4 ms·

Coinbase is in deep trouble – and so is the SEC

53 points by selimthegrim 4y ago

senttoschool 4y ago
Coinbase grew on the backs of ponzis and scams.
ciabattabread 4y ago
Hold on a second, I thought the whole point of crypto was having minimal to no government regulations. Now the article’s author wants to blame the SEC for having minimal to no government regulations?
- lern_too_spel 4y ago
  That usage of these systems couldn't be regulated was a fantasy that crypto-scammers pushed on crytpo-suckers. Of course they can be regulated, and the SEC has some blame for not regulating it before so many suckers got cleaned out. The author is certainly wrong about the importance of blockchains.
  - whatisweb3 4y ago
    A centralized exchange is not a blockchain. Depositing dollars into Coinbase is similar to depositing dollars into PayPal. The company can and should be regulated as a legal entity in order to protect user's funds and minimize fraud. Regulating a blockchain or smart contract is a harder matter.
    - lern_too_spel 4y ago
      Not at all. As long as you regulate the offramps to useful money via KYC, you can regulate the entire chain. That's what Chainalysis and kin are selling, perhaps not realizing that as soon as you regulate away the grift, the whole point of decentralized currency goes away.
      - whatisweb3 4y ago
        This only regulates on and off ramps to CEX. Other situations like trying to force a decentralized stablecoin to block accounts or add regulation to an ownerless DEX protocol are harder to regulate. Privacy features like TornadoCash and Aztec could make it harder still. In some of these cases the old laws do not fit well within new blockchain technological capabilities and how it is being used.
        lern_too_spel 4y ago
        It's as simple as not allowing coins not traceable only to other KYC wallets to be converted into usable money.
        whatisweb3 4y ago
        This would only apply to centralized exchanges and intermediary payment processors. A user can still trustlessly and anonymously transfer 1 ETH or 1000 DAI to another person in exchange for some goods or services, as they would with a cash transfer under the table. It is like asserting that marijuana could easily disappear if we just regulated it a little harder.
        lern_too_spel 4y ago
        Normal people don't engage in financial crime when the alternative is easier, faster, and cheaper. The outcome would be that people who are already trafficking would add new financial crimes to their charges.
        whatisweb3 4y ago
        Most people using crypto - actually running nodes, creating contracts, and sending messages on the blockchain - prefer it to dealing with traditional bank transfers and completely opaque centralized systems. It is often faster, easier, and cheaper to send USDC than USD, and it is far more programmable and extensible to develop an ERC20 contract than hope for a Stripe SDK or Shopify plugin. People will still use it even if the government attempts to cut it off entirely. Net result is that legitimate users will be treated as criminal, and/or will be forced to use broken banking infrastructure.
numair 4y ago
Regardless of people’s opinions on crypto, they should be concerned that the SEC stood by and watched while billionaires and unsophisticated investors got together and pumped and dumped LUNA. And after the whole thing blew up, the SEC went after zero people and forced the billionaire promoters to disgorge approximately zero dollars in profit. The SEC is a complete disaster. Time for a change in management.
- POPOSYS 4y ago
  The SEC is in a complicity disaster.
- capableweb 4y ago
  Correct me if i'm wrong, but the whole LUNA/Terra situation happened very recently and looking at past SEC enforcements, they're not exactly fast. Some things seems to take years before people get punished, cryptocurrencies or not. I'm sure if there are US-based individuals involved in the affair, they will eventually get what's coming for them, it'll just take some time.
- xiphias2 4y ago
  Mike Novogratz was the single biggest promoter of Luna (getting a Luna tatoo as well) personally responsible for moving billions of dollars into the token probably. He had a clear understanding that Luna was secured by billions of dollars of BTC backing on a personal account (which makes it clearly a security). https://www.cnbc.com/2022/05/29/who-got-rich-before-terra-stablecoin-collapsed.html https://www.cnbc.com/2022/05/29/who-got-rich-before-terra-st...
gammabetadelta 4y ago
gary is not making friends, but he's rich so he will be fine the whole idea of regulation through enforcement is absurd, when did it become to hard to make laws? why should companies guess at what will and won't be enforced based on one chairman's concoction.
schemescape 4y ago
> Some on Twitter have suggested Gensler leaked the investigation to Bloomberg to punish Coinbase, which has publicly complained about the SEC’s behavior. A veteran crypto lawyer familiar with the ways of Washington, DC told me this is almost certainly the case, and said Gensler’s fingerprints are on earlier leaks to the Wall Street Journal. This is an extraordinary claim. If it's "almost certainly the case", where's the evidence?
- junofan 4y ago
  How else do you think the sausage gets made?
- SamReidHughes 4y ago
  You can assume the investigation got leaked for a purpose. So, what do you think that purpose is?
aorth 4y ago
> Democratic party mandarins like Elizabeth Warren. What does "mandarin" mean in this context? It sounds negative. Curious to use such language in a serious piece.
- Tsiklon 4y ago
  Mandarin in this context is often used satirically to describe a senior civil servant. In the British press you’ll frequently hear of the leaders of the civil service described as “Whitehall Mandarins”.

