The Bond villain compliance strategy

https://www.bitsaboutmoney.com/archive/bond-villain-compliance-strategy/

by takinola • 3 years ago

552 415 3 years ago

monero-xmr3• 3 years ago

Man the anti-crypto news piles on like clockwork as the bull begins anew.

Crypto is finance without borders. It is literally the cypherpunk dream come alive - money issued on computers, censorable by no one, existing only as numbers. You could ban crypto with every government on earth and it would be severely reduced in price, but it would not die - it would just delay its inevitability. This is because cryptocurrency is an ideology - one of anti-state money, pro freedom, decentralized, empowering individuals. A circular economy of crypto does exist - it’s small vs. the speculation, but people do receive crypto and spend crypto without ever cashing out to fiat. As that economy grows, there is no longer anything the state can do to stop it.

But the state won’t stop crypto. That time has passed. Some in power saw the threat, but mostly the elites called it “rat poison squared” and laughed at it. Now crypto is so big you have major Republican presidential candidates issuing pro-crypto policy platforms and senators and powerful representatives defending it in committee hearings. It’s all over.

The real solution is to out compete crypto. Why do people like it? How can state currency do better? If you can’t solve that puzzle, then you aren’t going to defeat it.

cyberax• 3 years ago

Replace "crypto" with "drugs" and your message will remain basically the same.

243423443• 3 years ago

A circular economy of crypto does exist - it’s small vs. the speculation, but people do receive crypto and spend crypto without ever cashing out to fiat.

Can you provide examples that do not involve extortion or drugs?

monero-xmr3• 3 years ago

Servers, VPNs, software engineers that work in the crypto space. You can get a flavor at https://kycnot.me/

afroboy4• 3 years ago

Well i live in shitty country where trying to transfer USD or EUR is very dangereous and could get you a prison time and not that amount you think of, it just we want to buy things from Amazon. thanks to binance and other ways we could transfer money and buy things from out of borders.

viknesh• 3 years ago

Are there any factual assertions that you disagree with in the piece? Otherwise this seems to be more anti-Binance than crypto itself (although the author's viewpoint on crypto is clear).

monero-xmr3• 3 years ago

I am extremely deep in this space since nearly the beginning. My take on Binance is it started like many YOLO exchanges back in the 2017 boom but pioneered the exchange token model. They had very good customer service and onboarded nearly everyone. The model was FAFO with the understanding they would pay a fine later.

If the US government had the nuts they would have shut it down. They didn’t, and CZ probably won’t get any jail just like Bitmex’s Arthur Hayes. If they do put him in jail it’s a pittance vs. his massive equity stake and wealth.

As an addendum, the Tether Truthers assumed that when the US government was done sifting through their subpoenas, the Truth about Tether would be revealed and it would collapse. Just like with the NY AG, didn’t happen won’t happen - Tether is backed at this point after 8 quarters of high interest rates.

I was way, way more worried about crypto 2 years ago than I am now. The bad actors are being shaken out, the SEC mostly lost vs. Ripple, and the US and the world itself is yo-yoing back to conservative government after a period of progressive governments. All of this bodes well for crypto and its anti-state ethos.

rocqua• 3 years ago

"Crypto is finance without borders" is not a positive statement. Borders are important for security. Especially because states have varying degrees of ill-intent towards each other's citizens.

But more important than borders is jurisdiction of regulators. At least a significant portion of crimes are also evil. Lack of regulation really helps those evil things happen. Generally financial regulation is one of the more effective forms of crime prevention.

There's certainly regulation so stupid it almost reaches malice. There's probably regulation that is intentionally malicious. That needs to be solved, but solving it by saying 'only regulation as the cryptocurrencies currently allow' throws out way too much regulation. It lets too many evil things all of a sudden happen.

dmichulke2• 3 years ago

Especially because states have varying degrees of ill-intent towards each other's citizens.

I think the major risk crypto people see is not other states, but their own state.

At least a significant portion of crimes are also evil.

Likewise, a portion of non-crimes is evil. For example money printing. And it's huge, we're talking trillions.

The same trillions that can't be traced once they enter the Pentagon.

Generally, there seems to no longer be a moral authority the state wields, crimes and evil decoupled a long time ago, and people now see that they can choose who fleeces them and how.

slackfan• 3 years ago

Borders are important for the security of governments, and very little else. A reminder that passports and mandatory travel restrictions outside of a few countries didn't come into existence till WWI.

Border enforcement by governments as a whole has caused more death and human suffering than literally any other action by any nation state in the world.

Aerbil3132• 3 years ago

The single issue is that real world has borders in the form of nation-state borders and barriers (regulations) to the money transfer between entities. Crypto does not, and this leads to a conflict.

I am personally all in for a no-borders real world as long as there are no states which don’t believe in my ideology. But such a thing is utopia and doesn’t exist yet.

RandomLensman4• 3 years ago

State currencies are outcompeting crypto, including by considering it an asset denominated in said state currencies.

IIAOPSW• 3 years ago

I'm deeply disappointed that this isn't the strict bylaws, policy, and procedure documents for SPECTRE and its affiliates and controlled entities. I wanted to read the Henchman Code of Conduct, Infiltration Response and Prevention Procedure, and Workplace Health and Safety Guidelines for a shadowy, criminal org.

smnrchrds• 3 years ago

I wanted to read the Henchman Code of Conduct

Rule 1. Die fast, die often.

BiteCode_dev• 3 years ago

And break things

EdwardDiego• 3 years ago

The International Brotherhood of Henchsters union will negotiate better henching health and safety policies on behalf of all goons, thugs, hired thugs, minions, and of course henchpeople.

We all know that henching is an inherently risky job. Fighting some of the world's most tuxedo clad Scottish sociopaths is often dangerous, but that doesn't mean we can't reduce unnecessary risks.

Risks that cause lost productivity on your Doomstar project through avoidable injuries, recruitment delays, and the difficulty of removing tangled bodies from the drill you're using to get to the Earth's core.

We demand:

1. Adequate hand-rails on ledges, bridges, and _especially_ around piranha tanks, snake pits, etc.

2. Murder as a punishment for failing your boss "for the last time" now requires two written warnings beforehand.

3. Volcano bases must have adequate fire and lava escapes.

hlandau• 3 years ago

Old but obligatory link, the Evil Overlord List:

http://www.eviloverlord.com/lists/overlord.html

peteradio• 3 years ago

38) If I absolutely must ride into battle, I will certainly not ride at the forefront of my Legions of Terror, nor will I seek out my opposite number among his army.

This one makes no sense, surely evil overlords are invulnerable during the battle charge.

45) I will make sure I have a clear understanding of who is responsible for what in my organization. For example, if my general screws up I will not draw my weapon, point it at him, say "And here is the price for failure," then suddenly turn and kill some random underling.

This one is hilarious I didn't understand the direction until the last word.

jstarfish• 3 years ago

Check out Marvel's MODOK show. It explores the banalities like this that arise when a corporation buys out your evil lab, and how poorly a Narcissistic supervillain handles being subjugated by a power greater than himself.

roenxi• 3 years ago

Alexandra Elbakyan powers a big chunk of the worlds knowledge archiving almost singlehandedly. A tiny group of ringleaders powers who knows how much torrenting. The evidence I've seen so far is that coordinating a global blockade on anything tech is too expensive to manage. And getting more so as this more reliable alternative to the traditional banking system grows.

