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A comment on “But the SEC let us go public” and other flawed arguments in Coinbase's defense.

Re:“But the SEC let us go public” and other flawed arguments... by triceratops on Monday June 12, 2023 @07:05PM (#36302646)
Can anyone summarize what the stakes are here?

Is a loss for Coinbase a company-ending event? Or is being forced to register all the coins that aren't BTC or ETH a costly regulatory burden?

What are the implications of registering all these coins as securities? Does it affect whether they can be offered to non-accredited investors? How expensive is it? Who bears the costs?

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Re:“But the SEC let us go public” and other flawed arguments... by habitue on Monday June 12, 2023 @07:17PM (#36302767)
The issue is that if most coins are securities, then that means in order to operate, Coinbase has to become a registered securities exchange in order for it to do what it does. The regulations for securities exchanges are onerous, but also many of them aren't possible to comply with for crypto because of how it works.

So the SEC is saying "You are an unregistered securities exchange"

And coinbase is saying "Please give some kind of route by which we could possibly be compliant given the nature of cryptocurrencies"

And the SEC is saying "We have no obligation to give you such a route, just as we have no obligation to provide such a route for criminal black markets"

Who you interpret as being unreasonable here depends on if you think crypto is closer to the black market example, or if it's closer to being like regular securities but with a few tweaks to the rules to make it work.

[ Parent | on HN ]
Re:“But the SEC let us go public” and other flawed arguments... by triceratops on Monday June 12, 2023 @07:19PM (#36302790)
> aren't possible to comply with for crypto because of how it works

Why is this?

Thanks for the other detail you provided.

[ Parent | on HN ]
Re:“But the SEC let us go public” and other flawed arguments... by nickff on Monday June 12, 2023 @07:30PM (#36302919)
The SEC expects the disclosure of various types of information which are impossible to create/state in the case of a decentralized security/commodity/currency like crypto.
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Re:“But the SEC let us go public” and other flawed arguments... by lokar on Tuesday June 13, 2023 @12:45AM (#36305454)
I think that is mostly about offering a new security, not acting as a broker.
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Re:“But the SEC let us go public” and other flawed arguments... by Nursie on Tuesday June 13, 2023 @01:34AM (#36305861)
Sure, but presumably registered brokers can only deal in registered securities?
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Re:“But the SEC let us go public” and other flawed arguments... by H8crilA on Tuesday June 13, 2023 @04:44AM (#36307403)
No one is allowed to deal in unregistered securities.
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Re:“But the SEC let us go public” and other flawed arguments... by Nursie on Tuesday June 13, 2023 @05:25AM (#36307684)
Well true!
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Re:“But the SEC let us go public” and other flawed arguments... by JumpCrisscross on Tuesday June 13, 2023 @06:40AM (#36308187)
> No one is allowed to deal in unregistered securities

All of VC happens with unregistered securities.

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Re:“But the SEC let us go public” and other flawed arguments... by H8crilA on Tuesday June 13, 2023 @08:01AM (#36308968)
You got me :)

Accredited investors make an exception.

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Re:“But the SEC let us go public” and other flawed arguments... by habitue on Monday June 12, 2023 @07:52PM (#36303118)
Yeah, I'm not an expert here, but I believe it might be the reporting rules. This is the law that governs it, though it delegates a lot to the SEC and the particular requirements could be in the rules that the SEC puts out itself

https://www.sec.gov/about/about-securities-laws#secexact1934

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Re:“But the SEC let us go public” and other flawed arguments... by cmcaleer on Monday June 12, 2023 @08:01PM (#36303195)
Here is only one such brutal squeeze: registered security brokers must maintain control of all securities [0]. In practice, this means brokers use custodians[1]. Regulators have been working on making holding crypto harder for custodians [2].

[0]: Securities Exchange Act of 1934, Rule 15c3-3

[1]: https://www.sec.gov/news/public-statement/joint-staff-statem...

[2]: https://www.risk.net/investing/7956492/crypto-custody-faces-...

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Re:“But the SEC let us go public” and other flawed arguments... by JumpCrisscross on Tuesday June 13, 2023 @06:40AM (#36308183)
I don't think a week goes by when I don't see a custodian pitching crypto custody. Out of the challenges Coinbase faces in being compliant, custody is the least among them.
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Re:“But the SEC let us go public” and other flawed arguments... by adsfgiodsnrio on Tuesday June 13, 2023 @10:42AM (#36310934)
And the SEC is also saying "you don't get to ignore the rules just because you don't like them". Whatever the rules should be, it's clear Coinbase is on the wrong side of what they are now.
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Re:“But the SEC let us go public” and other flawed arguments... by civilitty on Monday June 12, 2023 @07:12PM (#36302714)
> Is a loss for Coinbase a company-ending event?

We don’t do that kind of thing in America except for the occasional Enron when extreme levels of fraud are involved and someone takes out California’s electrical grid to boost profits.

IANAL but these SEC violations don’t seem to fit the bill.

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Re:“But the SEC let us go public” and other flawed arguments... by triceratops on Monday June 12, 2023 @07:15PM (#36302749)
See: https://en.wikipedia.org/wiki/Aereo

The courts found their business model and technology fundamentally illegal.

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Re:“But the SEC let us go public” and other flawed arguments... by paulpauper on Monday June 12, 2023 @07:24PM (#36302852)
how about for-profit colleges . many were forced to shutdown due to lawsuits and major regulation under Obama
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Re:“But the SEC let us go public” and other flawed arguments... by adsfgiodsnrio on Tuesday June 13, 2023 @10:45AM (#36310970)
"OK, securities exchange, you can continue operating as long as you shut down the securities exchange."

I suppose they can keep the office cafeteria open.

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Re:“But the SEC let us go public” and other flawed arguments... by paulpauper on Monday June 12, 2023 @07:27PM (#36302877)
The stock price would seem to suggest it's a long way from being a company-ending event, otherwise it would be $5 instead of $50. one of the nice things about the EMH is it gives a good heuristic of assessing how important or serious something is, just by looking at how the stock price reacts, without having to understand the actual details. much of the problem has to do with staking.
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Re:“But the SEC let us go public” and other flawed arguments... by hef19898 on Tuesday June 13, 2023 @07:50AM (#36308859)
That's what a lot of people said about Wirecard up to almost the very end.
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Re:“But the SEC let us go public” and other flawed arguments... by lokar on Tuesday June 13, 2023 @12:49AM (#36305488)
Even if they loose they could probably still work out a way to broker btc and eth for Americans (as commodities). And also operate in other countries with different regulatory approaches.
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Re:“But the SEC let us go public” and other flawed arguments... by LatteLazy on Tuesday June 13, 2023 @07:12AM (#36308427)
Yes. Coinbase would need to immediately stop about 99% of its business. It's not clear how big the fines would be but also likely huge.
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