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The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp https://www.investopedia.com/te

The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp https://www.investopedia.com/terms/h/howey-test.asp So yes, if finance were unregulated, then he wouldn't have been violating the securities regulations that didn't exist. But they did exist, and the Howey Test is from 1946, so it shouldn't have been a surprise. A lot of people tried to pretend that the existing financial regulations, many of which were created in response to previous scams, didn't exist. Or at least didn't apply to them. Was this intentional fraud from the start? Or was it more like the sort of Ponzi scheme where some yutz starts off a business in hope, makes big promises, fudges the books a little, and then just gets in deeper and deeper? It's a good question for philosophers and spectators, but personally I don't care at all. And I doubt federal prosecutors care much either. I have zero sympathy for any of these people. "Move fast and break things" is a dubious ethos even when for something as trivial as a website to post selfies. But when you apply it to the foundations of our vigorously financialized capitalist economy, it's about as smart as applying it to submarine design.

juuular 3y ago
You should care (not saying it's bad you don't!), because the philosophy of it helps us distinguish between a system in which people participate in good faith but get mislead and cling to bad behavior out of fear, vs people participating in bad faith thinking they can get away with it. The difference is in terms of punishment and enforcement mechanisms. The person who keeps doing something bad out of fear that there's no way out is, in a sense, a failure of society as a whole. The person who is doing something bad as a way to get a leg up thinking they can get away with it is a failure of themselves to understand that society comes with a social contract. The end results and the ultimate suffering are the same. For the first situation, we want to educate people such that they are more aware and can avoid falling into that trap, and give them ways to get out of the trap that minimize damage. For the second situation, we want to isolate the damage they can cause and prevent them from causing more damage because they are fully conscious of what they are doing and what is going on, and that makes them more dangerous. If you mess up and get into an inextricable situation, there should be a way to resolve that with the promise of personal growth (along with guard rails to prevent repeating the same mistakes). If you deliberately cause an inextricable situation so you can profit off of it, the only resolution is to isolate the person who caused it from committing further harm until they go through personal growth such that they don't want to cause that harm anymore because they understand that harming others also means harming themselves in the big picture.
- wpietri 3y ago
  There are some cases where I care about intent. Did somebody step on my toes? My reaction will depend on the extent to which I think they meant it. But for large-scale financial crimes, I think worrying about that too much is not just unknowable and irrelevant, I think it's actively harmful. As with toe-stepping, we can recognize that a whoopsie moment may not deserve punishment. E.g., if you're out hunting with your buds and accidentally shoot somebody in the face, as with Dick Cheney, that's different than intentionally shooting somebody. But when somebody intentionally sets up or takes on a position of power, I think there are no whoopsies. Drinking a beer on the couch? Have fun. Drinking and getting in a car? Criminal. Drinking and getting in a car and killing somebody? It may be no more intentional than toe stepping. But at that point I don't really care whether they killed somebody because they meant to or not. The harm's the same. I think this especially matters when we look at things like the 2008 financial crisis. It caused enormous damage, both in financial and human terms. Yet basically nobody was held accountable. Why? Because they didn't mean it. They were just greedy fuckers in positions of extraordinary power that they used for personal gain without regard to the human impact. Plus they were the sort of people who looked a lot like the people who made the laws. They went to the same parties and had nice friends. So they were all somehow let off the hook. And we did little to make sure they'd get held responsible the next time. I think the personal growth bit is nice, but hopelessly naive. There are plenty of people who will do the right thing not out of love but of fear. There are worlds where those people are kept from doing harm, such that we can help them grow up to be decent. But we don't live in a world like that. And if we want to create that world, we need to stop the sociopaths and morally deficient goofs from causing massive trauma to those around them. Because I promise you, that will interfere with the victims' personal grwoth.
saurik 3y ago
Which point of the Howey Test do you feel is not satisfied by Pokémon cards? (If your answer has anything to do with the existence of the game, I am curious what you think of baseball cards.) You state that they don't satisfy the test with quite some certainty but left the reasoning to the reader; but, it would seem, to me, like Pokémon cards are no different from many of these cryptocurrencies the SEC is interested in: In this case, some company decided to print a bunch of supposedly rare things that they pinkie swear are actually rare, even though this company can print more any time they want. People who buy these cards from the company don't even know what they are buying, which seems particularly egregious, and maybe should be regulated as an illegal lottery! They then sell these things to people who are absolutely buying them with the expectation that they will go up in value. The people who print the cards insist they have "utility" in the form of a game people can play, and yet I have never heard of anyone actually playing this game... hell: the only 10 year old I know well happens to be obsessed with these cards and is presumably in the target market, and I'm not even certain he knows how to play the game! Instead, this kid just keeps his cards in binders and talks constantly about their rarity and potential later sale value, as even our children are being turned into amateur investors by the marketing efforts of this company; and the reality is that--like other so-called "collectible" crazes--most of these cards are going to be near-worthless in the long term as this is just a bubble being held up by the company's management efforts designed to shill their shitcards.
