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Coinbase Sued by SEC for Breaking US Securities Rules

178 points by kgwgk 3y ago

alphabetting 3y ago
The complaint https://storage.courtlistener.com/recap/gov.uscourts.nysd.599908/gov.uscourts.nysd.599908.1.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.59...
- isp 3y ago
  1 day ago, SEC sued Binance: https://news.ycombinator.com/item?id=36197353 https://news.ycombinator.com/item?id=36197353 (575 points, 423 comments) The Binance complaint: https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-101.pdf https://www.sec.gov/files/litigation/complaints/2023/comp-pr... Which contained the legendary line: > 111. As Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, “we are operating as a fking unlicensed securities exchange in the USA bro.” From a cursory review, the Coinbase complaint doesn't include the Coinbase "Compliance Officer" declaring that they are running a "fking unlicensed securities exchange in the USA bro", so they are already off on stronger footing than Binance.
  - T3RMINATED 3y ago
    [dead]
  - adsfgiodsnrio 3y ago
    I'm not sure. Coinbase is an American company, so the executives won't need to be extradited. There's a chance they'll actually do some prison time.
pwb25 3y ago
at the same time SEC don't tell them what to do or not? Such a weird agency
- kevingadd 3y ago
  It's kind of your obligation to understand the law as it is today and obey it.
  - polygamous_bat 3y ago
    Especially when your primary product and money maker is regulatory arbitrage, you better hire an army of lawyers to defend yourself against situations like this.
  - justanorherhack 3y ago
    Do you? You are likely in violation a lot more than you realize. They also haven't been clear or consistent.
    - kevingadd 3y ago
      Laws are written and passed by legislators, not the SEC.
- billythemaniam 3y ago
  It's not that weird, its there job is to enforce not teach. The FDA, EPA, etc set the rules and enforce those rules. They do not hold a company's hand following those rules.
  - ethanbond 3y ago
    FDA is actually pretty collaborative with pharma companies. But also pharma companies’ business models aren’t entirely dependent on circumventing regulation and they aren’t openly combative with regulators.
    - tolmasky 3y ago
      Only because they found it much more effective to "collaborate" on the regulations such that they'd be allowed to label opioids however they'd like and addict millions of people in one of the biggest health crises in the history of our country.
tikkun 3y ago
It seems like there's a US government mandate to kill crypto in the US. This energy would've been better at the time of peak-ICO, directed at the worst offenders. Going forward I would hope to see the SEC put more of its energy toward people who did ICOs involving untrue statements and legal violations as key parts of their pitches, as well as people who did SPACs with egregious forward projections.
- mikece 3y ago
  Cryptocurrency is a threat to the consolidated power of the Central Banks. Yes, "they" will mandate that it be killed, or at least that it's illegal to exchange fiat currency for crypto or use it as legal payment for goods and services.
  - agentgumshoe 3y ago
    Do you really think it's not the same people sitting at the top of crypto too? Criminals gonna criminal where it makes money.
    - bdcravens 3y ago
      That's one of the great fantasies in crypto: "The geek shall inherit the earth" There's no reason to believe banks and governments haven't been stacking crypto. The argument is that it wouldn't go unnoticed and large buys would drive up the price, but a well-run purchasing project could easily handle "small" purchases over a long-term, especially if the goal is control and not price speculation.
  - anthonyskipper 3y ago
    Cryptocurrency is a general threat to "society". It enabled a lot of bad actors and issues that did not exist before, and it is also in contrast to a lot of previous legislation created specifically to protect the average citizen. We should all treat it as a threat.
    - almavi 3y ago
rvz 3y ago
All part of the FedNow project that they are pushing in the US and (trying) to ban crypto, just like the Reserve Bank of India and UPI in India tried to do. Eventually, they will issue their own CBDC on top of FedNow.
- mikece 3y ago
  And with CBDC comes built-in restrictions on where and how the money can be spent and I would be very surprised if "exchange for bitcoin and vice versa" is allowed.
- senttoschool 3y ago
  No. I think they’re literally just going after unregistered securities and actually doing their job.
  - justanorherhack 3y ago
    Wish they would you know go after congress for the consistent and blatant insider trading violations but nah gotta protect the consumers from themselves.
    - senttoschool 3y ago
      What insider trading violations were there?
    - mrguyorama 3y ago
      Congress people are exempt from those laws. Why wouldn't they be, they literally wrote them
polygamous_bat 3y ago
SEC action against Coinbase and binance within 24 hours? Matt Levine must be having a field day somewhere.
- ttul 3y ago
  His interviews with SBF over the years are worth reviewing. You can tell he was always a skeptic…
- TheAlchemist 3y ago
  Let’s hope it continues with VCs that pumped and dumped crypto on unsuspecting retail. Some context: https://twitter.com/coloradotravis/status/1665881233832697857?s=20 https://twitter.com/coloradotravis/status/166588123383269785...
senttoschool 3y ago
I wonder how Gary Tan feels about this. If this is true, which I think it is, then would Gary change his stance on Coinbase?
timcavel 3y ago
[dead]
selfishqwe 3y ago