53 points by selimthegrim 4y ago

Coinbase grew on the backs of ponzis and scams.

Hold on a second, I thought the whole point of crypto was having minimal to no government regulations. Now the article’s author wants to blame the SEC for having minimal to no government regulations?

lern_too_spel 4y ago
That usage of these systems couldn't be regulated was a fantasy that crypto-scammers pushed on crytpo-suckers. Of course they can be regulated, and the SEC has some blame for not regulating it before so many suckers got cleaned out. The author is certainly wrong about the importance of blockchains.
- whatisweb3 4y ago
  A centralized exchange is not a blockchain. Depositing dollars into Coinbase is similar to depositing dollars into PayPal. The company can and should be regulated as a legal entity in order to protect user's funds and minimize fraud. Regulating a blockchain or smart contract is a harder matter.
  - lern_too_spel 4y ago
    Not at all. As long as you regulate the offramps to useful money via KYC, you can regulate the entire chain. That's what Chainalysis and kin are selling, perhaps not realizing that as soon as you regulate away the grift, the whole point of decentralized currency goes away.
    - whatisweb3 4y ago
      This only regulates on and off ramps to CEX. Other situations like trying to force a decentralized stablecoin to block accounts or add regulation to an ownerless DEX protocol are harder to regulate. Privacy features like TornadoCash and Aztec could make it harder still. In some of these cases the old laws do not fit well within new blockchain technological capabilities and how it is being used.
      - lern_too_spel 4y ago
        It's as simple as not allowing coins not traceable only to other KYC wallets to be converted into usable money.
        whatisweb3 4y ago
        This would only apply to centralized exchanges and intermediary payment processors. A user can still trustlessly and anonymously transfer 1 ETH or 1000 DAI to another person in exchange for some goods or services, as they would with a cash transfer under the table. It is like asserting that marijuana could easily disappear if we just regulated it a little harder.
        lern_too_spel 4y ago
        Normal people don't engage in financial crime when the alternative is easier, faster, and cheaper. The outcome would be that people who are already trafficking would add new financial crimes to their charges.
        whatisweb3 4y ago
        Most people using crypto - actually running nodes, creating contracts, and sending messages on the blockchain - prefer it to dealing with traditional bank transfers and completely opaque centralized systems. It is often faster, easier, and cheaper to send USDC than USD, and it is far more programmable and extensible to develop an ERC20 contract than hope for a Stripe SDK or Shopify plugin. People will still use it even if the government attempts to cut it off entirely. Net result is that legitimate users will be treated as criminal, and/or will be forced to use broken banking infrastructure.

numair 4y ago

Regardless of people’s opinions on crypto, they should be concerned that the SEC stood by and watched while billionaires and unsophisticated investors got together and pumped and dumped LUNA. And after the whole thing blew up, the SEC went after zero people and forced the billionaire promoters to disgorge approximately zero dollars in profit. The SEC is a complete disaster. Time for a change in management.

POPOSYS 4y ago
The SEC is in a complicity disaster.
capableweb 4y ago
Correct me if i'm wrong, but the whole LUNA/Terra situation happened very recently and looking at past SEC enforcements, they're not exactly fast. Some things seems to take years before people get punished, cryptocurrencies or not. I'm sure if there are US-based individuals involved in the affair, they will eventually get what's coming for them, it'll just take some time.
xiphias2 4y ago
Mike Novogratz was the single biggest promoter of Luna (getting a Luna tatoo as well) personally responsible for moving billions of dollars into the token probably. He had a clear understanding that Luna was secured by billions of dollars of BTC backing on a personal account (which makes it clearly a security). https://www.cnbc.com/2022/05/29/who-got-rich-before-terra-stablecoin-collapsed.html https://www.cnbc.com/2022/05/29/who-got-rich-before-terra-st...

gammabetadelta 4y ago

gary is not making friends, but he's rich so he will be fine the whole idea of regulation through enforcement is absurd, when did it become to hard to make laws? why should companies guess at what will and won't be enforced based on one chairman's concoction.

schemescape 4y ago

> Some on Twitter have suggested Gensler leaked the investigation to Bloomberg to punish Coinbase, which has publicly complained about the SEC’s behavior. A veteran crypto lawyer familiar with the ways of Washington, DC told me this is almost certainly the case, and said Gensler’s fingerprints are on earlier leaks to the Wall Street Journal. This is an extraordinary claim. If it's "almost certainly the case", where's the evidence?

junofan 4y ago
How else do you think the sausage gets made?
SamReidHughes 4y ago
You can assume the investigation got leaked for a purpose. So, what do you think that purpose is?

aorth 4y ago

> Democratic party mandarins like Elizabeth Warren. What does "mandarin" mean in this context? It sounds negative. Curious to use such language in a serious piece.

Tsiklon 4y ago
Mandarin in this context is often used satirically to describe a senior civil servant. In the British press you’ll frequently hear of the leaders of the civil service described as “Whitehall Mandarins”.