The economics here are not on the side of governments. The enforcement costs are high. The costs to individuals in acquiring and using crypto are low. The benefits of running a monetary system that bypasses the high costs of the global regulatory state are extremely high (in some sense, the outrageous costs of running the bitcoin network represents the implied drag of regulation). Even if being imprisoned is an inevitable result, there are a lot of people where the intervening high life of running a huge crypto exchange must be attractive.

The times are exciting. Unless we see capital controls the likes of which have never been tried (a possibility, the authoritarians must be stewing over crypto) might find these apparent victories by the regulator as Pyrrhic. Unlike most financial assets, once I've bought a cryptocurrency the only option they have is to come to my house and seize it. That isn't a feasible option at scale.

RandomLensman4• 3 years ago

Crypto doesn't need to be enforced out of existence, it already cannot compete with other money, so it remains a niche thing. Enforcing things on niches is easy to some extent (or rather not even needed).

pas5• 3 years ago

regulators don't have problem with crypto, they have problem with Crypto.

more seriously, there's zero problem with the technology. you can send money to anyone you want using a complicated game of crypto whisper phone, but everyone in the chain has to file tax returns or whatever is required in the jurisdictions along the path.

patio's piece opens with the insight that Crypto companies want to be eveywhere while being nowhere.

if Crypto wants to really be everywhere, then they can do what all big tech (and non-tech) inter-multi-continental conglomerate does, open branch offices, do the frustrating work of finding local regulation experts, navigating the immense labyrinth of global vs local realpolitik, etc.

they should/could have started with registering the fucking tokens.

it makes zero sense that they contested this, because they already do KYC for their own fucking anti-fraud purposes.

https://en.wikipedia.org/wiki/Regulation_A#Testing_The_Water...

kdkirsch• 3 years ago

I really appreciated the deep insightful analysis wrapped in an excellent metaphor.

1B05H1N• 3 years ago

In case anyone wants to read the US Treasury announcement:

https://home.treasury.gov/news/press-releases/jy1925

""" ...Binance willfully failed to report well over 100,000 suspicious transactions that it processed as a result of its deficient controls, including transactions involving terrorist organizations, ransomware, child sexual exploitation material, frauds, and scams.

Terrorist Financing. Binance failed to report to FinCEN transactions associated with terrorist groups including Al Qaeda, the Islamic State of Iraq and Syria (ISIS), Hamas’ Al-Qassam Brigades, and Palestinian Islamic Jihad (PIJ).

Ransomware. Despite being one of the largest receivers of ransomware proceeds, and transacting in millions of dollars of ransomware proceeds from attacks involving at least 24 different strains of ransomware, Binance failed to report these transactions.

Child Sexual Abuse Materials. Binance never reported transactions with websites devoted to selling child sexual abuse materials, including Dark Scandals.

Darknet Markets, Scams, and Other Illicit Activity. Despite sending and receiving virtual assets proceeds from large-scale hacks, account takeovers, and darknet markets dealing in illegal narcotics, counterfeit and fraud-related goods and services, as well as other illegal contraband, Binance never reported any such transactions. """

verisimi• 3 years ago

transactions involving terrorist organizations, ransomware, child sexual exploitation material, frauds, and scams

These justifications.

robocat• 3 years ago

They left out copyright infractions. I bought a car service manual and the seller wanted to be paid using Binance.

concordDance3• 3 years ago

The ability of people to freely exchange a store of value is something governments don't like. They want the power to veto transactions and declare people or entire countries impossible to trade with.

RandomLensman4• 3 years ago

Welcome to society.

lelanthran• 3 years ago

I don't think it's that nefarious. They just want to tax every transaction, which is what they were doing before crypto.

Vetoing and shutting down people and countries is a side effect, not the intended effect, of knowing all transactions.

throwawayqqq11• 3 years ago

Whereas on the classical side of wealth, gorillions are held by anonymous layers of legal bodies that allow quick shifting of assets out of taxation and circumvent eg. weapon embargos.

Its the messiness the article speaks about and it mostly works for the few and not the many.

It would be helpful for us to realize that it is that what goverments do like, aka sustain, because the existing power structures rely on it. I am not sure whether "tinking about the many" was ever a serious part of bro cultulture.

demondemidi2• 3 years ago

I don’t think anyone has squared the circle on absolute freedom versus nation destabilizing terrorism and child abuse. You seem to have just said, eh, oopsie doopsie.

campbel• 3 years ago

for good reason

skullone3• 3 years ago

You are so ignorant of the world that I feel sad for you

ponector3• 3 years ago

Is it a bad thing? Would the world be better if no sanctions, no anti money laundering rules, no financial regulations could be applied by governments?

csours• 3 years ago

Archimedes wishes he had a crowbar that could do the heavy lifting that "freely" is doing in that sentence.

galaxyLogic• 3 years ago

The word crypto comes from the Ancient Greek word kruptós, which means "hidden" or "secret". (a quote from AI)

Thus it is not a big surprise that some shady things might be going on as relates to it. Crime wants to be secret.

seabass-labrax• 3 years ago

Cryptocurrency (abbreviated 'crypto') is made possible by cryptography (also abbreviated 'crypto', but few call it that nowadays). Cryptography is from the Greek for secret because it involves doing various things with 'secret keys'. What you use it for may or may not involve secrecy - here are just a few of the most prominent examples:

- Authentication to prove your identity (no secrecy)

- Encryption to keep information private except to certain keyholders (secrecy)

- Signing to prove that information is as originally published (no secrecy)

keiferski4• 3 years ago

I’m no fan of Binance, but to label them as Bond villains while spending zero effort on trying to understand the ideology behind cryptocurrencies (at least, what was supposed to be the ideology) and why being a distributed business without a physical address is desirable from that point of view – and not just because they’re evil greedy people (of which Binance may still be) – makes this essay not very interesting. It would have been a much better piece had the author attempted to understand the decentralization ideology and then squared that with the apparently very real crimes so widespread in crypto.

Edit: found the essay that this link reminded me of: a comparison of Jason Bourne to James Bond, from a societal perspective. A good piece to read after this original link.

https://exple.tive.org/blarg/2015/09/20/bourne-aesthetic/

fake-name• 3 years ago

Have you considered that the author did try to understand the underlying ideology? It seems pretty accurate to me.

keiferski4• 3 years ago

Well, I can’t read his mind, but considering that he didn’t mention anything about it, I think we can assume that he hasn’t.

Even if he did, my criticism was about the essay, not the guy himself.

olalonde5• 3 years ago

He has long been adjacent to money and power, but craves more.
They have no passport and fly no flags; these concepts are thoroughly beneath them.

Yeah, this is not an intellectually honest characterization of libertarian and anti-authoritarian ideology. I'd be very, very surprised if Patrick didn't actually understand that.

pavlov5• 3 years ago

“being a distributed business without a physical address is desirable from that point of view”

Everybody agrees that CZ owns a majority of Binance (around 70% I believe). How does that square with the idea that it’s a “distributed business”? Its ownership is more centralized than Meta’s.

There’s no legal system on this planet that recognizes the notion of a company that’s 70% owned by someone but doesn’t have a physical address. It’s just nonsense that was meant to keep regulators from catching up. But it’s over. The DOJ now has full oversight of Binance, CZ has pleaded guilty, and he may still end up doing jail time.

keiferski4• 3 years ago

Geographical distribution and ownership distribution are not the same thing.

There’s no legal system on this planet that recognizes the notion of a company that’s 70% owned by someone but doesn’t have a physical address.

Yes, and so consider the possibility that some people see this as a problem to be solved and not an unchanging fact of reality.

Again, there is a huge rich new field of discussion about this stuff [1] and so I find the lack of curiosity by the author to be very uninteresting. You don’t have to agree with these ideas but to ignore them entirely is intellectually flawed, especially when it’s the supposed reason for these actions in the first place.

