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After the collapse of Silvergate and Signature, I say “let them have it”. The crypto industry may be adept at moving across borders, but so are seasoned crimin

After the collapse of Silvergate and Signature, I say “let them have it”. The crypto industry may be adept at moving across borders, but so are seasoned criminals. That shouldn’t automatically qualify them to operate with impunity. Millions of people lost savings in the wake of FTX, and we’re all just supposed to pretend that it was some singular, isolated incident? Their name was on an NBA arena, they spent millions on celebrity endorsements and ads, and were touted among what many consider to be one of the top tier venture firms in the world. The SEC had every right do this.

PretzelPirate 4y ago
> Millions of people lost savings in the wake of FTX, FTX...which was a regulated exchange in the US and failed because the SEC wasn't regulating. The issue with expanding the SEC's reach is that they're refusing to do their job and they're asking for more work that they aren't going to do. Commissioner Hester Peirce has a great statement on this: https://www.sec.gov/news/statement/peirce-rendering-inovation-2023-04-12 https://www.sec.gov/news/statement/peirce-rendering-inovatio... We also see this statement in the article: > The officials estimated about dozen crypto firms would fall under the expanded definition, but declined to provide any more specifics about which firms. Which means that the SEC isn't creating clarity about their proposed changes and the effects that they will have. They need to create clarity before asking the public to comment on something. If the SEC had been doing their job all this time and regulating the industry which they claim falls under their jurisdiction, people probably would have been saved from a lot of scams and loss of assets while still enabling blockchain products to be built by people who enjoy working on them.
- zefalt 4y ago
  Pretty sure FTX was not a US corporation and catered to non-US customers. FTX.us, which was a minor branch that catered to US customers, was thought to be relatively solvent but ultimately collapsed like most things associated with FTX. Not saying that the SEC would have prevented anything in the fallout, but blaming them for failing to regulate seems somewhat incorrect. Though, I am unclear why FTX filed bankruptcy in Delaware. Someone please correct me if I'm wrong.
- landoftheice 4y ago
  [dead]
matheusmoreira 4y ago
> Millions of people lost savings in the wake of FTX, and we’re all just supposed to pretend that it was some singular, isolated incident? Bail them out then. Why is it OK to bail out the Silicon Valley bank but not this one? These exchanges are literal banks, they even do fractional reserve banking which allows them to offer loans and savings accounts. Might as well bail out Tether too.
- anonymouskimmer 4y ago
  > Why is it OK to bail out the Silicon Valley bank but not this one? 1) Because SVB paid at least some money into the FDIC insurance fund. 2) Because SVB's deposits are mostly backed with still viable investments, and do not require an extended clawback process that will only ever get a certain fraction of the funds back.
  - matheusmoreira 4y ago
    Irrelevant. The whole point is to protect the blameless depositors, right? Then bail them out regardless of circumstances. Use taxpayer money to do it if necessary. Nobody cares whether the bank paid the insurance thing or not. What matters is avoiding financial calimity brought by the consequences of people's own choices.
    - anonymouskimmer 4y ago
      > The whole point is to protect the blameless depositors, right? No. Otherwise people who lose their belongings to theft would be reimbursed by the government. > What matters is avoiding financial calimity brought by the consequences of people's own choices. If FTX depositors can show that their losses mean that businesses will have to shut down, then they can probably twist the arm of politicians to make them whole with taxpayer funds. If they can't, then they're SOL like the rest of us.
Kranar 4y ago
It's funny you mention FTX, because FTX was exactly the opposite of a decentralized exchange. It was a centralized exchange that was unambiguously under the jurisdiction of the SEC. One of the major advantages of using a decentralized exchange is to avoid the risk that centralized exchanges like FTX expose you to, namely that it's a single point of failure that when collapses ends up taking a lot of people down with it. With a decentralized exchange, your transactions happen within a matter of minutes and your only exposure to any potential failure is during those minutes.
- anonymouskimmer 4y ago
  > With a decentralized exchange, your transactions happen within a matter of minutes and your only exposure to any potential failure is during those minutes. I thought many DXes operated by people effectively parking tokens in them for long periods of time so that others can come by and trade for those tokens (otherwise you'd need a way to sync up people who want to trade). The credits received for parked tokens can be redeemed for any token at the exchange, but during the possibly extended period of time you're holding a credit instead of holding a token, you can lose it all if the DX is compromised.
  - Kranar 4y ago
    You are correct, but as I mentioned in my post, transactions happen within a matter of minutes on decentralized exchanges.

