6 ms·

I have had limited but direct experience with CFTC (because of a cryptocurrency related project I did for a client), and I was not impressed. In this case, CFT

by z9znz 4y ago

I have had limited but direct experience with CFTC (because of a cryptocurrency related project I did for a client), and I was not impressed. In this case, CFTC came at us with claims that we were breaking rules and then required us to prove that we were not. Just looking at our website it was very clear what we were doing and what we were selling (education content), and there was not a hint of anything to suggest that we were selling investments or commodities. Even still, we had to give our corp attorney annotated screenshots of our website, illustrating exactly what our business was, and have that sent back to CFTC. After doing so, we heard nothing back from them. They should have been satisifed by what we sent (presumably they were), but they didn't even both to say, "Ok, you may go." The whole thing felt really arbitrary and amateur.

practice9 4y ago
I think this experience could be replicated anywhere in the world. This type of agency (as well as tax offices) will pursue low-hanging fruit while overlooking more complex and critical situations. And the lack of actionable feedback really underscores their inefficiency. > The whole thing felt really arbitrary and amateur. Lack of domain knowledge + corruption + a lack of incentives to improve (because they are part of the government, it is difficult to hold them accountable for their claims)
asah 4y ago
-1: this is often how regulatory bodies work. In particular, their non-response gives them better CYA in case there's malfeasance vs an explicit approval.
- themoonisachees 4y ago
  Then they are not good at regulating, are they not? A regulatory body should be able to say who they think is doing it wrong and who isn't.
  - deleted 4y ago
    [deleted]
  - psychlops 4y ago
    Do you actually mean to say that a regulatory body should publish who they suspect is committing fraud or am I mis-reading your comment? Given they have a limited time to review select entities and a limited view into them, that would be an impossible feat, not to mention the legal liability if/when they were wrong.
    - blitzar 4y ago
      As far as I can tell - FTX (at least international / not FTX.us) broke only 1 law - they broke their own terms and conditions :- 8.2.6 All Digital Assets are held in your Account on the following basis: (A) Title to your Digital Assets shall at all times remain with you and shall not transfer to FTX Trading ... Excluding this stipulation, which they will be prosecuted for - what exactly the CFTC/SEC/NYSE/NASDAQ/Secret Service/DEA/Texas Rangers were meant to do about a company in the Bahamas is beyond me.
      - hef19898 4y ago
        You mean the law(s) they broke involved stealing users assets? Reminder so, terms and conditions are not law nor is there any guarantee they hold up in court if challenged.
        blitzar 4y ago
        If their terms and conditions said "by depositing your assets on our exchange you are signing them over to us" then there would be no crime at all.
        greatwave1 4y ago
        Terms and conditions aren't necessarily enforceable, and they really aren't necessarily enforceable when it comes to financial services, and they really really aren't necessarily enforceable when it comes to blatant fraud.
- bo1024 4y ago
  What does the -1 part of your comment mean and how does it relate to the rest?
  - psychlops 4y ago
    He means he downvoted the comment. The original comment wasn't notable. I've also dealt with regulators and they primarily gather information and review it on their own.
    - bo1024 4y ago
      Ok, odd to downvote a comment because you agree with it and then to go on to provide more support for why the comment is correct...
Geee 4y ago
Well, it's quite popular in the MLM scene to wrap investments into some type of educational material. I believe OneCoin did just that, you paid for education packages and then got tokens as a gift. Maybe that's what they were looking at.
frankfrankfrank 4y ago
- RunSet 4y ago
  > the job itself is basically all about justifying its existence not actually achieving any purported objectives https://en.wikipedia.org/wiki/Self-licking_ice_cream_cone https://en.wikipedia.org/wiki/Self-licking_ice_cream_cone
- skybrian 4y ago
  Why should the bureaucrat be doing more work? That increases expenses for taxpayers, or alternately means the regulator can't do other things. In principle, there's nothing wrong with making the business being regulated pay the costs, assuming the work needs doing at all.
hayd 4y ago
Perhaps the trick is to donate to politicians who oversee these agencies...
- TacticalCoder 4y ago
  But if you plan to do it guys, only do it when the fundraiser raising tens of millions happens to be your well-connected-to-the-elite mom, a lawyer and teacher at Stanford teaching tax laws!
