| tracks crypto bros got arrested/sentenced?
| justapassenger wrote:
| Oh no. Anyway.
| shortrounddev2 wrote:
| The best thing to come out of the pandemic is the downfall of
| Crypto after the federal reserve raised interest rates
| jqpabc123 wrote:
| Crypto is a fraudster's paradise.
| [deleted]
| wpietri wrote:
| And unfortunately I think the tech industry unintentionally
| enabled it in a few ways.
|
| The internet/mobile boom was a real leap for humanity. (Not an
| unmixed one, any more than the printing press was. But a real
| leap nonetheless.) This left a lot investors looking for the
| Next Big Thing. I think it made regulators very cautious of
| possibly harming something that could be The Future.
| Journalists were accustomed to telling uncritical gee-whiz and
| great-man stories about tech. And we ended up with a cultural
| archetype of the genius tech founder in the Steve Jobs/Tony
| Stark mold.
|
| All of these things were vigorously exploited by the
| cryptocurrency fraudsters and blockchain grifters. That harmed
| all the people they suckered, of course. But I also think it
| was terrible for the tech industry. The culture flowed back
| into tech, and also created an incentive toward hype. All the
| years and all the money spent on the mining/blockchain/smart
| contract/ICO/DAO/NFT/DeFi/Web3 series of bullshit "innovations"
| could have gone to real technology and real companies. All the
| bright young people distracted by that stuff who instead of
| learning the fundamentals of real business and real tech who
| will have to spend years deprogramming themselves.
|
| Hopefully next time around we can be more discerning, more
| usefully critical.
| tmpz22 wrote:
| But how much does our industry get to claim unintentional?
|
| Were we incompetent? Naive? Uninformed? Blinded by good
| intentions, optimism, greed?
|
| If celebrities who endorsed ftx are now in hot water - should
| tech influencers such as major VC firms also be held liable?
| NegativeLatency wrote:
| Very much intentional, especially after the first couple
| rounds of fraud/theft/bad behavior, it's obvious that the
| downsides and risks were known, but the promotion of the
| tech kept being promoted.
| wpietri wrote:
| Entirely fair questions.
|
| I said unintentional because a lot of the same factors were
| helpful for the tech industry and we as an industry just
| blithely accepted their continuance. That includes the VC
| money spigots for sure.
|
| But there are plenty of actors, specific VCs included,
| where I have a hard time believing they didn't know better.
| In my view it was often their job to know better.
| sonicshadow wrote:
| > Hopefully next time around we can be more discerning, more
| usefully critical.
|
| Like after the destruction of democracy by social media? Or
| the implosion of the dot com bubble? How many more times does
| the tech industry get to just say "Hopefully next time!"
| wpietri wrote:
| That is an excellent question.
|
| For what it's worth, I think that whatever we choose to do,
| we're going to get a lot less leeway in the future. I was
| just at a Trust & Safety conference. European legislators
| and regulators are very much cracking down on the social
| media space, and it's clear that years of slippery behavior
| from places like Meta have burned a lot of goodwill.
| duckhelmet wrote:
| It's understandable why these were modded into invisibility
| ;) --
|
| @nancyhn: "The banking industry is a fraudster's paradise.
| The difference is they don't get arrested, they get bailed
| out with bonuses. It seems there are a lot of short memories
| here who don't remember 2008." --
|
| icepat: "If you rolled back every bitcoin transaction ever
| made you would end up with people in debt because the
| transaction fees were paid. This makes bitcoin into a scam.
| The miners in total are guaranteed to win, everyone else in
| total is guaranteed to lose. Some people haven't realized
| their loss but it's there. It is an ingenious scam because
| it's not the scammers who hype it up, no, it's the marks
| because the only way they can get ahead if they hype it up.
| The miners get their cut no matter what."
|
| "This is not the same for say, gold, because gold can be made
| into, say, electronics which now can be sold for more than
| the sum of the cost of the components. Stocks pay dividends
| etc."
|
| "Since so fundamentally it's a scam, is it a wonder other
| scams are built on top?"
| ChainOfFools wrote:
| Strongly agree with the point made about the miners being
| criminally overlooked in all of this. If crypto and Bitcoin
| are camouflaged pyramid schemes, the people at the top of
| the pyramid- even above the exchanges and the hucksters and
| the VCs, are the small handful big miners who have been
| doing it even before BTC was a few dollars each.
|
| There's a huge misdirection in the very thin narrative
| about minors, which is that "everyone knows" they've always
| had to sell the entirety of their coin bases to break even.
| This is completely taking the miners at their word when
| there is absolutely no reason to believe any of it.
|
| The reason the price is stabilized every time it should
| fall is because the miners, and the OG miners alone, have
| the ability to collectively throttle back on selling their
| newly mined coins to the market and can do so almost
| indefinitely because of the massive profits they realized
| on early gains held long term. This is the true source of
| number go up and I'm surprised how little attention it's
| been given, probably because miners are notoriously
| publicity shy. You'll notice they're never talked about it
| any of these articles.
| chx wrote:
| Deleted. Read
| https://ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-pon...
| https://www.ic.unicamp.br/~stolfi/bitcoin/2021-01-16-yes-pon...
| instead.
| icepat wrote:
| > If you rolled back every bitcoin transaction ever made you
| would end up with people in debt because the transaction fees
| were paid.
|
| This can be said about every bank transaction that charges a
| fee as well. Not a crypto fan at all (I find it rather silly
| overall), however this is not a particularly strong angle to
| attack it from.
| [deleted]
| otikik wrote:
| I am in firm opposition to crypto and I agree with you.
| That line of argumentation is so shaky that it makes crypto
| look better.
| hammock wrote:
| [flagged]
| srejk wrote:
| Are you really quoting _fucking human trafficker_ Andrew
| Tate on _economics_?
|
| Electronic funds transfer (including credit cards)
| increase the velocity of money significantly. This means
| more transactions, which means more overall wealth
| creation.
|
| To say nothing of the fact that of that 1.5% fee, I'm
| recovering most, all, or more than it with things like
| cashback, rewards points, etc.
| shagymoe wrote:
| As noted by another poster, all transactions cost someone
| something on every monetary network. You're also completely
| ignoring all the benefits miners provide by securing the
| network etc...
|
| Celcius, FTX, et al the many thousands of shitcoins are all
| scams or pyramid schemes without merit. Bitcoin, despite that
| fact that early adopters profit greatly, has many benefits to
| individuals and society as a whole but many people have
| simply closed themselves off to the possibility because
| they're unwilling, for mostly selfish reasons, to even
| consider the benefits.
| JohnFen wrote:
| > but many people have simply closed themselves off to the
| possibility because they're unwilling, for mostly selfish
| reasons, to even consider the benefits.
|
| And many people have considered the benefits and have
| rejected the scheme anyway.
|
| I'm curious, though... what do you mean by "selfish
| reasons"? That implies that such people are making a
| decision that disadvantages others in order to give
| themselves an advantage. I'm struggling to see how that
| concept applies here.
| pdntspa wrote:
| "Selfish reasons" is how markets work. Economists call it
| "Rational Self-Interest"
| shagymoe wrote:
| It's selfish to reject something beneficial to everyone
| because you won't benefit as much as others, no? Maybe
| jealousy is a better adjective.
|
| You continue to call it a "scheme" but it was literally
| invented due to the corruption and malfeasance and
| "schemes" of the current banking system. Do you call
| those schemes and scams as well or are those just the
| ones we've deemed acceptable and necessary for some
| reason?
|
| FWIW, I think the current system is unstoppable and
| inflation is necessary theft because that's just how it
| works but I do believe people should be able to save and
| not lose value. On a long-term basis, Bitcoin achieves
| that when essentially nothing else can because we've
| designed it that way.
|
| We're all "rich" here and I get why most of us simply
| want that to continue.
| gotimo wrote:
| ....is it selfish to promote something with zero
| practical use so you can sell it for more than you bought
| it for?
| shagymoe wrote:
| This is exactly what I mean so thanks for demonstrating.
| If you can't imagine a single useful purpose for Bitcoin,
| you're not even trying.
| JohnFen wrote:
| > It's selfish to reject something beneficial to everyone
| because you won't benefit as much as others, no?
|
| If I decide not to use cryptocurrencies, I am not denying
| anyone else from using cryptocurrencies. My decision
| disadvantages nobody. There is no social duty to use
| cryptocurrencies.
|
| Also, if I disagree that cryptocurrency is "beneficial to
| everyone" (and I do), then I'm not being selfish for not
| taking part no matter what.
|
| > You continue to call it a "scheme"
|
| I did not intend "scheme" as a pejorative. I meant it to
| mean "plan" or "system". My apologies for the
| miscommunication here.
|
| > We're all "rich" here and I get why most of us simply
| want that to continue.
|
| Umm, what? I honestly don't understand what you mean by
| this.
| zarzavat wrote:
| What global money transmission method doesn't have
| transaction fees? Can you name one?
| bravoetch wrote:
| Cash. That's why you have to declare it when you move it
| around in large amounts.
| nkrisc wrote:
| Cash has a transaction cost: you need to physically
| present it.