1. See the Network State stuff. https://www.youtube.com/live/x-GfuIFkB_Y?si=t1r96klba69rwTtx

camgunz3• 3 years ago

You don't need to dig into the ideology of crypto to make the argument that Binance's business was essentially money laundering and sanctions avoidance. But if you do, you'll have no trouble finding people arguing that ducking state financial regulations is a huge and core utility of crypto (let sex workers get paid, buy drugs, etc). You can disagree with the regime, Patrick does and so do I, but it doesn't change the fact that the whole thing was just crime, crime everywhere.

keiferski4• 3 years ago

Yes well that’s why I think it is a nuanced topic. Decentralization is appealing to a lot of people, including myself, but it also obviously has a ton of negative outcomes as well.

Acknowledging this and exploring the complexity is interesting; calling everyone evil Bond villains is childish and at the ethical level of a Marvel movie.

mkl• 3 years ago

The bit about Jason Bourne and James Bond is quoted from https://www.metafilter.com/93504/You-carry-a-00-number-it-me..., and the rest of that exple.tive.org link is irrelevant other stuff (don't bother).

asdfman123• 3 years ago

We all understand it, we've read about it since 2012.

We just rightfully understand that at least the exchange level, it's not about that. It's about money laundering and making billions.

mytailorisrich• 3 years ago

In most jurisdictions businesses must have a physical address, in fact it is a requirement to incorporate.

This is no government conspiracy against "my freedom", this is to offer a level of protection and allow service of legal documents.

Binance has always looked very shaddy and not to be touched with a bargepole.

dumbfounder• 3 years ago

The author is a pragmatist and simply thinks it ain’t gonna happen.

resolutebat2• 3 years ago

The author, patio11, has been writing about crypto since at least 2018 and is thoroughly familiar with "the ideology behind cryptocurrencies".

https://www.kalzumeus.com/tweetstorms/1032033115408031744

zxt_tzx3• 3 years ago

I agree that the author could’ve done more to make the case for the other side. Where I have some firsthand knowledge, I find eg his suggestion that Binance and FTX divided up markets based on US geopolitical affiliation implausible and unconvincing.

Nonetheless, it’s fair to wonder if crypto has meaningfully lived up to any of its promises and why it has been hard to point to examples of value creation in crypto in a way that would make sense to an average person

Animats3• 3 years ago

Here's the list of SEC crypto enforcement actions.[1] They start about two or three cases a month. 30 cases so far this year. At first, they focused on the out and out scams. Then, they shut down the ICO industry by sending out letters asking why each ICO wasn't registered as a security. Then they went after some of the NFT guys. They went after some paid influencers. Now they're going after the bigger exchanges. Plus, along the way, the usual out and out scams: "fraud for misappropriating at least $12 million of offering proceeds to purchase luxury goods including sports cars, watches, and a 555-carat black diamond..."

The SEC's position is simple: the same rules apply to crypto as to other financial products. After FTX, nobody is seriously opposing that any more. The "crypto is special" argument is dead. The scams are not even original - the scams are Ponzi schemes, pump and dump, front-running, insider trading, and just plain stealing customer assets. All of those were known before 1900. The crypto crowd isn't really that innovative.

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

injeolmi_love10• 3 years ago

There are over 1.8 million crypto tokens. If the SEC is going to shut down the industry, they’ll need to at least start shutting down more projects per month than are starting up.

growse2• 3 years ago

Where's the tax dollars to pay for this?

raccoonDivider• 3 years ago

Do any of them reach even 1% of Binance's size? If crypto stays a bunch of niche projects that only enthusiasts invest in, isn't that the SEC's goal accomplished? I can't imagine they would care about a coin that doesn't attract either a lot of retail customers or big financial institutions.

csomar3• 3 years ago

If you start an ICO, you are harmless until you get someone to buy into your token. For the SEC, you are harmless until you collect "millions" of dollars. Otherwise, you are just another one of these small scams that are happening all the time regardless of it using crypto or not.

eastbound2• 3 years ago

Remains the question: Why was it allowed to even live a little, when for the first dimes, it was clear it was a scheme that necessitated illegal actions at every step?

graphe• 3 years ago

What’s illegal step is mining crypto on your gpu?

matheusmoreira38• 3 years ago

Nothing illegal about proof of work.

ThePhysicist• 3 years ago

I think this quote of the prosecutor in Bankman-Frieds' case summarizes it well: "The crypto industry might be new, the players like Sam Bankman-Fried may be new, but this kind of fraud is as old as time and we have no patience for it".

jgilias5• 3 years ago

Note though that the fraud that the prosecutor addresses here doesn’t have anything to do with crypto per se. As in, it’s not about securities laws, or even AML stuff.

The fraud that scam bank man fraud got sentenced for was plain old theft. Taking customers assets (mainly crypto assets) and using it as his personal piggy bank.

matheusmoreira38• 3 years ago

Truth be told, the FTX case isn't even a cryptocurrency case. The Bankman essentially ran an unregulated bank. People deposited money into it and he just took it. He pretty much robbed his depositors.

It's ironic. Cryptocurrency was supposed to put an end to guys like that by ending the need for banks.

matheusmoreira38• 3 years ago

Crypto could have been special. Sadly it turned into stocks instead and people reinvented the entire financial system on top of it. I don't even mind their attempts to regulate this stuff anymore. Exchanges are literally banks.

They should stop just short of regulating the underlying cryptocurrencies themselves. Just treat these institutions like they're banks.

pjc505• 3 years ago

Crypto could have been special. Sadly it turned into stocks

This is the libertarian version of "true communism has never been tried". Of course people wanted to reinvent the financial system, it was profitable to do so.

rollcat4• 3 years ago

They should stop just short of regulating the underlying cryptocurrencies themselves.

The problem with not regulating a currency at all, is that it implies a permission for someone to print it at will. Cryptocurrency is no exception to this scenario; you are asked to trust the developers (technocracy) and node operators (50%+1 attack and all the usual power dynamics of the rich having more say than the majority) to not do it. The most important question you must ask yourself is, how long will the interests of that elite continue to align with yours (if they ever did).

The dream of a decentralized, community-run, grassroots infrastructure died sometime around the first GPU PoC - Satoshi themselves expressed discontent, saying GPUs would trivially out-mine the common man.

Communities can self-regulate because they run on trust; it's extremely difficult to build trust in a system designed around distrusting every single one of your peers.

jalapenos2• 3 years ago

No, it straight up doesn't work as a money, outside of very niche use cases like crime and evading the state.

Most people have no use for that, or speculation upon that, and just want a money that's simple, easy, fast, and reliable.

A decade after bitcoin, no-one but crooks and when-moon fanboys use it. Contrast that with AI: the moment it hit the retail market every man and his dog is using it for everything.

hanniabu5• 3 years ago

people reinvented the entire financial system on top of it

That's the goal, to remove intermediaries and trust.

There are permissionless and trustless application, but HN likes to use centralized scams like FTX to dunk on crypto and feel smug.

