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TIL to stop reading the top voted comment if it appears to be outrage and just read the article for myself instead. Just FYI here's the quote in context. She'

by bb88 3y ago

TIL to stop reading the top voted comment if it appears to be outrage and just read the article for myself instead. Just FYI here's the quote in context. She's posing a hypothetical here and not actually comparing Coinbase to a heroin dealer. This is very much in the style of Matt Levine at Bloomberg, btw. If a company went to the FDA and said “hello, we’d like to start selling heroin to the public for recreational use”, and the FDA said “no, you can’t do that”, the company could loudly complain that the FDA was not giving them a path to compliance. People would probably laugh at them. The company could decide the FDA was wrong, demand that they and/or Congress write new rules to allow for this innovative new heroin business that would bolster American capital markets, and decide that in the meantime they were going to sell heroin anyway. People might not be terribly sympathetic when it didn’t end well for them.

remarkEon 3y ago
Heroin is illegal, though? Still don't understand how the analogy applies to cryptocurrency. >The company could decide the FDA was wrong... But why would they decide this? Since Heroin is, again, illegal.
- khuey 3y ago
  Unregistered securities offerings are also illegal.
  - shkkmo 3y ago
    No, selling unregistered securities to people who aren't accredited investors is illegal.
- bb88 3y ago
  Would it have helped if she prefaced it with, "Here's a hypothetical about a company wanting to do illegal things..."? The style of argument is akin to Reductio ad Absurdum, taking an absurd position to it's logical conclusion. The "absurd position" here is a company wanting to sell heroin on the open market, and she takes that to the logical conclusion. She could have said "meth", "nuclear weapons", or "dead infants", or whatever instead of heroin to make her point. If you read that as a comparison to Coinbase being a heroin dealer than you're the one editorializing her effort. Here's another reductio ad absurdum argument: Let's assume the earth is flat. Either the surface of the earth must go to infinity or people must be walking off the edge of it somewhere.
  - friend_and_foe 3y ago
    Youre completely.ignoring the fact that "heroin is illegal" is cut and dry. Securities are not illegal. Selling them without a license is. Asking them to clarify the law and getting told "the law is clear" is not in any way the same as selling heroin knowing it is illegal.
    - rjbwork 3y ago
      The law is clear. It's not the job of regulatory agencies to advise companies on how to become compliant with the law and their rules. The law and their rules are...the law and their rules! Hire a lawyer for that!
      - AnthonyMouse 3y ago
        > It's not the job of regulatory agencies to advise companies on how to become compliant with the law and their rules. Honestly this should be a core mission of all regulatory agencies and the fact that it isn't is a disgrace.
        JumpCrisscross 3y ago
        > this should be a core mission of all regulatory agencies and the fact that it isn't is a disgrace You want public sector corporate law? If we’re socialising law, I’d think we’d start with criminal defense.
        bb88 3y ago
        I personally don't want tax dollars to fund corporate lawyering.
        friend_and_foe 3y ago
        Theres a distinction somewhere between "socializing law" and "tell me why you'd sue me before I do it accidentally."
- scott_w 3y ago
  Then replace “heroin” with “mouldy, maggot-ridden meat” and you get the point.
  - bb88 3y ago
    Brilliant!
- nl 3y ago
  In the very next paragraph she explains the analogy: > These three functions — bringing together securities orders for buyers and sellers, trading securities on behalf of others, and intermediating trades — are typically required to be separate due to conflicts of interest that emerge when one entity controls all of them. She is saying it is like Heroin. >> >The company could decide the FDA was wrong... > But why would they decide this? Since Heroin is, again, illegal. She is pointing out how absurb it is that Coinbase has decided the SEC is wrong (about the separation of roles) since - as you point out - not having the separation of roles is illegal.
stickfigure 3y ago
She's comparing cryptocurrency to heroin. The parent's point stands.
- Dylan16807 3y ago
  It's not "alarmist nonsense", it's just an example of something illegal. And it's not "cryptocurrency" being compared to illegal things, but unregistered security cryptocurrencies. Bitcoin, the biggest name in cryptocurrency, is fine.
  - iterativ 3y ago
    Yes well, some claim it's "securities", there is no clear law for that. Can I give you, for example, Amazon shared and get a coffee or a pizza ? Directly, not liquidate it first. Let's find out how the Ripple lawsuit is going to end, there is good chance to win it. The woke up one day and they "hey this crypto is a threat to our dollar'. Gensler said "we don't need any more digital currencies, we have USD, EUR, YEN". And that for centuries there was no need to transfer value through more than one medium. That can explain their views clearly.
    - JumpCrisscross 3y ago
      > Can I give you, for example, Amazon shared and get a coffee or a pizza ? Directly, not liquidate it first. No, this is specifically addressed by securities law. It's not impossible, but you have to do it properly.
      - ethanbond 3y ago
        what’s next, are you going to tell me that I can’t realize millions of dollars in crypto gains without paying income tax? Inconceivable!
        hef19898 3y ago
        You mean tax avoidance ain't legal??? Outrageous!
hbbio 3y ago
Which is a completely flawed comparison, not because of the matter but because unlike the hypothetical heroin case, the SEC *did approve the listing*.
- bb88 3y ago
  I suppose that is more honest than saying she made a direct comparison between Coinbase and heroin dealers.
- xinayder 3y ago
  Not really because she mentions SEC doesn't evaluate the businesses themselves when they apply for an IPO. Coinbase doing an IPO (and them using this argument against SEC) is not being compared to heroin. The comparison is that Coinbase would go to SEC and ask "hey we want to sell these bitcoin futures and securities, is it okay?" and SEC says "nope it isn't" and Coinbase just says "okay we'll sell it anyways", which is exactly what they did. They knew the law existed and applied to crypto, yet they decided to go against it anyways because they thought they could get away with interpretation shenaningans.
- simiones 3y ago
  The fact that the listing was approved is immaterial to whether the business is breaking securities law. The SEC is not required to verify that you are running a legitimate business before allowing you to IPO. They are only required to confirm that the data in the forms you mentioned represents your business correctly. The Coinbase S1 admits this explicitly: they explicitly list the risk of their business model being contested by the SEC later in the document that the SEC approved.
- JumpCrisscross 3y ago
  > a completely flawed comparison, not because of the matter but because unlike the hypothetical heroin case, the SEC did approve the listing The SEC doesn't approve IPOs. In bold among Coinbase's S-1's cover pages: "Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense." https://investor.coinbase.com/financials/sec-filings/sec-filings-details/default.aspx?FilingId=14742999 https://investor.coinbase.com/financials/sec-filings/sec-fil...

