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Every U.S. Crypto Exchange (and Binance) Is Being Investigated by the SEC

94 points by thesecretceo 4y ago

mhoad 4y ago
Seems like an industry that could actively use some oversight honestly. Good?
Cypher 4y ago
They've been investigating Crypto Exchanges for about 7 years. Not sure they gotta keep reminding us, I suppose it's because people lost money and they want them make it seem like they're doing something.
- ryanSrich 4y ago
  Aren’t all US exchanges KYC anyway? What could the SEC possibly be looking for?
  - rich_sasha 4y ago
    Binance isn't really, it's superlight on any checks (or at least was).
alfiedotwtf 4y ago
Anyone able to tell me the difference between a crypto exchange vs say Ebay selling Pokemon cards?
- yawnxyz 4y ago
  Ebay should probably have some oversight too
- batch12 4y ago
  One difference is that Pokémon cards are physical objects
  - chillwaves 4y ago
    Is that a meaningful difference?
    - dehrmann 4y ago
      Scrap paper has positive value.
    - batch12 4y ago
      Well yes, a huge difference. Whether or not the difference equates to value depends on the person.
- bushbaba 4y ago
  Can I ask Ebay to provide me 10x leverage on my pokemon card, to buy other pokemon cards? You can on many exchanges. Can I go to Ebay with my newly created "Fokemon" cards. Sell them to myself for pennies on the dollar in bulk. Generating demand from those thinking "Fokemon" is the new craze, and dump my supply making millions. While EBay lists my "Fokemon" cards to it's userbase while also taking a cut of a large "Fokemon" stash ("ICO"). This happened on MANY exchanges. Can I go to Ebay and sell 100s of thousands of dollars of merch which was bought with North Korean money? Well you can on many exchanges. Heck some exchanges don't require KYC for the first 1 BTC!!! per 'account'. Ebay does not let the same human seller open tons of seller accounts. In fact there's a black market of Ebay sellers asking 3rd parties to open accounts on behalf of them. So while there's some similarities, the difference is in respect to money laundering and fraud. Ebay actually tries to enforce both, where-as many exchanges often encourage both.
  - dehrmann 4y ago
    > Can I go to Ebay with my newly created "Fokemon" cards. Sell them to myself for pennies on the dollar in bulk. It might take a little effort with shell companies, but yes. A long as it's clear they're not Jokemon cards.
  - charcircuit 4y ago
    >Can I ask Ebay to provide me 10x leverage on my pokemon card, to buy other pokemon cards? EBay isn't a payment provider. You can get leverage from PayPal or a credit card company. >Can you list a new product and buy them from yourself Yes, it's possible. Why not make ads hyping up your products instead? >Can I go to Ebay and sell 100s of thousands of dollars of merch which was bought with North Korean money? Yes.
    - nl 4y ago
      > EBay isn't a payment provider. You can get leverage from PayPal or a credit card company. Which is why PayPal and credit providers are regulated...
  - npalli 4y ago
- floe 4y ago
  Pokemon cards fail the Howey test
  - charcircuit 4y ago
    So do coins listed by major US exchanges.
- neals 4y ago
  Pokemon? I don't know. Now Magic the Gathering though...
mv1234 4y ago
The SEC, and really every related regulatory agency, has been completely missing in action while shadow banks like Tether and USDC act as gasoline for spreading cryptocurrency fraud to the general public. The amount of fraudulent behavior occuring unchecked in plain view is staggering, and as someone who has been following cryptocurrency since the 2017 bubble it's completely erased what little confidence I had left in the federal governmnent. This is far too little too late.
- rvz 4y ago
  > The SEC, and really every related regulatory agency, has been completely missing in action while shadow banks like Tether and USDC act as gasoline for spreading cryptocurrency fraud to the general public. 'Completely?', 'Since 2017?' Then why have the SEC have already clamped down on 98% of the ICO frenzy of 2017 (First started by Ethereum) by making unregistered ICOs illegal in the US then? [0][1] [0] https://www.sec.gov/litigation/investreport/34-81207.pdf https://www.sec.gov/litigation/investreport/34-81207.pdf [1] https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-16 https://www.investor.gov/introduction-investing/general-reso...
  - dannyw 4y ago
    ICOs are still happening, it's just on DeFi now (uniswap, etc).
    - rvz 4y ago
      That is why I said 98%. The SEC knows they cannot be banned completely and that isn't the point. To say the SEC has been 'completely missing in action' sounds very dismissive, especially when one has been watching it during the peak of the hype cycle of 2017 and they did do something about the majority of ICOs back then. After that they have been investigating Ripple over its XRP token, and Coinbase if they have traded 'unregistered securities'. As always and more generally, regulators will forever be behind this cat and mouse game.
      - 4y ago
RobRivera 4y ago
good
deleted 4y ago
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deleted 4y ago
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WiSaGaN 4y ago
For question of whether SEC has jurisdiction over cryptos, there is something called "Howey Test" for anyone that is unaware of: Under the Howey Test, a transaction qualifies as a security if it involves the following four elements: - An investment of money - In a common enterprise - A reasonable expectation of profit - Derived from the efforts of others To be considered a security, a transaction must meet all four prongs of the Howey Test.
- doopy1 4y ago
  "A reasonable expectation of profit" seems like it would exclude all stable coins.
  - WiSaGaN 4y ago
    That's true. NFTs seem also failed the test because the speculated price increase is not "derived from the efforts of others". I think that is one of the reasons SEC considers Bitcoin to be a commodity (which probably falls in the jurisdiction of CFTC) but not a security.
    - SilverBirch 4y ago
      You're not quite right about NFTs. For example the "Lucky Block NFTs" entitle you to a percentage of a rewards pool. Or Vee Friends - Gary Vaynerchuk's NFTs - he's been very explicit that he will work to do things to increase the value of the NFTs. In fact, Gary Vee's pitch seems to be almost tailor made to meet the Howey test. I'm sure that A16Z were fastidious in their due diligence when they invested in it though.
      - WiSaGaN 4y ago
        I see. Thanks for the correction!
    - doopy1 4y ago
      I think this depends largely on the collection and how it's promoted, but just selling an art NFT imo seems like it would fail the test.
Eddy_Viscosity2 4y ago
Seeing how great a job the SEC does regulating other markets ripe with fraud and corruption, I don't think the crypto companies have much to worry about, assuming their campaign contributions are generous enough.

