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Is there any context around the quote? As far as I can tell, it's just been the SEC filing here against Binance and the earlier charges against Lim.

NoImmatureAdHom 3y ago
Yeah...without more context the quote says nothing. The rest of it could have been, "They're talking as if we are operating as a fcking unlicensed securities exchange in the USA bro" P.S.: I sit here wondering, is it the court system that doesn't want to write "fucking" or is it a quote where the author himself bowdlerized?
LatteLazy 3y ago
There are 2 contexts: On HN, that the majority irrationally hate crypto (the minority irrationally love it), and this re-enforces their views. In real life, that people have been trying to work out how to run a crypto exchange legally for about a decade. That the SEC is (suddenly and in a change of position) making that impossible. And that playing ball with regulators and trying to do the right thing will now be punished harshly (Coinbase). And people do don't really care will just ignore regulators (Binance). I honestly don't get why people don't see this. Japan has had decent regs for spot exchanges for a while. They work, FTX Japan creditors are basically fine because of this. <shrugs> https://www.bloomberg.com/news/articles/2023-02-17/bankrupt-ftx-s-japan-unit-is-set-to-return-client-funds-soon https://www.bloomberg.com/news/articles/2023-02-17/bankrupt-... Now people will downvote this or reply with comments that assume all lawsuits are won or that the SEC decides what is legal or that all crypto is bad etc.
- vkou 3y ago
  It's very easy to run a crypto exchange legally. Do KYC like anyone else who handles money does, and trade Bitcoin for dollars and back. Unfortunately, there's no money in that, all the money is in running an illegal exchange trading in unregistered securities (shitcoin and staking protocols and other crap). And no matter how many times you ask the SEC, they aren't going to give you guidance on how to do <illegal thing>. This upsets crypto people, who then go on Twitter and complain about how they are 'trying to work' but are getting stonewalled.
  - LatteLazy 3y ago
    >It's very easy to run a crypto exchange legally You should start one, you'd have a monopoly! :) The NICE thing about crypto exchanges is the very high fees they charge (compared to any other financial market). That's why people were so surprised FTX were also committing huge fraud. Why rob your clients illegally at night when you're already "robbing" them legally with fees in the daylight? As it is, people keep falling back on the SEC "aren't going to give you guidance on how to do <illegal thing>" but that's not what anyone is asking. And it's not even true, the SEC did give Coinbase plenty of advice and their blessing and permission to list publicly, before deciding all crypto is illegal and previous advice doesn't matter...
    - pjc50 3y ago
      I'm of the opinion that Gemini is the least-shady exchange, given the involvement of high profile US-resident US nationals, but that same property also makes it much less popular.
      - LatteLazy 3y ago
        Right now, all the liquidity is on Binance. So anyone going elsewhere is looking for less-shady options. That is what disappoints me about the SEC action against Coinbase: they are very high on the "not shady" list, and probably the best for combination of "not shady" AND "actually have liquidity and a workable tech stack". The SEC seem determined NOT to work with them despite Coinbase's best efforts. Meanwhile they loved FTX. It's like they have decided to try and stop all crypto by smashing (only) better options while allowing frauds. <tin foil hat>, I know...
        vkou 3y ago
        There's two main problems for exchanges. 1. The way they are doing something is criminal. (Stealing customer funds, comingling the books with their trading arm, operating while insolvent, failure to KYC/AML.) 2. They are doing something criminal. (They allow trading in illegal products.) Coinbase is, per the allegations, in category #2. FTX was in #1 and #2. Binance looks to be in #1 to at least some extent (to an unclear degree), and #2. #1 is a problem for any financial business. Every firm does it to some extent or another. They get punished and fined for it, and restructure operations to avoid repeating those mistakes. It's why compliance departments exist. That an exchange is doing #1 in a small way is not particularly newsworthy. (But if it's doing it in a big way, it is.) It's just regulatory problem. You can fix it by doing the right thing. But I'd be shocked if there are any exchanges that are not in category #2. You can't just fix it by tightening up your compliance controls - you have to exit most of you business to do so. But that's not a reason to crack down on them. Just because it's not the exchange's customers that get defrauded by the exchange in #2, doesn't mean that they aren't a ripe category for fraud, by the coin issuers, against the buyers.
- pjc50 3y ago
  > Japan has had decent regs for spot exchanges for a while. Why aren't Japanese exchanges more popular, then? > how to run a crypto exchange legally I think the answer has always been "you can't sell unregistered securities to the US general public", and that's bad news for 99% of crypto products. Bitcoin being the possible exception because it seems genuinely leaderless.
  - LatteLazy 3y ago
    >Why aren't Japanese exchanges more popular, then? Fair question: Japanese exchanges are only open to Japanese residents (and NOT to US citizens even if they are Japanese residents). >"you can't sell unregistered securities to the US general public Sounds easy, just let us know what counts as a security. Because the SEC doesn't seem sure. Or rather it's very sure but cannot tell anyone, but definitely know, but has changed it mind and won't go on record. As it is, this will be decided by the courts. Let's see how that goes...