  - cma 4y ago
    With the Ryan Salame part of the donations they covered both parties.
JumpCrisscross 4y ago
> it was very clear what we were doing and what we were selling (education content), and there was not a hint of anything to suggest that we were selling investments or commodities Lots of “educational” crypto content is thinly-veiled sales. > we had to give our corp attorney annotated screenshots of our website, illustrating exactly what our business was An attorney signing to your business being bona fide informational, and not one that e.g. profits from affiliate sales or coin drops, is material. What looks irrelevant at first glance is germane, at least for a regulator doing a first pass. > they didn't even both to say, "Ok, you may go." Not sure about commodities and futures, but for securities you may never go. You are always under force of jurisdiction, a set-up intentionally more intrusive than most American regulation.
- SilasX 4y ago
  >>they didn't even both to say, "Ok, you may go." >Not sure about commodities and futures, but for securities you may never go. Weird, the IRS didn't seem to have a problem notifying me when they were satisfied with my faxed explanation of a discrepancy they found. Maybe they're just unusually good at respecting their subjects as federal enforcement agencies go?
  - repomies69 4y ago
    I'm not from US, but in my experience the tax office is a different agency compared to many others. They are happy if you are "honest taxpayer" so to say. Other agencies have different incentives.
- panarky 4y ago
  "FTX" wasn't registered with the CFTC, only one of the 130 FTX-related entities was registered, specifically "FTX Derivatives US LLC".
  - gojomo 4y ago
    …which until recently was 'LedgerX' (still its domain name), & wasn't part of the bankruptcy filing, seems to be operating normally, & has reassured customers their assets are, per its regulated processes, separately custodied (not with the unlicensed/offshore FTX). So while it takes some time for these things to unravel – it could be the next domino to fall! – there is at least a plausible story that the actual CFTC-licensed entity here (fka LedgerX) was spared the theft & bankruptcy. That would be a credit to the CFTC's regime, rather than the knock portrayed here. (I believe that this spin comes from a advocacy group for maximal regulations, firing a salvo to support its factions in DC, taking advantage of confusion about which related but legally-distinct entities are licensed.)
andsoitis 4y ago
Do you mind sharing a link to the website (which is selling education content)?
jjtheblunt 4y ago
i think you're describing an agency whose members don't feel sure what they're even supposed to do. many people i know (most engineers, but not all) would say it's a symptom of "big government", the parts that exist and pay unmotivated employees as to their mission. (i find myself wondering almost off topic how this might or might not be analogous with small kernels and big kernels in operating systems.)
- hardolaf 4y ago
  The problem with the CFTC is that they should just be merged with the SEC. The wall between the two is just an odd historical oddity.
  - jjtheblunt 4y ago
    that sounds too logical ! :) seriously though, it's true, i realize, that the idea of refactoring doesn't happen well at government agency scale, does it?
dibt 4y ago
> illustrating exactly what our business was, and have that sent back to CFTC. Could it be that they were collecting data from you to build models for future analysis? Instead of paying people to research companies, and enter data into a system, force 20% of all companies to provide this data regardless of suspicions of wrongdoing? There's that saying "looks like a duck, quacks like a duck." Maybe they start from the position "I don't know what a duck looks like, or what it sounds like. I think you're a duck. What do you look like? What do you sound like?" That's just a guess. I have experience working elsewhere in the federal government. They often just throw darts at the wall to prove they are doing their job. New management will take over a department, and want to demonstrate change of some kind. Don't try to attach any rational thought to these actions.
jlarocco 4y ago
> In this case, CFTC came at us with claims that we were breaking rules and then required us to prove that we were not. Just looking at our website it was very clear what we were doing and what we were selling (education content), and there was not a hint of anything to suggest that we were selling investments or commodities. Even still, we had to give our corp attorney annotated screenshots of our website, illustrating exactly what our business was, and have that sent back to CFTC. Obviously I don't know the full story, but there really should be more diligence than just reading your website and taking your word for it, so I can't fault them just for requesting more information.