| InitialLastName wrote:
| At scale, you also need to verify it, count it, exchange
| it, and move it around.
| ixs wrote:
| I would posit that the fee for tje airline ticket or the
| fuel and upkeep for your car is a transaction fee levied
| on cash transactions.
|
| Sure, the bill itself is untouched, but the fee is still
| extracted.
| CyberDildonics wrote:
| I would posit that you didn't explain why these things
| are related at all.
| [deleted]
| jcranmer wrote:
| Journalists really need to link to court documents. Although in
| this situation, there does seem to be quite a few of them:
|
| US v Mashinsky:
| https://storage.courtlistener.com/recap/gov.uscourts.nysd.60...
|
| SEC v Celsius:
| https://storage.courtlistener.com/recap/gov.uscourts.nysd.60...
|
| FTC v Celsius:
| https://storage.courtlistener.com/recap/gov.uscourts.nysd.60...
|
| CFTC v Celsius:
| https://storage.courtlistener.com/recap/gov.uscourts.nysd.60...
| dcist wrote:
| Thank you! I never understand why journalists don't link to
| court documents.
| zzzeek wrote:
| newspapers can't sell ads on a remote court document site
|
| which leads to a great business idea, run a mirror that
| republishes legal / government documents in a syndicated
| fashion with [your ad here]
| wildrhythms wrote:
| My favorite are the news articles with links to other
| articles, that link back to the original, thus cyclically
| references itself as a source.
| johndhi wrote:
| I like that idea. A homepage that lists the top 20 stories
| of the day that are about a document that probably isn't
| actually linked to. Go to our site
| (www.readtheactualdocument.com) to see it -- and get served
| ads.
|
| Additive would be some highlighting and annotating of the
| document (as nytimes sometimes does) to point people to
| salient points.
| carlosjobim wrote:
| 100% of readers will not read the source document.
| nivertech wrote:
| Scribd already does that, but with subscription/one-time
| payments instead of ads.
|
| I guess it's only works with leaked or hard to find
| documents.
|
| But why would a media website upload docs to your site,
| when they can serve it from their own?
| zzzeek wrote:
| if I get a commemorative lucite block with "Leader in
| Innovation" someday, I'll know it came from your startup
| as they went public, good luck!
| Workaccount2 wrote:
| They probably do but the editors remove them.
|
| It seems that rule number one of running a news site is to
| never have any external links. It's like a casino, they want
| you to come in and get lost.
| mschuster91 wrote:
| That seems to be the case for US media... here in Germany,
| it's a bit different at least for quality media. Spiegel,
| Heise, Die ZEIT and T-Online all happily link to sources,
| even up to competing news media.
| GCA10 wrote:
| thesmokinggun.com already does provide a fine repository of
| current and past court filings of interest. They've been
| around for years, and some journalists do link to them.
| Intriguingly, the one ad on their site at the moment is for
| diamond engagement rings.
|
| I suppose that ad's positioning could be just random
| programmatic placement. But if anyone in the HN community
| can figure out why court-filing enthusiasts are especially
| likely to want to buy an engagement ring off an unverified
| website, I'd love to know more
| giarc wrote:
| Because 99% of readers probably don't want to/won't read
| them.
| fsckboy wrote:
| if news organizations did a good job of quoting/summarizing
| court documents, I would be happy not to read them either
| 1vuio0pswjnm7 wrote:
| "Journalists really need to link to court documents."
|
| https://news.bloomberglaw.com/securities-law/ex-celsius-ceo-...
|
| Depends on the audience perhaps.
| sakopov wrote:
| Well that's definitely one way to "unbank" yourself.
| LatteLazy wrote:
| [flagged]
| onlyrealcuzzo wrote:
| The SEC never said Celsius wasn't dealing in securities.
| yieldcrv wrote:
| The criminal charges are from the DOJ and specifically include
| commodities fraud.
|
| Nobody is going to be splitting hairs over SEC semantics
| because its not just about securities.
| Chabsff wrote:
| The very next paragraph goes into specific details wrt/ how
| Celsius allegedly lied to their clients.
|
| "The agency said Celsius engaged in "risky trading practices"
| and made uncollateralized loans, despite telling investors that
| it did not. The company also falsely claimed to have raised $50
| million from selling its token, and claimed to have 1 million
| active users when in fact it had only around 500,000
| depositors, many of whom were no longer active, the SEC said."
|
| Securities or not, selling something while knowingly lying to
| buyers about what it is they are purchasing is fraud.
| brvsft wrote:
| Mashinsky is a conman. This has nothing to do with the SEC
| being coy about whether BTC is a security and everything to do
| with Mashinsky lying to his customers about the risk involved
| in investing through Celsius. Here's a clip of him getting
| called out on his lies in a debate with a Bitcoin hater:
|
| https://www.youtube.com/watch?v=OBohJXhpRHU&t=2m7s
| martin8412 wrote:
| That's completely irrelevant. It's not the job of the SEC to
| guide companies/people on what constitutes securities. Their
| job is to bring enforcement action if they believe the law is
| being broken.
|
| If you want legal advice, get a lawyer. If you don't want an
| expensive court case to determine who is in the right, don't do
| business in areas without established case law.
| scottiebarnes wrote:
| > It's not the job of the SEC to guide companies/people on
| what constitutes securities
|
| Which government agency fulfills that role?
| growse wrote:
| The judiciary. See the Howey test.
| scottiebarnes wrote:
| I guess the judiciary system will eventually rule on what
| is legal / not legal via a legal contest, but courts are
| not actively informing and guiding American companies on
| what the rules are.
|
| Seems like there should be an agency that does?
| Furthermore, the SEC does seem to fulfill some of this
| role, ie. registering securities.
| growse wrote:
| > but courts are not actively informing and guiding
| American companies on what the rules are.
|
| Isn't this what lawyers are for?
| scottiebarnes wrote:
| Guess that's how the world works then; do something until
| the government sues you, go to court and set precedent.
| Seems a bit inefficient. Or maybe its the most efficient
| path after all.
| [deleted]
| cft wrote:
| USA was doing very well before FTC was created in 1914. In
| fact, most of American wealth that the US has been riding on,
| was accumulated before then. Airplane, Ford Model T, etc
| where all created before then.
| matthews2 wrote:
| Airplane was released in 1980.
| legitster wrote:
| Let's say I run a swap meet for people to buy and sell Pokemon
| cards. There are lots of scammers out there, but I promise people
| they are going to get good prices. And I even offer to buy cards
| off of people at good prices to drum up interest.
|
| Tomorrow, the SEC decides that Pokemon cards are securities (far-
| fetched, but work with me here) Suddenly, anyone buying and
| selling them becomes a criminal. I tell people via text message
| "pish-posh - there's no way the SEC could enforce this". But
| people stop coming so I promise them that I can buy up all of
| their cards anyway. Especially the cards that complete my
| collection.
|
| Then it gets enforced. Not only did I trade in illegal assets, I
| am now guilty of fraud for telling people it was safe. I am also
| guilty of market manipulation! And on top of it, I did it via
| text message so it's now wire fraud to boot.
|
| As far as I understand reading the charges, this is mostly what
| he is guilty of. This is a bit different than the "true" type-1
| frauds that exist in crypto - the blatant pump and dump schemes,
| et al. In fact, I would feel safe to say there _might_ have been
| no fraud _without the SEC classification_. (EDIT: Ignore this
| since they also did a lot of legitimate fraud too)
|
| Regardless, the writing is on the wall for crypto. I could not
| even fathom why you would want to be holding onto even Bitcoin or
| Ether right now.
| LapsangGuzzler wrote:
| In order for your analogy to hold, you can't forget about the
| part where you constantly push the idea that trading Pokemon
| cards is a better way to make money than banking, manipulating
| the prices of cards and lying about how the cards are priced.
|
| Guys like Mashinsky bad-mouthed banking nonstop and touted
| their exchanges as more equitable platforms to store and make
| money.
| __loam wrote:
| Whether something is a security is up to the SEC and other
| federal agencies, not the companies making Crypto.
|
| Ignorance of securities regulation isn't an excuse.
| DennisP wrote:
| Based on today's XRP case, it appears to actually be up to
| the courts.
| shawndrost wrote:
| This is a truly insane apologia for a firm which marketed a
| banking-like product with risk-free returns of up to 17%.
|
| > Mashinsky explained that Celsius's rates were so much higher
| than bank deposit rates not because it was riskier than a bank,
| but because it passed along more of its earnings to customers.
| "Somebody is lying," said Mashinsky: "Either the bank is lying
| or Celsius is lying."
| Natuerich wrote:
| I find it far fetched that those experts didn't knew they are
| acting as a type of bank and wouldn't talk to a lawyer upfront.
|
| I did clarify things with a lawyer for a very small company.
|
| They accepted the risk, they lost.
| majormajor wrote:
| The physical collectibles market is over a century old for
| baseball cards. So far the SEC hasn't stepped in for places
| trading baseball cards, magic cards, pokemon cards, sneakers,
| etc.
|
| So the burden of proof seems to be on the claim that they're
| the same, or that it's a meaningful analogy.
