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The answer is that they almost certainly are securities, but the precedent isn't established. White collar prosecution is expensive and complex, and prosecutor

The answer is that they almost certainly are securities, but the precedent isn't established. White collar prosecution is expensive and complex, and prosecutors care about their careers. They want certain wins, preferably fast. So the SEC are waiting for slam dunk cases to establish precedent. In practice this means they wait for something large and obvious to implode, and prosecute months/years after the fact.

dvt 4y ago
> So the SEC are waiting for slam dunk cases to establish precedent. But this might never happen. I can launch a lending protocol completely anonymously, pump it on Twitter/Telegram, and get 7+ figures TVL overnight. It might not even be predatory (even though a lot are), but who would the SEC even go after at that point?
- whatshisface 4y ago
  There's probably something stopping you from getting actual 7 figures from that.
  - notch656a 4y ago
    Not really. It's been done time and time again. Never underestimate the number of stupid people out there, desperate to break even with inflation somehow while their banks pay them negative interest rates. https://youtu.be/C6nAxiym9oc?t=260 https://youtu.be/C6nAxiym9oc?t=260
    - whatshisface 4y ago
      It's easy for "crypto companies" to inflate their apparent values by selling one token for $1 while they have a trillion. Consequently I am a little skeptical about how many of them have actually made a lot of money.
    - rmbyrro 4y ago
      Has it been done by you? If it's so easy with such high rewards, why don't you try an MVP the next weekend and see how it goes?
      - notch656a 4y ago
        Obviously if I haven't personally done it, it isn't possible. I could also get rich knocking people in the head with bats and taking their wallets. For a little while. It's telling some people who let their true colors show, espousing ideas like "hey if I can make good money hurting others I'll do it, and why haven't you!" Crime is not hard, most houses are easily broken into, many people can be tricked, the human body is fragile, and society runs on a shockingly large amount of trust. Do not conflate the fact that most don't engage in the worst of crimes with the actual difficulty in doing it.
        rmbyrro 4y ago
        Not contesting the possibility. Just the easiness to do it. I don't think it's easy and it probably requires some good level of intelligence to pull this off.
        boeingUH60 4y ago
        I think you're missing the point, which is that even in the world of crime, most intending criminals don't succeed. For every successful rug pull, there were probably 100 others that didn't gain any friction.
        aww_dang 4y ago
      - dvt 4y ago
        DeFi rug pulls were extremely common in the bull market, here's a list[1]. Obviously doing it "next weekend" is going to be much harder given that FTX just collapsed and all of crypto is going to hell in a hand basket. [1] https://coinscreed.com/defi-top-10-list-of-crypto-rug-pulls.html https://coinscreed.com/defi-top-10-list-of-crypto-rug-pulls....
- skybrian 4y ago
  They could go after exchanges and apps distributed in app stores. That is, wherever normal people might go to easily buy such a thing. Sure, people will use VPN's and side-loaded apps, but would limit the damage quite a bit.
nradov 4y ago
There are no prosecutors in the SEC. Their attorneys can only bring civil enforcement suits. When they find evidence of criminal activity they pass that to the Justice Department for possible prosecution.
Mistletoe 4y ago
Somehow the SEC can’t even win a case against XRP which fails the Howey Test miserably. If XRP isn’t a security I don’t know what is. is: (1) an investment of money, (2) in a common enterprise, (3) with the expectation of profit and (4) to be derived from the efforts of others.
- JacobThreeThree 4y ago
  >Somehow the SEC can’t even win a case against XRP which fails the Howey Test miserably. If XRP isn’t a security I don’t know what is. They're beholden to the established financial system and players and "regulating" crypto would also mean giving crypto a stamp of approval, which they seemingly do not want to do.

dvt 4y ago

> So the SEC are waiting for slam dunk cases to establish precedent. But this might never happen. I can launch a lending protocol completely anonymously, pump it on Twitter/Telegram, and get 7+ figures TVL overnight. It might not even be predatory (even though a lot are), but who would the SEC even go after at that point?

whatshisface 4y ago
There's probably something stopping you from getting actual 7 figures from that.
- notch656a 4y ago
  Not really. It's been done time and time again. Never underestimate the number of stupid people out there, desperate to break even with inflation somehow while their banks pay them negative interest rates. https://youtu.be/C6nAxiym9oc?t=260 https://youtu.be/C6nAxiym9oc?t=260
  - whatshisface 4y ago
    It's easy for "crypto companies" to inflate their apparent values by selling one token for $1 while they have a trillion. Consequently I am a little skeptical about how many of them have actually made a lot of money.
  - rmbyrro 4y ago
    Has it been done by you? If it's so easy with such high rewards, why don't you try an MVP the next weekend and see how it goes?
    - notch656a 4y ago
      Obviously if I haven't personally done it, it isn't possible. I could also get rich knocking people in the head with bats and taking their wallets. For a little while. It's telling some people who let their true colors show, espousing ideas like "hey if I can make good money hurting others I'll do it, and why haven't you!" Crime is not hard, most houses are easily broken into, many people can be tricked, the human body is fragile, and society runs on a shockingly large amount of trust. Do not conflate the fact that most don't engage in the worst of crimes with the actual difficulty in doing it.
      - rmbyrro 4y ago
        Not contesting the possibility. Just the easiness to do it. I don't think it's easy and it probably requires some good level of intelligence to pull this off.
      - boeingUH60 4y ago
        I think you're missing the point, which is that even in the world of crime, most intending criminals don't succeed. For every successful rug pull, there were probably 100 others that didn't gain any friction.
        aww_dang 4y ago
    - dvt 4y ago
      DeFi rug pulls were extremely common in the bull market, here's a list[1]. Obviously doing it "next weekend" is going to be much harder given that FTX just collapsed and all of crypto is going to hell in a hand basket. [1] https://coinscreed.com/defi-top-10-list-of-crypto-rug-pulls.html https://coinscreed.com/defi-top-10-list-of-crypto-rug-pulls....
skybrian 4y ago
They could go after exchanges and apps distributed in app stores. That is, wherever normal people might go to easily buy such a thing. Sure, people will use VPN's and side-loaded apps, but would limit the damage quite a bit.

nradov 4y ago

There are no prosecutors in the SEC. Their attorneys can only bring civil enforcement suits. When they find evidence of criminal activity they pass that to the Justice Department for possible prosecution.

Mistletoe 4y ago

Somehow the SEC can’t even win a case against XRP which fails the Howey Test miserably. If XRP isn’t a security I don’t know what is. is: (1) an investment of money, (2) in a common enterprise, (3) with the expectation of profit and (4) to be derived from the efforts of others.

JacobThreeThree 4y ago
>Somehow the SEC can’t even win a case against XRP which fails the Howey Test miserably. If XRP isn’t a security I don’t know what is. They're beholden to the established financial system and players and "regulating" crypto would also mean giving crypto a stamp of approval, which they seemingly do not want to do.