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Crypto companies think they don't trade securities which is clearly wrong and contradicted by their own advertising. People buy crypto without a real use for cr

by TimPC 3y ago

Crypto companies think they don't trade securities which is clearly wrong and contradicted by their own advertising. People buy crypto without a real use for crypto because they think they can sell it for more later. Everyone under the sun knows this. It's obviously a security and failing to register should be met by SEC cases like this one.

EricDeb 3y ago
People buy houses, dont live in them, purely to sell them for more later.
pnpnp 3y ago
Isn’t it true that the SEC wouldn’t let Coinbase register since they said Bitcoin _isn’t_ a security? It’s my understanding that Coinbase tried.
- dragontamer 3y ago
  Article discusses Coinbase Earn, which was a staking service providing APY yields. Is that not an unregistered financial product? That's also the kind of financial product directly behind FTX, Voyager, Gemini, and Lunacoin / Celsius collapses. So we have direct evidence of a particular produce (staking) that is both unregistered and dangerous. That many Americans lost money over.
  - hirako2000 3y ago
    Gemini didn't collapse, and an evidence takes a bit more clarity to be treated as such. Luna is.. a coin Can't you get APY returns as a retail customer with pretty much any high street banks? In what ways is that less dangerous than going through a crypto exchange: by the fact the SEC is actively criminalising the activity rather than issuing licenses so that some customer protection via the justice system remains out there for this sort of market. You mentioned FTX, that's a good example, an exchange run by a con goofy looking artist, that achieved such massive penetration even on the US market was made possible exactly because it is so cumbersome or impossible for a legit business to get a license, the crypto affiliated threats making it also difficult for normal banks to do any sort of business with crypto entities. All that being said, sure, if they don't have a license they can be sued for their earn products. The only clear distinctions, the one thing the name mentioned and many others still running
    - dragontamer 3y ago
      Ehhh, I got confused over the myriad of collapsed companies. Perhaps I shouldn't try to get better memory, but instead cryptocoin companies need to stop collapsing. Its getting difficult to remember each company's situation on an individual basis. Gemini was sued by SEC for running unregulated securities and was forced to shut down Gemini Earn months ago. Whatever, but its just another example of the kind of products the SEC is clearly looking at. > Luna is.. a coin Lunacoin supported Terra, and Celsius was backing its staking product with Terra coins. Are... you unaware of the connection between Luna and Celsius? I wrote "Lunacoin / Celsius" for a reason. This didn't even happen that long ago, so I guess I assumed people would know where I was going. I'm trying to describe the scope of unregistered, unregulated, super-dangerous "staking" schemes that collapsed over the last year. The names I discussed are all related to staking.
      - hirako2000 3y ago
        I'm aware, I'm just pointing out luna is a coin. It's a bit hard to assimilate it to business entities running unregistered financial products on the US soil. My understanding is that Celsius or any lender that gets exposed to a token value collapsing can quickly get itself in serious muds since loans have a collateral, and in crypto those are often crypto tokens. Anyhow that's my recollection of what happened to Celsius, i could be wrong. I don't think the problem the SEC is invoking is "dangerous" investments. I'm not sure who would be entitled to make the difference. You could stake eth and that would be one of the safest positions to take in the crypto space. Actually anybody can, whether the SEC sees it as OK, via centralised exchanges for those who can access them or decentralized exchanges for those who can't. But then of course eth could drop 95% in value by next year and the yield would mean nothing to compensate. It could go the other way and go the other way. Does it make it a dangerous product? A security illegal to trade without a license which the SEC wouldn't grant a license to offer as a product to anyone? Because it's dangerous or because it's a security having drastic volatility? More volatile than Gamespot shares not so long ago? Does it make gamespot so dangerous it should be banned from trading as a security? And one last one, what is more dangerous, owning eth tokens staked for long term returns, or some treasury bonds issued by a country that is systematically on the verge of defaulting on its unbearable debt? And who's to say? I don't think the SEC has any legitimacy left to be taken seriously, it let SBF runs business inside and outside the US soil for years, embezzling well over 10B dollars, whether he is innocent or an idiot crook the ridicule crown goes to the SEC for not having seen anything suspect until after the empire entirely collapsed. About having flimsy memories, it's OK but it discounts serious weight throwing incorrect facts when attacking a type of trading activity as a whole. Your argument did read like because so many collapsed, the whole thing must be flagged as a failure. Anyhow, coinbase, kraken, binance, gemini, kucoin and many others have been operating for years just fine, and are successful, profitable businesses to this day despite all the obstacles regulators and the press threw at them. Anyhow back to the main point, I'm with you earn products if unregistered are non compliant with regulations, so the SEC can have its case and continue to pretend it's doing its job.