|
| But hey, let's look at the this case - the accused did the
| following:
|
| * created their own token (ok, so they aren't just a card swap
| meet or trading site like your analogy)
|
| * pumped and dumped that token
|
| * paid ridiculous interest rates (I sure haven't seen that from
| the places I get my Pokemon cards...) and advertised that the
| principal was safe (these are wildly mutually contradictory,
| and many people knew it at the time)
|
| * lent money...
|
| ok let's stop there, we're already clearly in a different
| universe of financial activity.
|
| EDIT: misattributed a followup comment
| okwubodu wrote:
| To be clear, I think Celsius committed actual fraud. I just
| want to talk about one particular point here.
|
| > So the burden of proof seems to be on the claim that
| they're the same, or that it's a meaningful analogy.
|
| I have a pair of "Dear Summer" Off-White x Nike Dunk Lows,
| the last collection released while Virgil Abloh was alive.
| The SNKRs (Nike) app randomly selected active users for the
| chance to purchase them; necessary, because they were
| guaranteed to sell out instantly. At the time of purchase
| nobody had any clue what the shoes would look like, nor which
| "n of 50" colorway they would get. We were presented with a
| picture of the shoebox, a size selection, a buy button, and a
| countdown timer. However, it's not far off to say that
| despite this, _every single person_ (remember, only active
| users got this notification) that initially purchased the
| shoe did so knowing there was absolutely no chance that a
| limited edition Off-White /Virgil Abloh/Nike shoe would sell
| for less than a 100%+ premium over retail on the aftermarket.
| Completely risk-free, assuming $180 wouldn't hurt your
| pockets in the near term.
|
| Under the SEC's reading of the Howey Test that omits the word
| "solely," the purchase of these shoes constitute
|
| 1. An investment of money (check)
|
| 2. In a common enterprise (check. Let's be honest, the
| majority of pairs sold hit the resell market immediately.
| Forman, 421 U.S. at 852-53 may not be applicable.)
|
| 3. With the expectation of profit (check, check, check) to be
| derived from the efforts of others (the ongoing reputation
| and marketing efforts of everyone involved),
|
| making them unregistered securities.
|
| Naturally, this means Nike has to "come in and register," for
| every limited supply drop, StockX and GOAT have to register
| as securities exchanges, and only accredited investors are
| allowed to purchase at retail. Anything else is clearly a
| violation of The Law.
|
| All of this is perfectly reasonable because, "the law is
| clear, we're obligated...to enforce the law as Congress
| passed it and how the courts interpret it," as Chair Gensler
| put it.
| hattmall wrote:
| Except there actually are people who really do want the
| shoes not for resale. And that is a legitimate driver of
| value and it is a very limited market.
| simple-thoughts wrote:
| The SEC has argued in some crypto cases that even if just
| a few token holders buy for profit instead of for
| utility, the token is still a security. Of course that's
| wrong, but it is the SEC official position.
| okwubodu wrote:
| Just as there actually are people who really do want the
| tokens just to cover gas fees and not for resale.
| ImPostingOnHN wrote:
| 2) and 3) don't seem to actually apply to sneakers here:
|
| 2) I've used the app before, the fact that someone else and
| I both want these sneakers doesn't make our purchase of a
| pair each a "common enterprise".
|
| 3) I didn't expect profit, and buying a thing which can be
| resold for profit doesn't mean every purchase of it was an
| expectation. All my sneakers are worn.
| smogcutter wrote:
| > Tomorrow, the SEC decides that Pokemon cards are securities
| (far-fetched, but work with me here)
|
| There's a little bit of rhetorical sleight of hand here. It's
| far fetched because the analogy isn't actually very good. This
| isn't hand waving a minor problem- why the SEC is calling
| crypto securities and not pokemon cards is the right at the
| heart of the issue.
| dmitrygr wrote:
| Your example left out the crimes...
|
| You didn't promise people that their Pokemon cards ARE money.
| You didnt promise them that they WILL NECESSARILY go up in
| value. That's the difference.
| [deleted]
| vkou wrote:
| Let's say that your analogy has zero actual bearing on what
| actually happened in this situation, and end the conversation
| there.
|
| He misrepresented Celsius. That's fraud. It doesn't matter if
| you do it with dollars, bitcoins, scrip, or Pokemon cards.
| Animats wrote:
| > Let's say that your analogy has zero actual bearing on what
| actually happened in this situation, and end the conversation
| there.
|
| Yes.
|
| Here's Celsius's web site archived in early 2022.[1] See what
| they claimed. They went all the way to being a fake bank. In
| their own words:
|
| _" Meet Celsius: a community of over 1 million users that
| earn up to 17% yield on their crypto. Get paid new coins
| every week and borrow cash at 1%. Buy coins, earn yield,
| borrow, and transfer with no fees. Available on web and
| mobile apps."_
|
| [1] https://web.archive.org/web/20220103153602/https://celsiu
| s.n...
| CyberDildonics wrote:
| _Yes._
|
| What are you answering 'yes' to here?
| Animats wrote:
| Agreeing with "Let's say that your analogy has zero
| actual bearing on what actually happened in this
| situation, and end the conversation there."
| BlandDuck wrote:
| I think the way to understand this is that the SEC is concerned
| about protecting unsophisticated regular folks from being
| scammed.
|
| If you started aggressively marketing your Pokemon cards,
| presenting them as financially sound investments, and regular
| people started putting their entire pension savings into them
| lured by false promises and being scammed, then the SEC might
| well take an interest in Pokemon cards as well.
|
| In short, what qualifies as a "security" and becomes subject to
| regulation is fluid and endogenous. As soon it starts involving
| real wealth for regular folks, chances are it will be deemed
| subject to regulation.
| samstave wrote:
| [flagged]
| RetpolineDrama wrote:
| [flagged]
| bandrami wrote:
| [flagged]
| FireBeyond wrote:
| > For example I don't see the SEC going after Kilolo
| Kijakazi, who is actively scamming working adults under 40
| every day.
|
| Why would they? How is your social security contribution a
| fungible, tradable asset?
|
| And agree or not, she's following government administration
| policy (which still may not survive legal challenge, but
| that's separate to 'securities fraud').
| legitster wrote:
| > I think the way to understand this is that the SEC is
| concerned about protecting unsophisticated regular folks from
| being scammed.
|
| Keep in mind, the people the SEC are focused on "making
| whole" are _the investors_. The actual "unsophisticated
| investors" who make up the bulk of Celcius's customer base
| are going to get next to nothing out of the settlement.
| However, the sophisticated institutional investors who
| invested directly into Celsius will get most of _their_ money
| back.
|
| It would actually be a completely different legal case if
| they just said "Celcius misrepresented the security of their
| assets". In your Pokemon example where I am scamming people,
| they could bust me for fraud without having to reclassify all
| cards everywhere. But that's not the case they are making
| here.
| gamblor956 wrote:
| The SEC is not focused on making the "institutional
| investors" whole. That is happening in bankruptcy court,
| because Celsius declared bankruptcy, and that is how
| bankruptcies work: the senior creditors get their money
| back first. If you have problems with that, take it up with
| the bankruptcy court and U.S. bankruptcy laws that classify
| customers as junior creditors.
|
| In fact, the SEC does not ever get involved in "making
| investors whole." It leaves that part up to the investors
| themselves.
|
| The SEC's complaint seeks to bar Mashinsky from future
| involvement in crypto trading, to bar him from being an
| officer or director of a publicly traded company, and for
| the disgorgement of profits arising from maintaining the
| price of crypto tokens through market manipulation tactics.
| [https://www.sec.gov/news/press-release/2023-133]
|
| Also, in your Pokemon example you claim that buying up
| Pokemon that completes your collection somehow constitutes
| market manipulation. But that's a thing collectors actually
| do...so...by definition not market manipulation but a
| fundamental part of the market for collectibles (and in the
| Pokemon hypo Pokemons have instrinsic value because they
| can be used and valued in a Pokemon game independently of
| their trading value, in addition to their trading fair
| market value based on their rarity as a collectible item).
| This is very different from what the Celsisus guy did; he
| used wash trading to artificially increase the price of a
| crypto token whose only value was in being traded.
| jnwatson wrote:
| The SEC does indeed get involved with recovering money
| for victims of investment fraud.
|
| Source: me. The SEC recovered about a third of the money
| I unwittingly invested in a Ponzi scheme.
| gamblor956 wrote:
| So...the SEC didn't try to make you whole...it recovered
| about a third of the money you lost to the Ponzi scheme
| through a disgorgement order.
|
| The SEC can order disgorgement of _profits_ from an
| investment scam (which are then returned to victims to
| the extent such profits are recoverable), but making
| victims whole for their losses is a very different thing.
| Vespasian wrote:
| If you are willing to share: How did you end up getting
| tricked and how can other people avoid the same.
| jnwatson wrote:
| It was a pretty good scam. The scammer had a company that
| sold fractional profit shares in oil wells. Without
| getting too deep in the weeds, he sold the equivalent of
| more than 100%. He invested the proceeds of new
| investment in paying out old investors and buying new oil
| wells.
|
| Eventually he ran out of new investor money and the
| scheme unraveled.