- deleted 3y ago
  [deleted]
- empath-nirvana 3y ago
  1) An investment of money 2) In a common enterprise 3) With the expectation of profit 4) To be derived from the efforts of others It fails on points 2 and 4.
  - saurik 3y ago
    The common enterprise here is, similar to the argument against cryptocurrencies, the efforts to make money off of these cards; and the efforts of others here is the work being put in by the company which printed these cards to market them and design this game. If the company suddenly disappeared tomorrow--or began to mismanage their product line, potentially suddenly printing a bunch of cards they previously claimed were rare--the value of these cards would plummet, as people aren't just buying them for their prior established value: they expect that this company will defend their IP portfolio, release expansions with new content, and continue the efforts to market this game in stores. If you disagree with this analysis, maybe you can show how this is (or is not) different to, say, Axie Infinity (a crypto company even I actually do feel is a security under this test--with centralized servers managing centrally minted NFTs--and which is very similar in nature to Pokémon as it is clearly a rip-off of their IP) or (to take a more standard example) Filecoin (one which the SEC claims is a security in their lawsuit against Coinbase)?
bandrami 3y ago
The most amusing part of crypto is watching libertarians learn in realtime why these regulations exist
- wpietri 3y ago
  Absolutely agreed. Back in college I met some very sincere, thoughtful, and kind libertarians. I occasionally imagine how horrified they'd be to learn that their considered and nuanced political philosophy had become a popular fig leaf for "I do what I want without regard to harm for others".
  - pixl97 3y ago
    The problem is libertarianism has always been this way. Typically when you're younger it sounds like a good idea. It would likely work if people weren't assholes. Then you grow up and realize people are assholes. Most people grow out of their libertarian phase, but the ones I worry about are those that don't. All I can think about when I see an old libertarian is "That asshole would install a toxic waste dump beside my house and make me spend the rest of my short life suing them for damages"
    - wpietri 3y ago
      Could be. But for me there's a difference between "we have to limit harm, but let's do it in ways that otherwise lean toward freedom" and the maximalist "I DO WHAT I WANT! YOU'RE NOT MY REAL DAD" types. So I agree the absolutist libertarians are somewhere between dangerously naive and sociopathic. And I think the volunteer billionaire defense squad is ridiculous. But I have met reasonable ones who saw it more as a direction to lean, a counterbalance to authoritarian approaches.
    - DennisP 3y ago
      Some libertarians answer that yes, people are assholes, but that includes the people in the government.
jjulius 3y ago
>The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp https://www.investopedia.com/terms/h/howey-test.asp ... Pokemon cards were only used as an example to explain what happened, almost like an ELI5. Whether they'd pass they Howey Test or not is irrelevant.
- wpietri 3y ago
  It's not irrelevant. It's a bad example because it creates an intuition that what was done was something very different than what was actually done.
- timy2shoes 3y ago
  > Whether they'd pass they Howey Test or not is irrelevant. Not if you're the SEC enforcing securities laws, which only apply if they pass the Howey test.
legitster 3y ago
> It's a good question for philosophers and spectators, but personally I don't care at all Please don't be so narrow sighted. Have you ever been charged with a crime you didn't know was a crime? You don't think overzealous sheriffs or prosecutors love pulling out old statutes on people? Holding people accountable for laws they had no reasonable way of knowing is a miscarriage of justice. Our criminal system absolutely takes intent into account when determining criminality and sentencing. I have no idea why people think the Howey test is so cut and dry when courts sometimes struggle with a legal definition for a sandwich.
- wpietri 3y ago
  Mashinsky definitely has a "reasonable way of knowing" about these laws. More than that, anybody starting a company has a positive duty to clients and investors to make sure that it's legal before things get too far.
  - legitster 3y ago
    Maybe a better example would be the pot industry. Pot is blatantly illegal at the federal level. So everyone currently running a dispensary is theoretically operating fraudulently with their business partners. Does that mean they have a duty to their own business partners or customers or investors to shut down their own business?
    - wpietri 3y ago
      They are not operating fraudulently. Their customers are buying and getting marijuana. Their investors surely know the risks as well. If we're looking for an analogy in this space, I think it's more like snake oil. So imagine a company started selling a new "nutritional supplement" or "herbal blend" that helped with anxiety. But it turned out the secret ingredient was weed. That would be a fraud on investors and they could well get charged for that on top of the base drug charges.
- Analemma_ 3y ago
  "Ignorance of the law is not an excuse" is a well-established legal principle with precedent going back to Ancient Rome. It does get a bit tricky when regulatory statutes get involved, but c'mon: all these businesses save maybe Coinbase are run by criminals. We're not talking about well-meaning people acting in good faith here. Also, that all only applies to criminal statues, not civil/regulatory ones. If you're a construction firm who doesn't know that houses have to be built to fire code, maybe you'll escape criminal prosecution, but the government is going to take an axe to your business anyway.

