SEC charges Kraken for operating as an unregistered securities exchange
sec.gov
sec.gov
IMO it's not even unclear, crypto companies just want to pretend it is because their pocketbook depends on it, but I'm not a lawyer.
The link at the top of this page is 90 pages of the SEC telling Kraken what rules and regulations they have broken. It is certainly possible the court will disagree with the SEC, but I wouldnt bet on it.
I would (not a lot, but I would). They lost on the Grayscale trust, they lost on XRP being a security (extremely relevant here), they're seemingly settling with Binance... the court has been disagreeing with the SEC a whole lot on the matter of blockchain regulation lately.
Yes, that would be what the SEC is doing right now by initiating enforcement actions.
Basically, the rules for whether a retirement plan meets the qualifications for favorable tax treatment are highly complex, so a plan sponsor can ask the IRS to determine if the structure of the plan fits the rules by asking for a "Favorable Determination Letter". This seems to me highly analogous to what crypto exchanges wanted from the SEC.
Of course, it seems best that a regulating body is clear about their regulations. It seems weird that’s even in contention, to be honest. But I do wonder about an obligation to do so.
One aspect of common-law, is that it is law that is equally applied to all. The logic is, if Bob did thing $x, and Sally did thing $x, both should expect a similar outcome.
This is because a person has a right to know how specific acts are interpreted by courts, for whatever legislation is being tried against. A person has a literal right in common-law, pre-dating most modern democracies, to know how a thing they do will be interpreted.
And this is why most descendants of common-law legal systems, such as the US, put such strong strictures on prior judgements. It's vital. It's missed by many, but this is how people know how the law will be interpreted.
And my point in all of this is, yes, 100%, under common-law, someone has to give you an idea of how your actions will be interpreted. It's core to common-law, and US law, is predicated upon common-law, criminal or civil.
"Ignorance of the law is no excuse", however, that does not remove the right to be informed of the law when asked!
(Let's not dive into the few places that have napoleonic civil code in the US, and stick to federal law at least)
And given that we've seen exchange after exchange fail to perform basic tasks like "don't commingle customer funds," I have a hard time feeling any sympathy for cryptocurrency companies here.
If my startup fails because I hired the wrong people, I take the full blame. Why should it be different if I invested in the wrong company or trusted the wrong company with my money?
As someone who is trustworthy and providing a service, I am harmed by the SEC creating a false veneer or respectability for investors to invest in my biggest competitors. I'd rather investors be forced to do due diligence.
Most people can't do that, and even if they could, most people don't have the time nor the patience to do that
--
I'd much rather pool our money into a commission that does this for the population than spend every waking moment personally auditing companies for breaking the rules. Oh, and I have to set them too. No thanks.
Just because the FDA is not perfect does not mean that it's a net negative.
[0] https://www.fdareview.org/issues/theory-evidence-and-example...
The first way to take advantage there is to outsource the cost of dangerous experiments to (sometimes) desperate people and then to society at large for picking up the pieces.
If heroin is legal, nobody forces you to buy it. If generic insulin is illegal, you're in trouble.
No government is lawlessness, which is MUCH worse than a mediocre government.
I'd argue that up to a point, lawlessness is worse than even a bad government.
And nothing can beat a good to great government.
If you don't want regulations, sure, Somalia is that way --->
How do "we" fix it? You can vote for two Senators and one Congressperson and even assuming that your vote in particular was the deciding vote and one of your choices on the ballot was someone actually inclined to do something, you now have a legislature in which the bad laws pass with a margin of 33 Senators and 174 members of Congress instead of 35 and 175.
The only way to fix it would be to fix the structural incentives in place, i.e. institute more checks and balances to prevent regulatory capture. But this is the chicken and egg problem -- to change the rules you have to be in power, but if you're already in power then you like the existing rules because they're the things that put you in power.