94 points by thesecretceo 4y ago

Seems like an industry that could actively use some oversight honestly. Good?

They've been investigating Crypto Exchanges for about 7 years. Not sure they gotta keep reminding us, I suppose it's because people lost money and they want them make it seem like they're doing something.

ryanSrich 4y ago
Aren’t all US exchanges KYC anyway? What could the SEC possibly be looking for?
- rich_sasha 4y ago
  Binance isn't really, it's superlight on any checks (or at least was).

alfiedotwtf 4y ago

Anyone able to tell me the difference between a crypto exchange vs say Ebay selling Pokemon cards?

yawnxyz 4y ago
Ebay should probably have some oversight too
batch12 4y ago
One difference is that Pokémon cards are physical objects
- chillwaves 4y ago
  Is that a meaningful difference?
  - dehrmann 4y ago
    Scrap paper has positive value.
  - batch12 4y ago
    Well yes, a huge difference. Whether or not the difference equates to value depends on the person.
bushbaba 4y ago
Can I ask Ebay to provide me 10x leverage on my pokemon card, to buy other pokemon cards? You can on many exchanges. Can I go to Ebay with my newly created "Fokemon" cards. Sell them to myself for pennies on the dollar in bulk. Generating demand from those thinking "Fokemon" is the new craze, and dump my supply making millions. While EBay lists my "Fokemon" cards to it's userbase while also taking a cut of a large "Fokemon" stash ("ICO"). This happened on MANY exchanges. Can I go to Ebay and sell 100s of thousands of dollars of merch which was bought with North Korean money? Well you can on many exchanges. Heck some exchanges don't require KYC for the first 1 BTC!!! per 'account'. Ebay does not let the same human seller open tons of seller accounts. In fact there's a black market of Ebay sellers asking 3rd parties to open accounts on behalf of them. So while there's some similarities, the difference is in respect to money laundering and fraud. Ebay actually tries to enforce both, where-as many exchanges often encourage both.
- dehrmann 4y ago
  > Can I go to Ebay with my newly created "Fokemon" cards. Sell them to myself for pennies on the dollar in bulk. It might take a little effort with shell companies, but yes. A long as it's clear they're not Jokemon cards.
- charcircuit 4y ago
  >Can I ask Ebay to provide me 10x leverage on my pokemon card, to buy other pokemon cards? EBay isn't a payment provider. You can get leverage from PayPal or a credit card company. >Can you list a new product and buy them from yourself Yes, it's possible. Why not make ads hyping up your products instead? >Can I go to Ebay and sell 100s of thousands of dollars of merch which was bought with North Korean money? Yes.
  - nl 4y ago
    > EBay isn't a payment provider. You can get leverage from PayPal or a credit card company. Which is why PayPal and credit providers are regulated...
- npalli 4y ago
floe 4y ago
Pokemon cards fail the Howey test
- charcircuit 4y ago
  So do coins listed by major US exchanges.
neals 4y ago
Pokemon? I don't know. Now Magic the Gathering though...