It'd be like me pointing to bernie madoff and saying "see, I told you all of the stock market was a scam!"

rovek• 3 years ago

Nothing soured my (already negative) opinion of Crypto as much as regular conversations with a Crypto VC. Every time we spoke they were either sceptical or very excited about something that, to me, was obviously a trivial example of 1 or more classic scams. Whether or not they were excited about it didn't seem to track with the scamminess.

fsloth• 3 years ago

That’s sort of general problem with people regardless of industry who’ve drunk the startup coolaid … wrong way around, let’s say. The point of innovation is not to reinvent the wheel. Saying you are startuppy does not excuse you from actually learning about the field. One could even radically propose knowledge of field helps to find innovations. What one should avoid is saying ’no’ just because such a thing does not exist yet. If the thing exists, has a name like ’Big Bad Mistake’, you should at least acknowledge it. (Yeah yeah, rockets were impossible and Musk beat them but that happened via respect of existing art and extending it, not completely ignoring it).

vidarh4• 3 years ago

When I did my second startup and first to get proper VC funding, we were young and stupid and got talked into changing strategy because the VC, while not going for an actual scam, was very clearly thinking we could win a game of musical chairs that necessarily would end badly - this was a the height of the dot-com boom, and they wanted us to chase signups over revenue because per-user valuations were way out of whack with what there was any reasonable hope of earning from users who had signed up for a free service.

Their hope was we could exit before the music stopped (we didn't; we survived, barely, thanks to mostly sheer luck of having closed our B-round weeks before the bubble burst, and managed to pivot and survive with massive cuts). We still hoped we could make it profitable without that, but there was no way we could generate enough revenue to justify the exit we were hoping for, but the proportion of our budget that went to marketing certainly made achieving profitability much harder.

Which is to say that VC's often chase very high-risk ways of getting growth even in cases where they know it's just a question of time before valuations will collapse, because most of them are in the business of producing returns, not sustainable companies, and many of them are "dumb money". It's a tough business. I spend a few years in one, analysing the track records of other funds among other things, and I saw so much stupidity in that dataset.

huehehue• 3 years ago

What soured my opinion was everyone and their dog trying to explain to me how they were going to get rich with bitcoin and NFTs.

And this was when I was actively employed developing crypto finance instruments! Like, I have warned people not to buy the thing I have built because they did not understand it.

It is/was a great playground for modeling different instruments imo, but people don't want to treat it like the back alley casino it is.

legutierr8• 3 years ago

The SEC's position is simple: the same rules apply to crypto as to other financial products.

If you only reference the SEC's own press releases, you are going to miss the nuance here.

The SEC on its own doesn't get to decide when and how existing securities law applies to cryptocurrencies. Absent a settlement, any action undertaken by the SEC must be decided by a federal court.

Importantly, the SEC has been losing in court. For instance, the SEC, which had been blocking a spot Bitcoin ETF, was told in unequivocal terms by the DC Court of Appeals that its reasons for not allowing the ETF to issue were completely unsound. More pertinent to the question of enforcement: another federal court recently found that exchange-traded Ripple XRP tokens are not securities, with the implication that the SEC does not have jurisdiction to regulate the trading of Ripple XRP tokens on exchanges. If you extrapolate this finding to other cryptocurrencies, the SEC cases against Kraken and Coinbase are on shaky ground.

The fact that the SEC can list so many victories on its website is more a function of how costly it is to fight the SEC in court, rather than being a function of whether the SEC is right in all of its assertions.

There have been too many cases of fraud in the crypto industry, and it's good that the SEC has pursued enforcement against them. There are cases, however, where SEC has gone too far, and continues to go too far—especially in light of the fact that the SEC refuses to set forth clear criteria as to which crypto tokens it considers securities, and which crypto tokens it does not consider securities.

Now that the SEC is going after larger players, we are starting so see more cases actually go to court. If the trend continues, one or more of these cases will end up before the Supreme Court, and we will find out what the actual law is in the United States with regards to which crypto tokens are securities and which ones are not, and whether the SEC does in fact have any jurisdiction at all over the crypto exchanges.

You should not be surprised if after everything is said and done—after we have a Supreme Court opinion—crypto is in fact a special case under US securities law, at least with regards to some tokens.

You should also not be surprised if some of the cases in the list that you reference lose their legal support once the law is clarified by the Supreme Court. In hindsight, some of these SEC enforcement actions may be seen as unfair and unjust.

davedx3• 3 years ago

the SEC refuses to set forth clear criteria as to which crypto tokens it considers securities, and which crypto tokens it does not consider securities.

Here you go: "A security is a fungible, negotiable financial instrument that represents some type of financial value"

It's not the responsible of enforcement agencies to educate people as to what crimes are. This is like pleading ignorance.

carstenhag• 3 years ago

Imo completely valid for the SEC to file lawsuits for a broad spectrum. All of this crypto stuff is a point where both "knowns" and "unknowns" regarding law interpretations/rules meet.

So essentially them losing sometimes makes it clearer what is allowed, whether the SEC is actually responsible or not.

vinniepukh2• 3 years ago

Does it have to go to SCOTUS for the powerful precedent to be set?

I would imagine the SEC will be keen to avoid a country-wide precedent should they lose in district courts.

Excellent comment btw. It’s the 201-level analysis vs the 101 that we see in the media of SEC shutting down crypto etc

FireBeyond3• 3 years ago

the SEC refuses to set forth clear criteria as to which crypto tokens it considers securities, and which crypto tokens it does not consider securities

This is a PR soundbite. Coinbase has milked this one quite extensively. "Woe is us, we're trying to do the right thing but the SEC won't tell us what to do!"

It's not actually accurate.

And when the people responsible for writing become Coinbase's lawyers, not their marketing team, and the rubber hits the road in court, Coinbase says no such thing. This is the actual crux of their complaint, in their own words:

for many tokens, registering is not possible due to effort involved, or not economically viable.

Coinbase doesn't like the cost of having to register securities for the shitcoin du jour - there's no money to be made.

But the SEC isn't obligated to make a profitable business model for Coinbase.

But it sounds far better to get the crypto club and libertarians up in arms about unhelpful government organizations.

throw3823423• 3 years ago

Let's be realistic here: The US supreme court always tells us what the law is, every time, regardless of how clear the law's writing is, and how the court had rules in the past. The same can happen in lower courts, as federal circuits come back with head-scratching rulings whenever it suits the judge's aesthetic preferences. Judge shopping is quite popular in expensive cases for good reasons.

So we shouldn't be surprised when anything changes, ever, given how much activism we are seeing in courts today. So the question is, how much do the people that actually decide what a law means really like cryptocurrencies? I suspect the only good chance most of those companies have is rely on the court's dislike for government agencies, regardless of what laws say. But as far as I am aware, the good friends of the court tend to be very involved in old banking, and thus they aren't fond of crypto companies either.

So maybe those companies should start lobbying Harlan Crow and his circle of friends.

kemitchell6• 3 years ago

The SEC doesn't set the legal standard for what is or is not a security. The courts do, based on the statutes passed by Congress.

Here's a guide they published: https://www.sec.gov/corpfin/framework-investment-contract-an... It summarizes the law.

The SEC obviously will not be publishing a release saying it won't enforce the law according to criteria written to suit cryptocurrency promoters. Its key public mission is investor protection.

Animats3• 3 years ago

another federal court recently found that exchange-traded Ripple XRP tokens are not securities

You mean this case?[1]

No, that's not what the court decided. The setup with Ripple was that institutional investors bought tokens directly from Ripple, and then resold them on an open market. The court ruled that resale of the tokens on the open market did not violate the Howey test because Ripple was not a party to that transaction. But the initial sale to institutional investors is still being litigated. Whether the resale by the institutional investors is a regulated event hasn't been litigated yet.

So this is a token-laundering scheme that may have worked. Or not; the remaining parts of the case go to trial on April 23, 2024.