Or in times of populism, you use your power to remove the rules that were meant to constrain opportunities for corruption because they're inconvenient to your agenda, and then those constraints stay gone because they're inconvenient to the next administration's agenda too. So how do you get them back, or introduce new ones?
> And nothing can beat a good to great government.
The best form of government is a benevolent dictator. The worst form of government is a malevolent dictator. But the only difference is who is in charge, which changes over time.
> If you don't want regulations, sure, Somalia is that way
Is there some way we can get past the thing where people are unable to distinguish between the government prohibiting acts of violence and the government prohibiting informed consensual interactions between adults and imposing competition-destroying bureaucratic rules at the behest of incumbent megacorps?
Accepting that fact is hard, but it's reality.
There are two ways to deal with the fact that some people make poor decisions. The first is to teach people to make better decisions. This is obviously the correct answer, because it needs to be done anyway, because the second is insane. The second is to make all of their decisions for them.
And there is no "them" -- they're us. The people making the laws are just as human as anyone else. All you're doing is punting the decision to a different fallible entity which has less information because they're choosing in the abstract without the benefit of context. And causing errors to be universal rather than individual, resulting in systemic risk and lethal monoculture.
It's far better to have 20% of people make the wrong choice than 100%.
> Bayer marketed diacetylmorphine as an over-the-counter drug under the trademark name Heroin.[91] It was developed chiefly as a morphine substitute for cough suppressants
Whereas if you have cancer and cannabis can prevent your nausea but the federal government maintains a prohibition on it for three generations, what are your options?
Part of the ban on cannabis, psychedelics, etc has been to ban research on their effects as well. I think there's some clear lines that can be drawn on good laws vs bad laws here.
I feel like the problem we have is that we've utterly failed at informed consent.
You go to the doctor for a minor surgery and come home with a prescription for opioids. You take them even if you're not in any real discomfort, because your doctor prescribed them. Or maybe you could have done with half as much, but then there's a chance it wouldn't have been enough, and having the patient rely on their own judgment is discouraged. So now you're addicted to opioids.
Then we get a backlash where the people who are actually in severe pain can't get their medication because doctors used to over-prescribe it.
This entire system is asinine. The problem is not that people have access to opioids. Anybody can get them by going to a doctor and lying about their symptoms, therefore anybody should be able to just get them from the pharmacy. Stop rewarding mendacity. But the process of getting them from the pharmacy should require being informed of the risks so you can be responsible -- not being handed a bottle with a bunch of papers you're not going to read and then taking them whether you really need them or not.
We need to stop banning everything and start better informing people so they can make reasonable choices.
Purdue and our system of insurance created monetary incentives for doctors to overprescribe and misled them about the side effects. Normal people died even when they followed instructions because of the cycle of withdrawal symptoms.
History has repeated waves of addictive drugs because there's alway someone with an incentive to sell them. This is not a place where market outcomes work.
Private regulation can exist inside of a free market. Consumers and producers of food or financial products can voluntarily participate with private ratings agencies. These standards can be higher or lower, based upon market preferences. The existence of a state backed monopoly is widely recognized as prohibitive to competition. State monopolies create issues around corruption, gatekeeping and more. Too many to expand upon here.
If you don't like free markets, that's fine. There's no need to misconstrue the options. The anti-market sentiment is somewhat surprising to see here.
https://mises.org/power-market/fda-approval-monopolists-sche...
https://www.greenchoicenow.com/v/food-pyramid-usda-dietary-g...
https://www.salon.com/2015/04/12/the_fdas_phony_nutrition_sc...
If you'd prefer a centrally planned and regulated economy, that is a different discussion. From my side, I believe you should enjoy your views and the living situation which accompanies it.
Not interested in arguing the virtues of either approach here. Taking exception with the inaccurate characterizations is as far as I go. If you believe an economy driven by central bank policy is a free-market, I'm not sure there's much more we can say here.
Even the US economy is a capitalist system with government intervention.
