Every U.S. Crypto Exchange (and Binance) Is Being Investigated by the SEC

https://www.forbes.com/sites/michaeldelcastillo/2022/08/04/every-us-crypto-exchange-and-binance-is-being-investigated-by-the-sec-says-senator-lummis-staffer/

by thesecretceo • 4 years ago

94 61 4 years ago

forbes.com

mhoad• 4 years ago

Seems like an industry that could actively use some oversight honestly. Good?

Cypher• 4 years ago

They've been investigating Crypto Exchanges for about 7 years. Not sure they gotta keep reminding us, I suppose it's because people lost money and they want them make it seem like they're doing something.

alfiedotwtf• 4 years ago

Anyone able to tell me the difference between a crypto exchange vs say Ebay selling Pokemon cards?

yawnxyz• 4 years ago

Ebay should probably have some oversight too

batch122• 4 years ago

One difference is that Pokémon cards are physical objects

chillwaves• 4 years ago

Is that a meaningful difference?

bushbaba• 4 years ago

Can I ask Ebay to provide me 10x leverage on my pokemon card, to buy other pokemon cards? You can on many exchanges.

Can I go to Ebay with my newly created "Fokemon" cards. Sell them to myself for pennies on the dollar in bulk. Generating demand from those thinking "Fokemon" is the new craze, and dump my supply making millions. While EBay lists my "Fokemon" cards to it's userbase while also taking a cut of a large "Fokemon" stash ("ICO"). This happened on MANY exchanges.

Can I go to Ebay and sell 100s of thousands of dollars of merch which was bought with North Korean money? Well you can on many exchanges. Heck some exchanges don't require KYC for the first 1 BTC!!! per 'account'. Ebay does not let the same human seller open tons of seller accounts. In fact there's a black market of Ebay sellers asking 3rd parties to open accounts on behalf of them.

So while there's some similarities, the difference is in respect to money laundering and fraud. Ebay actually tries to enforce both, where-as many exchanges often encourage both.

charcircuit2• 4 years ago

Can I ask Ebay to provide me 10x leverage on my pokemon card, to buy other pokemon cards?

EBay isn't a payment provider. You can get leverage from PayPal or a credit card company.

Can you list a new product and buy them from yourself

Yes, it's possible. Why not make ads hyping up your products instead?

Can I go to Ebay and sell 100s of thousands of dollars of merch which was bought with North Korean money?

Yes.

npalli• 4 years ago

It used to be crypto guys had some high idealistic goals of giving financial access to the downtrodden and oppressed people of the world. Now that most of these schemes have been proven to be a result of ZIRP and straight up fraud, the argument nowadays is just that there is borderline illegal activity everywhere and people lose money gambling and doing stupid stuff anyways, why can't we do such borderline stuff and make money off people? Not even trying to pretend to be good guys, sad.

dehrmann2• 4 years ago

Can I go to Ebay with my newly created "Fokemon" cards. Sell them to myself for pennies on the dollar in bulk.

It might take a little effort with shell companies, but yes. A long as it's clear they're not Jokemon cards.

floe• 4 years ago

Pokemon cards fail the Howey test

charcircuit2• 4 years ago

So do coins listed by major US exchanges.

neals• 4 years ago

Pokemon? I don't know. Now Magic the Gathering though...

mv1234• 4 years ago

The SEC, and really every related regulatory agency, has been completely missing in action while shadow banks like Tether and USDC act as gasoline for spreading cryptocurrency fraud to the general public. The amount of fraudulent behavior occuring unchecked in plain view is staggering, and as someone who has been following cryptocurrency since the 2017 bubble it's completely erased what little confidence I had left in the federal governmnent. This is far too little too late.

rvz3• 4 years ago

The SEC, and really every related regulatory agency, has been completely missing in action while shadow banks like Tether and USDC act as gasoline for spreading cryptocurrency fraud to the general public.

'Completely?', 'Since 2017?'

Then why have the SEC have already clamped down on 98% of the ICO frenzy of 2017 (First started by Ethereum) by making unregistered ICOs illegal in the US then? [0][1]

[0] https://www.sec.gov/litigation/investreport/34-81207.pdf

[1] https://www.investor.gov/introduction-investing/general-reso...

dannyw2• 4 years ago

ICOs are still happening, it's just on DeFi now (uniswap, etc).

Animats• 4 years ago

Nope. They bring the hammer down on one or two crypto scams each month.[1] This week, Forsage. The SEC generally acts after someone reports losing money, so, like most law enforcement, they're looking at the past.

[1] https://www.sec.gov/spotlight/cybersecurity-enforcement-acti...

ryanSrich• 4 years ago

Why do you want the government meddling in people’s individual financial affairs? Seems like an extremely odd thing to wish for.

ShamelessC• 4 years ago

With all due respect, if you actually don’t know the answer to this (misleadingly worded) question, you should probably also know that you sound outstandingly tone deaf to large swathes of the population who learned about Keynesian economics in school and/or are proponents of government spending/regulations.

Are you trying to convince people or just trying to catch someone tripping up on your bizarrely biased trick questions?

nl5• 4 years ago

A well regulated and trusted financial sector is the foundation of a strong market economy.

People should be free to make their own mistakes. But companies should be forced to disclose relevant and honest information.