  - andreygrehov 3y ago
    > That many Americans lost money over. This requires a citation with data points, eg how many Americans lost money, how much money did they lose, etc. Because, what if there are more Americans who've made money than those who have lost? > SEC said Coinbase has since at least 2019 made billions of dollars by handling cryptocurrency transactions, while evading the disclosure requirements meant to protect investors This is a pure framing - it doesn't matter how much money Coinbase made. Otherwise, it means that if you don't make _billions_, you can conveniently avoid the disclosure requirements intended to protect investors. So really, they should've written something like: "Coinbase has been facilitating cryptocurrency transactions since at least 2019, while evading the disclosure requirements intended to protect investors". While I do understand that these are the legal requirements, the protect investors "narrative" (khm-khm, requirement) is a joke. People lose money trading stocks / options / etc every day. To me, as a consumer, there is zero difference between trading AAPL on TD Ameritrade App vs trading crypto through Coinbase App. How's TD Ameritrade protecting me from losing money?
    - itake 3y ago
      > Because, what if there are more Americans who've made money than those who have lost? Why does this matter? Even if Americans are scamming foreigners (0 Americans losing money), that doesn’t make this legal. The difference between aapl and coinbase is there is regulatory audits of the books and required publications about the health of the security. There are rules about insider trading and insurance protections if a brokerage mishandles your money (see Blockfi).
      - andreygrehov 3y ago
        > Why does this matter? Because the parent said "that many Americans lost money over". Plus the SEC is "protecting investors". So I'm asking, what if there are more people who've made money over those who lost? Does that mean life's good? Coinbase has been pretty transparent about their operations. Not only transparent, they've publicly mentioned several times how frustrated they are dealing with SEC, the organization that is slow to come up with various legal requirements for the cryptocurrency industry. In a way, Coinbase helps the SEC to raise their own bar.
  - pa7x1 3y ago
    Minor clarification. Coinbase Earn is a lending product, you lend to Coinbase and you receive interest. The same applies to Celsius, it provided interest on money they borrowed. Coinbase also offers staking as a service, the SEC is also going after this. But both of the above are different from actual Proof of Stake, as conceived by Ethereum. The SEC has made no mention of this in neither of the 2 current lawsuits. Unfortunately many of these products misused the term to whitewash or as a marketing gimmick.
- strangescript 3y ago
  If you opened an exchange and did nothing but trade bitcoin, and only bitcoin, you would be free and clear, but there is no real money in that. Coinbase argued a few years ago they were losing to competition because their competitors could do a lot of gray area stuff they couldn't to do being a US-based traded company. Getting listed on Coinbase used to be the gold standard of a trusted, respectable crypto, but they at some point decided screw it and just embraced the coming legal challenges.
  - pnpnp 3y ago
    Interesting! I hadn’t looked at it this way.
- Ekaros 3y ago
  Bitcoin itself might not be. Even many other currencies might not. But what other "products" they are running? Those could and probably would fall under various classifications.
  - pnpnp 3y ago
    Ah, of course. I forgot that they have many other offerings.
  - TimPC 3y ago
    Honestly bitcoin not being a security has been one of the biggest mistakes the SEC has made over the past decade. They gave that guidance and are stuck with it now. But the argument for it being a commodity is pretty weak and being a security would be useful from a regulatory framework. I think it's pretty clear bitcoin needs as much or more regulation than a typical stock or bond and is a more likely source of fraud or problems than typical stocks or bonds are.
krunck 3y ago
That's odd. All these years I thought I was exchanging dollars for Bitcoin for spending it. Thanks for setting me straight.
- _fizz_buzz_ 3y ago
  I know lots of people that own bitcoin. I haven't met anybody that uses bitcoin to spend it on anything. It still makes front page news on reddit if someone does groceries with crypto: https://old.reddit.com/r/CryptoCurrency/comments/13a9q3r/yes_i_did_it_again_i_went_to_the_supermarket_here/ https://old.reddit.com/r/CryptoCurrency/comments/13a9q3r/yes... People write articles if a house gets sold with bitcoin: https://finbold.com/house-in-portugal-sold-for-3-bitcoins-in-a-historic-first-ever-direct-sale/ https://finbold.com/house-in-portugal-sold-for-3-bitcoins-in... Spending bitcoin on "stuff" basically doesn't exist. It's a rounding error.
  - achillean 3y ago
    As a vendor that tried accepting crypto I can confirm that it's basically non-existent. And the few transactions that do take place have a lot more issues than regular payments: https://blog.shodan.io/accepting-crypto-a-vendor-perspective/ https://blog.shodan.io/accepting-crypto-a-vendor-perspective...