On one hand USA & UK do anything to stop bad guys from stealing their people's money and on other hand they welcome corrupt, drug lords, oligarchs and criminal billionaires with open arms. I hate bad guys no matter where they are from but that's clearly not how USA, UK, Canada, Australia and newzealand have been acting.
ur-whale 3y ago
https://archive.is/kRE18 https://archive.is/kRE18
hermannj314 3y ago
"Since at least 2019, through the Coinbase Platform, Coinbase has operated as: an unregistered broker" Anyone else have a problem with the latency of our government? This is a law from 1934 that the SEC exists to enforce. You'd think they be a bit better at the job. This seems very slow to respond.
- pavlov 3y ago
  We don't know exactly what communications SEC and Coinbase have had over the years. We do know Coinbase hired lots of very expensive lawyers to handle that relationship, so this wasn't exactly a surprise to the company. They've been stalling and preparing for years.
- LatteLazy 3y ago
  Because before FTX, the political mood was laissez-faire. And now it is "bring me their heads". Say what you like about crypto, coinbase have been 200% upfront, honest and compliant in their businesses and the SEC were A-Ok with that until 1 month ago.
- LeifCarrotson 3y ago
  What latency do you expect? In 1934, things moved slowly. Scaling was entirely manual and mostly linear, if you were an unregistered broker, to handle a thousand times more transactions you needed to hire approximately thousand times more brokers, and changes like that would get noticed quickly. Someone in 1934 might have been proud of how fast-paced they could operate, given that in the preceding two decades the telephone had exploded in popularity. They could even place a trans-continental phone call, and communicate with someone a thousand miles away; imagine that! Governments designed and tested in the 1700s and 1800s should not be expected to anticipate and seamlessly cope with technological change that is accelerating faster and faster.
  - bushbaba 3y ago
    The USA’s governance system is literally designed by the founders to make slow change. They were fearful that quick legal/governance changes would have less than desirable consequences.
EddieEngineers 3y ago
Well some of my comments about Coinbase being better than Binance on yesterdays post aged like fine milk
LatteLazy 3y ago
Whatever you think of Crypto (and everyone thinks it is either cancer or a miracle) Congress, not the SEC should be defining what a security (or commodity etc) is. Not just a SEC land grab. Especially as they were so cool with everything pre-FTX...
- 0xB31B1B 3y ago
  There is 80 years of case law in the US about what is and isn’t a security. The SEC is applying the 80 years of case law history to this action. It’s not an SEC land grab.
  - LatteLazy 3y ago
    If these actions were always illegal why have the SEC waiting this long to act? Why did they interview all these people, promise licenses, encourage them etc? Why wine and dine SBF? If people think Crypto should be banned, make the case. But let's pretend it is banned, that's just silly... The SEC just lost a ruling (and got roasted by the judge) when they tried to suppress the comments of the previous SEC head explicitly saying Crypto is not a security.
    - j0hnyl 3y ago
      Not to mention the fact that coinbase is a public company, so the SEC allowed them to go public while having a full understanding of their business - an endorsement of what they're doing if you will, yet today it's suddenly illegal. How does this reflect on the SEC?
      - 0xB31B1B 3y ago
        Going public regs is not about validating business practices, it’s about validating disclosures to investors. Entirely different things.
        LatteLazy 3y ago
obblekk 3y ago
There's a line of critique that says it's unfair for the government to have allowed Coinbase to break the law for so long, and then change their mind. But in the American system, the burden of proof is on the government (SEC) to prove the behavior is actually illegal and until then, Coinbase was presumed innocent and had the freedom to continue doing what they want. What's frustrating for crypto advocates is they were unable to use the 5yr analysis period to convince society to legalize their behavior (in the way that Uber/Lyft were able). But this is one of the things the American system gets very right. A "trial" period where new behavior is allowed until the Executive branch can either prove its illegal, or Legislative branch can explicitly make it legal. It's an expensive system that achieves a balance between regulation and experimentation.
- obblekk 3y ago
  @dang was this comment deleted from the comments page for this article?
- zorked 3y ago
  "Do something in a limbo for 5 years then find out whether you will go to jail or not". Great system.
  - soufron 3y ago
    who said it was a limbo? they only pretended it was.
- darkwizard42 3y ago
  I mean Coinbase literally sued the SEC to get them to define more appropriate rules. So I have a hard time buying that Coinbase just ran away with it and didn't try to get things more legalized. They realized there was jeopardy in how they operated and wanted to get things clarified.
  - ceejayoz 3y ago
    > I mean Coinbase literally sued the SEC to get them to define more appropriate rules. By which they mean "we don't like the ones you told us about". https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpndWQm/78f95afa4f0ebaaefb303e1a4f172d03/Coinbase_petition_for_SEC_rulemaking.pdf https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpn... > Rather than initiate new rulemaking, Chair Gensler has repeatedly stated through speeches and testimony that the vast majority of digital tokens are securities, and has asked issuers and exchanges that offer, sell, and trade them to come in and register. We disagree that the majority of digital assets are securities. For those digital assets that are securities, registration under the current rules is, for many market participants, either not possible or not economically viable given the associated and unnecessary compliance burdens. Coinbase: "Plz make rules." SEC: "We already have them." Coinbase: Yes, but we don't like those ones."