by bb88 3y ago

remarkEon 3y ago

Heroin is illegal, though? Still don't understand how the analogy applies to cryptocurrency. >The company could decide the FDA was wrong... But why would they decide this? Since Heroin is, again, illegal.

khuey 3y ago
Unregistered securities offerings are also illegal.
- shkkmo 3y ago
  No, selling unregistered securities to people who aren't accredited investors is illegal.
bb88 3y ago
Would it have helped if she prefaced it with, "Here's a hypothetical about a company wanting to do illegal things..."? The style of argument is akin to Reductio ad Absurdum, taking an absurd position to it's logical conclusion. The "absurd position" here is a company wanting to sell heroin on the open market, and she takes that to the logical conclusion. She could have said "meth", "nuclear weapons", or "dead infants", or whatever instead of heroin to make her point. If you read that as a comparison to Coinbase being a heroin dealer than you're the one editorializing her effort. Here's another reductio ad absurdum argument: Let's assume the earth is flat. Either the surface of the earth must go to infinity or people must be walking off the edge of it somewhere.
- friend_and_foe 3y ago
  Youre completely.ignoring the fact that "heroin is illegal" is cut and dry. Securities are not illegal. Selling them without a license is. Asking them to clarify the law and getting told "the law is clear" is not in any way the same as selling heroin knowing it is illegal.
  - rjbwork 3y ago
    The law is clear. It's not the job of regulatory agencies to advise companies on how to become compliant with the law and their rules. The law and their rules are...the law and their rules! Hire a lawyer for that!
    - AnthonyMouse 3y ago
      > It's not the job of regulatory agencies to advise companies on how to become compliant with the law and their rules. Honestly this should be a core mission of all regulatory agencies and the fact that it isn't is a disgrace.
      - JumpCrisscross 3y ago
        > this should be a core mission of all regulatory agencies and the fact that it isn't is a disgrace You want public sector corporate law? If we’re socialising law, I’d think we’d start with criminal defense.
        bb88 3y ago
        I personally don't want tax dollars to fund corporate lawyering.
        friend_and_foe 3y ago
        Theres a distinction somewhere between "socializing law" and "tell me why you'd sue me before I do it accidentally."
scott_w 3y ago
Then replace “heroin” with “mouldy, maggot-ridden meat” and you get the point.
- bb88 3y ago
  Brilliant!
nl 3y ago
In the very next paragraph she explains the analogy: > These three functions — bringing together securities orders for buyers and sellers, trading securities on behalf of others, and intermediating trades — are typically required to be separate due to conflicts of interest that emerge when one entity controls all of them. She is saying it is like Heroin. >> >The company could decide the FDA was wrong... > But why would they decide this? Since Heroin is, again, illegal. She is pointing out how absurb it is that Coinbase has decided the SEC is wrong (about the separation of roles) since - as you point out - not having the separation of roles is illegal.