by z9znz 4y ago

practice9 4y ago

I think this experience could be replicated anywhere in the world. This type of agency (as well as tax offices) will pursue low-hanging fruit while overlooking more complex and critical situations. And the lack of actionable feedback really underscores their inefficiency. > The whole thing felt really arbitrary and amateur. Lack of domain knowledge + corruption + a lack of incentives to improve (because they are part of the government, it is difficult to hold them accountable for their claims)

asah 4y ago

-1: this is often how regulatory bodies work. In particular, their non-response gives them better CYA in case there's malfeasance vs an explicit approval.

themoonisachees 4y ago
Then they are not good at regulating, are they not? A regulatory body should be able to say who they think is doing it wrong and who isn't.
- deleted 4y ago
  [deleted]
- psychlops 4y ago
  Do you actually mean to say that a regulatory body should publish who they suspect is committing fraud or am I mis-reading your comment? Given they have a limited time to review select entities and a limited view into them, that would be an impossible feat, not to mention the legal liability if/when they were wrong.
  - blitzar 4y ago
    As far as I can tell - FTX (at least international / not FTX.us) broke only 1 law - they broke their own terms and conditions :- 8.2.6 All Digital Assets are held in your Account on the following basis: (A) Title to your Digital Assets shall at all times remain with you and shall not transfer to FTX Trading ... Excluding this stipulation, which they will be prosecuted for - what exactly the CFTC/SEC/NYSE/NASDAQ/Secret Service/DEA/Texas Rangers were meant to do about a company in the Bahamas is beyond me.
    - hef19898 4y ago
      You mean the law(s) they broke involved stealing users assets? Reminder so, terms and conditions are not law nor is there any guarantee they hold up in court if challenged.
      - blitzar 4y ago
        If their terms and conditions said "by depositing your assets on our exchange you are signing them over to us" then there would be no crime at all.
        greatwave1 4y ago
        Terms and conditions aren't necessarily enforceable, and they really aren't necessarily enforceable when it comes to financial services, and they really really aren't necessarily enforceable when it comes to blatant fraud.
bo1024 4y ago
What does the -1 part of your comment mean and how does it relate to the rest?
- psychlops 4y ago
  He means he downvoted the comment. The original comment wasn't notable. I've also dealt with regulators and they primarily gather information and review it on their own.
  - bo1024 4y ago
    Ok, odd to downvote a comment because you agree with it and then to go on to provide more support for why the comment is correct...

Geee 4y ago

Well, it's quite popular in the MLM scene to wrap investments into some type of educational material. I believe OneCoin did just that, you paid for education packages and then got tokens as a gift. Maybe that's what they were looking at.

frankfrankfrank 4y ago

RunSet 4y ago
> the job itself is basically all about justifying its existence not actually achieving any purported objectives https://en.wikipedia.org/wiki/Self-licking_ice_cream_cone https://en.wikipedia.org/wiki/Self-licking_ice_cream_cone
skybrian 4y ago
Why should the bureaucrat be doing more work? That increases expenses for taxpayers, or alternately means the regulator can't do other things. In principle, there's nothing wrong with making the business being regulated pay the costs, assuming the work needs doing at all.

hayd 4y ago

Perhaps the trick is to donate to politicians who oversee these agencies...

TacticalCoder 4y ago
But if you plan to do it guys, only do it when the fundraiser raising tens of millions happens to be your well-connected-to-the-elite mom, a lawyer and teacher at Stanford teaching tax laws!
- cma 4y ago
  With the Ryan Salame part of the donations they covered both parties.