|
| I don't know how I would have caught it. The regulatory
| oversight in oil well finances is poor.
|
| The guy was on the lam for a few months, then sentenced
| to 10 years in Federal prison. He then escaped and hasn't
| been found.
| sroussey wrote:
| When you park money with someone that neither wants to be a
| bank or an exchange, you get neither of those protections.
|
| Assume all the money is gone.
|
| Particularly when they are offering 17x the going interest
| rate.
| 2OEH8eoCRo0 wrote:
| What about coins they created and sold?
| tomcar288 wrote:
| what does bitcoin have to do with it?
|
| If anything, holding bitcoin (with self custody) protects you
| from this sort of thing because there's no counter party risk.
| From that standpoint, holding bitcoin does not have counter
| party risk, unlike holding gold or equities in an online
| account.
|
| don't throw the baby out with the bathwater.
| themagician wrote:
| The SEC doesn't bring criminal charges. The SEC pursues civil
| action. The SEC tries to hold people liable for the damages
| they cause, and the bar here is relatively low--a preponderance
| of evidence (more likely than not) is all that's needed.
|
| If they suspect something is criminal they will then recommend
| that the Justice Department seek criminal charges. Different
| legal case, and this has a much higher bar.
|
| Reporting on the SEC often gets mixed up and convoluted. You
| read about the SEC "charges" and a not guilty criminal plea,
| but these are actually two separate legal cases happening
| simultaneously. This is the way it usually happens, since the
| SEC is unlikely to "enforce" the law (since they can't) unless
| they can get the Justice Department to bring charges. It's much
| easier to pursue civil litigation and hold people responsible
| if you can get a criminal conviction.
|
| If you are facing a criminal trial for fraud there is likely
| substantial evidence that doesn't fully come through in the
| reporting. Criminal charges like this don't actually happen
| that often, which is why the SEC is said to be toothless. They
| only really pursue if they think they can get the Justice
| Department onboard AND they can get a criminal conviction.
| Yeah, yeah, innocent until proven guilty and all that... but if
| you are facing allegations from both the SEC and the Justice
| Department you've probably done something pretty heinous.
| Our_Benefactors wrote:
| Maybe I'm misunderstanding the analogy, but I thought wire
| fraud only applied to abuse of the bank wire system? Is
| unsavory advice really categorized as wire fraud?
| salawat wrote:
| A legal "wire" is any communication or signaling system
| allowing for the propagation of information across State
| lines, at least as far as I can tell from how it is regularly
| enforced.
|
| You could use TCP over carrier pidgeon to implement your
| criminal communication network, and it'd still be eligible
| for wire fraud. The deserialization from what I assume would
| be message packets strapped to the pidgeon nets you as still
| using "electronics".
|
| https://www.law.cornell.edu/uscode/text/18/1343
| nickphx wrote:
| Uhhh, two brief examples of fraud: Celsius said they had
| insurance to cover deposits - they did not. Celsius said
| customer funds are not used for high-risk loans -- they were.
| kevinthew wrote:
| Right -- this is pretty clear cut fraud.
|
| I think the normalization of criminal activity in the crypto
| space is largely due to regulatory ignorance but when there
| are clear cut cases of fraud, the SEC should aggressively
| prosecute these crooks.
| vorpalhex wrote:
| > Suddenly, anyone buying and selling them becomes a criminal.
|
| No, people buy and sell securities all the time. You simply
| need to follow the regulations for handling securities which
| includes certain types of tax and risk effort.
|
| If you keep selling securities while not following the KYC and
| tax stuff for those securities, you will in fact be breaking
| the law.
|
| Nor did the SEC magically throw down one day and start calling
| crypto a security. It is plainly and obviously a security _and
| has always been one_.
| legitster wrote:
| The regulations for handling securities are through a
| brokerage. This is a HUGE deal because handling crypto
| through a brokerage would basically neuter it.
|
| Imagine trying to buy a pizza with Bitcoin, but you have to
| go into your Charles Schwab account and wait 3 days for the
| Bitcoin transaction to settle. In a brokerage system you
| would get the ownership stake aspect of crypto, but none of
| the transactional ones.
| afterburner wrote:
| > This is a HUGE deal because handling crypto through a
| brokerage would basically neuter it.
|
| Nah, it's still an equity. People don't buy pizza with
| their Microsoft stock, but they still buy Microsoft stock.
|
| Even crypto fanatics use Venmo.
| vorpalhex wrote:
| The settlement time on stocks is minutes. There is no
| requirement that brokerages are slow to settle. That is
| your brokerage choosing to be risk adverse.
| legitster wrote:
| The requirements are set by the SEC:
|
| https://www.sec.gov/about/reports-publications/investor-
| publ...
| vorpalhex wrote:
| I'm going to repeat myself.
|
| There is no requirement that brokerages are slow to
| settle.
|
| There is a requirement - the one you linked - that a
| brokerage may not take MORE than three days.
|
| It does not require them to take three days. A brokerage
| can settle as fast as it can.
| RetpolineDrama wrote:
| >If you keep selling securities while not following the KYC
|
| FWIW KYC "laws" are unconstitutional garbage. The government
| should not be able to force private companies to do the work
| of LEA.
|
| And before you inevitably reply about how "it's good because
| it's stops XYZ"
|
| 1) It doesn't "stop" XYZ
|
| 2) I don't care, privacy and freedom are more important than
| catching a few more % down the long tail curve of bad guys.
| vkou wrote:
| > FWIW KYC "laws" are unconstitutional garbage.
|
| Imagine, for a moment, that I'm a literalist. Which exact
| part of the constitution prohibits them?
|
| > The government should not be able to force private
| companies to do the work of LEA.
|
| Good thing they aren't tasked with the work of an LEA, they
| simply have an obligation to report what they know.
|
| But even if they were, there's nothing that precludes the
| government from conscripting people for service to the
| state (The draft). Or from empowering third-parties with
| LEA-like powers (Bounty hunters, for example).
|
| Are those also prohibited by the constitution? Which part
| of it?
| DennisP wrote:
| The judge in the XRP case disagreed with you today.
| vorpalhex wrote:
| > The court sided with the SEC when it came to "Ripple's
| Institutional Sales of XRP to sophisticated individuals and
| entities," saying they were securities transactions and
| constituted an investment of money. Ripple won when it came
| to "programmatic" sales, however, or sales made through
| trading algorithms, as well as other distributions.
|
| https://www.cnbc.com/2023/07/13/xrp-surges-after-judge-
| deliv...
| DennisP wrote:
| Which stands to reason. Doing an ICO and promising to
| issue a token is a pretty clear securities transaction,
| but that doesn't mean that the token itself is a
| security.
|
| This was the view of William Hinman of the SEC, in 2018:
| "the token - or coin or whatever the digital information
| packet is called - all by itself is not a security, just
| as the orange groves in Howey were not."
|
| https://www.sec.gov/news/speech/speech-hinman-061418
| ajross wrote:
| > Tomorrow, the SEC decides that [whatever] are securities
|
| That's not really the way this works. "Security" is defined by
| law, not by the SEC. Existing stock markets and other trading
| entities have existing regulatory relationships with the SEC,
| but the SEC's enforcement powers aren't remotely limited just
| to the NYSE et. al. The question is why Celsius thought they
| didn't need to follow securities regulation, given their
| business.
|
| Because, and let's be honest here, _crypto coins and assets are
| really just obviously securities by any reasonable
| interpretation_. They 're abstract tokens of ownership, they're
| liquid, they're traded with others in the same kind of way (via
| an exchange intermediary), and for the same reasons
| (investment).[1]
|
| Clearly this was the way things were going to shake out. Could
| the SEC have been clearer? Surely. But to pretend that Celsius
| couldn't have seen this coming is ridiculous.
|
| [1] FWIW: note that trading cards and other collectibles fail
| most of these tests. While sometimes you buy them for
| investment or on exchanges, they remain primarily physical
| devices providing a means to play a game.
| wpietri wrote:
| The important difference being that Pokemon cards don't meet
| the Howey test: https://www.investopedia.com/terms/h/howey-
| test.asp
|
| So yes, if finance were unregulated, then he wouldn't have been
| violating the securities regulations that didn't exist. But
| they did exist, and the Howey Test is from 1946, so it
| shouldn't have been a surprise. A lot of people tried to
| pretend that the existing financial regulations, many of which
| were created in response to previous scams, didn't exist. Or at
| least didn't apply to them.
|
| Was this intentional fraud from the start? Or was it more like
| the sort of Ponzi scheme where some yutz starts off a business
| in hope, makes big promises, fudges the books a little, and
| then just gets in deeper and deeper? It's a good question for
| philosophers and spectators, but personally I don't care at
| all. And I doubt federal prosecutors care much either.
|
| I have zero sympathy for any of these people. "Move fast and
| break things" is a dubious ethos even when for something as
| trivial as a website to post selfies. But when you apply it to
| the foundations of our vigorously financialized capitalist
| economy, it's about as smart as applying it to submarine
| design.