It did. People learned that there were a lot of scams and now the market for suckers is drying up. This is a typical pattern: Problem occurs, market responds to problem and results in improvement, government simultaneously responds to problem and has no effect or makes it worse, people point to improvement and credit new government regulations or lack of improvement and demand even more government regulations. Then we get stuck with a bunch of burdensome new rules because Something Had To Be Done.
Notice also that all of the stuff you're listing is fraudulent and already illegal. If regulations work then why didn't they work?
With maybe an exemption if you manage to be totally isolated (but then at least private property is a weird concept anyway).
Even so, I doubt we'll be able to see eye to eye given your starting premises about collectivism. I'd venture that the individual does own himself and that the liberal tradition starts from this point.
A consequentialist might venture that some of the darkest events in history flow from the collectivist ideologies. The opposing deontological view would be that the individual does own himself and private property does exist. We would struggle to define fraud and theft without these premises. Indeed, objecting to fraud and theft becomes problematic when you are simultaneously arguing that private property, individuals and free exchange are impossible.
However, practically, we find out time and time again that these ideals are not enough to sustain themselves and that in the defense of those ideals there are trade offs to be made that compromise them to some extent. Realising some idealised version would require different humans and I don't subscribe to ideas of realities that need those (in the same way that that speaks against idealist versions of collectivism).
The real debate is then what trade offs to make and there we might not agree but that is totally fine and part of the process.
It is similar to the argument against utopia. It is true that we probably will not achieve the anarchocapitalist ideal within our lifetime. Any steps towards a freer and more prosperous society are still laudable. Those incremental steps would most likely involve pragmatic compromises.
Asserting that free-markets don't exist, because they have never lived up to the utopian ideal is a stretch. More so in the context of the discussion. There are already private financial ratings agencies, auditors and more. If people don't like cryptocurrencies or Kraken, they can simply choose not to participate.
The human condition will always contain challenges. This is what gives us the opportunity to improve. When we speak of laissez-faire, the claim is not that it will bring about a utopia or that living within a perfect ideal is a possibility for imperfect humans. The claim is that moves towards the ideal will offer an incremental improvement. History has illustrated this well.
In a similar vein, I don't think free markets exists because of how humans are, not because they don't live up to some utopia. We might move towards certain ideals, but there might be a limit how close we get and beyond that there is no net improvement.
Also, no, people cannot just not participate: if cryptocurrencies cause some wider issue then everyone will have to pick up the tab one way or another.
If your food is poison, you don't have the opportunity to learn from your mistake and stop doing business with that company, because you die. If you don't eat any food, you still die.
But Coca Cola is fully FDA-approved -- even though it's bad for you. Because it doesn't immediately kill you, which gives you the opportunity to make your own choices and learn from your mistakes.
Which is how investments work. Some of them are better than others. The role of the government isn't to make the decision for you, it's to punish the people who deceive you. And since bad investments don't cause anaphylaxis or liver damage, the case for heavy-handed rules or pre-registration is missing.
If someone is running a ponzi or committing fraud, you arrest them, the same as you do if they're selling counterfeit electronics. If someone is just buying and selling cryptocurrency on the internet, which is the thing you purposely intended to exchange for your money, and they do nothing more than faithfully convey to you the thing you knowingly requested, what does the government need to regulate about it? Nothing nefarious is occurring.
But the SEC makes markets more free, not less.
Again, in order to ensure this healthy competition in markets, regulation is required. This is why we attempt to inhibit monopolists, and why antitrust laws in general exist. Absolute freedom in the personal sense is expressly not a goal of modern free market economics.
You are free, subject to taxation of course, to hang onto your "hard earned labor" on your shitcoins but Kraken is not free to operate as a securities exchange unless it complies with the regulations in place so as to ensure an orderly and healthy market.
DeFi people are constantly finding out[0] why some centralization and oversight is a good idea.
You're right. This is why we don't want a completely _free_ market, we want a _competitive_ market that has actors to prevent and punish fraud and abuse.
Regulators are good actually.