  - dopa42365 3y ago
    It's almost as if people don't actually want a multiple dollar transaction fee that can take an hour (or more) to process. That may be acceptable when you use bitcoin (or more likely Monero) to buy whatever your heart desires, but is absolutely not usable for regular purchases.
throw1234651234 3y ago
It's absolutely unclear what the SEC is doing here at all. Why is ALGO a security and ETH is not? They do the same thing. What are the implications of this lawsuit? Completely unclear. This is vague and unhelpful. edit: Keep downvoting - the fact, with a clear example, remains.
- pjc50 3y ago
  Howey test.
- tromp 3y ago
  I think ETH should have been classified as one too, due to its ICO. Making an exemption for that was a mistake...
  - simpsond 3y ago
    The primary use cases of ETH are changing state of the network and collateral for state change validation. Requester pays to effect change and some ETH is burnt and some goes to validators to incentivize operation. What other security does that? I don’t expect profit when using it to change state of the network.
  - WinstonSmith84 3y ago
    Let's ask Gensler what are his thoughts about ETH then https://twitter.com/sassal0x/status/1648338351832064003 https://twitter.com/sassal0x/status/1648338351832064003 Oh wait ... :-)
    - throw1234651234 3y ago
      That's amazing on the level of refusal to answer a simple question.
- EscapeFromNY 3y ago
  When was ETH declared as not a security? I don't remember hearing anything about that. The SEC says only BTC is a commodity: https://www.axios.com/2022/06/28/bitcoin-is-the-only-coin-the-sec-chair-will-call-a-commodity https://www.axios.com/2022/06/28/bitcoin-is-the-only-coin-th... The CFTC says only BTC is a commodity: https://cryptoslate.com/cftc-chair-rostin-behnam-snubs-ethereum-claims-only-bitcoin-is-a-commodity/ https://cryptoslate.com/cftc-chair-rostin-behnam-snubs-ether... People keep saying that regulation is unclear, when let's be honest, it's perfectly clear. Just not what a lot of people wanted to hear.
gonzo41 3y ago
What's the use of crypto again? Because I think it's kinda useless. Just like NFT's
- taeric 3y ago
  I could ask the same for a lot of things, though? Time shares, collectible card games, collectibles at large, fashion at large, etc. Not that I can or will wholly defend crypto. That just doesn't seem like a relevant complaint. I do question the desire for everlasting permanence of the blockchain. I know we like to keep real estate deed records and such going back as far as we can, but even there we have limited utility of that. Encasing it in a technical solution that expands to cover more transactions does feel limited in usefulness. Largely ironic/funny that it makes it incredibly unsuited to criminal use.
  - jakear 3y ago
    > Time shares They bring the probability that you will be harassed by police/landowners/elements/civilians when residing in an area way down. Personally, I take the harassment and sleep on the street. But it's not easy and many would pay not to. > collectible card games You have fun when you play them. People pay to have fun. > collectibles at large Idk some people just get weird addictions. I put collectables at large in the same bucket as crypto, no defense there. > fashion at large Looking good is more likely to get you laid. People like getting laid, and will pay for it.
    - taeric 3y ago
      Do note that the SEC's argument is usually along the lines of "if anybody is buying this to make money, then it is potentially a security." The "common enterprise" part makes it a bit different, but only a bit. Also note that time shares typically are securities, in my understanding. In contrast to a house, which is not. My argument there wasn't to identify some other things that are or are not securities, but "things that are kinda useless." In the case of timeshares, I'd say they are actively more harm than good.
- 3y ago
throw0101c 3y ago
> Crypto companies think they don't trade securities […] I think the main debate is whether they are (in the US) securities under the SEC or commodities under the CFTC. Though there may be related products and funds that are being traded.
isp 3y ago
> Crypto companies think they don't trade securities To quote the Binance Chief "Compliance" Officer: "we are operating as a fking unlicensed securities exchange in the USA bro" Source: Quoted in the filing yesterday where SEC sued Binance > 111. As Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, “we are operating as a fking unlicensed securities exchange in the USA bro.” https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-101.pdf https://www.sec.gov/files/litigation/complaints/2023/comp-pr...
- EA-3167 3y ago
  It's almost unbelievable that someone would put something so monumentally incriminating in writing, but there it is. Those boys are doomed.
  - Analemma_ 3y ago
    A bunch of people have speculated that this was a CYA move. I mean, if you get hired as the Compliance Officer for a company which clearly has no interest in compliance and only hired you to give a facade of respectability, you probably want to have a paper trail indicating "I clearly communicated that this was against the law, and they ignored me" for when the cops inevitably come.
    - jahewson 3y ago
      Nothing says “innocent” like observing your criminality before getting right back to participating in the crime.
      - ceejayoz 3y ago