| jjulius wrote:
| >The important difference being that Pokemon cards don't meet
| the Howey test: https://www.investopedia.com/terms/h/howey-
| test.asp
|
| ... Pokemon cards were only used as an example to explain
| what happened, almost like an ELI5. Whether they'd pass they
| Howey Test or not is irrelevant.
| wpietri wrote:
| It's not irrelevant. It's a bad example because it creates
| an intuition that what was done was something very
| different than what was actually done.
| timy2shoes wrote:
| > Whether they'd pass they Howey Test or not is irrelevant.
|
| Not if you're the SEC enforcing securities laws, which only
| apply if they pass the Howey test.
| saurik wrote:
| Which point of the Howey Test do you feel is not satisfied by
| Pokemon cards? (If your answer has anything to do with the
| existence of the game, I am curious what you think of
| baseball cards.)
|
| You state that they don't satisfy the test with quite some
| certainty but left the reasoning to the reader; but, it would
| seem, to me, like Pokemon cards are no different from many of
| these cryptocurrencies the SEC is interested in:
|
| In this case, some company decided to print a bunch of
| supposedly rare things that they pinkie swear are actually
| rare, even though this company can print more _any time they
| want_. People who buy these cards from the company don 't
| even know what they are buying, which seems particularly
| egregious, and maybe should be regulated as an illegal
| lottery!
|
| They then sell these things to people who are absolutely
| buying them with the expectation that they will go up in
| value. The people who print the cards insist they have
| "utility" in the form of a game people can play, and yet I
| have never heard of anyone actually playing this game...
| hell: the only 10 year old I know well happens to be obsessed
| with these cards and is presumably in the target market, and
| I'm not even certain he knows how to play the game!
|
| Instead, this kid just keeps his cards in binders and talks
| constantly about their rarity and potential later sale value,
| as even our children are being turned into amateur investors
| by the marketing efforts of this company; and the reality is
| that--like other so-called "collectible" crazes--most of
| these cards are going to be near-worthless in the long term
| as this is just a bubble being held up by the company's
| management efforts designed to shill their shitcards.
| coolbreezetft22 wrote:
| I play the actual card game and it is does indeed have a
| very popular competitive scene. In fact the most valuable
| modern cards are the ones that satisfy both of 1) appealing
| artwork and 2) high usage in competitive play.
|
| For older cards though I disagree that the the pokemon
| company can just reprint more any time they want and dilute
| the value. The most valuable card out there is the original
| first edition Charizard from the 90s. They can never really
| reprint this card and have it be treated in the exact same
| way. And they do regularly "remaster" or reprint the
| original set from the 90s in order to cash in on the
| nostalgic 30-somethings who now have a disposable income (I
| believe there is another one coming later this year). But
| these are just replicas and not the "real" thing. Kind of
| like an original antique/book/currency/artifact vs a
| replica.
|
| However I'd say at least 50% of the cards in any printed
| set are not useful in gameplay if you are actually trying
| to build as competitive a deck as possible, and are really
| only good for collecting a complete set. They will also
| print "alternate artworks" of common cards which are the
| exact same gameplay-wise but visually different and
| artificially much rarer.
| [deleted]
| empath-nirvana wrote:
| 1) An investment of money 2) In a common enterprise 3) With
| the expectation of profit 4) To be derived from the efforts
| of others
|
| It fails on points 2 and 4.
| saurik wrote:
| The common enterprise here is, similar to the argument
| against cryptocurrencies, the efforts to make money off
| of these cards; and the efforts of others here is the
| work being put in by the company which printed these
| cards to market them and design this game. If the company
| suddenly disappeared tomorrow--or began to mismanage
| their product line, potentially suddenly printing a bunch
| of cards they previously claimed were rare--the value of
| these cards would plummet, as people aren't just buying
| them for their prior established value: they expect that
| this company will defend their IP portfolio, release
| expansions with new content, and continue the efforts to
| market this game in stores.
|
| If you disagree with this analysis, maybe you can show
| how this is (or is not) different to, say, Axie Infinity
| (a crypto company even I actually do feel is a security
| under this test--with centralized servers managing
| centrally minted NFTs--and which is very similar in
| nature to Pokemon as it is clearly a rip-off of their IP)
| or (to take a more standard example) Filecoin (one which
| the SEC claims is a security in their lawsuit against
| Coinbase)?
| gamblor956 wrote:
| The common enterprise test doesn't work for things where
| the primary purpose for most owners is to own the card
| (for playing, as with Pokemon, or for display, as with
| baseball cards or most other collectibles). That a small
| fraction of owners acquire collectibles to trade in them
| as valuable assets doesn't taint the fundamental
| character of the collectible for everyone else. (Contrast
| to crypto, where everyone buys crypto for the purpose of
| ultimately selling it for higher value since it has no
| other use or reason for existing.)
|
| Axie Infinity might run afoul of the Howrey test because
| of deliberate design decisions in the game which make it
| nothing like Pokemon: the ability to cash-out in-game
| currency, and the ability to loan out axies to other
| players and make money from their in-game efforts. Unlike
| Pokemon cards, which can be loaned out by players without
| any involvement from the company printing the cards,
| loaning out axies and earning money from other players'
| playing required the active involvement of the company
| behind the game. Moreover, making money (and especially
| making money pyramid-style from loaning out your axies to
| other players) was marketed as the primary selling point
| for the game for over a year, in contrast to Pokemon and
| baseball cards where the printing companies have never
| made claims about the value of the cards or the putative
| income that could be derived from engaging in a career
| trading them.
| empath-nirvana wrote:
| "Through the efforts of others" is the activity of the
| block chain itself, which is engaging in economic
| activity in pursuit of profit. So, Axie infinity and
| FileCoin clearly fall under that.
|
| There's no common enterprise for ordinary collectibles. A
| truly analogous situation would be if pokemon represented
| a share in the pokemon company where you could
| participate in the profits derived from pokemon
| merchandising or something like that.
| gamblor956 wrote:
| _(If your answer has anything to do with the existence of
| the game, I am curious what you think of baseball cards.)_
|
| Yes, if you ignore the primary reason for Pokemon cards
| (the game), then they can magically be made to look like
| securities....
|
| _They then sell these things to people who are absolutely
| buying them with the expectation that they will go up in
| value._
|
| No, completely false and this betrays a complete lack of
| understanding of why people buy collectibles. People buy
| collectibles to _collect_ them; the value is in
| _possessing_ the collectible; rare collectibles have value
| because it is harder to acquire them to add to one 's
| collection.
|
| With respect to baseball cards: they are collectibles. They
| have value because people collect them. To keep. They don't
| represent an interest in a common for-profit enterprise,
| and they don't derive their value from the efforts of
| others. The value of a card is derived from the card
| itself: the quality of the print, the rarity of the card in
| its respective printing run, and (most importantly) its
| physical condition. Popular players' cards are usually more
| valuable because more people want to own the card, not
| because owning the card will somehow make you more money
| from that player's efforts. (I still have a few baseball
| cards from when I was a kid. My Ken Griffey Jr card is
| worth about a penny because it is not in good condition; my
| mint Tim Belcher card is worth $1.35 because I never had a
| reason to look at it. But even though nobody knows who he
| is outside of hardcore Dodgers fans, some people out there
| still want to have a complete Dodgers lineup from the
| 1987.)
|
| And this is why analogies to collectibles always fail for
| crypto bros: collectibles have value in themselves, but
| crypto only has value to the extent it might represent
| something else.
| rondini wrote:
| In a 50 mile radius around me there are 44 officially
| sanctioned Pokemon tournaments happening this month. If you
| look outside your social circle you'll find that a lot of
| people play the #2 TCG in the world
| saurik wrote:
| There were (maybe even are) a ton of people playing Axie
| Infinity (an NFT rip-off of Pokemon) also; does that mean
| it isn't a security, because some people actually play
| it? When I was a kid I certainly knew people (including
| myself) who played Magic: The Gathering, and yet most of
| the reason we all bought as many cards as we did was the
| lottery and collectible trading mechanic.
|
| If you are willing to admit that there are "utility" to
| these cards, then what makes them different from
| cryptocurrency projects that do the same? If the game
| weren't so popular--maybe it is one of the numerous card
| games we wouldn't quickly be able to name that are all
| rip-offs of the concept, but didn't have the juicy IP of
| Pokemon--would you then suddenly consider it a security?
| pessimizer wrote:
| If a crypto token has any utility other than being a
| balance on an account that can be traded (which some do,
| or at least purport to do), I think it should be a lot
| harder to call them a security. As most of them are
| though, they don't actually exist other than as an entry
| in a ledger.
| [deleted]
| pessimizer wrote:
| I _deeply disapprove_ of Magic and honestly think that it
| shouldn 't be allowed to be marketed to children if
| cigarettes aren't allowed to be marketed towards children.
| But an enormous number of people actually play the
| (shockingly boring) game. And while there's little doubt
| that most of the cards being purchased now are going to end
| up worthless, the "long term" in Magic has already been
| reached because it's been around for 30 years.
|
| Magic is being held up by the early cards having been
| driven up in price by millennial and young gen x players
| who became adults with real incomes and social lives that
| revolved around the game. WoC manipulates the market as
| much as it can manage, trying to maintain the hope that one
| can strike it rich, but they make their money off the new
| cards, not the used ones.