Forcing companies to make truthful and accurate disclosures and forcing them to implement basic controls is important. It makes everyone better and protects investors and customers from unnecessary frauds and disruptions.
It's free people in a free market learning from their mistakes and saying "well THAT sucked! Let's not do THAT again!". But you know, more efficiently, as is the market's want - rather than re learning the same lesson over and over and over again, we write it down and codify it.
Of course, that's regulations at their best. Regulations at their worst are pretty awful too! But given your post was about the very existence of regulations and their related agencies, I thought I'd offer a perspective :).
And let's not ignore the fact that these exchanges have done this right out in the open for around 10 years now. Coinbase even had their IPO approved by the SEC. So it's very clear that the SEC treated this as legal for a decade before suddenly changing their position. This seems incredibly dishonest to me.
On the IPO, the registration is independant from such pursuits as the SEC raised during their approval. [2]
That said, there would have been better course of action to protect consumers, such as establishing an appropriate regulatory framework, but I may be too European.
[1] https://www.sec.gov/news/speech/speech-hinman-061418
[2] https://www.sec.gov/Archives/edgar/data/1679788/000000000020...
Suppose you create a new coin under similar circumstances as Bitcoin. No pre-mine. But it's a new coin and nobody cares about it, so nobody is mining it, so you can go mine it yourself and get all the block rewards for a while. Then once you have a lot of it you go about promoting the coin and developing the technology which causes it to be worth something.
In theory the difference is that anybody else could have mined the coin from the first day too, but at that point nobody else had any reason to think it would ever be worth anything.
The SEC reviews the disclosures being made by the company that's filing for public listing, not the legality of their business model.
You can go look at the Coinbase IPO filing [1]. Under the heading "Summary of risk factors", it reads:
"A particular crypto asset’s status as a 'security' in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, and our business, operating results, and financial condition may be adversely affected."
Nowhere does it say "the SEC has approved our operations, it's all good!" On the contrary, Coinbase is saying that the assets they offer on their exchange may be viewed as securities and it may eventually result in fines or penalties. That's disclosure.
- -
[1] https://www.sec.gov/Archives/edgar/data/1679788/000162828021...
Like the EU, Hong Kong, Japan and other countries are doing.
[Obviously the SEC can recommend changes to the law, and if it loses this case it might well do]
This seems to be with accounting, not securities.
> there's actually a pretty clear answer as to what would need to be done to be fully above-the-board and legal
What needs to be done to be fully legal?
There is nothing per se nefarious about co-mingling customer funds, provided that you are otherwise compliant with the law.
Banks, for instance, don't just co-mingle customer funds, they invest those funds on their own behalf and reap the profits for themselves. Sometimes a bank will share a portion of its profit with its customers, in the form of intest; more often, the bank pays little or no interest, and actually charges the customer fees. A bank will risk its customers' money, and its customers will pay for that privilege.
Kraken has been operating under the money transmitter licensing scheme for a decade, and like banks, money transmitters don't have any legal requirement to segregate customer funds—although they do have the responsibility to maintain sufficient cash balances or liquid investments to cover all of what they owe to customers.
Whether Kraken is breaking the law is something that will likely be decided by a court. The SEC asserts that Kraken has broken the law, but it is not up to the SEC to decide—it is up to the courts.
It is not illegal to operate a spot commodities exchange without approval from the SEC, unless those commodities are also the kinds of securities the trading of which require SEC approval. It is also not illegal to operate as an unlicensed broker-dealer of non-security commodities, or as an unlicensed custodian of non-security commodities. The SEC only has jurisdiction over securities.
It is not in the slightest bit clear yet that the crypto tokens for sale on Kraken are in fact securities of any kind. The SEC asserts that they are, but at this point it is just an assertion. The SEC will have to win in court.
And that is why banks are regulated, must register, follow certain rules etc.