[1] https://www.nysd.uscourts.gov/sites/default/files/2023-07/SE...

cs702• 3 years ago

"Fools, as it has long been said, are indeed separated, soon or eventually, from their money. So, alas, are those who, responding to a general mood of optimism, are captured by a sense of their own financial acumen. Thus it has been for centuries; thus in the long future it will also be." - John Kenneth Galbraith

Source: https://www.goodreads.com/quotes/10115990-fools-as-it-has-lo...

infogulch• 3 years ago

As always, new technology is neutral, but the latency between a new technology appearing and the attention of the law breeds scams that are completely mundane.

sonicanatidae• 3 years ago

So, the underlying issue is the wrong people are scamming money from the poors.

I base this entirely on the trackrecord of the SEC and the market.

Now, to wait for someone to argue that PFOF and Dark Pool trading is "fair".

anon_trader3• 3 years ago

While crypto might not be the ideal solution, it's hard to not notice that modern AML/KYC banking laws are rapidly degrading into complete bullshit, and it is nice to have a workaround.

I've just read an article how Russian emigrants around the world (that's up to several million people, more than some European countries) are struggling with opening and maintaining bank accounts, and have to resort to all kinds of workarounds, crypto and Binance included. You might not have any sympathy for them, especially in current circumstances, but they did nothing wrong, and won't cease to exist just because of your lack of sympathy.

Where I live now, there is a growing number of street currency exchange shops which will gladly and openly accept your USDT and hand over cash in either local currency or USD $100 bills; no documents ever asked, of course. That kind of infrastructure did not exist a mere couple years ago.

You might think, why don't just ban it all, but, I'll say it again, the problem with this line of thinking is that if you, as the government, declare large enough numbers of mostly innocent people criminal or "undesirable", they won't magically vanish into thin air overnight; to the contrary, you've just made life harder for your own law enforcement, as real criminals will now have a much larger crowd to blend in.

For many countries where it is difficult to legally buy or transfer USD at international market rates (either because of sanctions or capital controls), there is a thriving USD/USDT/BTC black market, involving, in extreme cases, the majority of population; see Argentina or Venezuela for example. Labeling all of them as "criminals" achieves you nothing.

null0pointer2• 3 years ago

This comment was marked [dead] when I read it. I vouched it back into visibility. I wish people would respond with a comment if they disagree, rather than reporting it.

Meta-comment aside, there’s another population segment who suffer from overbearing AML/KYC regulations - homeless people. Many homeless people do not have any form of ID and hence cannot open a bank account. What option do they have? I would argue for low value accounts, say <$5000 annual transaction volume, AML/KYC enforcement should not be required. $5000 is such a small amount in the grand scheme of money laundering that the government should really focus on the bigger fish. Splitting your laundered money into many bank accounts would, or could, fall under existing structuring laws and would be easily detectable by any bank.

I haven’t even mentioned that in many countries, such as the US, you have absolutely no guaranteed right to banking access. Your access to banking can be shut off overnight by any one of the various middle men involved. Until these things are solved, and legal persons can be guaranteed access to banking then crypto is necessary.

ben_w2• 3 years ago

Here's a trilemma:

1. Everyone should have access to banking, and a $5k nominal/year in most of the G7 economies[0] is small enough it shouldn't attract attention.

2. If you don't require proof of ID, you can't stop people signing up for as many small accounts as they want to.

3. Homeless people may not have any formal proof of ID (either because it's too expensive, or as a direct consequence of why they're homeless in the first place[1]).

You can try to get around #3 with biometrics. But even with AI assistance, the goal here is to prove a person isn't already on the system — which is much harder than merely showing they're the same person as on the ID card they have with them, for reasons which are basically a generalisation of the Birthday problem[2].

[0] one of the G7 is the EU, the worst of the EU is Bulgaria at €12400 GDP (nominal) per capita, Wikipedia reports that "More than a fifth of the labour force work for a minimum wage of $1.16 per hour.[203]" but that citation (which follows) is from 2012 and this is where I stopped going down the rabbit hole: https://web.archive.org/web/20121224023912/http://epp.eurost...

[1] off the top of my head: because they ran away from home as a minor and didn't take sufficient documentation with them; or because they had an untreated mental health problem; or because they're an unregistered migrant; or because they were born in the country but out of the system.

[2] https://en.wikipedia.org/wiki/Birthday_problem

zxt_tzx3• 3 years ago

I’m new to HN, could I check how does this report/vouching thing work?

If someone is new and their comments get reported (because people disagree? or must there be a violation of the site guidelines), then the comment would be marked as dead and thus hidden?

Who can vouch for these users then? Is there an upvote/downvote mechanism too that’s not visible to me because I’m a new user?

CrazyStat2• 3 years ago

This comment was marked [dead] when I read it. I vouched it back into visibility. I wish people would respond with a comment if they disagree, rather than reporting it.

Comments from brand new accounts (as in this case) are marked dead by default as a spam prevention measure, I believe.

anon_trader3• 3 years ago

Thank you.

I preferred to register a throwaway for obvious privacy reasons, immediately got shadowbanned, and while I refrained from posting the actual article link [1] that I mentioned, that did not really help.

[1] (Russian) https://vc.ru/relife/928248-50-bankov-kotorye-chashche-vsego...

matheusmoreira38• 3 years ago

it's hard to not notice that modern AML/KYC banking laws are rapidly degrading into complete bullshit

They were always bullshit from day one. AML/KYC is literally the financial arm of warrantless global mass surveillance. To me it's comical when I see HN defending unlimited strong cryptography and yet drawing the line at untraceable financial transactions. They are one and the same.

anon_trader3• 3 years ago

There is a difference between "evil" and "ineffective", and while I agree with the more controversial "evil" part, my point was to emphasize the "ineffective" part of it.

I won't go into further details even under anonymous account, but I have some first-hand experience dealing with compliance from various financial institutions, I have a general idea of what they ask, what they do NOT ask, and all of this feels much like IP address logging or so-called "chain analysis": it may work against unprepared people (mostly those who "have nothing to hide"), but is almost trivially bypassable by any semi-motivated attacker.

Mostly it's because incentives are completely off. These people are not the police; their top priority is to cover their asses with enough paperwork, not actively engage in yet another anti-whatever crusade.

pjc505• 3 years ago

While I'm definitely a "crypto skeptic", I think it's probably going to persist in this niche of "US-equivalent hawala banking for people who aren't allowed the stability of the US dollar".

People worried about US hyperinflation are nuts. People worried about Argentine hyperinflation have a reasonable point.

A big problem with everything is that digital money has no scale. It's reasonable to want to stop people transacting billions of dollars for Russian weapons and it's not reasonable to pursue every last Russian national. But in an electronic system "one" and "one billion" fit in the same field.

miohtama5• 3 years ago

I have a Lithuanian friend (not even Russian, or Russian heritage) who has a same name as a sanctioned person in Russia. He has never been able to make an international wire transfer. Banks bounce his transaction back based on a name check.

csomar3• 3 years ago

AML/KYC banking laws are rapidly degrading into complete bullshit

It did not. That was their purpose all along but it's nicer to say we are implementing AML instead of we are sanctioning these guys or we are restricting outflows.

Crypto did not boom because it is mathematically revolutionary (it is, but most people don't really understand it). It boomed because there is a market for it.

crotchfire• 3 years ago

The only reason it got big enough to be boom-eligible was that geeks, nerds, and cypherpunks (in particular) understood how mathematically revolutionary it was.

skrebbel• 3 years ago

I recognize that this is partly taste and some will hate the style here, but wow how did patio11 get even better at writing? Every sentence is a delight.