|
| It's the same thing that happened with comic books and
| baseball cards: people who bought baseball cards in the 50s
| and early/mid-60s found themselves with small fortunes,
| because there were wealthy nostalgic baby boomers to sell
| to. People bought baseball cards in the 80s and 90s trying
| to cargo cult the price increases of those classic cards,
| and the people who printed baseball cards played into that.
| That doesn't make baseball cards a type of security where
| one is investing in the growth in the community that buys
| baseball cards any more than buying a washing machine makes
| you an investor in the growth of the community that buys
| washing machines, although washing machines also have a
| resale value.
|
| Buying crypto gives you nothing but a line in the
| distributed accounts of the people who are coining crypto.
| It's nothing but an obligation. There's not even the token
| value that a 10 cent stock certificate might provide.
| rightbyte wrote:
| How can MtG be even remotely comparable to cigarettes? I
| would buy a comparison to lotteries or "loot boxes" due
| to boosters ...
| legitster wrote:
| > It's a good question for philosophers and spectators, but
| personally I don't care at all
|
| Please don't be so narrow sighted. Have you ever been charged
| with a crime you didn't know was a crime? You don't think
| overzealous sheriffs or prosecutors love pulling out old
| statutes on people?
|
| Holding people accountable for laws they had no reasonable
| way of knowing is a miscarriage of justice. Our criminal
| system _absolutely_ takes intent into account when
| determining criminality and sentencing.
|
| I have no idea why people think the Howey test is so cut and
| dry when courts sometimes struggle with a legal definition
| for a sandwich.
| Analemma_ wrote:
| "Ignorance of the law is not an excuse" is a well-
| established legal principle with precedent going back to
| Ancient Rome. It does get a bit tricky when regulatory
| statutes get involved, but c'mon: all these businesses save
| maybe Coinbase are run by criminals. We're not talking
| about well-meaning people acting in good faith here.
|
| Also, that all only applies to criminal statues, not
| civil/regulatory ones. If you're a construction firm who
| doesn't know that houses have to be built to fire code,
| maybe you'll escape criminal prosecution, but the
| government is going to take an axe to your business anyway.
| wpietri wrote:
| Mashinsky definitely has a "reasonable way of knowing"
| about these laws. More than that, anybody starting a
| company has a positive duty to clients and investors to
| make sure that it's legal before things get too far.
| legitster wrote:
| Maybe a better example would be the pot industry. Pot is
| _blatantly_ illegal at the federal level. So everyone
| currently running a dispensary is theoretically operating
| fraudulently with their business partners.
|
| Does that mean they have a duty to their own business
| partners or customers or investors to shut down their own
| business?
| wpietri wrote:
| They are not operating fraudulently. Their customers are
| buying and getting marijuana. Their investors surely know
| the risks as well.
|
| If we're looking for an analogy in this space, I think
| it's more like snake oil. So imagine a company started
| selling a new "nutritional supplement" or "herbal blend"
| that helped with anxiety. But it turned out the secret
| ingredient was weed. That would be a fraud on investors
| and they could well get charged for that on top of the
| base drug charges.
| bandrami wrote:
| The most amusing part of crypto is watching libertarians
| learn in realtime why these regulations exist
| wpietri wrote:
| Absolutely agreed. Back in college I met some very sincere,
| thoughtful, and kind libertarians. I occasionally imagine
| how horrified they'd be to learn that their considered and
| nuanced political philosophy had become a popular fig leaf
| for "I do what I want without regard to harm for others".
| pixl97 wrote:
| The problem is libertarianism has always been this way.
| Typically when you're younger it sounds like a good idea.
| It would likely work if people weren't assholes. Then you
| grow up and realize people are assholes. Most people grow
| out of their libertarian phase, but the ones I worry
| about are those that don't. All I can think about when I
| see an old libertarian is "That asshole would install a
| toxic waste dump beside my house and make me spend the
| rest of my short life suing them for damages"
| DennisP wrote:
| Some libertarians answer that yes, people are assholes,
| but that includes the people in the government.
| wpietri wrote:
| Could be. But for me there's a difference between "we
| have to limit harm, but let's do it in ways that
| otherwise lean toward freedom" and the maximalist "I DO
| WHAT I WANT! YOU'RE NOT MY REAL DAD" types. So I agree
| the absolutist libertarians are somewhere between
| dangerously naive and sociopathic. And I think the
| volunteer billionaire defense squad is ridiculous. But I
| have met reasonable ones who saw it more as a direction
| to lean, a counterbalance to authoritarian approaches.
| juuular wrote:
| You should care (not saying it's bad you don't!), because the
| philosophy of it helps us distinguish between a system in
| which people participate in good faith but get mislead and
| cling to bad behavior out of fear, vs people participating in
| bad faith thinking they can get away with it.
|
| The difference is in terms of punishment and enforcement
| mechanisms. The person who keeps doing something bad out of
| fear that there's no way out is, in a sense, a failure of
| society as a whole. The person who is doing something bad as
| a way to get a leg up thinking they can get away with it is a
| failure of themselves to understand that society comes with a
| social contract.
|
| The end results and the ultimate suffering are the same. For
| the first situation, we want to educate people such that they
| are more aware and can avoid falling into that trap, and give
| them ways to get out of the trap that minimize damage. For
| the second situation, we want to isolate the damage they can
| cause and prevent them from causing more damage because they
| are fully conscious of what they are doing and what is going
| on, and that makes them more dangerous.
|
| If you mess up and get into an inextricable situation, there
| should be a way to resolve that with the promise of personal
| growth (along with guard rails to prevent repeating the same
| mistakes). If you deliberately cause an inextricable
| situation so you can profit off of it, the only resolution is
| to isolate the person who caused it from committing further
| harm until they go through personal growth such that they
| don't want to cause that harm anymore because they understand
| that harming others also means harming themselves in the big
| picture.
| wpietri wrote:
| There are some cases where I care about intent. Did
| somebody step on my toes? My reaction will depend on the
| extent to which I think they meant it.
|
| But for large-scale financial crimes, I think worrying
| about that too much is not just unknowable and irrelevant,
| I think it's actively harmful.
|
| As with toe-stepping, we can recognize that a whoopsie
| moment may not deserve punishment. E.g., if you're out
| hunting with your buds and accidentally shoot somebody in
| the face, as with Dick Cheney, that's different than
| intentionally shooting somebody.
|
| But when somebody intentionally sets up or takes on a
| position of power, I think there are no whoopsies. Drinking
| a beer on the couch? Have fun. Drinking and getting in a
| car? Criminal. Drinking and getting in a car and killing
| somebody? It may be no more intentional than toe stepping.
| But at that point I don't really care whether they killed
| somebody because they meant to or not. The harm's the same.
|
| I think this especially matters when we look at things like
| the 2008 financial crisis. It caused enormous damage, both
| in financial and human terms. Yet basically nobody was held
| accountable. Why? Because they didn't _mean_ it. They were
| just greedy fuckers in positions of extraordinary power
| that they used for personal gain without regard to the
| human impact. Plus they were the sort of people who looked
| a lot like the people who made the laws. They went to the
| same parties and had nice friends. So they were all somehow
| let off the hook. And we did little to make sure they 'd
| get held responsible the next time.
|
| I think the personal growth bit is nice, but hopelessly
| naive. There are plenty of people who will do the right
| thing not out of love but of fear. There are worlds where
| those people are kept from doing harm, such that we can
| help them grow up to be decent. But we don't live in a
| world like that. And if we want to create that world, we
| need to stop the sociopaths and morally deficient goofs
| from causing massive trauma to those around them. Because I
| promise you, that will interfere with the victims' personal
| grwoth.
| RC_ITR wrote:
| Playing Devil's Advocate - The Pokemon card is a _thing._ I 'm
| not buying it because I think it is a fungible asset that I can
| use to transact with (the _thing_ I bought has a physical
| condition that can be graded, it is unique).
|
| No one was collecting crypto to complete their collection, they
| were buying crypto (not caring even a little bit about which
| particular unique token they bought) because they thought it
| would be a useful tool in future monetary transactions.
|
| The _real_ crime here is US regulators thinking "commodities"
| was a fix-all solution for regulating crypto when you can eat
| most commodities, but not crypto (since again, If I buy orange
| juice futures from someone, they can't deliver me _any_
| oranges, they need to be edible and of a certain grade).
|
| Now regulators have come to their senses, but in a really
| confusing and unfair way TBH.
| saurik wrote:
| People aren't buying Pokemon cards to "complete their
| collection": they are buying them because they think someone
| else will pay more for them later, presumably because _they_
| want to "complete their collection", but that makes just as
| little sense... they too will be buying it from the first
| person in order to sell it to a third person. There is
| supposedly a game attached to Pokemon cards, but that excuse
| to establish "utility" is pretty flimsy: even the 10 year old
| I know who is obsessed with these cards is only in it as an
| amateur investor and it isn't clear to me he even knows the
| results; he's simply fallen for the marketing efforts of this
| company shilling their shitcards on an unsuspecting populace,
| many of whom will lose thousands of dollars by the time this
| particular collectible bubble is over.