pawelduda 3y ago
Thought experiment - Sue Google for being non-compliant and <insert other reasons like indexing scam websites or displaying scam ads> post IPO - Announce FedFind search engine - "Too bad for you Google, should have been compliant and not engage in scamming innocent users" Yeah. I'm grossly oversimplifying but w/e. Highly doubt FED intentions are unbiased here and that they're doing this out of good will.
legitster 3y ago
One thing I think I have learned from all this is the limited power of lobbying. Despite throwing billions of dollars at lobbyists and campaign contributions over nearly a decade, no legislation of any note was ever passed to protect crypto. It's almost impressive, although I don't know if it could be chalked up to the complete ineptitude of the crypto industry.
- gphil 3y ago
  Or: incumbent banks worried about disruption have the stronger lobby/influence.
- paulpauper 3y ago
  yea, people assume lobbyists have special powers. look how much worse 'big tobacco' regulation has gotten over past 50 years despite endless lobbying by tobacco companies.
- CPLX 3y ago
  It's because crypto is and has always been a scam and there's not ever going to be a constituency for that. The fact that they got pretty close is the scary part.
smeej 3y ago
If you're commenting on this without even having read Coinbase's 32-page Petition for Rulemaking [0] from July 21, 2022, which is extensively footnoted about how the existing securities laws cannot apply to cryptocurrencies, so new rulemaking is needed, please stop and read it before you reveal your ignorance. The SEC's failure to respond to this as required by law is the subject of Coinbase's lawsuit against them from April. It's just simply and outrageously false to pretend there is some clearcut way Coinbase could have registered, or even been sure which assets the SEC was going to consider securities. There isn't, and the SEC has already been sued about their failure to provide it. [0] (PDF) https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpndWQm/78f95afa4f0ebaaefb303e1a4f172d03/Coinbase_petition_for_SEC_rulemaking.pdf https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpn...
- bushbaba 3y ago
  Yet many in coinbase performed insider trading. They broke regulations other banks and exchanges are required to follow for stocks. Coinbase isn’t innocent.
  - RestlessMind 3y ago
    Show me a big company and I will show you an individual who broke some law while working there. A few bad apples don't make the whole company culpable as long as the said company takes measures like giving proper training and firing the bad apples.
    - bushbaba 3y ago
      Was not a few bad actors. There’s a majority of their employees pre IPO who have been out of compliance.
      - RestlessMind 3y ago
        Any source / citation?
- 3y ago
airgapstopgap 3y ago
Frankly I think anything crypto-related is very unpleasant to discuss on HN (by the way why is this site called HN? Why not just "American tech news"?) Any sign of damage done to crypto industry is met with fierce jubilation you could only compare to comments on fresh Ukrainian casualties in some Z channel in Telegram. There is zero interest in understanding the specifics. The most embarrassing, pedestrian, knuckle-dragging cases against privacy, straight out of Four Horsemen of Infocalypse, are trotted out (same as we're increasingly seeing wrt putative risks from AI; oh no, power too great for peasants to handle, we need regulation!). I understand the extreme seediness of crypto and affiliated organizations, the intrinsic association with crime, obnoxious promotion, NFT era, SBF nonsense and more. But the degree of intellectual bankruptcy in HN discourse is at least equally repulsive and strongly suggests that there's a lot of jealousy underneath all this schadenfreude and pretense of indignation. I think the world should have some slack. It should be hackable. There must be a crack in everything, because systems of power go bad over time. If Americans have such complete religious faith in their system, that is their choice. They attempt to enforce extraterritoriality of their regulation a bit too often, though, and they are moving in lockstep with other major hubs of power. Crypto has enabled me to survive and escape a bad place, at least once. It allows people in countries less functional than "the West" live with a modicum of dignity, as is sometimes discussed – and met with incurious "scrutiny" to the tune of "BBC article or didn't happen" – here [1] [2]. It would be a shame if in another decade the idea that you, a regular citizen of the world without any special authority, could remotely transmit value to other people completely at your own discretion and in complete privacy (so long as you follow certain rules), without say-so of appointees of Washington or Brussels or Beijing, becomes as absurd as going outside without an always-on tracker device. Yet this is still what crypto is about. 1. https://news.ycombinator.com/item?id=35461837 https://news.ycombinator.com/item?id=35461837 2. https://news.ycombinator.com/item?id=32291810 https://news.ycombinator.com/item?id=32291810
petilon 3y ago
Coinbase is the favorite tool of scammers, see for example https://archive.ph/PikUQ https://archive.ph/PikUQ