JaDogg4• 3 years ago

We should strive to eliminate finance, not to go back to the past when each lord had their own currency. Cryptocurrency is hindering human progress.

matheusmoreira38• 3 years ago

A fully automated post scarcity society would be nice.

JaDogg4• 3 years ago

Indeed.

miohtama5• 3 years ago

If compared to the national currencies Bitcoin is 16th largest, larger than 100+ national currencies

https://coinmarketcap.com/fiat-currencies/

So the development is towards other direction - less currencies of lords.

JaDogg4• 3 years ago

Disagree, I am talking about whole set of cryptocurrencies. see here: https://coinmarketcap.com/all/views/all/.

smallnix• 3 years ago

And also Binance gleefully and knowingly banked [...] child pornographers. That’s not an allegation; that has been confessed to.

I would like to learn more about that. Does anyone have a source?

resolutebat2• 3 years ago

More than 1,000 transactions took place involving three marketplaces that dealt in child pornography and related material, FinCEN said. An administrator of one of those sites, Dark Scandals, was indicted in 2020. The site featured violent rape videos.

https://news.bloomberglaw.com/crypto/binance-lapses-boosted-...

olalonde5• 3 years ago

The article's viewpoint relies on accepting AML regulations and financial surveillance as beneficial. In my view, CZ is not a villain; he ran a popular business without defrauding customers. There were no victims. His wrongdoing lies in not taking his "police" role seriously enough. As per AML regulations, he had a duty to investigate customers and de-platform those that he considered criminal, all without due process of course. However, he chose not to strictly adhere to this role. Yes he broke laws, unethical laws that do more harm than good. I don't know to what degree CZ was motivated by personal gain vs principle but I don't believe he deserves the "Bond villain" label.

jgilias5• 3 years ago

I think the “Bond villain” label is more to point towards the way of doing the operation. Which is pretty fitting imo, from the point of view of being everywhere and nowhere at the same time.

rtpg• 3 years ago

I think people dismiss how much AML regulations are directly linked to preventing crime from being efficient. There’s a reason that scammers ask for gift cards, and it’s not “just” because of traceability reasons (mules have always been a thing)

Countries have varying levels of fraud and organized scams, and I think stuff like AML compliance flows play a bigger part than people appreciate

jgilias5• 3 years ago

Yes, and one could argue that banning end to end encryption and doing preventive monitoring of all communications would render crime even less efficient.

I think it’s just natural that in a democratic society people fall on different parts of the spectrum when it comes to thinking of what the correct trade-off should be.

Recently Lyn Alden posted how her wire transfer to her family in Egypt to cover some mortgage payments got blocked. I mean, if a celebrity (in some circles) with known family ties to Egypt experiences this, what chances do we mere mortals have?

Making a 10k payment to an African country basically lands you in AML red “don’t do business with” lists. And sure enough, maybe most people doing this are financing terrorists, what do I know. But I think there’s a meaningful debate to be had here.

matheusmoreira38• 3 years ago

We don't dismiss it. We know it makes life hard for criminals. We just don't care. It's still the financial arm of warrantless global surveillance. It's the government working around its due process restrictions by getting private corporations to do the dirty work. As such, it should absolutely be opposed and resisted on principle.

The USA was literally founded upon principles like these. Look how far from the ideal it's fallen. If you're gonna sacrifice freedom for security, might as well go all the way and become a fascist state.

olalonde5• 3 years ago

Sure, AML might be beneficial if it had no cost. It does make crime slightly more inefficient. However, AML has a massive cost. It makes legal transactions inefficient as well. Billions of people are unbanked and underbanked, in large part thanks to AML. It forces money transmitters to carry out what amounts to extrajudicial punishment on people and industries deemed "at risk". The estimated global cost of compliance amounts to hundreds of billions of dollars annually. Imagine if all those wasted resources instead went to chasing terrorists & human traffickers for those actual crimes.

pr337h4m• 3 years ago

The Bank Secrecy Act, under which he was charged, is of extremely dubious constitutionality (https://www.coincenter.org/broad-ambiguous-or-delegated-cons...), and it certainly violates the spirit of the Bill of Rights.

raincole• 3 years ago

it certainly violates the spirit of the Bill of Rights.

Sadly the list of acts that violate the spirit of the BIll of Rights is really, really long.

miohtama5• 3 years ago

Also Binance and Mr Zhao were not found guilty helping or funding terrorists, only breaking anti-money laundering laws. Despite years of investigation DoJ did not find definitive evidence that Binance would have helped criminals or terrorists, only evade sanctions.

In the case of HSBC, when there was more direct evidence of serving Mexican drug cartels, no one did jail time https://www.democracynow.org/2012/12/13/matt_taibbi_after_la...

pavlov5• 3 years ago

"... a popular business without defrauding customers. There were no victims"

I believe it's been proven that Binance traded against its customers and manipulated token prices on its platform. That kind of thing is completely forbidden in the world of traditional stock exchanges and brokers.

That makes Binance customers victims of their manipulations. When Binance made profits from trading on its own platform, it came from the pockets of its customers.

Crypto exchanges are less like stock exchanges and more like casinos where the house is guaranteed to win in the long run in bets made by customers. Maybe that's the deal that Binance's happy customers signed up for, but I don't think regular retail investors could be expected to understand that's how it works.

matheusmoreira38• 3 years ago

I believe it's been proven that Binance traded against its customers and manipulated token prices on its platform.

Can you cite this? I'd like to read more about it.

Crypto exchanges are less like stock exchanges and more like casinos where the house is guaranteed to win in the long run in bets made by customers.

I agree. Binance skims so much money from every transaction it's not even funny. Truth is a company in their position doesn't even need to run a dishonest operation in order amass vast amounts of money. They just need to let it happen.

Maybe that's the deal that Binance's happy customers signed up for, but I don't think regular retail investors could be expected to understand that's how it works.

Well it sure as hell wasn't for lack of warning. I've told people not to get into the shitcoin casino. To their faces. They still got into it. I simply don't have a lot of sympathy for these people when they get liquidated.

ric2b5• 3 years ago

How are stock exchanges not also guaranteed to win in the long run due to the bets of their customers?

That's the entire business of both types of exchanges, collect fees on every trade that the users make (besides some newer stuff like the robinhood model).

smrtinsert• 3 years ago

His wrongdoing lies in not taking his "police" role seriously enough.

I'm absolutely incredulous at this statement.

davedx3• 3 years ago

There were no victims.

"Terrorist Financing. Binance failed to report to FinCEN transactions associated with terrorist groups including Al Qaeda, the Islamic State of Iraq and Syria (ISIS), Hamas’ Al-Qassam Brigades, and Palestinian Islamic Jihad (PIJ).

Child Sexual Abuse Materials. Binance never reported transactions with websites devoted to selling child sexual abuse materials, including Dark Scandals."

oconnor663• 3 years ago

The problem with this line of reasoning by itself, is that it justifies some policies we like but also other policies we don't like. (For example, almost no one wants background checks or KYC laws for buying a computer.) Assuming we're not cartoonish totalitarians, we counterbalance the concept of indirect victimhood with some other concept of privacy or liberty or something. But that's where all the hardest questions come up.

wongarsu• 3 years ago

Finance is in a somewhat unique place in that we hold them responsible for their customers. If a bank doesn't ask any questions and as a consequence provides service to known terrorists that's against their perceived (and codified) obligations. Yet the we allow anyone to ride the subway, to get a telephone connection, or to have their home hooked up to electricity. If your internet provider terminated your contract because you download files from Syria or regularly upload large files and trigger their risk analysis that would be seen as outrageous. Yet that is exactly what we expect of finance companies.

olalonde5• 3 years ago

"Terrorist Financing, Ransomware and Child Sexual Abuse Materials": none of those crimes were committed by Binance. And I bet those actual criminals all used cash or WhatsApp at some point. Maybe even McDonald.