        It could, if you're a whistleblower/informant. The SEC's bounty program makes it a pretty good idea. https://www.sec.gov/whistleblower https://www.sec.gov/whistleblower
        madrox 3y ago
dcow 3y ago
There are two modalities to crypto and the law needs to treat them differently. Running a node on a crypto currency network does not generate securities. It generates commodities. We don't tax people on the FMV of gold when they dig it out of the ground. But, speculating on the price of gold by creating a virtual token/contract/etc. and selling that, well that’s obviously a security. Just because people buy gold speculatively does make it a security. So buying bitcoin or chia (no longer eth) is still buying a commodity. Anything else, yeah, seems like it passes the sniff test for a security.
- stonogo 3y ago
  In my youth it was illegal to own gold at all unless it was jewelry. You'd be surprised what "we" do when it comes to wealth.
- vkou 3y ago
  > We don't tax people on the FMV of gold when they dig it out of the ground. Why shouldn't we? We tax people on the FMV of something valuable created out of thin air, why should gold be an exception?
  - lottin 3y ago
    It isn't exempt. The miner will have to pay VAT when they try to sell the gold.
  - paulddraper 3y ago
    > We tax people on the FMV of something valuable created out of thin air, There are income taxes which apply when goods or services are sold. There are sales taxes when goods are purchased. There are property taxes when goods are owned. Nothing gets taxed on creation.
    - revbed 3y ago
      And there are excise taxes when goods are created.
spaceman_2020 3y ago
What about tokens that are used to pay the network, like Ethereum? If you want to use any chain that uses Ethereum, either as a L1 or L2, you need ETH.
api 3y ago
A security represents ownership in something. This is just gambling. It's more like an unregulated casino than an unlicensed stock exchange.
zamfi 3y ago
> People buy crypto without a real use for crypto because they think they can sell it for more later. That's not what makes something a security -- many things fit into that template that aren't securities: collectibles, commodities, etc.
thesausageking 3y ago
If that's true, then why did the SEC approve Coinbase's IPO and not doing anything about it until years later? Even in spite of Coinbase meeting with the SEC hundreds of times and testifying before congress. This is a complete change in their stance by the SEC.
- thisgoesnowhere 3y ago
  Because the SECs role in IPOs have nothing to do with wether or not you are breaking securities law. They are just testing that you are not lying in your public financial declarations.
  - thesausageking 3y ago
    You're saying that the SEC knowingly allowed Coinbase to become a public company, have insiders dump billions in stock on the public, and then continue to operate a completely illegal business for another 2 years without taking any action at all? Not even issuing any guidance which Coinbase requested from them dozens of times? If so, that would be a huge scandal and the SEC should be investigated immediately. A much simpler explanation is that crypto was largely ignored by regulators, including the very shady parts like FTX, for most of Coinbase's life. When FTX imploded, lawmakers turned on crypto and put pressure on the SEC to attack the industry. This is why there's been a whole series of actions by them in the last 6 months.
    - donedeals 3y ago
      Typically IPO approvals include a carve out that says this approval cannot bed used a defense in a SEC action. CB will still use it as an argument.
drexlspivey 3y ago
SEC is supposed to tell them what is a security and what isn’t so they can refrain from selling them. Exchanges have been asking for clarification over and over. So far the only thing the SEC said on the subject is that BTC in not a security but nothing about the other cryptos. In the absence of regulatory clarity Coinbase have devised their own framework to classify what tokens aren’t securities and proceeded to list them. I don’t know how you can blame them. It’s the SEC’s job to tell them what they can trade and what they can’t but they refuse to do it.
- TylerE 3y ago
  They did tell them - Howey test etc, Coinbase just didn't like the answer and thus has been pretending they didn't hear it.
  - drexlspivey 3y ago
    Please point to where the SEC has made any official statement defining which crypto is and isn't a security.
    - TylerE 3y ago
      That's not how it works. They say what a security is. It's not their job to be babysit. Corps wishing to play in this field are expected to understand the basic foundations.
- Yizahi 3y ago
  When tokenbro industry invented a very convoluted asset class they expected government to say "Oh, it's really hard to understand and classify it, that's why we won't do it at all. You guys can do whatever you want now.". But actually they said "Oh, it's really hard to understand and classify it, that's why we will have to do it the long and painful way, and you guys can wait for us or not. But if you want to operate before the decision is reached - it's on you if you break the law.". Apparently a really convoluted business plan is not an inherent human right, if it is masking law infringement in he mean time. Who knew, right?:)
redox99 3y ago
Some cryptocurrencies may or may not be securities. Gary Gensler himself has said that Bitcoin is not a security.
ryukoposting 3y ago
In the 90s people bought Beanie Babies because they thought they could sell them for more later. Are Beanie Babies securities?