178 points by kgwgk 3y ago

The complaint https://storage.courtlistener.com/recap/gov.uscourts.nysd.599908/gov.uscourts.nysd.599908.1.0.pdf https://storage.courtlistener.com/recap/gov.uscourts.nysd.59...

isp 3y ago
1 day ago, SEC sued Binance: https://news.ycombinator.com/item?id=36197353 https://news.ycombinator.com/item?id=36197353 (575 points, 423 comments) The Binance complaint: https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-101.pdf https://www.sec.gov/files/litigation/complaints/2023/comp-pr... Which contained the legendary line: > 111. As Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, “we are operating as a fking unlicensed securities exchange in the USA bro.” From a cursory review, the Coinbase complaint doesn't include the Coinbase "Compliance Officer" declaring that they are running a "fking unlicensed securities exchange in the USA bro", so they are already off on stronger footing than Binance.
- T3RMINATED 3y ago
  [dead]
- adsfgiodsnrio 3y ago
  I'm not sure. Coinbase is an American company, so the executives won't need to be extradited. There's a chance they'll actually do some prison time.

pwb25 3y ago

at the same time SEC don't tell them what to do or not? Such a weird agency

kevingadd 3y ago
It's kind of your obligation to understand the law as it is today and obey it.
- polygamous_bat 3y ago
  Especially when your primary product and money maker is regulatory arbitrage, you better hire an army of lawyers to defend yourself against situations like this.
- justanorherhack 3y ago
  Do you? You are likely in violation a lot more than you realize. They also haven't been clear or consistent.
  - kevingadd 3y ago
    Laws are written and passed by legislators, not the SEC.
billythemaniam 3y ago
It's not that weird, its there job is to enforce not teach. The FDA, EPA, etc set the rules and enforce those rules. They do not hold a company's hand following those rules.
- ethanbond 3y ago
  FDA is actually pretty collaborative with pharma companies. But also pharma companies’ business models aren’t entirely dependent on circumventing regulation and they aren’t openly combative with regulators.
  - tolmasky 3y ago
    Only because they found it much more effective to "collaborate" on the regulations such that they'd be allowed to label opioids however they'd like and addict millions of people in one of the biggest health crises in the history of our country.