BobaFloutist2• 3 years ago

I'm pretty sure "Bond Villain" is primarily intended as a pun.

DylanSp• 3 years ago

The article's viewpoint relies on accepting AML regulations and financial surveillance as beneficial.

You might want to check the last section of the article:

We are a nation of laws. I’d support reforming some of them; a lot of the AML/KYC regulatory apparatus harms individuals who have done no wrong. Much is not well-calibrated in terms of societal costs versus occasionally facilitating a Bond villain’s self-immolation.
However, in the interim, one cannot simply gleefully ignore the laws because the opportunity to do so allows you to become wealthy beyond the dreams of avarice. [...] I do not know if we’ll ever have a world with this scale of crypto businesses without the crime. The crime was the product.

ric2b5• 3 years ago

The crime is the product because that's what's left after the media makes it sound like everyone using crypto is either an idiot or a criminal, so most businesses avoid it because they don't want to be labeled as either.

elwell2• 3 years ago

There's "morally OK", and then there's "love your neighbor". If a road is used to traffic an ambulance saving a life and also a kidnapper, the hands-off road builder is "morally OK". But, in the world we really want to live in, if the road builder has some reasonable means to disallow road usage for kidnappers (excuse the hypothetical), they, in love of the victim, should.

olalonde5• 3 years ago

There's no reasonable way to stop criminals from using fiat currency or cryptocurrency. It's all a costly security theater.

jgilias5• 3 years ago

It’s interesting how the market’s reaction to this was basically - nothingburger, tick tock, next block.

quijoteuniv2• 3 years ago

Difficult to not think about other Tech CEOs when reading this, and most very rich people that did not inherit the money to start with. If you look IMO they all have in common that they have at least once done something morally questionable/ illegal, usually at their beginnings. The ability then is that they have manage to mantain themselves out of the reprimands, or had made enough money that they could buy themselves out of it. Name one and i promised i find something.

HPsquared• 3 years ago

Doesn't the same apply to everyone though? "Show me the man and I'll show you the crime"

https://en.m.wikipedia.org/wiki/Give_me_the_man_and_I_will_g...

quijoteuniv2• 3 years ago

It does sound pretty totalitarian but i guess there must be a difference (at least karmically) between stealing food to give to your family and profiting in the millions with election manipulation. And anyway what is the point in defending billionaire narcissist CEOs?

bambax2• 3 years ago

This is about crypto and Binance. It's a little too long IMHO -- the last paragraph says it all, and plainly enough:

I do not know if we’ll ever have a world with this scale of crypto businesses without the crime. The crime was the product. An opportunity to transform global financial infrastructure was greatly overstated and has not come to pass. I do not expect this to change.

Shatnerz2• 3 years ago

Can any financial system exist without financial crimes? Just look at HSBC. Nearly all of Binance's failures also happened at HSBC which continues to operate within the law simply by paying fines as the cost of business every so often.

bambax2• 3 years ago

The big difference between crypto and regular finance isn't the crimes; it's that finance has other uses than crime, and crypto doesn't.

htrp• 3 years ago

The financial sevices industry considers fraud as a feature.

Just in moderation

pas5• 3 years ago

But the product was gambling and funvestment (buy funky pictures, silly named coins/tokens), the crime was doing it unregistered. (And it's not like the constant whack-a-mole evasion did not cost them anything.)

Right now these serious claims (that the main product was money laundering for ISIS et al.) are unsubstantiated.

nickdothutton• 3 years ago

Google Riggs Bank and BCCI.

TacticalCoder2• 3 years ago

Your users and counterparties understand it to be a lie the entire time, of course.

I'm not sure users feel that way. Maybe users just believe they live in a free world and do nothing wrong by buying $100 USD of Solana or Shiba coins.

The evil, evil, evil person, outside of government's reach, who sneakily installed the crypto.com app (oh, the horror!): surely he needs to be send to some re-education camp to be taught the merits of the state and why we need less options and more state?

We are a nation of laws. I’d support reforming some of them; a lot of the AML/KYC regulatory apparatus harms individuals who have done no wrong

Yup. It is insane. It is the bane of my existence. I'm not a drug dealer, I'm not selling firearms, I'm not kidnapping kids to sell their organs, I'm not funding terrorism. Leave me the FUCK alone.

However, in the interim, one cannot simply gleefully ignore the laws because the opportunity to do so allows you to become wealthy beyond the dreams of avarice.

But is it unthinkable, for state lovers, to imagine a world where people would be free to decide if they buy or not cryptocurrencies?

I know it's a very ugly word: freedom. But shouldn't people have more of it and not less?

davedx3• 3 years ago

Freedom isn't the only goal of society. It's in tension with other things like security, privacy, and so on.

Libertarians are dumbasses because they wilfully ignore this.

Andrex• 3 years ago

Libertarians are just anarchists with extra steps.

IsaacL• 3 years ago

I agree with you politically and spiritually.

However, Patrick Mackenzie is a person of the highest calibre (see, e.g., this: https://worksinprogress.co/issue/the-story-of-vaccinateca/).

There is a need for laws, and there is a need for laws that respect freedom. As of 2023, the details of how a freedom-respecting social system would work have only been scantily developed.

If men like patio11 aren't convinced by the pro-freedom case, why would anyone else be?

The libertarian movement has supported many bad actors. Cryptography has supported many evil acts. Libertarianism is not bad and cryptography is not evil; but no-one serious will follow us until we clean up our act.

(It's not enough to say that the current system is bad or worse. The current system is terrible. But we should be aiming to set things right, not simply tweak things on the margin.)

pas5• 3 years ago

I don't have problem with KYC/AML, I have problem with the lack of consumer protection, with their shitty websites, security theater app and processes, their inability to do proper risk and compliance checking/monitoring/reporting respectfully.

Strange opaque "post hoc" enforcement (when you are allowed to transfer money in, but not out) should be illegal without probable cause and "habeas corpus", etc.

samirillian• 3 years ago

I almost liked the tone this was written in until I got to "totes". It's a fine line between clever and cloying. Depressing how much of that article I understood.

ano-ther• 3 years ago

I like “slow database enthusiasts”.

We had all the technology required to CC regulators on every banking transaction years before slow database enthusiasts decided all transactions would eventually be publicly readable and persisted forever. We simply chose not to implement it. It would have been quite expensive and infringed on the privacy of many ordinary people and firms.

eastern2• 3 years ago

I don't care about Binance or CZ or even crypto but it was worthwhile wading through the article just to learn this:

"The U.S.’s point of view on the matter, elucidated at length in any indictment for financial crimes, is that if you have ever touched an electronic dollar, that dollar passed through New York, and therefore you’ve consented to the jurisdiction of the United States. Dollarization is very intentionally wielded like a club to accomplish the U.S.’s goals."

justaj2• 3 years ago

So wait, does this mean that if an exchange is far outside of the US jurisdiction, it can be subject to the US laws simply by trading in dollars?

How is that even remotely legal?

wolf550e• 3 years ago

The US military and the US as a large market you want to trade with make it legal.

appplication• 3 years ago

Why wouldn’t it be? The exclusive purpose of crypto is to circumvent existing regulation for financial transfers. The US government would obviously not be so rosy about that idea, nor would it recognize the “sovereignty” of crypto such that its laws would not apply.

eastern2• 3 years ago

It's completely legal under the law called 'might is right'.