> Kraken has been operating under the money transmitter licensing scheme for a decade
Yeah, but that doesn't give them a license to operate a securities exchange, or a bank. How many other money transmitters (that are not registered securities exchanges or banks) have 'tokens for sale' like Kraken?
Quite a few. In fact, all of the major centralized exchanges operating in the US are authorized to do so because they are licensed money transmitters (with the exception of some that might be operating under the NYS "Trust" licensing scheme), and none of them are broker-dealers regulated by the SEC, because until very recently the SEC has taken the position that broker-dealers are not allowed to sell crypto assets.
For years the money transmitter licensing scheme was understood to be the correct (and sufficient) licensing scheme under which a crypto exchange could legally operate in the United States. It is only since the beginning of the Biden administration that the SEC has taken the position that crypto exchanges have an obligation to register with the SEC. The Ripple lawsuit was filed at the tail end of the Trump administration (after the election), but it was not targeted at exchanges. It's also worth noting that the judge in the Ripple case found that exchange-traded XRP tokens are not securities. In other words, the SEC's assertion of authority over exchange-traded Ripple tokens was explicitly denied.
There is good reason to believe that SEC will be unsuccessful in asserting even broader authority over all tokens that are available on Kraken.
Am I crazy to call this vexatious harassment?
If P then Q:
If {x,y,z} are securities, [ then {Exchanges a, B, and C} have provided securities exchange services of assets {x,y,z} without the requisite license are thus owe a civil fine. ]
But how is a suit against Exchange A the appropriate forum to hear whether assets {x, y, or z} are securities?
Given that - presumably - assets {x,y,z} are not yet ruled to be securities, there was not sufficient cause or standing to make a claim of bad faith or intent to provide exchange services for unregistered securities.
Exchange A operated in good faith, pursued the requisite state and federal procedures for assessing whether or not such assets were securities, and specifically does not intend to sell securities.
Should there be an is_this_a_security() function of a US government regulatory agency, defendants would be required to request such review before listing said specific types of assets.
I think you meant to say here and unlike banks, because banks absolutely do not need to have sufficient funds to cover all customer's savings.
Unless.. are things different in the US? It's been a decade since I've read the Bank Act (Canadian), and when I did, only 5% of customer's account holdings were required to be held in tangible assets (gold, cash, etc), and inspected yearly by the Minister of Finance.
And I believe even that requirement has been dropped.
For those who have a short memory, a bank run last occurred earlier this year with the Silicon Valley Bank... https://www.investopedia.com/svb-financial-group-shares-crat...
By the way, if you put your cash money in a bank, your money is insured up to 250,000USD in the US and up to 100,000EUR in the EU. Anything above is your own risk. But it's perfectly fine because at least, it's regulated.
https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/basel23_...
Both banks and money transmitters (including Kraken) need to maintain sufficient assets to cover customer obligations. The difference is that for money transmitters those assets have to be liquid, while for banks they do not have to be liquid (which is why SVB got into trouble).
On the other hand, neither banks nor money transmitters need to designate specific assets as being held on behalf of customers, specifically, separate and apart from their own capital or operating accounts. Designating specific accounts or balances as being held on behalf of customers is typically what is meant by “segregating customer funds”.
Banking has not worked like this in quite a few years.
The investments that banks can make are restricted, but it is not inaccurate to call them investments.
In the case of spot markets CFTC can only intervene if there is a fraud or manipulation. There is also “actual delivery rule”, I.e. if crypto “exchange” didn’t settled spot trade on underlying Blockchain or a ledger in 28 days - they effectively created a derivative, and fall under the CFTC mandate.
The actual problem is that no part of the government wants to be the one to tell you if something is legal, because whoever actually makes the decision takes the blame for the consequences one way or the other.
So Congress punts and passes unclear laws. Then the SEC refuses to comment. Then the courts send you away if you try to get them to decide by asserting that you don't have standing because no one has tried to enforce the law against you yet. But then you have no way to know if they'll try to enforce the law against you in the future -- and the only way to find out is to do the thing that may or may not be illegal and see if you get charged with a crime.
