This reminds me a lot of a different Armstrong repeatedly saying that he couldn’t be doping because he was the most drug-tested athlete in history. In reality, the law is perfectly clear and hasn’t changed in decades, so what would giving clarity even mean?

Clarity can include explaining how some laws apply in situations relevant to Coinbase or crypto currencies. Sometimes dots need to be connected.

If the law is perfectly clear, is ETH a security or a commodity? Gensler can't even answer that question.

https://twitter.com/sassal0x/status/1648338351832064003

The SEC doesn’t give out legal advice.

They ought to. Giving advice is the difference between having the government work with the people, on the same side, and having it be an adversary.

The goal should be legal compliance and productive companies.

Not clarifying what you will or will not prosecute simply creates unnecessary fear and distrust of the system. Think of all the crime that would not be committed if only the SEC said it was criminal before hand. Maybe thousands of people wouldn’t have lost money to crypto scams if there were greater clarity.

SEC doesn't give legal advice because they don't make the laws.

Want legal advice? Talk to a lawyer. But if your council tells you it's OK to push some boundaries then don't be surprised if you get slapped. And if you don't like getting slapped then you can go to court. Which is exactly what is happening. Seems like the system is working as intended.

The SEC enforces the law, and it should be totally normal for them to say "this is how we plan to enforce this law". By not saying so, they create a lot of unnecessary churn.

Imagine you are outside a store, and there is a police officer outside. You ask them "If I go inside and take some bread off the shelf and walk out without paying, is that ok?". Should the officer say "talk to a lawyer" or should they say "I would arrest you on the way out"?

They aren't offering legal advice, they are just telling you how they will enforce the law. And heck, maybe you'll go to court and get it overturned. But at least you know what enforcement actions will be taken.

First of all, not everything can be reduced to the absolute most simplistic of metaphors like you're trying to do.

Second,

> Last month, the SEC issued Coinbase with a Wells notice, which is often one of the final steps before the regulator formally issues charges. It generally lays out the framework of the regulatory argument and offers the potentially accused an opportunity to rebut the SEC’s claims.

It sounds like Coinbase has gotten the answers they were looking for, they just don't like it.

It doesn't seem like Coinbase has received such answers, they just know that some sort of enforcement action is coming. As per the article, "[Armstrong says] the company has not got any more information on the specific issues the SEC has".

E.g. here's Gensler refusing to answer whether the SEC considers ETH a security - https://twitter.com/sassal0x/status/1648338351832064003

You wouldn’t need to ask the SEC that hypothetical because you can see their long history of bringing cases against “bread thieves” and (correctly) infer that they would bring a similar suit against you for the same or similar conduct. To the extent you think your hypothetical situation differs enough from the case history that you and your lawyers are genuinely unsure (or, more commonly, genuinely believe they wouldn’t charge you) then you can ask them via a No Action Letter which is basically a formal way of asking them “What would you do if I did XYZ?” The risk, of course, is that they’ll tell you they would view XYZ as a violation of federal securities laws and take action accordingly. There’s also the risk that they’ll change their mind— it’s not a promise or even a permanent reprieve. It’s just one “police officer” telling one person how they would hypothetically respond to that one fact pattern at that one moment in time. The next “officer” might take an entirely different view.

You don't need to make the laws to give advice. Are you saying the SEC can't or isn't required? Because not being required does not mean they shouldn't do it.

The vast majority of government workers (including such lowly people as the workers who check applications for food stamps) cannot give advice because humans are fallible and will get it wrong sometimes. The government doesn't want people suing them for that situation, so they just ban all advice basically.

Is that correct? If I am taking a company public, or some other activity that falls under their purview, can I not ask the SEC to provide guidance on the appropriate measures to take?

Yes, of course, a lawyer can provide that. But surely, the SEC should be able to provide advice or point to resources on how to be compliant if needed?

If not, I'm really surprised.

Social workers seem to give advice. IRS also looks like it can advise you as to what you need to do to avoid further action against you.

It’s not as if no one can ever get advise from the government bodies.

But this is only a "problem" for those who want to ride right on the line of what's technically legal. People who strive to stay within what the law is trying to accomplish, who are with the spirit of the law rather than the letter, have no such issues.

I’m just coming at this from a consumer point of view. I want the SEC to be effective so when I invest in some new commodity or security then I know that it at least legal and I won’t lose all my money due to the government declaring it not.

That isn’t the function of the SEC. They make sure issuers have complied with disclosure requirements so investors can make their own decisions. They make sure you get full and fair disclosure and that’s about it. They’re more like the FDA’s regulation of cosmetics (here are the rules, we’ll assume you’re following them and we’ll take action if/when we suspect you’re not) rather than the FDA’s regulation of pharmaceuticals (prove to us this works and is safe before you sell it).

The problem is always something like this: "I'm telling the SEC that I'm doing A, B, C. SEC says it's legal. Later, SEC finds out I'm really doing A, B, C, D, which is illegal"

The SEC isn't dumb enough to be trapped into an opinion that can be twisted around.

Exactly, there here to step in when things go bad. This is regulatory overreach.