| banannaise wrote:
| > There is supposedly a game attached to Pokemon cards, but
| that excuse to establish "utility" is pretty flimsy
|
| Playing the game is a game. (There are dozens of major
| tournaments, including national and world championships, of
| people playing the game.) Collecting the cards is also, in
| a different way, a game. They have made a product that
| people do things with. You are essentially trying to define
| all products with resale value as securities.
| saurik wrote:
| I am just drawing an analogy to the same BS arguments
| that the SEC--and the anti-crypto crowd on this forum--
| like to make against projects like Filecoin.
|
| Why do you then believe that cryptocurrencies are somehow
| different? How about Axie Infinity, which is specifically
| a game similar to Pokemon cards?
|
| Why is it somehow sufficient for Pokemon cards to say "a
| game is a game" but you say that for crypto and you are
| "shilling your shitcoin"?
|
| Do you believe this to be different for baseball cards,
| which do not have a game, or for competing collectible
| card games which never got popular?
|
| (After all, if you are willing to say that just wanting
| to collect and trade cards for purposes of making money
| is itself a game that establishes utility, what are you
| even trying to regulate in the first place? Aren't you
| then just making all securities into products?)
| RC_ITR wrote:
| >Why do you then believe that cryptocurrencies are
| somehow different? How about Axie Infinity, which is
| specifically a game similar to Pokemon cards?
|
| The first two words in NFT are "Non-Fungible." Those are
| certainly not securities.
|
| Level-1 coins (and most L2) _are fungible by design._ He
| 's not in trouble for dealing in NFTs.
|
| If that's not a meaningful difference, then I'm curious
| for what your explanation is for _why NFTs exist._
| banannaise wrote:
| > After all, if you are willing to say that just wanting
| to collect and trade cards for purposes of making money
| is itself a game
|
| Making money is not the reason that people collect and
| trade Pokemon cards, and if you think it is then your
| brain has been pretty badly poisoned by activities where
| making money is the only objective.
| afterburner wrote:
| Crypto assets are illegal if you try to dodge taxes. Or, as a
| trading institution, pretend that you have no duty to follow
| tax laws on reporting client transactions. They're no different
| than equities if you follow all the laws.
|
| This all seems weird to me in Canada. Here, it's been
| acknowledged for years that crypto = equities.
|
| Fraud is illegal either way though.
| legitster wrote:
| The tax thing is overrated. Equities have to be traded
| through a brokerage and that's the real death knell for
| crypto.
|
| If your dream is to be able to buy a pizza with bitcoin,
| having to do the transaction via your respective brokerages
| would not work.
| afterburner wrote:
| That dream has been dead for years. BTC is all about
| investment now.
| DennisP wrote:
| That's more true for bitcoin than for some other
| projects, but even bitcoin has the Lightning Network
| which they're attempting to use for payments using BTC.
| DennisP wrote:
| The writing would definitely be on the wall if the SEC got to
| make the final decision. But they don't, and they just had a
| big loss in court with the XRP case. If XRP isn't a security,
| then most other things traded on exchanges aren't securities
| either.
|
| https://www.reuters.com/legal/us-judge-says-sec-lawsuit-vs-r...
| kodah wrote:
| Broader question: Given that SEC enforcement is speculative
| (eg: we _think_ this might be a security) do they have to pay
| damages when they 're wrong? If not, why? If so, how much?
| austin-cheney wrote:
| That conclusion is an assumption of an assumption of an
| assumption.
|
| First of all, SEC enforcement is both civil and regulatory.
| The SEC is an independent federal agency. Since it is not a
| member of a federal executive department it has no criminal
| enforcement capability. All matters of criminal conduct are
| forwarded to the Justice Department.
|
| Secondly, SEC enforcement is not speculative. They can
| seize assets just the same as the Justice Department as a
| matter of regulatory enforcement and they do so regularly.
| SEC enforcement agents specialize in securities law which
| is a legal specialty.
|
| Third, the law is unclear whether crypto, crypto exchanges,
| and transactions therein qualify as securities. If this
| activity were to become illegal tomorrow then that becomes
| a matter for the Justice Department to enforce, not the
| SEC.
|
| Source: I have relations to a famous (in securities
| enforcement world) former SEC enforcer.
| wmf wrote:
| They're pretty careful to never be wrong.
| null0pointer wrote:
| The parent of the comment you're replying to literally
| cites a case where they were deemed to be wrong.
| ethanbond wrote:
| It looks a bit more nuanced than that. Torres is the
| judge in the XRP case. From the article:
|
| -----
|
| Torres, who is based in New York, on Thursday said the
| company's $728.9 million of XRP sales to hedge funds and
| other sophisticated buyers amounted to unregistered sales
| of securities.
|
| But Torres ruled that Ripple's XRP sales on public
| cryptocurrency exchanges were not offers of securities
| under the law, because purchasers did not have a
| reasonable expectation of profit tied to Ripple's
| efforts.
|
| Those sales were "blind bid/ask transactions," she said,
| in which the buyers "could not have known if their
| payments of money went to Ripple, or any other seller of
| XRP."
|
| -----
|
| So it seems XRP was deemed a security just the sales on
| public exchanges weren't a securities offering? A bit
| confusing IMO.
| null0pointer wrote:
| Thanks for the clarification.
| DennisP wrote:
| From reading over the decision, the judge emphasizes that
| a security is an investment contract. The institutional
| investors and Ripple formed a contract, in which the
| investors were promised that Ripple would do various
| things in exchange for the investment.
|
| On the secondary markets, people were just speculating on
| the token price going up or down. They weren't getting
| any promises from Ripple, or even necessarily giving
| money to Ripple, so there was no contract. If there's no
| contract, there's no security. Just speculating on the
| price of something doesn't turn that thing into a
| security.
| jrflowers wrote:
| In this analogy you also had a service where people staked
| their Pokemon cards and advertised an APY% rate of return on
| those Pokemon cards, and had a service wherein people could use
| borrow and lend their Pokemon cards with the intent of
| financial gain.
| reaperman wrote:
| You may be aware already, but if you replace Pokemon with Magic
| the Gathering cards this actually becomes almost unbelievably
| close to a true story (minus the SEC story arc). The first
| "huge" bitcoin exchange[0] was originally a Magic card exchange
| which got extended to support cryptocurrencies. "Mt. Gox" =
| "Magic the Gathering online exchange". If it hadn't been hacked
| it would likely be in Coinbase's shoes right now and then your
| hypothetical would truly be eerily accurate. But of course it
| was hacked, it was a trading card exchange dealing in
| cryptocurrencies -- a major hack was basically inevitable.
|
| 0: https://en.wikipedia.org/wiki/Mt._Gox
| jonathankoren wrote:
| As an old coworker of mine said when MtGox imploded due to
| fraud and/or just abysmal security, "What? Don't you do all
| your banking at the comic book shop?"
| esotericimpl wrote:
| [dead]
| Nuzzerino wrote:
| Mtgox was not run very professionally, so I doubt they would
| have lasted this long. I had to deal with them on IRC to get
| my money out. I was told that the person with the keys to get
| my withdrawal was "in the bathtub". This was on the last day
| or so before everything was shut down and during the actual
| crisis, mind you.
| jack_pp wrote:
| When your house of cards comes tumbling down might as well
| take a bath to relieve the stress
| sleepybrett wrote:
| "house of magic cards" maybe .. ba-dum-chaa
| afterburner wrote:
| No one can bother you in the bathroom.
| hutzlibu wrote:
| I would say that is up for debate. For example in this
| case:
|
| https://www.washingtonpost.com/archive/politics/1995/01/0
| 6/8...
| sroussey wrote:
| More interesting idea: tomorrow Microsoft delists from public
| exchange and only allows OTC to buy/sell this now private
| company -- but you can only do so with Pokemon trading cards.
| And anyone that owns some is now a MS owner as well.
|
| Now do you decide the Pokemon cards are securities?
| jncfhnb wrote:
| As others have pointed out this analogy is kind of bad. But...
| also you seem to clearly acknowledge within the hypothetical
| that performing an action would be a crime, and then do the
| action. And then you're upset because it wouldn't have been a
| crime if it hadn't been made a crime... but it was and you knew
| that and you did it anyway.
| Ensorceled wrote:
| Yeah, these analogies are always terrible, but this one
| actually includes the "hey they ruled it was a crime and I
| decided that was bullshit and kept criming" part.
| csours wrote:
| Some people are confused about SEC involvement. As a reminder,
| the SEC cannot bring criminal charges. If someone gets arrested,
| Department of Justice decided to arrest them.
|
| > The U.S. Attorney's Office in Manhattan said it would hold a
| press conference at 11:30 a.m. ET (1530 GMT) to provide details
| on the charges against Mashinsky and Cohen-Pavon.
| legitster wrote:
| Sure, but the SEC completely controls the definition of
| criminality here. There was no arrest-able offence until the
| SEC made it one.
| csours wrote:
| I really don't know how to respond to this. You can see the
| charges starting on page 37 of this document:
|
| https://storage.courtlistener.com/recap/gov.uscourts.nysd.60.