JumpCrisscross 4y ago

> it was very clear what we were doing and what we were selling (education content), and there was not a hint of anything to suggest that we were selling investments or commodities Lots of “educational” crypto content is thinly-veiled sales. > we had to give our corp attorney annotated screenshots of our website, illustrating exactly what our business was An attorney signing to your business being bona fide informational, and not one that e.g. profits from affiliate sales or coin drops, is material. What looks irrelevant at first glance is germane, at least for a regulator doing a first pass. > they didn't even both to say, "Ok, you may go." Not sure about commodities and futures, but for securities you may never go. You are always under force of jurisdiction, a set-up intentionally more intrusive than most American regulation.

SilasX 4y ago
>>they didn't even both to say, "Ok, you may go." >Not sure about commodities and futures, but for securities you may never go. Weird, the IRS didn't seem to have a problem notifying me when they were satisfied with my faxed explanation of a discrepancy they found. Maybe they're just unusually good at respecting their subjects as federal enforcement agencies go?
- repomies69 4y ago
  I'm not from US, but in my experience the tax office is a different agency compared to many others. They are happy if you are "honest taxpayer" so to say. Other agencies have different incentives.
panarky 4y ago
"FTX" wasn't registered with the CFTC, only one of the 130 FTX-related entities was registered, specifically "FTX Derivatives US LLC".
- gojomo 4y ago
  …which until recently was 'LedgerX' (still its domain name), & wasn't part of the bankruptcy filing, seems to be operating normally, & has reassured customers their assets are, per its regulated processes, separately custodied (not with the unlicensed/offshore FTX). So while it takes some time for these things to unravel – it could be the next domino to fall! – there is at least a plausible story that the actual CFTC-licensed entity here (fka LedgerX) was spared the theft & bankruptcy. That would be a credit to the CFTC's regime, rather than the knock portrayed here. (I believe that this spin comes from a advocacy group for maximal regulations, firing a salvo to support its factions in DC, taking advantage of confusion about which related but legally-distinct entities are licensed.)

andsoitis 4y ago

Do you mind sharing a link to the website (which is selling education content)?

jjtheblunt 4y ago

i think you're describing an agency whose members don't feel sure what they're even supposed to do. many people i know (most engineers, but not all) would say it's a symptom of "big government", the parts that exist and pay unmotivated employees as to their mission. (i find myself wondering almost off topic how this might or might not be analogous with small kernels and big kernels in operating systems.)

hardolaf 4y ago
The problem with the CFTC is that they should just be merged with the SEC. The wall between the two is just an odd historical oddity.
- jjtheblunt 4y ago
  that sounds too logical ! :) seriously though, it's true, i realize, that the idea of refactoring doesn't happen well at government agency scale, does it?

dibt 4y ago

> illustrating exactly what our business was, and have that sent back to CFTC. Could it be that they were collecting data from you to build models for future analysis? Instead of paying people to research companies, and enter data into a system, force 20% of all companies to provide this data regardless of suspicions of wrongdoing? There's that saying "looks like a duck, quacks like a duck." Maybe they start from the position "I don't know what a duck looks like, or what it sounds like. I think you're a duck. What do you look like? What do you sound like?" That's just a guess. I have experience working elsewhere in the federal government. They often just throw darts at the wall to prove they are doing their job. New management will take over a department, and want to demonstrate change of some kind. Don't try to attach any rational thought to these actions.

jlarocco 4y ago

> In this case, CFTC came at us with claims that we were breaking rules and then required us to prove that we were not. Just looking at our website it was very clear what we were doing and what we were selling (education content), and there was not a hint of anything to suggest that we were selling investments or commodities. Even still, we had to give our corp attorney annotated screenshots of our website, illustrating exactly what our business was, and have that sent back to CFTC. Obviously I don't know the full story, but there really should be more diligence than just reading your website and taking your word for it, so I can't fault them just for requesting more information.