by TimPC 3y ago

EricDeb 3y ago

People buy houses, dont live in them, purely to sell them for more later.

pnpnp 3y ago

Isn’t it true that the SEC wouldn’t let Coinbase register since they said Bitcoin _isn’t_ a security? It’s my understanding that Coinbase tried.

dragontamer 3y ago
Article discusses Coinbase Earn, which was a staking service providing APY yields. Is that not an unregistered financial product? That's also the kind of financial product directly behind FTX, Voyager, Gemini, and Lunacoin / Celsius collapses. So we have direct evidence of a particular produce (staking) that is both unregistered and dangerous. That many Americans lost money over.
- hirako2000 3y ago
  Gemini didn't collapse, and an evidence takes a bit more clarity to be treated as such. Luna is.. a coin Can't you get APY returns as a retail customer with pretty much any high street banks? In what ways is that less dangerous than going through a crypto exchange: by the fact the SEC is actively criminalising the activity rather than issuing licenses so that some customer protection via the justice system remains out there for this sort of market. You mentioned FTX, that's a good example, an exchange run by a con goofy looking artist, that achieved such massive penetration even on the US market was made possible exactly because it is so cumbersome or impossible for a legit business to get a license, the crypto affiliated threats making it also difficult for normal banks to do any sort of business with crypto entities. All that being said, sure, if they don't have a license they can be sued for their earn products. The only clear distinctions, the one thing the name mentioned and many others still running
  - dragontamer 3y ago
    Ehhh, I got confused over the myriad of collapsed companies. Perhaps I shouldn't try to get better memory, but instead cryptocoin companies need to stop collapsing. Its getting difficult to remember each company's situation on an individual basis. Gemini was sued by SEC for running unregulated securities and was forced to shut down Gemini Earn months ago. Whatever, but its just another example of the kind of products the SEC is clearly looking at. > Luna is.. a coin Lunacoin supported Terra, and Celsius was backing its staking product with Terra coins. Are... you unaware of the connection between Luna and Celsius? I wrote "Lunacoin / Celsius" for a reason. This didn't even happen that long ago, so I guess I assumed people would know where I was going. I'm trying to describe the scope of unregistered, unregulated, super-dangerous "staking" schemes that collapsed over the last year. The names I discussed are all related to staking.
    - hirako2000 3y ago
      I'm aware, I'm just pointing out luna is a coin. It's a bit hard to assimilate it to business entities running unregistered financial products on the US soil. My understanding is that Celsius or any lender that gets exposed to a token value collapsing can quickly get itself in serious muds since loans have a collateral, and in crypto those are often crypto tokens. Anyhow that's my recollection of what happened to Celsius, i could be wrong. I don't think the problem the SEC is invoking is "dangerous" investments. I'm not sure who would be entitled to make the difference. You could stake eth and that would be one of the safest positions to take in the crypto space. Actually anybody can, whether the SEC sees it as OK, via centralised exchanges for those who can access them or decentralized exchanges for those who can't. But then of course eth could drop 95% in value by next year and the yield would mean nothing to compensate. It could go the other way and go the other way. Does it make it a dangerous product? A security illegal to trade without a license which the SEC wouldn't grant a license to offer as a product to anyone? Because it's dangerous or because it's a security having drastic volatility? More volatile than Gamespot shares not so long ago? Does it make gamespot so dangerous it should be banned from trading as a security? And one last one, what is more dangerous, owning eth tokens staked for long term returns, or some treasury bonds issued by a country that is systematically on the verge of defaulting on its unbearable debt? And who's to say? I don't think the SEC has any legitimacy left to be taken seriously, it let SBF runs business inside and outside the US soil for years, embezzling well over 10B dollars, whether he is innocent or an idiot crook the ridicule crown goes to the SEC for not having seen anything suspect until after the empire entirely collapsed. About having flimsy memories, it's OK but it discounts serious weight throwing incorrect facts when attacking a type of trading activity as a whole. Your argument did read like because so many collapsed, the whole thing must be flagged as a failure. Anyhow, coinbase, kraken, binance, gemini, kucoin and many others have been operating for years just fine, and are successful, profitable businesses to this day despite all the obstacles regulators and the press threw at them. Anyhow back to the main point, I'm with you earn products if unregistered are non compliant with regulations, so the SEC can have its case and continue to pretend it's doing its job.
- andreygrehov 3y ago
  > That many Americans lost money over. This requires a citation with data points, eg how many Americans lost money, how much money did they lose, etc. Because, what if there are more Americans who've made money than those who have lost? > SEC said Coinbase has since at least 2019 made billions of dollars by handling cryptocurrency transactions, while evading the disclosure requirements meant to protect investors This is a pure framing - it doesn't matter how much money Coinbase made. Otherwise, it means that if you don't make _billions_, you can conveniently avoid the disclosure requirements intended to protect investors. So really, they should've written something like: "Coinbase has been facilitating cryptocurrency transactions since at least 2019, while evading the disclosure requirements intended to protect investors". While I do understand that these are the legal requirements, the protect investors "narrative" (khm-khm, requirement) is a joke. People lose money trading stocks / options / etc every day. To me, as a consumer, there is zero difference between trading AAPL on TD Ameritrade App vs trading crypto through Coinbase App. How's TD Ameritrade protecting me from losing money?
  - itake 3y ago
    > Because, what if there are more Americans who've made money than those who have lost? Why does this matter? Even if Americans are scamming foreigners (0 Americans losing money), that doesn’t make this legal. The difference between aapl and coinbase is there is regulatory audits of the books and required publications about the health of the security. There are rules about insider trading and insurance protections if a brokerage mishandles your money (see Blockfi).
    - andreygrehov 3y ago
      > Why does this matter? Because the parent said "that many Americans lost money over". Plus the SEC is "protecting investors". So I'm asking, what if there are more people who've made money over those who lost? Does that mean life's good? Coinbase has been pretty transparent about their operations. Not only transparent, they've publicly mentioned several times how frustrated they are dealing with SEC, the organization that is slow to come up with various legal requirements for the cryptocurrency industry. In a way, Coinbase helps the SEC to raise their own bar.
- pa7x1 3y ago
  Minor clarification. Coinbase Earn is a lending product, you lend to Coinbase and you receive interest. The same applies to Celsius, it provided interest on money they borrowed. Coinbase also offers staking as a service, the SEC is also going after this. But both of the above are different from actual Proof of Stake, as conceived by Ethereum. The SEC has made no mention of this in neither of the 2 current lawsuits. Unfortunately many of these products misused the term to whitewash or as a marketing gimmick.
strangescript 3y ago
If you opened an exchange and did nothing but trade bitcoin, and only bitcoin, you would be free and clear, but there is no real money in that. Coinbase argued a few years ago they were losing to competition because their competitors could do a lot of gray area stuff they couldn't to do being a US-based traded company. Getting listed on Coinbase used to be the gold standard of a trusted, respectable crypto, but they at some point decided screw it and just embraced the coming legal challenges.
- pnpnp 3y ago
  Interesting! I hadn’t looked at it this way.
Ekaros 3y ago
Bitcoin itself might not be. Even many other currencies might not. But what other "products" they are running? Those could and probably would fall under various classifications.
- pnpnp 3y ago
  Ah, of course. I forgot that they have many other offerings.
- TimPC 3y ago
  Honestly bitcoin not being a security has been one of the biggest mistakes the SEC has made over the past decade. They gave that guidance and are stuck with it now. But the argument for it being a commodity is pretty weak and being a security would be useful from a regulatory framework. I think it's pretty clear bitcoin needs as much or more regulation than a typical stock or bond and is a more likely source of fraud or problems than typical stocks or bonds are.