Which is bullshit. Somebody should have to officially tell you if you're allowed to do something or not, ahead of time.
And if you're Bernie Madoff, all they have to do is tell you that no, you're not allowed to do that, and here's why. But then if you think you are allowed to do that, you would have standing to challenge that official determination in court.
And how would this process actually work in practice?
Would making such a request be free? Probably not, since they would consume a lot of lawyer time at the relevant agencies. If it were free, people could file thousands of slightly different requests for all imaginable variations of their dubious business plan, hoping that something would slip by.
If filing such a request costs money, then maybe the process would be more like applying for a patent. There would be some kind of guarantee about processing time, and some kind of legal promise that the response you received actually offers some level of protection when you do proceed with the thing you applied to do. This is clearly a big deal. There would maybe need to be a new profession of counterfactual judges who decide on the legality of things that haven’t happened.
How much should such a process cost? Seems like $10k would only get you started. Who decides the fee structure? What if the case is very complicated and involves many different aspects of law?
Overall, seems like a massive change from how legal systems work today.
The idea of people DDOSing the regulator with thousands of slight variations of a proposal is unrealistic. These are people, not computers - if someone was blatantly abusing the system like that, the SEC would just tell them to knock it off.
The fundamental problem here is that nobody in crypto is acting in good faith. They're just looking for loopholes to exploit. Publishing more guidance is pointless against such actors. Remember, this is an industry where Sam Bankman-Fried stood out as the honest guy who wants to play along with regulators.
If they tell you that you can't do it, that should give you standing to challenge their determination in court. And, of course, if they tell you that you can do it, they can't later prosecute you for the thing they officially approved. Asking them a hundred times doesn't matter; if they say yes then you're happy and if they say no you can sue them and it becomes an issue for the courts in the same way as if they charged you for it, except that you don't go to jail if the courts rule against you because you haven't done it yet.
> There would maybe need to be a new profession of counterfactual judges who decide on the legality of things that haven’t happened.
We could call them lawyers and have them work for the agency in charge of prosecuting that part of the law, so when they publish their opinion it expresses the official position of the prosecutor's office and precludes them from reinterpreting the existing law in a different way against your behavior ex post facto.
> How much should such a process cost?
They're lawyers. They get paid by the hour. The first thing they do is evaluate how many hours it will take to research your question, the estimate is free, and then you decide if you want to pay them. In most cases this will not take much; these are professionals answering questions in the specific area of their expertise. How much time does it take to answer a simple yes or no question?
The answers all get published (no secret interpretations of the law) and can be used by anyone, so large entities will often pay to have an ambiguous law clarified and then everybody knows the answer.
The only thing you're doing here is requiring them to tell you how they intend to interpret the law. That doesn't seem like too much to ask.
One really interesting thing I found about moving out of the US is that this is not always the case around the world. At a startup in the Netherlands we were discussing whether or not we could use a particular tax deduction in a particular way. The wording was really unclear. A colleague called the tax authority, and the person on the line agreed that the wording was not clear. They put us on hold, discussed, and came back that they thought we could, indeed, do what we wanted to do. Upon asking they sent us a letter clarifying.
I could not imagine this ever happening when dealing with the IRS.
Have you tried? I haven’t tried it with the IRS, but I have tried asking my states permitting and planning department about the legality of various rental schemes for a property (that I didn’t own) and they were happy to look up the permits and tell me that indeed what I was asking about was not legal for that property. And further they let me know that tons of people do it anyway and that they don’t really check, but it’s a risk.
Fighting the SEC isn't easy or cheap either, raising questions about the reluctance to pursue the pathway to compliance. If there truly exists a legal route for a company to become "above-the-board and legal", why hasn't this path been taken? My guess is that that route is just for show, it doesn't exist in practice.
the laws on penny stocks are extremely well established. Crypto is asking for a free ride just because.
They don't register because they think they can get away without it, it's pretty simple.
