“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 bb88 on Tuesday June 13, 2023 @02:08AM (#36306148)

I quote from TFA:

    Coinbase also writes in great detail in the S-1 about 
    the risk that the SEC might bring a lawsuit exactly like 
    the one they just have:

        [W]e could be subject to legal or regulatory action in the event the 
        SEC, a foreign regulatory authority, or a court were to determine that a supported crypto asset 
        currently offered, sold, or traded on our platform is a “security” under applicable laws… [W]e could 
        be subject to judicial or administrative sanctions for failing to offer or sell the crypto asset in 
        compliance with the registration requirements, or for acting as a broker, dealer, or national 
        securities exchange without appropriate registration.

        [T]here is regulatory uncertainty regarding the status of our staking activities under the U.S. 
        federal securities laws.

It's pretty clear they knew they were operating in a shady area from their S1 filing -- and so now you're surprised the regulatory hammer fell on them?

Imagine if a company was selling "ground human meat" (see the movie "Soylent Green"). And they did it, well, because the market for ground human meat was suddenly exploding! I mean, in their S1 they might say "Sure this might be illegal, the FDA might take regulatory action against us." But also "Ground human meat is one hot market right now, you don't want to be left out on this rocket that's going straight to the moon!"

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Re:“But the SEC let us go public” and other flawed arguments... by rockemsockem on Tuesday June 13, 2023 @02:20AM (#36306239)

Sounds like they expected in advance for the SEC to do something stupid and were very upfront about that fact. Now that the SEC has done a stupid thing they are complaining that the SEC in fact did the stupid thing. Sounds perfectly reasonable to me.

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Re:“But the SEC let us go public” and other flawed arguments... by scott_w on Tuesday June 13, 2023 @03:43AM (#36306905)

Enforcement agencies don't have to stop you ahead of time, even if that action is disallowed or even illegal.

For example, police officers will regularly sit by the side of the road with a speed gun. They'll make no attempt to stop you driving at 150mph on the motorway but, in the UK, you'll receive a court summons through your door after the fact (and probably lose your license).

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[dead]

Re:“But the SEC let us go public” and other flawed arguments... by scott_w on Tuesday June 13, 2023 @03:30PM (#36315651)

> However, abusing retroactive enforcement

Statements like this create a pretty clear case that you haven’t read or shown any real interest in the SEC investigation and litigation related to crypto.

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Re:“But the SEC let us go public” and other flawed arguments... by sebzim4500 on Tuesday June 13, 2023 @05:59AM (#36307911)

And if that same policeman happened to be speaking to parliament and was asked whether going 150 mph was legal he would be able to give a clear answer.

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Re:“But the SEC let us go public” and other flawed arguments... by xioxox on Tuesday June 13, 2023 @06:04AM (#36307944)

A better example is HMRC, the tax authority, in the UK. They won't tell you if your tax avoidance scheme is legal or not, but they will fine you or take you to court if they later decide it is not.

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Re:“But the SEC let us go public” and other flawed arguments... by roywiggins on Tuesday June 13, 2023 @10:02AM (#36310361)

In the US, taxes is one of the cases where you can actually get a letter from the IRS saying "yeah this is probably okay":

https://www.investopedia.com/terms/p/plr.asp

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Re:“But the SEC let us go public” and other flawed arguments... by scott_w on Wednesday June 14, 2023 @03:48AM (#36322793)

Just reading that, it looks like this isn't free. Essentially, what you're paying the IRS for here is for them to procure legal advice for you (with the added benefit that they'll bind themselves to that for a while?)

However:

> Even with a favorable ruling, a taxpayer has no absolute guarantee of the tax consequences, since the IRS can modify or revoke a previously issued private letter ruling if it is later determined that the ruling was incorrect or inconsistent with the current position of the IRS.

So even with a PLR, you have no guarantees.

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Re:“But the SEC let us go public” and other flawed arguments... by scott_w on Tuesday June 13, 2023 @06:07AM (#36307961)

Two things:

1. Firstly, if the law isn't settled, then no they wouldn't.

2. The SEC weren't being asked by Congress, they were being asked by Coinbase.

So no, your attempt to torture the analogy doesn't work at all.

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Re:“But the SEC let us go public” and other flawed arguments... by sebzim4500 on Tuesday June 13, 2023 @06:24AM (#36308072)

The head of the SEC was asked by congress if Eth was a security, and true to form he refused to answer.

I don't understand how anyone can believe these people act in good faith.

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Re:“But the SEC let us go public” and other flawed arguments... by scott_w on Tuesday June 13, 2023 @07:13AM (#36308436)

> 1. Firstly, if the law isn't settled, then no they wouldn't.

> The head of the SEC was asked by congress if Eth was a security, and true to form he refused to answer.

So what you're saying is that the Head of the SEC refused to answer a question they're not qualified to. Because it's an unsettled area of law that they're now challenging through enforcement action.

> I don't understand how anyone can believe these people act in good faith.

I could ask the same of you.

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Re:“But the SEC let us go public” and other flawed arguments... by amanaplanacanal on Tuesday June 13, 2023 @08:13AM (#36309085)

One way to look at it: the SEC doesn’t decide what is legal. They have an opinion, but it is the courts that decide. This is the process working as designed.

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