krunck 3y ago

That's odd. All these years I thought I was exchanging dollars for Bitcoin for spending it. Thanks for setting me straight.

_fizz_buzz_ 3y ago
I know lots of people that own bitcoin. I haven't met anybody that uses bitcoin to spend it on anything. It still makes front page news on reddit if someone does groceries with crypto: https://old.reddit.com/r/CryptoCurrency/comments/13a9q3r/yes_i_did_it_again_i_went_to_the_supermarket_here/ https://old.reddit.com/r/CryptoCurrency/comments/13a9q3r/yes... People write articles if a house gets sold with bitcoin: https://finbold.com/house-in-portugal-sold-for-3-bitcoins-in-a-historic-first-ever-direct-sale/ https://finbold.com/house-in-portugal-sold-for-3-bitcoins-in... Spending bitcoin on "stuff" basically doesn't exist. It's a rounding error.
- achillean 3y ago
  As a vendor that tried accepting crypto I can confirm that it's basically non-existent. And the few transactions that do take place have a lot more issues than regular payments: https://blog.shodan.io/accepting-crypto-a-vendor-perspective/ https://blog.shodan.io/accepting-crypto-a-vendor-perspective...
- dopa42365 3y ago
  It's almost as if people don't actually want a multiple dollar transaction fee that can take an hour (or more) to process. That may be acceptable when you use bitcoin (or more likely Monero) to buy whatever your heart desires, but is absolutely not usable for regular purchases.