PretzelPirate 4y ago

> Millions of people lost savings in the wake of FTX, FTX...which was a regulated exchange in the US and failed because the SEC wasn't regulating. The issue with expanding the SEC's reach is that they're refusing to do their job and they're asking for more work that they aren't going to do. Commissioner Hester Peirce has a great statement on this: https://www.sec.gov/news/statement/peirce-rendering-inovation-2023-04-12 https://www.sec.gov/news/statement/peirce-rendering-inovatio... We also see this statement in the article: > The officials estimated about dozen crypto firms would fall under the expanded definition, but declined to provide any more specifics about which firms. Which means that the SEC isn't creating clarity about their proposed changes and the effects that they will have. They need to create clarity before asking the public to comment on something. If the SEC had been doing their job all this time and regulating the industry which they claim falls under their jurisdiction, people probably would have been saved from a lot of scams and loss of assets while still enabling blockchain products to be built by people who enjoy working on them.

zefalt 4y ago
Pretty sure FTX was not a US corporation and catered to non-US customers. FTX.us, which was a minor branch that catered to US customers, was thought to be relatively solvent but ultimately collapsed like most things associated with FTX. Not saying that the SEC would have prevented anything in the fallout, but blaming them for failing to regulate seems somewhat incorrect. Though, I am unclear why FTX filed bankruptcy in Delaware. Someone please correct me if I'm wrong.
landoftheice 4y ago
[dead]

matheusmoreira 4y ago

> Millions of people lost savings in the wake of FTX, and we’re all just supposed to pretend that it was some singular, isolated incident? Bail them out then. Why is it OK to bail out the Silicon Valley bank but not this one? These exchanges are literal banks, they even do fractional reserve banking which allows them to offer loans and savings accounts. Might as well bail out Tether too.

anonymouskimmer 4y ago
> Why is it OK to bail out the Silicon Valley bank but not this one? 1) Because SVB paid at least some money into the FDIC insurance fund. 2) Because SVB's deposits are mostly backed with still viable investments, and do not require an extended clawback process that will only ever get a certain fraction of the funds back.
- matheusmoreira 4y ago
  Irrelevant. The whole point is to protect the blameless depositors, right? Then bail them out regardless of circumstances. Use taxpayer money to do it if necessary. Nobody cares whether the bank paid the insurance thing or not. What matters is avoiding financial calimity brought by the consequences of people's own choices.
  - anonymouskimmer 4y ago
    > The whole point is to protect the blameless depositors, right? No. Otherwise people who lose their belongings to theft would be reimbursed by the government. > What matters is avoiding financial calimity brought by the consequences of people's own choices. If FTX depositors can show that their losses mean that businesses will have to shut down, then they can probably twist the arm of politicians to make them whole with taxpayer funds. If they can't, then they're SOL like the rest of us.

Kranar 4y ago

It's funny you mention FTX, because FTX was exactly the opposite of a decentralized exchange. It was a centralized exchange that was unambiguously under the jurisdiction of the SEC. One of the major advantages of using a decentralized exchange is to avoid the risk that centralized exchanges like FTX expose you to, namely that it's a single point of failure that when collapses ends up taking a lot of people down with it. With a decentralized exchange, your transactions happen within a matter of minutes and your only exposure to any potential failure is during those minutes.

anonymouskimmer 4y ago
> With a decentralized exchange, your transactions happen within a matter of minutes and your only exposure to any potential failure is during those minutes. I thought many DXes operated by people effectively parking tokens in them for long periods of time so that others can come by and trade for those tokens (otherwise you'd need a way to sync up people who want to trade). The credits received for parked tokens can be redeemed for any token at the exchange, but during the possibly extended period of time you're holding a credit instead of holding a token, you can lose it all if the DX is compromised.
- Kranar 4y ago
  You are correct, but as I mentioned in my post, transactions happen within a matter of minutes on decentralized exchanges.