I'm not necessarily convinced by the criticism of stablecoins specifically. But regulation of honesty and risk disclosure in the financial sector as a principle is something that has strong support.

manicdee• 4 years ago

Yes, I want the government regulating the finance sector because far too many people are willing to trust someone who presents a complicated system as a way to take money.

Today the crypto scammers, tomorrow the hedge fund traders.

TomSwirly4• 4 years ago

Because I have knowledge of history, and specifically, what a shitshow it was before financial regulation occurred.

Consider reading a history book too.

bloqs• 4 years ago

What is odd about wanting governments to stop criminal and predatory behaviour? Yes, there is a libertarian cost to this, but when clearly defined and monitored, everyone benefits. Do you want people to have the freedom to exploit and harm others? Isn't that somewhat odd?

nl5• 4 years ago

Why the specific criticism of stable coins?

Seems to me that Tether and USDC are both different cases for one thing, and secondly why are they specifically "gasoline" rather than the incredible (and misleading) returns advertised by some DeFi protocols?

smoldesu4• 4 years ago

Stablecoins have to be backed by something, and pretty much every example I've seen has zero accountability for whatever the asset is leveraged against. Anyone can make a coin that holds roughly the same value, but it's a lot harder to ensure that you have the liquidity for your users to cash out whenever they please. It's a lot easier for a government to handle that sort of thing.

ufo2• 4 years ago

Tether is gasoline they print new tethers out of thin air and use them to purchase bitcoin in the market, propping up the price of bitcoin.

root_axis• 4 years ago

I'm ambivalent. I think the SEC has done a passable job, all things considered. They have acted slowly but surely, without impulsivity, taking the time to understand the technology while applying a nuanced eye to the evolution and growing sophistication of this shady ecosystem over the years. The SEC has gradually tightened the screws on the grift while not stifling the ecosystem that allows the credulous true believer to pay for their webhosting with bitcoin. Today with the benefits of hindsight from living in a world with billions of dollars in stolen funds, ICO mania, NFT mania, celebrity pump & dumps, a ransomware explosion etc etc, it's easy to say "you should have prevented this", but like with any new technology, the government is gradually catching up. In many ways, the government is much farther behind with respect to other internet technologies, like social media for instance...

TomSwirly4• 4 years ago

They have acted slowly but surely, without impulsivity, taking the time to understand the technology

This must be a joke... right?

They've had fourteen years to understand the technology. But more, if they didn't understand this, it was their responsibility to not allow it to happen until they did.

The SEC has an active responsibility to proactively prevent fraud and financial panics. By allowing unregistered, unregulated, unaudited securities to proliferate for 14 years while they apparently did or said nothing, they have allowed this to become a trillion dollar problem. If a conventional investment bank had done anything like this, the SEC would not have allowed this, but they dropped the ball utterly and completely here.

addicted• 4 years ago

You don’t need to understand the technology to recognize the financial scams being run.

Offering 15-20% guaranteed rates of returns to unsophisticated lay people in times of historically low interest rates doesn’t require any technical knowledge to know it’s gonna fail and/or is a scam.

smoldesu4• 4 years ago

it's completely erased what little confidence I had left in the federal governmnent.

So, cryptocurrencies are used to scam people, and you blame the government?

The government had every reason to stay out of the cryptocurrency discussion. Every web3 startup and their mom was racing to get some form of government endorsement; had the floor been opened for discussion, we would have watched as every exchange threw the other under the bus just so they could look clean and make good on their investors. It would have been unmitigated madness, and arguably, their refusal to really acknowledge crypto has had the exact chilling effect they wanted. Hyperbolic speculative trading is on the decline, Bitcoin is almost worth 1/3 of it's peak value, and hackers are continuing to exploit their script-kiddy software stacks. A time-out in the corner is exactly what the crypto world needed.

TomSwirly4• 4 years ago

Absolutely the government is to blame, in just the same way if companies started pumping a new pollutant into the environment and the EPA did nothing about it for 14 years.

windows2020• 4 years ago

Early on I had a feeling the crypto crowd would have a meltdown if a gov agency came in and tried to restrict what they were doing.

RobRivera• 4 years ago

good

WiSaGaN3• 4 years ago

For question of whether SEC has jurisdiction over cryptos, there is something called "Howey Test" for anyone that is unaware of:

Under the Howey Test, a transaction qualifies as a security if it involves the following four elements:

- An investment of money

- In a common enterprise

- A reasonable expectation of profit

- Derived from the efforts of others

To be considered a security, a transaction must meet all four prongs of the Howey Test.

doopy12• 4 years ago

"A reasonable expectation of profit" seems like it would exclude all stable coins.

WiSaGaN3• 4 years ago

That's true. NFTs seem also failed the test because the speculated price increase is not "derived from the efforts of others". I think that is one of the reasons SEC considers Bitcoin to be a commodity (which probably falls in the jurisdiction of CFTC) but not a security.

jiggawatts• 4 years ago

"Derived from the efforts of others" also excludes most crypto, since by definition they produce nothing.

Eddy_Viscosity2• 4 years ago

Seeing how great a job the SEC does regulating other markets ripe with fraud and corruption, I don't think the crypto companies have much to worry about, assuming their campaign contributions are generous enough.

Every U.S. Crypto Exchange (and Binance) Is Being Investigated by the SEC

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