Forget about exchanges. If a random business anywhere in the world buys a product from a factory in a neighbouring country and settles in dollars, this applies.

csomar3• 3 years ago

You can’t have real dollars without a US bank account.

xkcd1963• 3 years ago

I think the writer overstates the power of the global finance institution, whatever it is. If someone would decide to make all banking transactions publicly readable and persistent forever, other people would just create an alternative global finance institution. There is no omnipotence "allowing" shenanigans to happen.

spacecadet2• 3 years ago

Its very interesting to me that we went from "dont be evil" to full on Bond Villain leading every sudo-tech company in 20 years.

I guess the initial lies that pushed the dont be evil line set the tone that you say one thing and do another...

vinniepukh2• 3 years ago

sudo as in “superuser do” or as in “pseudo-“

lordfrito3• 3 years ago

It's been heartbreaking to watch this unfold slowly over my lifetime.

The techno optimism I had in the 90s has been crushed by profound despair for the human species, as I watch the salivating sociopaths among us getting accolades as they invent brand new ways to use this technology to subjugate the rest of us. These are our new role models?

nerdponx2• 3 years ago

People have always been like this. I don't know why anybody believed it would be different this time around.

pavlov5• 3 years ago

In just 25 years, we went from the early Internet’s “information wants to be free” to the crypto mindset of “we must insert expensive scarcity into digital realms”.

And often it’s even the same people. I’m baffled by the Marc Andreessens of this world.

WaitWaitWha• 3 years ago

I know this will read like I am a luddite, but hear me out.

I would love to consider crypto as a type of medium of exchange. Unfortunately, as soon as crypto came out, I saw governments of many nations moving into it in some way, shape, or form. They gave it two options, either government has full control over time or eradication, with a few outliers. The US SEC was vacillating on how to deal with crypto for quite some time, and they are not alone. Is it property or legal tender, both, or neither? Now they have planted their stake.

Cash is a tangible and disconnected way for payment for goods and services. Disconnected, as in the government (mostly) does not have instantaneous method to cripple the existence of cash. It requires significantly more interaction than just disable, for our example a government run, centralized crypto exchange (lest we forget, however you feel about politics, when governments froze or seized banked assets).

1. fear of the government wiping out all crypto assets in an instance because one disagrees with them, or more likely by an accident or hackers.

2. no transactions can be conducted if there is no electricity or device to conduct the exchange of crypto. There are many nations where power outages are scheduled as a matter of fact, or worse, power on times are scheduled. The dependence on a device is a bit more acceptable but the cost between a paper clip that holds the paper cash versus a cellular phone is still enormous.

cherryteastain4• 3 years ago

no transactions can be conducted if there is no electricity or device to conduct the exchange of crypto

Same is true for fiat. Vast majority of transaction volume happens in computers these days.

rossdavidh2• 3 years ago

More than once, I have mentioned to someone that the vast majority of the $$ they have in the bank, do not actually physically exist anywhere, and seen otherwise intelligent people look surprised and horrified.

Horffupolde• 3 years ago

2) you can issue some kind of physical money then periodically settle crypto. It’s not all or nothing.

moldach• 3 years ago

Author: "Someone needs to write an East Asian studies paper on how Tokyo became Switzerland for Asian crypto enthusiasts due to a combination of governance, network connectivity, latency, and geopolitical risk. I nominate anyone other than me."

Done:

"Tokyo: Asia's Crypto Haven. Unraveling the Swiss Connection in Governance and Technology"

https://instabooks.ai/products/dce8add9-2d5c-ecdf-860a-38bb3...

Feel free to fact check it

Footnote73416• 3 years ago

People should have the human right to use their money anonymously in ways that they want, as an abstraction of cash, as an abstraction of human value.

skullone3• 3 years ago

And when crimes totalling hundreds of billions happen, who will you call?

ponector3• 3 years ago

Better call Saul!

martinky24• 3 years ago

This is some delusional, misinformed, crypto bro kool aid type propaganda lol

Footnote73416• 3 years ago

Justify to me where my rights should end on the spectrum of trading someone a piece of fruit for another piece of fruit, or giving him precious metals for it, or giving him fiat, or giving him electronic dollars, or giving him monero.

please pick the point on that line where my rights should end and I should be submitted to bureaucracy, KYC, etc.

ketzo2• 3 years ago

Serious question: why?

Why should we have the inalienable right to exchange goods and services, no matter what the goods and services are?

Why is that an important tenet of a prosperous and free society? It hasn’t ever been one, and we’ve done well so far.

ric2b5• 3 years ago

Because privacy is important for freedom.

hahajk• 3 years ago

Perhaps because of individual sovereignty, which I believe is the basis of our rights in liberal democracy.

We have given up some of that sovereignty in order to live in a govt. We should ask if giving up the right to free exchange is necessary for the functioning of our society.

njharman• 3 years ago

Your absolute rights end when they encounter another person.

As society, we've decided peoples individual rights can/should be curtailed when they harm others. We will never agree on definition of "harm". But, certainly money can be used for harm. From I pay someone to kill you, to I donate money to group government has labeled "terrorist", to we made profit polluting environment, etc.

Footnote73416• 3 years ago

Yes words can be used for harm too, and there's very strict rules for how the government can regulate and investigate speech. I'm saying the same should be true for money.

Georgelemental• 3 years ago

What if the money was stolen? Or obtained in some other illegal way?

akudha2• 3 years ago

The thing that amazes me about these people/companies - why do they think they can escape the reach of U.S government? It is the most powerful and vicious entity there is, if they want to get you, they will. What makes these people think that they are smarter or luckier than their fellow law breakers that came before them.

Unlike SBF (who seems dumber than a rock), CZ doesn’t seem that dumb. I don’t understand this at all

rossdavidh2• 3 years ago

There were lots of examples of "better to ask for forgiveness as a rich person than permission as a poor person", that they saw. Tech companies entered finance, taxi-driving, health-advice-dispensing, etc. and didn't fall into line with existing laws and regulations for years, until after they got rich.

They were, no question, incorrect, but if you're wanting to believe it could work (because you really wanted to get rich), you could convince yourself of it.

bear1412• 3 years ago

You, like everyone else, have never read about the smartest/luckiest criminals in the world because they don’t get caught.

akudha2• 3 years ago

Ok, fair enough. But the question still remains - what are the odds of not getting caught? Just because a handful of people win the lottery every year doesn’t mean you and I will, correct? In the case of lottery, all I am gonna lose is a few dollars that I paid for the ticket, but doing illegal activities can cost me my freedom and life.

jncfhnb• 3 years ago

And they don’t get caught because they don’t take too much. So less interesting

takinola3• 3 years ago

Well, it did kinda work. At least for a while. CZ, SBF, etc gained fabulous wealth and would have gotten away with if not for those darned kids! The reality is lots of people are willing to take extreme risk for extreme reward. Sometimes those risks involve the potential of serious jail time.

silexia• 3 years ago

Superb writing, "Binance operated in many jurisdictions. The U.K.: kicked out. France: under investigation. Germany, the Netherlands, etc, etc, they required non-teams of non-employees at non-headquarters to keep track of all the places they weren’t registered doing their non-crimes."

throwaway20372• 3 years ago

Who did the art? That image is so cool. I don't see any attribution. (I assume someone like patio11 is paying a graphic artist to create art for his blog.)

patio112• 3 years ago

In the alt text, but it is DALL-E.

throwaway20372• 3 years ago

Woah, that is crazy that DALL-E is so good now.

The Bond villain compliance strategy

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