NoImmatureAdHom 3y ago

Yeah...without more context the quote says nothing. The rest of it could have been, "They're talking as if we are operating as a fcking unlicensed securities exchange in the USA bro" P.S.: I sit here wondering, is it the court system that doesn't want to write "fucking" or is it a quote where the author himself bowdlerized?

LatteLazy 3y ago

There are 2 contexts: On HN, that the majority irrationally hate crypto (the minority irrationally love it), and this re-enforces their views. In real life, that people have been trying to work out how to run a crypto exchange legally for about a decade. That the SEC is (suddenly and in a change of position) making that impossible. And that playing ball with regulators and trying to do the right thing will now be punished harshly (Coinbase). And people do don't really care will just ignore regulators (Binance). I honestly don't get why people don't see this. Japan has had decent regs for spot exchanges for a while. They work, FTX Japan creditors are basically fine because of this. <shrugs> https://www.bloomberg.com/news/articles/2023-02-17/bankrupt-ftx-s-japan-unit-is-set-to-return-client-funds-soon https://www.bloomberg.com/news/articles/2023-02-17/bankrupt-... Now people will downvote this or reply with comments that assume all lawsuits are won or that the SEC decides what is legal or that all crypto is bad etc.

vkou 3y ago
It's very easy to run a crypto exchange legally. Do KYC like anyone else who handles money does, and trade Bitcoin for dollars and back. Unfortunately, there's no money in that, all the money is in running an illegal exchange trading in unregistered securities (shitcoin and staking protocols and other crap). And no matter how many times you ask the SEC, they aren't going to give you guidance on how to do <illegal thing>. This upsets crypto people, who then go on Twitter and complain about how they are 'trying to work' but are getting stonewalled.
- LatteLazy 3y ago
  >It's very easy to run a crypto exchange legally You should start one, you'd have a monopoly! :) The NICE thing about crypto exchanges is the very high fees they charge (compared to any other financial market). That's why people were so surprised FTX were also committing huge fraud. Why rob your clients illegally at night when you're already "robbing" them legally with fees in the daylight? As it is, people keep falling back on the SEC "aren't going to give you guidance on how to do <illegal thing>" but that's not what anyone is asking. And it's not even true, the SEC did give Coinbase plenty of advice and their blessing and permission to list publicly, before deciding all crypto is illegal and previous advice doesn't matter...
  - pjc50 3y ago
    I'm of the opinion that Gemini is the least-shady exchange, given the involvement of high profile US-resident US nationals, but that same property also makes it much less popular.
    - LatteLazy 3y ago
      Right now, all the liquidity is on Binance. So anyone going elsewhere is looking for less-shady options. That is what disappoints me about the SEC action against Coinbase: they are very high on the "not shady" list, and probably the best for combination of "not shady" AND "actually have liquidity and a workable tech stack". The SEC seem determined NOT to work with them despite Coinbase's best efforts. Meanwhile they loved FTX. It's like they have decided to try and stop all crypto by smashing (only) better options while allowing frauds. <tin foil hat>, I know...
      - vkou 3y ago
        There's two main problems for exchanges. 1. The way they are doing something is criminal. (Stealing customer funds, comingling the books with their trading arm, operating while insolvent, failure to KYC/AML.) 2. They are doing something criminal. (They allow trading in illegal products.) Coinbase is, per the allegations, in category #2. FTX was in #1 and #2. Binance looks to be in #1 to at least some extent (to an unclear degree), and #2. #1 is a problem for any financial business. Every firm does it to some extent or another. They get punished and fined for it, and restructure operations to avoid repeating those mistakes. It's why compliance departments exist. That an exchange is doing #1 in a small way is not particularly newsworthy. (But if it's doing it in a big way, it is.) It's just regulatory problem. You can fix it by doing the right thing. But I'd be shocked if there are any exchanges that are not in category #2. You can't just fix it by tightening up your compliance controls - you have to exit most of you business to do so. But that's not a reason to crack down on them. Just because it's not the exchange's customers that get defrauded by the exchange in #2, doesn't mean that they aren't a ripe category for fraud, by the coin issuers, against the buyers.
pjc50 3y ago
> Japan has had decent regs for spot exchanges for a while. Why aren't Japanese exchanges more popular, then? > how to run a crypto exchange legally I think the answer has always been "you can't sell unregistered securities to the US general public", and that's bad news for 99% of crypto products. Bitcoin being the possible exception because it seems genuinely leaderless.
- LatteLazy 3y ago
  >Why aren't Japanese exchanges more popular, then? Fair question: Japanese exchanges are only open to Japanese residents (and NOT to US citizens even if they are Japanese residents). >"you can't sell unregistered securities to the US general public Sounds easy, just let us know what counts as a security. Because the SEC doesn't seem sure. Or rather it's very sure but cannot tell anyone, but definitely know, but has changed it mind and won't go on record. As it is, this will be decided by the courts. Let's see how that goes...