tikkun 3y ago

It seems like there's a US government mandate to kill crypto in the US. This energy would've been better at the time of peak-ICO, directed at the worst offenders. Going forward I would hope to see the SEC put more of its energy toward people who did ICOs involving untrue statements and legal violations as key parts of their pitches, as well as people who did SPACs with egregious forward projections.

mikece 3y ago
Cryptocurrency is a threat to the consolidated power of the Central Banks. Yes, "they" will mandate that it be killed, or at least that it's illegal to exchange fiat currency for crypto or use it as legal payment for goods and services.
- agentgumshoe 3y ago
  Do you really think it's not the same people sitting at the top of crypto too? Criminals gonna criminal where it makes money.
  - bdcravens 3y ago
    That's one of the great fantasies in crypto: "The geek shall inherit the earth" There's no reason to believe banks and governments haven't been stacking crypto. The argument is that it wouldn't go unnoticed and large buys would drive up the price, but a well-run purchasing project could easily handle "small" purchases over a long-term, especially if the goal is control and not price speculation.
- anthonyskipper 3y ago
  Cryptocurrency is a general threat to "society". It enabled a lot of bad actors and issues that did not exist before, and it is also in contrast to a lot of previous legislation created specifically to protect the average citizen. We should all treat it as a threat.
  - almavi 3y ago

rvz 3y ago

All part of the FedNow project that they are pushing in the US and (trying) to ban crypto, just like the Reserve Bank of India and UPI in India tried to do. Eventually, they will issue their own CBDC on top of FedNow.

mikece 3y ago
And with CBDC comes built-in restrictions on where and how the money can be spent and I would be very surprised if "exchange for bitcoin and vice versa" is allowed.
senttoschool 3y ago
No. I think they’re literally just going after unregistered securities and actually doing their job.
- justanorherhack 3y ago
  Wish they would you know go after congress for the consistent and blatant insider trading violations but nah gotta protect the consumers from themselves.
  - senttoschool 3y ago
    What insider trading violations were there?
  - mrguyorama 3y ago
    Congress people are exempt from those laws. Why wouldn't they be, they literally wrote them

polygamous_bat 3y ago

SEC action against Coinbase and binance within 24 hours? Matt Levine must be having a field day somewhere.

ttul 3y ago
His interviews with SBF over the years are worth reviewing. You can tell he was always a skeptic…
TheAlchemist 3y ago
Let’s hope it continues with VCs that pumped and dumped crypto on unsuspecting retail. Some context: https://twitter.com/coloradotravis/status/1665881233832697857?s=20 https://twitter.com/coloradotravis/status/166588123383269785...

senttoschool 3y ago

I wonder how Gary Tan feels about this. If this is true, which I think it is, then would Gary change his stance on Coinbase?

timcavel 3y ago

[dead]

selfishqwe 3y ago

On one hand USA & UK do anything to stop bad guys from stealing their people's money and on other hand they welcome corrupt, drug lords, oligarchs and criminal billionaires with open arms. I hate bad guys no matter where they are from but that's clearly not how USA, UK, Canada, Australia and newzealand have been acting.

ur-whale 3y ago

https://archive.is/kRE18 https://archive.is/kRE18

hermannj314 3y ago

"Since at least 2019, through the Coinbase Platform, Coinbase has operated as: an unregistered broker" Anyone else have a problem with the latency of our government? This is a law from 1934 that the SEC exists to enforce. You'd think they be a bit better at the job. This seems very slow to respond.

pavlov 3y ago
We don't know exactly what communications SEC and Coinbase have had over the years. We do know Coinbase hired lots of very expensive lawyers to handle that relationship, so this wasn't exactly a surprise to the company. They've been stalling and preparing for years.
LatteLazy 3y ago
Because before FTX, the political mood was laissez-faire. And now it is "bring me their heads". Say what you like about crypto, coinbase have been 200% upfront, honest and compliant in their businesses and the SEC were A-Ok with that until 1 month ago.
LeifCarrotson 3y ago
What latency do you expect? In 1934, things moved slowly. Scaling was entirely manual and mostly linear, if you were an unregistered broker, to handle a thousand times more transactions you needed to hire approximately thousand times more brokers, and changes like that would get noticed quickly. Someone in 1934 might have been proud of how fast-paced they could operate, given that in the preceding two decades the telephone had exploded in popularity. They could even place a trans-continental phone call, and communicate with someone a thousand miles away; imagine that! Governments designed and tested in the 1700s and 1800s should not be expected to anticipate and seamlessly cope with technological change that is accelerating faster and faster.
- bushbaba 3y ago
  The USA’s governance system is literally designed by the founders to make slow change. They were fearful that quick legal/governance changes would have less than desirable consequences.

