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I think the way to understand this is that the SEC is concerned about protecting unsophisticated regular folks from being scammed. If you started aggressively

I think the way to understand this is that the SEC is concerned about protecting unsophisticated regular folks from being scammed. If you started aggressively marketing your Pokemon cards, presenting them as financially sound investments, and regular people started putting their entire pension savings into them lured by false promises and being scammed, then the SEC might well take an interest in Pokemon cards as well. In short, what qualifies as a "security" and becomes subject to regulation is fluid and endogenous. As soon it starts involving real wealth for regular folks, chances are it will be deemed subject to regulation.

RetpolineDrama 3y ago
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- FireBeyond 3y ago
  > For example I don't see the SEC going after Kilolo Kijakazi, who is actively scamming working adults under 40 every day. Why would they? How is your social security contribution a fungible, tradable asset? And agree or not, she's following government administration policy (which still may not survive legal challenge, but that's separate to 'securities fraud').
- bandrami 3y ago
  [flagged]
legitster 3y ago
> I think the way to understand this is that the SEC is concerned about protecting unsophisticated regular folks from being scammed. Keep in mind, the people the SEC are focused on "making whole" are the investors. The actual "unsophisticated investors" who make up the bulk of Celcius's customer base are going to get next to nothing out of the settlement. However, the sophisticated institutional investors who invested directly into Celsius will get most of their money back. It would actually be a completely different legal case if they just said "Celcius misrepresented the security of their assets". In your Pokémon example where I am scamming people, they could bust me for fraud without having to reclassify all cards everywhere. But that's not the case they are making here.
- gamblor956 3y ago
  The SEC is not focused on making the "institutional investors" whole. That is happening in bankruptcy court, because Celsius declared bankruptcy, and that is how bankruptcies work: the senior creditors get their money back first. If you have problems with that, take it up with the bankruptcy court and U.S. bankruptcy laws that classify customers as junior creditors. In fact, the SEC does not ever get involved in "making investors whole." It leaves that part up to the investors themselves. The SEC's complaint seeks to bar Mashinsky from future involvement in crypto trading, to bar him from being an officer or director of a publicly traded company, and for the disgorgement of profits arising from maintaining the price of crypto tokens through market manipulation tactics. [https://www.sec.gov/news/press-release/2023-133 https://www.sec.gov/news/press-release/2023-133] Also, in your Pokemon example you claim that buying up Pokemon that completes your collection somehow constitutes market manipulation. But that's a thing collectors actually do...so...by definition not market manipulation but a fundamental part of the market for collectibles (and in the Pokemon hypo Pokemons have instrinsic value because they can be used and valued in a Pokemon game independently of their trading value, in addition to their trading fair market value based on their rarity as a collectible item). This is very different from what the Celsisus guy did; he used wash trading to artificially increase the price of a crypto token whose only value was in being traded.
  - jnwatson 3y ago
    The SEC does indeed get involved with recovering money for victims of investment fraud. Source: me. The SEC recovered about a third of the money I unwittingly invested in a Ponzi scheme.
    - arlcode 3y ago
      If you are willing to share: How did you end up getting tricked and how can other people avoid the same.
      - jnwatson 3y ago
        It was a pretty good scam. The scammer had a company that sold fractional profit shares in oil wells. Without getting too deep in the weeds, he sold the equivalent of more than 100%. He invested the proceeds of new investment in paying out old investors and buying new oil wells. Eventually he ran out of new investor money and the scheme unraveled. I don’t know how I would have caught it. The regulatory oversight in oil well finances is poor. The guy was on the lam for a few months, then sentenced to 10 years in Federal prison. He then escaped and hasn’t been found.
samstave 3y ago
[flagged]

RetpolineDrama 3y ago

[flagged]

FireBeyond 3y ago
> For example I don't see the SEC going after Kilolo Kijakazi, who is actively scamming working adults under 40 every day. Why would they? How is your social security contribution a fungible, tradable asset? And agree or not, she's following government administration policy (which still may not survive legal challenge, but that's separate to 'securities fraud').
bandrami 3y ago
[flagged]

legitster 3y ago

> I think the way to understand this is that the SEC is concerned about protecting unsophisticated regular folks from being scammed. Keep in mind, the people the SEC are focused on "making whole" are the investors. The actual "unsophisticated investors" who make up the bulk of Celcius's customer base are going to get next to nothing out of the settlement. However, the sophisticated institutional investors who invested directly into Celsius will get most of their money back. It would actually be a completely different legal case if they just said "Celcius misrepresented the security of their assets". In your Pokémon example where I am scamming people, they could bust me for fraud without having to reclassify all cards everywhere. But that's not the case they are making here.

gamblor956 3y ago
The SEC is not focused on making the "institutional investors" whole. That is happening in bankruptcy court, because Celsius declared bankruptcy, and that is how bankruptcies work: the senior creditors get their money back first. If you have problems with that, take it up with the bankruptcy court and U.S. bankruptcy laws that classify customers as junior creditors. In fact, the SEC does not ever get involved in "making investors whole." It leaves that part up to the investors themselves. The SEC's complaint seeks to bar Mashinsky from future involvement in crypto trading, to bar him from being an officer or director of a publicly traded company, and for the disgorgement of profits arising from maintaining the price of crypto tokens through market manipulation tactics. [https://www.sec.gov/news/press-release/2023-133 https://www.sec.gov/news/press-release/2023-133] Also, in your Pokemon example you claim that buying up Pokemon that completes your collection somehow constitutes market manipulation. But that's a thing collectors actually do...so...by definition not market manipulation but a fundamental part of the market for collectibles (and in the Pokemon hypo Pokemons have instrinsic value because they can be used and valued in a Pokemon game independently of their trading value, in addition to their trading fair market value based on their rarity as a collectible item). This is very different from what the Celsisus guy did; he used wash trading to artificially increase the price of a crypto token whose only value was in being traded.
- jnwatson 3y ago
  The SEC does indeed get involved with recovering money for victims of investment fraud. Source: me. The SEC recovered about a third of the money I unwittingly invested in a Ponzi scheme.
  - arlcode 3y ago
    If you are willing to share: How did you end up getting tricked and how can other people avoid the same.
    - jnwatson 3y ago
      It was a pretty good scam. The scammer had a company that sold fractional profit shares in oil wells. Without getting too deep in the weeds, he sold the equivalent of more than 100%. He invested the proceeds of new investment in paying out old investors and buying new oil wells. Eventually he ran out of new investor money and the scheme unraveled. I don’t know how I would have caught it. The regulatory oversight in oil well finances is poor. The guy was on the lam for a few months, then sentenced to 10 years in Federal prison. He then escaped and hasn’t been found.

samstave 3y ago

[flagged]