throw1234651234 3y ago

It's absolutely unclear what the SEC is doing here at all. Why is ALGO a security and ETH is not? They do the same thing. What are the implications of this lawsuit? Completely unclear. This is vague and unhelpful. edit: Keep downvoting - the fact, with a clear example, remains.

pjc50 3y ago
Howey test.
tromp 3y ago
I think ETH should have been classified as one too, due to its ICO. Making an exemption for that was a mistake...
- simpsond 3y ago
  The primary use cases of ETH are changing state of the network and collateral for state change validation. Requester pays to effect change and some ETH is burnt and some goes to validators to incentivize operation. What other security does that? I don’t expect profit when using it to change state of the network.
- WinstonSmith84 3y ago
  Let's ask Gensler what are his thoughts about ETH then https://twitter.com/sassal0x/status/1648338351832064003 https://twitter.com/sassal0x/status/1648338351832064003 Oh wait ... :-)
  - throw1234651234 3y ago
    That's amazing on the level of refusal to answer a simple question.
EscapeFromNY 3y ago
When was ETH declared as not a security? I don't remember hearing anything about that. The SEC says only BTC is a commodity: https://www.axios.com/2022/06/28/bitcoin-is-the-only-coin-the-sec-chair-will-call-a-commodity https://www.axios.com/2022/06/28/bitcoin-is-the-only-coin-th... The CFTC says only BTC is a commodity: https://cryptoslate.com/cftc-chair-rostin-behnam-snubs-ethereum-claims-only-bitcoin-is-a-commodity/ https://cryptoslate.com/cftc-chair-rostin-behnam-snubs-ether... People keep saying that regulation is unclear, when let's be honest, it's perfectly clear. Just not what a lot of people wanted to hear.

gonzo41 3y ago

What's the use of crypto again? Because I think it's kinda useless. Just like NFT's

taeric 3y ago
I could ask the same for a lot of things, though? Time shares, collectible card games, collectibles at large, fashion at large, etc. Not that I can or will wholly defend crypto. That just doesn't seem like a relevant complaint. I do question the desire for everlasting permanence of the blockchain. I know we like to keep real estate deed records and such going back as far as we can, but even there we have limited utility of that. Encasing it in a technical solution that expands to cover more transactions does feel limited in usefulness. Largely ironic/funny that it makes it incredibly unsuited to criminal use.
- jakear 3y ago
  > Time shares They bring the probability that you will be harassed by police/landowners/elements/civilians when residing in an area way down. Personally, I take the harassment and sleep on the street. But it's not easy and many would pay not to. > collectible card games You have fun when you play them. People pay to have fun. > collectibles at large Idk some people just get weird addictions. I put collectables at large in the same bucket as crypto, no defense there. > fashion at large Looking good is more likely to get you laid. People like getting laid, and will pay for it.
  - taeric 3y ago
    Do note that the SEC's argument is usually along the lines of "if anybody is buying this to make money, then it is potentially a security." The "common enterprise" part makes it a bit different, but only a bit. Also note that time shares typically are securities, in my understanding. In contrast to a house, which is not. My argument there wasn't to identify some other things that are or are not securities, but "things that are kinda useless." In the case of timeshares, I'd say they are actively more harm than good.
3y ago

throw0101c 3y ago

> Crypto companies think they don't trade securities […] I think the main debate is whether they are (in the US) securities under the SEC or commodities under the CFTC. Though there may be related products and funds that are being traded.

isp 3y ago

> Crypto companies think they don't trade securities To quote the Binance Chief "Compliance" Officer: "we are operating as a fking unlicensed securities exchange in the USA bro" Source: Quoted in the filing yesterday where SEC sued Binance > 111. As Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, “we are operating as a fking unlicensed securities exchange in the USA bro.” https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-101.pdf https://www.sec.gov/files/litigation/complaints/2023/comp-pr...