Nonsense. The SEC, like all regulatory agencies, provides legal guidance and interpretations in order that people may follow the law. Here is a link to them doing just that: https://www.sec.gov/rules/interp.shtml

That’s not even remotely the same as showing up at their office and asking them to apply the law to your specific scenario. That’s what lawyers do. And if your lawyers are unsure they can ask the SEC via the No Action letter process. For CoinBase to say “well we had a bunch of meetings and we asked them to explain the law to us” is disingenuous because of course they’re not going to get an answer that way. That’s not how the SEC works and that isn’t their job. Do you know why they didn’t go the No Action route? Because they knew the answer they’d get and they didn’t like it.

> they can ask the SEC via the No Action letter process

So you admit that they do give legal advice. Thank you.

No. No Action Letters are absolutely not legal advice and they all specifically state as much.

Armstrong says they did, and says they met to discuss things like this. We will see what happened in reality during the course of the court case. I don't think it is wise to trust the words of any crypto actors.

I don't agree with you. There are many actors in the crypto ecosystem and sadly the scammers and bad guys have, in general, better execution an exposure that the good ones. Personally I was involved in helping representatives in writing laws to move forward.

If there is no guidance you can build an organization that could be destroyed arbitrarily in one day. SEC had enough time...

I don't want to exaggerate but it seems like the financial establishment is really worried, and not precisely about money laundering and corruption. Those use everything as a tool, it does not matter if it is crypto or your "5 star" bank.

> bad guys have, in general, better execution an exposure that the good ones.

So much better that I take it purely on faith that there are decent people in that space. I have to take it on faith, because I haven't actually seen or heard from any of them and so have no evidence that they exist.

I consider others and my company, good actors in the space: think about the space critically and giving transparent feedback and scenarios between the skepticism and the utopia.

And you may well be -- but I don't know you or your company, so I have no way of knowing. The space is generally so tainted that it's not unreasonable to assume the people in it aren't exactly good until proven otherwise.

Logically speaking you are saying that there is no exist good people in the space. That is a really difficult assertion to probe. I am saying something simpler: there exist good people in the space.

Then, you are saying "but I don't know you or your company, so I have no way of knowing.". Well, that is not my job, do your work if you want to change your mind. If you need help I can present you to good people but I assume you can do it by yourself.

Also, again logically, saying that there is no good people in the space, we should first define good people in general. Not trying to sound pedantic but trying to show you that your assertion is about a lot of people, probably in the order or millions.

> do your work if you want to change your mind

The point is that scammers are so prevalent it's not worth "doing your work." The ROI on vetting every player in a given transaction just isn't high enough to make it worth engaging. We don't have to do all this shit in the actual financial industry because of regulation and insurance. Nobody's presented a compelling reason to re-evolve those protections because blockchain.

And yes, the assertion is about a lot of people. That's why we put locks on our cars and houses instead of vetting everyone in town. You keep arguing about symptoms without addressing causes.

PayPal is full of scammers, it is not crypto. Even you can say that PayPal is wrongdoing in many aspects that will not resist in court. Just an example.

Do you have some data on the percentage likelihood of being scammed in crypto vs in the traditional financial markets?

Let's just cherry pick on DeFi. DeFi had something around 10% of its entire TVL lost last year to hacks and scams. I guarantee you that 10% of the entire 'TVL' of PayPal wasn't lost to hacks and scams.

PayPal has almost 79B in assets. Pretty sure they didn't lose 8B to hacks last year.

The fundamental character of crypto - a market where police and regulators look the other way, but money moves freely - whose biggest rocket ride to fame came from Silk Road - is perfectly suited to attract crime and criminality. Without crypto nobody would even remember ransomware because you can't send millions of dollars in Starbucks gift cards.

This is its niche, like it or not. Because if you're not trying to do crime, classical finance is faster, cheaper and safer.

The focus of this thread was about cryptocurrencies as assets.

When you talk about hacks we are shifting the discussion to computer security. Computer security intersects with scamming but they are two different things, you are comparing apples to oranges, it is also a field that nowadays is weaponized and the money invested and gained in the field itself exceed the money in DeFi hacks. Do you know the price in the market of bugs and exploits for Google Chrome, WhatsApp, iOS, etc? The ones exploiting them could be scammers, state actors, etc. The specialthing about DeFi is that hackers are attracted because code is literally money.

There is one more thing that complement and give answer for posts above in this thread: big scams and hacks in the cryptocurrency space are difficult to cash out: significant exchanges use transaction tracing tools (KYT: know your transaction) to freeze assets connected to illegal activities.

> Logically speaking you are saying that there is no exist good people in the space. That is a really difficult assertion to probe. I am saying something simpler: there exist good people in the space.

No, that's not at all what I was saying. I actually said the opposite: I assume that there are good people in this space despite the lack of evidence for it.

> do your work if you want to change your mind

I don't think that my mind needs to be changed here. We're in fundamental agreement here anyway, so I'm not sure what you think should be different in my thinking.

I just have no way of being able to tell who the good people are. And, ultimately, it doesn't actually matter because I don't deal with cryptocurrency in my own affairs.

>The space is generally so tainted that it's not unreasonable to assume the people in it aren't exactly good until proven otherwise.

I could say the exact same about the finance, defence, and health insurance sectors.

For over 40 years, I've only ever heard bad news about those industries. Still, it would be wrong to assume every single individual actor in those spaces is a bad actor; I know that bad news is widely reported in the media, and good news rarely is.