mv1234 4y ago

The SEC, and really every related regulatory agency, has been completely missing in action while shadow banks like Tether and USDC act as gasoline for spreading cryptocurrency fraud to the general public. The amount of fraudulent behavior occuring unchecked in plain view is staggering, and as someone who has been following cryptocurrency since the 2017 bubble it's completely erased what little confidence I had left in the federal governmnent. This is far too little too late.

rvz 4y ago
> The SEC, and really every related regulatory agency, has been completely missing in action while shadow banks like Tether and USDC act as gasoline for spreading cryptocurrency fraud to the general public. 'Completely?', 'Since 2017?' Then why have the SEC have already clamped down on 98% of the ICO frenzy of 2017 (First started by Ethereum) by making unregistered ICOs illegal in the US then? [0][1] [0] https://www.sec.gov/litigation/investreport/34-81207.pdf https://www.sec.gov/litigation/investreport/34-81207.pdf [1] https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-16 https://www.investor.gov/introduction-investing/general-reso...
- dannyw 4y ago
  ICOs are still happening, it's just on DeFi now (uniswap, etc).
  - rvz 4y ago
    That is why I said 98%. The SEC knows they cannot be banned completely and that isn't the point. To say the SEC has been 'completely missing in action' sounds very dismissive, especially when one has been watching it during the peak of the hype cycle of 2017 and they did do something about the majority of ICOs back then. After that they have been investigating Ripple over its XRP token, and Coinbase if they have traded 'unregistered securities'. As always and more generally, regulators will forever be behind this cat and mouse game.
    - 4y ago

RobRivera 4y ago

good

deleted 4y ago

[deleted]

deleted 4y ago

[deleted]

WiSaGaN 4y ago

For question of whether SEC has jurisdiction over cryptos, there is something called "Howey Test" for anyone that is unaware of: Under the Howey Test, a transaction qualifies as a security if it involves the following four elements: - An investment of money - In a common enterprise - A reasonable expectation of profit - Derived from the efforts of others To be considered a security, a transaction must meet all four prongs of the Howey Test.

doopy1 4y ago
"A reasonable expectation of profit" seems like it would exclude all stable coins.
- WiSaGaN 4y ago
  That's true. NFTs seem also failed the test because the speculated price increase is not "derived from the efforts of others". I think that is one of the reasons SEC considers Bitcoin to be a commodity (which probably falls in the jurisdiction of CFTC) but not a security.
  - SilverBirch 4y ago
    You're not quite right about NFTs. For example the "Lucky Block NFTs" entitle you to a percentage of a rewards pool. Or Vee Friends - Gary Vaynerchuk's NFTs - he's been very explicit that he will work to do things to increase the value of the NFTs. In fact, Gary Vee's pitch seems to be almost tailor made to meet the Howey test. I'm sure that A16Z were fastidious in their due diligence when they invested in it though.
    - WiSaGaN 4y ago
      I see. Thanks for the correction!
  - doopy1 4y ago
    I think this depends largely on the collection and how it's promoted, but just selling an art NFT imo seems like it would fail the test.

Eddy_Viscosity2 4y ago

Seeing how great a job the SEC does regulating other markets ripe with fraud and corruption, I don't think the crypto companies have much to worry about, assuming their campaign contributions are generous enough.