EA-3167 3y ago
It's almost unbelievable that someone would put something so monumentally incriminating in writing, but there it is. Those boys are doomed.
- Analemma_ 3y ago
  A bunch of people have speculated that this was a CYA move. I mean, if you get hired as the Compliance Officer for a company which clearly has no interest in compliance and only hired you to give a facade of respectability, you probably want to have a paper trail indicating "I clearly communicated that this was against the law, and they ignored me" for when the cops inevitably come.
  - jahewson 3y ago
    Nothing says “innocent” like observing your criminality before getting right back to participating in the crime.
    - ceejayoz 3y ago
      It could, if you're a whistleblower/informant. The SEC's bounty program makes it a pretty good idea. https://www.sec.gov/whistleblower https://www.sec.gov/whistleblower
      - madrox 3y ago

dcow 3y ago

There are two modalities to crypto and the law needs to treat them differently. Running a node on a crypto currency network does not generate securities. It generates commodities. We don't tax people on the FMV of gold when they dig it out of the ground. But, speculating on the price of gold by creating a virtual token/contract/etc. and selling that, well that’s obviously a security. Just because people buy gold speculatively does make it a security. So buying bitcoin or chia (no longer eth) is still buying a commodity. Anything else, yeah, seems like it passes the sniff test for a security.

stonogo 3y ago
In my youth it was illegal to own gold at all unless it was jewelry. You'd be surprised what "we" do when it comes to wealth.
vkou 3y ago
> We don't tax people on the FMV of gold when they dig it out of the ground. Why shouldn't we? We tax people on the FMV of something valuable created out of thin air, why should gold be an exception?
- lottin 3y ago
  It isn't exempt. The miner will have to pay VAT when they try to sell the gold.
- paulddraper 3y ago
  > We tax people on the FMV of something valuable created out of thin air, There are income taxes which apply when goods or services are sold. There are sales taxes when goods are purchased. There are property taxes when goods are owned. Nothing gets taxed on creation.
  - revbed 3y ago
    And there are excise taxes when goods are created.

spaceman_2020 3y ago

What about tokens that are used to pay the network, like Ethereum? If you want to use any chain that uses Ethereum, either as a L1 or L2, you need ETH.

api 3y ago

A security represents ownership in something. This is just gambling. It's more like an unregulated casino than an unlicensed stock exchange.

zamfi 3y ago

> People buy crypto without a real use for crypto because they think they can sell it for more later. That's not what makes something a security -- many things fit into that template that aren't securities: collectibles, commodities, etc.

thesausageking 3y ago

If that's true, then why did the SEC approve Coinbase's IPO and not doing anything about it until years later? Even in spite of Coinbase meeting with the SEC hundreds of times and testifying before congress. This is a complete change in their stance by the SEC.

thisgoesnowhere 3y ago
Because the SECs role in IPOs have nothing to do with wether or not you are breaking securities law. They are just testing that you are not lying in your public financial declarations.
- thesausageking 3y ago
  You're saying that the SEC knowingly allowed Coinbase to become a public company, have insiders dump billions in stock on the public, and then continue to operate a completely illegal business for another 2 years without taking any action at all? Not even issuing any guidance which Coinbase requested from them dozens of times? If so, that would be a huge scandal and the SEC should be investigated immediately. A much simpler explanation is that crypto was largely ignored by regulators, including the very shady parts like FTX, for most of Coinbase's life. When FTX imploded, lawmakers turned on crypto and put pressure on the SEC to attack the industry. This is why there's been a whole series of actions by them in the last 6 months.
  - donedeals 3y ago
    Typically IPO approvals include a carve out that says this approval cannot bed used a defense in a SEC action. CB will still use it as an argument.

drexlspivey 3y ago

SEC is supposed to tell them what is a security and what isn’t so they can refrain from selling them. Exchanges have been asking for clarification over and over. So far the only thing the SEC said on the subject is that BTC in not a security but nothing about the other cryptos. In the absence of regulatory clarity Coinbase have devised their own framework to classify what tokens aren’t securities and proceeded to list them. I don’t know how you can blame them. It’s the SEC’s job to tell them what they can trade and what they can’t but they refuse to do it.

TylerE 3y ago
They did tell them - Howey test etc, Coinbase just didn't like the answer and thus has been pretending they didn't hear it.
- drexlspivey 3y ago
  Please point to where the SEC has made any official statement defining which crypto is and isn't a security.
  - TylerE 3y ago
    That's not how it works. They say what a security is. It's not their job to be babysit. Corps wishing to play in this field are expected to understand the basic foundations.
Yizahi 3y ago
When tokenbro industry invented a very convoluted asset class they expected government to say "Oh, it's really hard to understand and classify it, that's why we won't do it at all. You guys can do whatever you want now.". But actually they said "Oh, it's really hard to understand and classify it, that's why we will have to do it the long and painful way, and you guys can wait for us or not. But if you want to operate before the decision is reached - it's on you if you break the law.". Apparently a really convoluted business plan is not an inherent human right, if it is masking law infringement in he mean time. Who knew, right?:)

redox99 3y ago

Some cryptocurrencies may or may not be securities. Gary Gensler himself has said that Bitcoin is not a security.

ryukoposting 3y ago

In the 90s people bought Beanie Babies because they thought they could sell them for more later. Are Beanie Babies securities?