Pointing at all the other scofflaws doesn't make you not a scofflaw.
Have you considered it may be impossible to fulfill because by their very nature these things cannot pass the tests to be legal?
> why doesn't anyone do so instead of battling the SEC in court?
Because none of them meet the bar of legality. Because they do not meet the most basic requirements of consumer protection, transparency, fair market trading. It's not the SEC making requirements for crypto so stringent, it's crypto's complete failure to fulfill the necessary criteria for a registered security.
As others have said - the SEC aren't going to make it easy for me to register my ponzi scheme either, should I blame them when I get shut down for running it anyway? Cry about how they're making it difficult to figure out how to follow their guidelines? Whine that ponzi schemes are not being allowed a simple way to compliance? Or should I maybe re-evaluate what I'm trying to do?
> register my ponzi scheme either, should I blame them when I get shut down for running it anyway
In my opinion, if the scheme was transparent and no deception was involved, I do believe consenting adults should be allowed to transact. I am not big on the idea of protecting people from themselves, when no deception is involved.
Regardless, ponzi schemes are explicitly illegal. If you think that all crypto tokens should be illegal as well, a law should be passed. Making them implicitly illegal through bureaucracy and at the whims of bureaucrats is not an ideal state of things in a democratic society.
The laws don’t explicitly say “cryptocurrency is illegal”, instead they are effectively duck-typed, which is good because it stops “oh but my thing is different, this time we’re using bottle-caps”.
Sounds clear enough to me...
The crypto people want to pretend their tokens are something completely different, so they’re not willing to use the existing process and instead cry out for SEC to come up with something just for them.
For an example, some of the stringent per-transaction KYC/AML reporting requirements in traditional financial systems are often incompatible with today’s mechanisms of distributed ledgers.
Coinbase actively cooperated with token founders and venture capitalists like A16Z to list various newly issued tokens so that the creators and VCs could sell them to retail investors. This arrangement sure makes them look like securities.
Personally I’m fine if Coinbase and Kraken trade Bitcoin and Ethereum. Being restricted to those would be devastating for their profits though.
There appears to be no clear path forward for crypto exchanges to legally list new crypto tokens to the public. I suspect that is the goal of the SEC and administration; to limit what is available to the public, rather than define clear policies that would enable regulated trading. The only token actually tested is XRP, which was deemed to not be a securities offering[2], and is notably absent from this new filing.
[1] https://www.sec.gov/files/litigation/complaints/2023/comp-pr...
[2] https://www.investopedia.com/crypto-exchanges-allow-xrp-trad...
That's American securities law. The exchanges can always sell these tokens to accredited investors, but that's not the business they want to be in, I guess.
Of the tokens you mention, Solana was a major component of Sam Bankman-Fried's fraud empire. You dismiss the consumer protection aspect, but clearly it would have been better for consumers if SBF and FTX/Alameda didn't have access to American retail investors through this token.
What I'm trying to say is, it's probably very hard right now to change securities laws in a direction that would make it easier for Americans to buy the kinds of tokens that SBF manipulated. That just seems like political reality.
Yes - which makes the ledgers illegal.
You'd have to come up with a convincing reason why KYC/AML reporting requirements are bad to change those financial laws.
There’s a reason why the lawmaking, executive, and judicial powers are separated in a democracy.
"Investigators tracked the money through many layers of bank accounts to Binance and another exchange, U.S.-based Kraken, police said. By the time Binance and Kraken provided account records, the police said the funds had been withdrawn or sent to a "mixer," a service which anonymises crypto transactions by breaking them up and mixing them with other funds. The personal information held by both exchanges on the accounts was often fake or stolen from victims, the officers said.
Kraken told Reuters it has "bank-grade" customer checks and robust tools to prevent fraud. Kraken disputed that customer information provided to Braunschweig police was fake, saying "every indicator we have suggests these accounts were used by legitimate clients.""
IANAL, but I would think it'd be the job of the business in question to hire lawyers, who would then offer their opinion on the matter.