stickfigure 3y ago

She's comparing cryptocurrency to heroin. The parent's point stands.

Dylan16807 3y ago
It's not "alarmist nonsense", it's just an example of something illegal. And it's not "cryptocurrency" being compared to illegal things, but unregistered security cryptocurrencies. Bitcoin, the biggest name in cryptocurrency, is fine.
- iterativ 3y ago
  Yes well, some claim it's "securities", there is no clear law for that. Can I give you, for example, Amazon shared and get a coffee or a pizza ? Directly, not liquidate it first. Let's find out how the Ripple lawsuit is going to end, there is good chance to win it. The woke up one day and they "hey this crypto is a threat to our dollar'. Gensler said "we don't need any more digital currencies, we have USD, EUR, YEN". And that for centuries there was no need to transfer value through more than one medium. That can explain their views clearly.
  - JumpCrisscross 3y ago
    > Can I give you, for example, Amazon shared and get a coffee or a pizza ? Directly, not liquidate it first. No, this is specifically addressed by securities law. It's not impossible, but you have to do it properly.
    - ethanbond 3y ago
      what’s next, are you going to tell me that I can’t realize millions of dollars in crypto gains without paying income tax? Inconceivable!
      - hef19898 3y ago
        You mean tax avoidance ain't legal??? Outrageous!

hbbio 3y ago

Which is a completely flawed comparison, not because of the matter but because unlike the hypothetical heroin case, the SEC *did approve the listing*.

bb88 3y ago
I suppose that is more honest than saying she made a direct comparison between Coinbase and heroin dealers.
xinayder 3y ago
Not really because she mentions SEC doesn't evaluate the businesses themselves when they apply for an IPO. Coinbase doing an IPO (and them using this argument against SEC) is not being compared to heroin. The comparison is that Coinbase would go to SEC and ask "hey we want to sell these bitcoin futures and securities, is it okay?" and SEC says "nope it isn't" and Coinbase just says "okay we'll sell it anyways", which is exactly what they did. They knew the law existed and applied to crypto, yet they decided to go against it anyways because they thought they could get away with interpretation shenaningans.
simiones 3y ago
The fact that the listing was approved is immaterial to whether the business is breaking securities law. The SEC is not required to verify that you are running a legitimate business before allowing you to IPO. They are only required to confirm that the data in the forms you mentioned represents your business correctly. The Coinbase S1 admits this explicitly: they explicitly list the risk of their business model being contested by the SEC later in the document that the SEC approved.
JumpCrisscross 3y ago
> a completely flawed comparison, not because of the matter but because unlike the hypothetical heroin case, the SEC did approve the listing The SEC doesn't approve IPOs. In bold among Coinbase's S-1's cover pages: "Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense." https://investor.coinbase.com/financials/sec-filings/sec-filings-details/default.aspx?FilingId=14742999 https://investor.coinbase.com/financials/sec-filings/sec-fil...