| ..
|
| The document references the Code of Laws of the United States
| of America or USC, specifically the sections on Securities
| Fraud, Commodities Fraud, and Wire Fraud. The SEC didn't add
| these sections just for this case, they were there before
| Celsius was founded.
| JohnFen wrote:
| I think that it's more accurate to say that the legality of
| these actions wasn't clear, which everybody knew from the
| start. These companies decided to take a risk, and they
| rolled badly on the dice.
|
| The legality is still unclear, too. We don't know whether or
| not these companies violated the law until a court rules on
| it.
| tyre wrote:
| > the legality of these actions wasn't clear
|
| They were completely clear. The whole time. There were no
| moments when it was a reasonable thought that securities
| weren't securities "because blockchain.
| misiti3780 wrote:
| He has quite the personal website: https://www.mashinsky.com/
| popcalc wrote:
| >Groundlink vision was that happy drivers = happy customers
| while Uber was subsidizing rides for Millennials = IPO of a
| money loosing business.
|
| When people miss basic typos it can sometimes expose a culture
| of grift going all the way down. The reason many dictators have
| horrendous interior design in their palaces. Their cousin gets
| the contract and then it gets outsourced in a chain a dozen
| times before someone buys the actual thing off AliExpress and
| pockets $5.
| dsalzman wrote:
| Hopefully he updates https://www.mashinsky.com/failed-ventures
| thrownaway89865 wrote:
| Would someone explain to me what the endgame of these fraudsters
| is? I mean, of course they are trying to get rich quick pulling
| these schemes but you would believe that they do it because they
| perceive that there is some sort of opportunity to cash out
| without inevitably going to prison some day, right? What is the
| thought process in the mind of these criminals when shit hits the
| fan? Maybe just hire very expensive lawyers or move to some weird
| jurisdiction where they can't get arrested?
| DropInIn wrote:
| Only a minority of criminals are ever arrested let alone
| convicted.
|
| They hope to be in the majority who get away scot free and
| become one of the nouveau riche.
| brucethemoose2 wrote:
| Some of them do exit. There are many crypto pump-and-dump
| schemes where the project website is zombified, and the
| founders are MIA (and are probably sipping cocktails on a beach
| somewhere).
|
| The big fish though... The FTX founder was described as being a
| gambling addict: he would take _any_ risk as long as the
| outcome was statistically favorable. And I think this attitude
| was pervasive among many of the biggest crypto names. They were
| 't looking for exits, they were looking to go even bigger
| because they can't help themselves.
| onemoresoop wrote:
| I think the end game is something like making enough money such
| that doing some time would make it worth it, and we all know
| how white collar crime is punished. Of course they stash a lot
| of money so even after a lot of it is clawed back they keep
| enough.
| [deleted]
| cmrdporcupine wrote:
| All evidence from the people I know who have gone to work in
| that industry is that it's a mix of true believers, and 50%
| outright narcissistic sociopaths who know how to manipulate
| true believers.
|
| And then about 20% of people who just think the whole thing is
| "nifty" and getting to write fancy software or build a business
| around it is kinda fun, and they paid lots, so whatever.
| zzzeek wrote:
| the endgame is clear, be one of the 99% of fraudsters that are
| never prosecuted
| deepsquirrelnet wrote:
| Notoriously weak prosecution of white collar crime makes more
| people willing to take risks. I'm not sure it's any more
| complicated than that.
|
| If you're going to commit small scale fraud, you might as well
| commit large scale fraud, because on face, it seems less risky.
| JumpCrisscross wrote:
| > _Notoriously weak prosecution of white collar crime makes
| more people willing to take risks_
|
| This is more a perceptions problem in Silicon Valley. Every
| fraud announcement is followed by hand wringing around the
| lack of prosecution. Every prosecution, convictions. Every
| conviction, sentencing.
| kayodelycaon wrote:
| You're thinking about this too hard. The vast majority of them
| have either
|
| 1. Not considered what could happen after they have the money.
|
| 2. Think they are smart enough to will get away with it.
| kalverra wrote:
| In the case of Celsius, this seems like one of those a case of
| starting with good intentions, but quickly turning into fraud
| city in desperate attempts to keep the boat afloat.
|
| For the more run-of-the-mill crypto scammers, there's a
| combination of over-confidence that no one can touch them, or
| will bother to come after them. Or they just don't even think
| that far. For a lot of the bullshit influencer pump and dumps,
| the worst that's happened has been ZachXBT or Coffeezilla
| exposing your bullshit. Which is a good thing, but the
| influencer just pops back up with another get rich quick scheme
| in a couple months for a new group of rubes.
| [deleted]
| gloryjulio wrote:
| There are tons of small scale influencer scammers are not
| prosecuted, and some could even pull the scams again. Logan
| Paul, techlead..u get the idea
| nextworddev wrote:
| Didn't techlead literally commit all the things Celsius CEO
| is charged for, with his Million Token?
| gloryjulio wrote:
| And he gets away of it. It's not even on many ppl's rader
| loeg wrote:
| He may or may not get justice in time. These things move
| slowly and the authorities have limited resources.
| Vespasian wrote:
| The proverb "The wheels of justice turn slowly, but grind
| exceedingly fine" comes to mind.
|
| Not always and for anybody but surprisingly many people
| are caught long after the interest of the public moved
| elsewhere.
| tornato7 wrote:
| FTX, 3AC, Celsius, etc. took the crypto pill and believed their
| investments were going to the moon with no way to stop it.
| That's why they took such risky bets (with customer money, too)
| - because in the certain case that Bitcoin hit $1M they would
| be trillionaires.
|
| Of course because of this attitude there was way too much
| leverage in the system, which drove up prices to ATHs
| temporarily, but when the money supply ran out things quickly
| came back to reality and that leverage turned into bankruptcy.
|
| Though in an alternate universe, the fed never raised rates,
| GBTC became a spot ETF, crypto fervor continued, and SBF is the
| richest man on earth having leveraged customer funds in a scam
| that actually worked out.
| wpietri wrote:
| One of the things you have to understand about fraud is that
| much of it isn't rationally planned from the get-go. People get
| into situations and get caught up in the dynamics of them.
|
| Imagine a founder. He has an idea he thinks is brilliant. A
| sure money-maker. He's a bit of a dreamer, and objective
| observers would question whether it's possible. But the nay-
| sayers have been wrong before, and he believes in the idea. So
| he goes looking for money.
|
| As part of that process, he learns to pitch. He figures out the
| most convincing things to say, and how to say them with maximum
| persuasion. Is what he saying true or correct? That doesn't
| really matter. It might not even be knowable at this point. The
| key incentives for him are whether people respond emotionally
| in ways that they give him money.
|
| So imagine he does that and he gets the money. He has some
| investors who expect big returns. They may not really
| understand the topic, but they liked his confidence, and they
| too started to believe. But what they really want is more money
| back, and their belief is going to be partly contingent on
| seeing that happen.
|
| Our founder starts to spend the money, trying to make it real.
| Maybe the product works. Maybe he has some success selling it.
| (Maybe he is even selling it despite it not working, a
| surprisingly common outcome.) It's not going as well as he
| hoped, but he's still _confident_. He still _believes_. Because
| that 's the performance his investors want for him. But he's
| used to putting a positive spin on things, so he tells
| investors what they want to hear that it's going great.
|
| At some point, some of the investors get nervous. They expected
| returns. He led them to believe there would be big returns. So
| he pays some of those people some money. An accountant might
| say he has to pay them profits, not other investors' money. But
| the money's all jumbled up both in his head and in the world.
| If there's any impropriety, something his brain will anxiously
| skip over, he knows he'll make it right in the end. Because
| this is going to be a big success.
|
| From there, the cycle continues. The founder digs the hole
| deeper and deeper over time. As long as he's confident, as long
| as he _performs_ success, new money will keep rolling in. And
| with it comes hope. Maybe it will all work out! Maybe they 'll
| be so successful that they'll pay everybody back and nobody
| will notice a little early corner-cutting.
|
| Objectively, of course, things are getting more and more
| obviously criminal. But there's nobody objective around. The
| founder is instead surrounded by dupes, fools, and the
| complicit. To the extent that anybody honestly recognizes the
| criminality, they mostly don't talk about it or they get out
| ASAP.
|
| So to answer your question, there is generally no planned
| endgame, the same way I didn't have a planned endgame for
| eating a lot of cheeseburgers in my 20s. I may have heard about
| the consequences, but they didn't affect my behavior. It's not
| that I had a bad plan. I not only had no plan, but didn't think
| enough about the future to even have a place in my mind where a
| plan would go.
| skrebbel wrote:
| Love the cheeseburger analogy
| 0xDEF wrote:
| Many of them seem to be in the grey zone between old money and
| new money. Born to rich but not legally untouchable parents.
| naikrovek wrote:
| I'm shocked! SHOCKED! _Well,_ not that shocked.
|
| cryptocurrency is very attractive to people who want to scam
| people out of money, and ransomware probably wouldn't exist
| without it.
|
| I say pour on the hate for cryptocurrency. The hate is justified
| and fully earned.
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