juuular 3y ago

You should care (not saying it's bad you don't!), because the philosophy of it helps us distinguish between a system in which people participate in good faith but get mislead and cling to bad behavior out of fear, vs people participating in bad faith thinking they can get away with it. The difference is in terms of punishment and enforcement mechanisms. The person who keeps doing something bad out of fear that there's no way out is, in a sense, a failure of society as a whole. The person who is doing something bad as a way to get a leg up thinking they can get away with it is a failure of themselves to understand that society comes with a social contract. The end results and the ultimate suffering are the same. For the first situation, we want to educate people such that they are more aware and can avoid falling into that trap, and give them ways to get out of the trap that minimize damage. For the second situation, we want to isolate the damage they can cause and prevent them from causing more damage because they are fully conscious of what they are doing and what is going on, and that makes them more dangerous. If you mess up and get into an inextricable situation, there should be a way to resolve that with the promise of personal growth (along with guard rails to prevent repeating the same mistakes). If you deliberately cause an inextricable situation so you can profit off of it, the only resolution is to isolate the person who caused it from committing further harm until they go through personal growth such that they don't want to cause that harm anymore because they understand that harming others also means harming themselves in the big picture.

wpietri 3y ago
There are some cases where I care about intent. Did somebody step on my toes? My reaction will depend on the extent to which I think they meant it. But for large-scale financial crimes, I think worrying about that too much is not just unknowable and irrelevant, I think it's actively harmful. As with toe-stepping, we can recognize that a whoopsie moment may not deserve punishment. E.g., if you're out hunting with your buds and accidentally shoot somebody in the face, as with Dick Cheney, that's different than intentionally shooting somebody. But when somebody intentionally sets up or takes on a position of power, I think there are no whoopsies. Drinking a beer on the couch? Have fun. Drinking and getting in a car? Criminal. Drinking and getting in a car and killing somebody? It may be no more intentional than toe stepping. But at that point I don't really care whether they killed somebody because they meant to or not. The harm's the same. I think this especially matters when we look at things like the 2008 financial crisis. It caused enormous damage, both in financial and human terms. Yet basically nobody was held accountable. Why? Because they didn't mean it. They were just greedy fuckers in positions of extraordinary power that they used for personal gain without regard to the human impact. Plus they were the sort of people who looked a lot like the people who made the laws. They went to the same parties and had nice friends. So they were all somehow let off the hook. And we did little to make sure they'd get held responsible the next time. I think the personal growth bit is nice, but hopelessly naive. There are plenty of people who will do the right thing not out of love but of fear. There are worlds where those people are kept from doing harm, such that we can help them grow up to be decent. But we don't live in a world like that. And if we want to create that world, we need to stop the sociopaths and morally deficient goofs from causing massive trauma to those around them. Because I promise you, that will interfere with the victims' personal grwoth.

saurik 3y ago

Which point of the Howey Test do you feel is not satisfied by Pokémon cards? (If your answer has anything to do with the existence of the game, I am curious what you think of baseball cards.) You state that they don't satisfy the test with quite some certainty but left the reasoning to the reader; but, it would seem, to me, like Pokémon cards are no different from many of these cryptocurrencies the SEC is interested in: In this case, some company decided to print a bunch of supposedly rare things that they pinkie swear are actually rare, even though this company can print more any time they want. People who buy these cards from the company don't even know what they are buying, which seems particularly egregious, and maybe should be regulated as an illegal lottery! They then sell these things to people who are absolutely buying them with the expectation that they will go up in value. The people who print the cards insist they have "utility" in the form of a game people can play, and yet I have never heard of anyone actually playing this game... hell: the only 10 year old I know well happens to be obsessed with these cards and is presumably in the target market, and I'm not even certain he knows how to play the game! Instead, this kid just keeps his cards in binders and talks constantly about their rarity and potential later sale value, as even our children are being turned into amateur investors by the marketing efforts of this company; and the reality is that--like other so-called "collectible" crazes--most of these cards are going to be near-worthless in the long term as this is just a bubble being held up by the company's management efforts designed to shill their shitcards.