EddieEngineers 3y ago

Well some of my comments about Coinbase being better than Binance on yesterdays post aged like fine milk

LatteLazy 3y ago

Whatever you think of Crypto (and everyone thinks it is either cancer or a miracle) Congress, not the SEC should be defining what a security (or commodity etc) is. Not just a SEC land grab. Especially as they were so cool with everything pre-FTX...

0xB31B1B 3y ago
There is 80 years of case law in the US about what is and isn’t a security. The SEC is applying the 80 years of case law history to this action. It’s not an SEC land grab.
- LatteLazy 3y ago
  If these actions were always illegal why have the SEC waiting this long to act? Why did they interview all these people, promise licenses, encourage them etc? Why wine and dine SBF? If people think Crypto should be banned, make the case. But let's pretend it is banned, that's just silly... The SEC just lost a ruling (and got roasted by the judge) when they tried to suppress the comments of the previous SEC head explicitly saying Crypto is not a security.
  - j0hnyl 3y ago
    Not to mention the fact that coinbase is a public company, so the SEC allowed them to go public while having a full understanding of their business - an endorsement of what they're doing if you will, yet today it's suddenly illegal. How does this reflect on the SEC?
    - 0xB31B1B 3y ago
      Going public regs is not about validating business practices, it’s about validating disclosures to investors. Entirely different things.
      - LatteLazy 3y ago

obblekk 3y ago

There's a line of critique that says it's unfair for the government to have allowed Coinbase to break the law for so long, and then change their mind. But in the American system, the burden of proof is on the government (SEC) to prove the behavior is actually illegal and until then, Coinbase was presumed innocent and had the freedom to continue doing what they want. What's frustrating for crypto advocates is they were unable to use the 5yr analysis period to convince society to legalize their behavior (in the way that Uber/Lyft were able). But this is one of the things the American system gets very right. A "trial" period where new behavior is allowed until the Executive branch can either prove its illegal, or Legislative branch can explicitly make it legal. It's an expensive system that achieves a balance between regulation and experimentation.

obblekk 3y ago
@dang was this comment deleted from the comments page for this article?
zorked 3y ago
"Do something in a limbo for 5 years then find out whether you will go to jail or not". Great system.
- soufron 3y ago
  who said it was a limbo? they only pretended it was.
darkwizard42 3y ago
I mean Coinbase literally sued the SEC to get them to define more appropriate rules. So I have a hard time buying that Coinbase just ran away with it and didn't try to get things more legalized. They realized there was jeopardy in how they operated and wanted to get things clarified.
- ceejayoz 3y ago
  > I mean Coinbase literally sued the SEC to get them to define more appropriate rules. By which they mean "we don't like the ones you told us about". https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpndWQm/78f95afa4f0ebaaefb303e1a4f172d03/Coinbase_petition_for_SEC_rulemaking.pdf https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpn... > Rather than initiate new rulemaking, Chair Gensler has repeatedly stated through speeches and testimony that the vast majority of digital tokens are securities, and has asked issuers and exchanges that offer, sell, and trade them to come in and register. We disagree that the majority of digital assets are securities. For those digital assets that are securities, registration under the current rules is, for many market participants, either not possible or not economically viable given the associated and unnecessary compliance burdens. Coinbase: "Plz make rules." SEC: "We already have them." Coinbase: Yes, but we don't like those ones."

pawelduda 3y ago

Thought experiment - Sue Google for being non-compliant and <insert other reasons like indexing scam websites or displaying scam ads> post IPO - Announce FedFind search engine - "Too bad for you Google, should have been compliant and not engage in scamming innocent users" Yeah. I'm grossly oversimplifying but w/e. Highly doubt FED intentions are unbiased here and that they're doing this out of good will.

