4 ms·

And Coinbase is worth $75 billion. Unless executives start going to actual prison, the smart move is going to be to break the law.

dannyw 6y ago
It should like the actual misbehaviour was that coinbase was running multiple trading algorithms, one to hedge and one to arbitrate between exchanges, and they sometimes incidentally traded against each other. Running multiple algorithms is as common as writing multiple unit tests. That is standard operating practice. What is also a common practice is adding a netting layer so that your algorithms internally settle before sending out trades to the market. This is generally done to save trading fees, but it didn't apply to Coinbase because they are also the exchange. So, overall it sounds like inexperience, not malice.
- tehlike 6y ago
  You need to find out who is the employee in question.
onion2k 6y ago
You can't pay fines out of market cap.
- keiferski 6y ago
  Not a finance guy, so apologies if this is a stupid question: What about percentage-based fines? I.e. 1% of market cap.
  - rocqua 6y ago
    The point is that the 'market capitalization' isn't the bank account. It's nothing more than 'share price * number of shares'. You can try to pay a fine by selling more stock. Or by getting convertible bonds. But there are no guarantees.
    - keiferski 6y ago
      Right, but the purpose of fines is to disincentivize behavior. If you tied them to a percentage of market cap, rather than a flat fee, it seems likely that you'd get less violations, no?
      - 55555 6y ago
        This is the income-based speeding ticket discussion but for companies instead of people.
        capableweb 6y ago
        Which makes a lot of sense. How is it fair that a speeding ticket costs the same for everyone? For the lower-class, a speeding ticket can mean not being able to afford food for the month. For the upper-class, a speeding ticket can been seen as just the price for driving faster than usual. Laws are supposed to treat us equally, but without considering the income of the one who gets fined, the law is really unfavorable to some while at most a nuisance for others.
        ByteJockey 6y ago
        It depends on what you think the purpose of these laws is. If you think they're supposed to be deterrents, then you're absolutely right. It's not a deterrent for rich people. The other point of view is that by speeding, you are doing a certain amount of damage to society. Speeding does kill people, so you can spread the cost to society across all speeders. Government agencies regularly put values on human lives (usually around $10 million right now), so it becomes a simple number of people killed * $10 million / number of speeders / rate of speeders being caught. This damage being done, however, is the same no matter how much money you make. There's a long tradition of seeing the punishment for a crime as making society whole after you've done damage to it (hence the phrase "paying your debt to society" being used to refer to a prison sentence).
        ryanlol 6y ago
        > How is it fair that a speeding ticket costs the same for everyone? It isn’t. Why should I pay the same fines while driving my lamborghini with fresh brakes and tires as the poor people speeding in their deathboxes? My car probably has half the braking distance of theirs.
- loeg 6y ago
  This is maybe true in some facile sense, but companies can and do exchange market cap for working capital through ATM offerings[0]. Is there some specific reason companies cannot sell stock to finance fines? (Even if it is disallowed in some regulatory sense -- I am not aware of this -- money is fungible, and I don't believe a single fine prevents future stock offerings.) [0]: https://en.wikipedia.org/wiki/At-the-market_offering https://en.wikipedia.org/wiki/At-the-market_offering

dannyw 6y ago

It should like the actual misbehaviour was that coinbase was running multiple trading algorithms, one to hedge and one to arbitrate between exchanges, and they sometimes incidentally traded against each other. Running multiple algorithms is as common as writing multiple unit tests. That is standard operating practice. What is also a common practice is adding a netting layer so that your algorithms internally settle before sending out trades to the market. This is generally done to save trading fees, but it didn't apply to Coinbase because they are also the exchange. So, overall it sounds like inexperience, not malice.

tehlike 6y ago
You need to find out who is the employee in question.

onion2k 6y ago

You can't pay fines out of market cap.

keiferski 6y ago
Not a finance guy, so apologies if this is a stupid question: What about percentage-based fines? I.e. 1% of market cap.
- rocqua 6y ago
  The point is that the 'market capitalization' isn't the bank account. It's nothing more than 'share price * number of shares'. You can try to pay a fine by selling more stock. Or by getting convertible bonds. But there are no guarantees.
  - keiferski 6y ago
    Right, but the purpose of fines is to disincentivize behavior. If you tied them to a percentage of market cap, rather than a flat fee, it seems likely that you'd get less violations, no?
    - 55555 6y ago
      This is the income-based speeding ticket discussion but for companies instead of people.
      - capableweb 6y ago
        Which makes a lot of sense. How is it fair that a speeding ticket costs the same for everyone? For the lower-class, a speeding ticket can mean not being able to afford food for the month. For the upper-class, a speeding ticket can been seen as just the price for driving faster than usual. Laws are supposed to treat us equally, but without considering the income of the one who gets fined, the law is really unfavorable to some while at most a nuisance for others.
        ByteJockey 6y ago
        It depends on what you think the purpose of these laws is. If you think they're supposed to be deterrents, then you're absolutely right. It's not a deterrent for rich people. The other point of view is that by speeding, you are doing a certain amount of damage to society. Speeding does kill people, so you can spread the cost to society across all speeders. Government agencies regularly put values on human lives (usually around $10 million right now), so it becomes a simple number of people killed * $10 million / number of speeders / rate of speeders being caught. This damage being done, however, is the same no matter how much money you make. There's a long tradition of seeing the punishment for a crime as making society whole after you've done damage to it (hence the phrase "paying your debt to society" being used to refer to a prison sentence).
        ryanlol 6y ago
        > How is it fair that a speeding ticket costs the same for everyone? It isn’t. Why should I pay the same fines while driving my lamborghini with fresh brakes and tires as the poor people speeding in their deathboxes? My car probably has half the braking distance of theirs.
loeg 6y ago
This is maybe true in some facile sense, but companies can and do exchange market cap for working capital through ATM offerings[0]. Is there some specific reason companies cannot sell stock to finance fines? (Even if it is disallowed in some regulatory sense -- I am not aware of this -- money is fungible, and I don't believe a single fine prevents future stock offerings.) [0]: https://en.wikipedia.org/wiki/At-the-market_offering https://en.wikipedia.org/wiki/At-the-market_offering