deleted 3y ago
[deleted]
empath-nirvana 3y ago
1) An investment of money 2) In a common enterprise 3) With the expectation of profit 4) To be derived from the efforts of others It fails on points 2 and 4.
- saurik 3y ago
  The common enterprise here is, similar to the argument against cryptocurrencies, the efforts to make money off of these cards; and the efforts of others here is the work being put in by the company which printed these cards to market them and design this game. If the company suddenly disappeared tomorrow--or began to mismanage their product line, potentially suddenly printing a bunch of cards they previously claimed were rare--the value of these cards would plummet, as people aren't just buying them for their prior established value: they expect that this company will defend their IP portfolio, release expansions with new content, and continue the efforts to market this game in stores. If you disagree with this analysis, maybe you can show how this is (or is not) different to, say, Axie Infinity (a crypto company even I actually do feel is a security under this test--with centralized servers managing centrally minted NFTs--and which is very similar in nature to Pokémon as it is clearly a rip-off of their IP) or (to take a more standard example) Filecoin (one which the SEC claims is a security in their lawsuit against Coinbase)?

bandrami 3y ago

The most amusing part of crypto is watching libertarians learn in realtime why these regulations exist

wpietri 3y ago
Absolutely agreed. Back in college I met some very sincere, thoughtful, and kind libertarians. I occasionally imagine how horrified they'd be to learn that their considered and nuanced political philosophy had become a popular fig leaf for "I do what I want without regard to harm for others".
- pixl97 3y ago
  The problem is libertarianism has always been this way. Typically when you're younger it sounds like a good idea. It would likely work if people weren't assholes. Then you grow up and realize people are assholes. Most people grow out of their libertarian phase, but the ones I worry about are those that don't. All I can think about when I see an old libertarian is "That asshole would install a toxic waste dump beside my house and make me spend the rest of my short life suing them for damages"
  - wpietri 3y ago
    Could be. But for me there's a difference between "we have to limit harm, but let's do it in ways that otherwise lean toward freedom" and the maximalist "I DO WHAT I WANT! YOU'RE NOT MY REAL DAD" types. So I agree the absolutist libertarians are somewhere between dangerously naive and sociopathic. And I think the volunteer billionaire defense squad is ridiculous. But I have met reasonable ones who saw it more as a direction to lean, a counterbalance to authoritarian approaches.
  - DennisP 3y ago
    Some libertarians answer that yes, people are assholes, but that includes the people in the government.

jjulius 3y ago

>The important difference being that Pokemon cards don't meet the Howey test: https://www.investopedia.com/terms/h/howey-test.asp https://www.investopedia.com/terms/h/howey-test.asp ... Pokemon cards were only used as an example to explain what happened, almost like an ELI5. Whether they'd pass they Howey Test or not is irrelevant.

wpietri 3y ago
It's not irrelevant. It's a bad example because it creates an intuition that what was done was something very different than what was actually done.
timy2shoes 3y ago
> Whether they'd pass they Howey Test or not is irrelevant. Not if you're the SEC enforcing securities laws, which only apply if they pass the Howey test.

legitster 3y ago

> It's a good question for philosophers and spectators, but personally I don't care at all Please don't be so narrow sighted. Have you ever been charged with a crime you didn't know was a crime? You don't think overzealous sheriffs or prosecutors love pulling out old statutes on people? Holding people accountable for laws they had no reasonable way of knowing is a miscarriage of justice. Our criminal system absolutely takes intent into account when determining criminality and sentencing. I have no idea why people think the Howey test is so cut and dry when courts sometimes struggle with a legal definition for a sandwich.

wpietri 3y ago
Mashinsky definitely has a "reasonable way of knowing" about these laws. More than that, anybody starting a company has a positive duty to clients and investors to make sure that it's legal before things get too far.
- legitster 3y ago
  Maybe a better example would be the pot industry. Pot is blatantly illegal at the federal level. So everyone currently running a dispensary is theoretically operating fraudulently with their business partners. Does that mean they have a duty to their own business partners or customers or investors to shut down their own business?
  - wpietri 3y ago
    They are not operating fraudulently. Their customers are buying and getting marijuana. Their investors surely know the risks as well. If we're looking for an analogy in this space, I think it's more like snake oil. So imagine a company started selling a new "nutritional supplement" or "herbal blend" that helped with anxiety. But it turned out the secret ingredient was weed. That would be a fraud on investors and they could well get charged for that on top of the base drug charges.
Analemma_ 3y ago
"Ignorance of the law is not an excuse" is a well-established legal principle with precedent going back to Ancient Rome. It does get a bit tricky when regulatory statutes get involved, but c'mon: all these businesses save maybe Coinbase are run by criminals. We're not talking about well-meaning people acting in good faith here. Also, that all only applies to criminal statues, not civil/regulatory ones. If you're a construction firm who doesn't know that houses have to be built to fire code, maybe you'll escape criminal prosecution, but the government is going to take an axe to your business anyway.