legitster 3y ago

One thing I think I have learned from all this is the limited power of lobbying. Despite throwing billions of dollars at lobbyists and campaign contributions over nearly a decade, no legislation of any note was ever passed to protect crypto. It's almost impressive, although I don't know if it could be chalked up to the complete ineptitude of the crypto industry.

gphil 3y ago
Or: incumbent banks worried about disruption have the stronger lobby/influence.
paulpauper 3y ago
yea, people assume lobbyists have special powers. look how much worse 'big tobacco' regulation has gotten over past 50 years despite endless lobbying by tobacco companies.
CPLX 3y ago
It's because crypto is and has always been a scam and there's not ever going to be a constituency for that. The fact that they got pretty close is the scary part.

smeej 3y ago

If you're commenting on this without even having read Coinbase's 32-page Petition for Rulemaking [0] from July 21, 2022, which is extensively footnoted about how the existing securities laws cannot apply to cryptocurrencies, so new rulemaking is needed, please stop and read it before you reveal your ignorance. The SEC's failure to respond to this as required by law is the subject of Coinbase's lawsuit against them from April. It's just simply and outrageously false to pretend there is some clearcut way Coinbase could have registered, or even been sure which assets the SEC was going to consider securities. There isn't, and the SEC has already been sued about their failure to provide it. [0] (PDF) https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpndWQm/78f95afa4f0ebaaefb303e1a4f172d03/Coinbase_petition_for_SEC_rulemaking.pdf https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpn...

bushbaba 3y ago
Yet many in coinbase performed insider trading. They broke regulations other banks and exchanges are required to follow for stocks. Coinbase isn’t innocent.
- RestlessMind 3y ago
  Show me a big company and I will show you an individual who broke some law while working there. A few bad apples don't make the whole company culpable as long as the said company takes measures like giving proper training and firing the bad apples.
  - bushbaba 3y ago
    Was not a few bad actors. There’s a majority of their employees pre IPO who have been out of compliance.
    - RestlessMind 3y ago
      Any source / citation?
3y ago

airgapstopgap 3y ago

Frankly I think anything crypto-related is very unpleasant to discuss on HN (by the way why is this site called HN? Why not just "American tech news"?) Any sign of damage done to crypto industry is met with fierce jubilation you could only compare to comments on fresh Ukrainian casualties in some Z channel in Telegram. There is zero interest in understanding the specifics. The most embarrassing, pedestrian, knuckle-dragging cases against privacy, straight out of Four Horsemen of Infocalypse, are trotted out (same as we're increasingly seeing wrt putative risks from AI; oh no, power too great for peasants to handle, we need regulation!). I understand the extreme seediness of crypto and affiliated organizations, the intrinsic association with crime, obnoxious promotion, NFT era, SBF nonsense and more. But the degree of intellectual bankruptcy in HN discourse is at least equally repulsive and strongly suggests that there's a lot of jealousy underneath all this schadenfreude and pretense of indignation. I think the world should have some slack. It should be hackable. There must be a crack in everything, because systems of power go bad over time. If Americans have such complete religious faith in their system, that is their choice. They attempt to enforce extraterritoriality of their regulation a bit too often, though, and they are moving in lockstep with other major hubs of power. Crypto has enabled me to survive and escape a bad place, at least once. It allows people in countries less functional than "the West" live with a modicum of dignity, as is sometimes discussed – and met with incurious "scrutiny" to the tune of "BBC article or didn't happen" – here [1] [2]. It would be a shame if in another decade the idea that you, a regular citizen of the world without any special authority, could remotely transmit value to other people completely at your own discretion and in complete privacy (so long as you follow certain rules), without say-so of appointees of Washington or Brussels or Beijing, becomes as absurd as going outside without an always-on tracker device. Yet this is still what crypto is about. 1. https://news.ycombinator.com/item?id=35461837 https://news.ycombinator.com/item?id=35461837 2. https://news.ycombinator.com/item?id=32291810 https://news.ycombinator.com/item?id=32291810

petilon 3y ago

Coinbase is the favorite tool of scammers, see for example https://archive.ph/PikUQ https://archive.ph/PikUQ