It’s for the courts to decide then. That’s what they’re literally for.
You could argue that a more productive approach would be to come up with something at the lawmaker level. Even if it’s so restrictive that it drives most exchanges out, such as Canada has done.
> The complaint against Kraken alleges no fraud, no market manipulation, no customer losses due to hacking or compromised security, and no breaches of fiduciary duty. It includes big dollar amounts but does not allege a single one of those dollars is missing or misused – no ponzi scheme, no failure to maintain adequate reserves, and no failure to preserve the identity of client funds 1:1. Indeed, none of these things would be true.
> Instead, the complaint makes a technical argument: that Kraken’s business requires special securities licenses to operate because the digital assets we support are really “investment contracts.” This is incorrect as a matter of law, false as a matter of fact, and disastrous as a matter of policy.
...
> The SEC already tried this theory and a court rejected it outright. The SEC argued in that case that digital assets bought and sold on trading platforms were really securities transactions. The Federal Court for the Southern District of New York disagreed, ruling that the SEC failed entirely to satisfy the relevant legal test. The court held that the SEC’s unprecedented legal theory was contrary to the “economic reality” of such transactions. The SEC’s case against Kraken will fail, too, and for the same reasons.
> The SEC alleges that Kraken “commingled” its own funds with its clients’. This is a similar allegation already made of other crypto trading platforms. The SEC cannot and does not allege that any customer funds are missing, or any loss has occurred. Nor does it allege that any loss will occur. The complaint itself concedes that this so-called “commingling” is no more than Kraken spending fees it has already earned.
> The SEC famously argues that digital asset trading platforms like Kraken can simply “come in and register” with the agency. As most securities law experts know, there is not a single law on the books supporting this position. The SEC has promulgated no rule describing how an order in a digital asset should be matched, no guidance on how a trade should be cleared, and articulated no standards for how to broker a digital asset transaction. The allegation is hollow; there is no such thing as an exchange, broker dealer, or clearing agency for investment contracts. The SEC is demanding compliance with a regime that doesn’t exist.
> Meanwhile, groups of lawmakers from both sides of the aisle have questioned what they call SEC’s “regulation via enforcement” approach. They have asked why the agency’s actions against crypto firms seem less focused on “compliance and customer protection,” but were instead “calculated for maximum publicity and political impact.” Others have observed that the SEC’s strategy “does not protect the public.” Indeed, this suit does nothing to protect the public. Like those in complaints that have come before, its allegations are factually incorrect, contrary to law, and the wrong way to create policy in the United States.
To me the SEC and Gary Gensler are going to get their arses handed to themselves once again.
I'm not a fan of crypto currency, but a big part of my dislike for it is how difficult it is to actually use it. I don't mean technically though. I mean legally.
In Canada, all crypto transactions are considered taxable events. Did you sell a couch on Facebook Marketplace using Bitcoin? Time to calculate your capital gain or loss from a vaguely worded set of guidelines.
It's all political IMO. The real value in crypto is having a currency that isn't subjected to the whims of governments and the people that control monetary policy alongside the massive payment networks like Visa and MasterCard. Controlling the flow of money allows pseudo bans on things the people that control those systems don't like.
My hot take on the whole thing is that half the goal is to make it well known that all the remaining exchanges perform strict KYC and that crypto transactions are trivially easy to track while being extra complicated to report on your taxes (at least in Canada). Once that's done crypto currency doesn't have much value to anyone.
Even if it were a real honest-to-god currency it would be the same though, right? That's how it works here in Japan at least - buy a couch in dollars, now you have to calculate capital gains against your average cost basis for dollars (which I guess includes every dollar you earned in your whole working life, if you lived in Canada before you moved here?)
What a surprise that the government isn't about to make it convenient to evade its authority.
> Once that's done crypto currency doesn't have much value to anyone.
It already doesn't. The lofty early promises have long fallen flat and all that is left is a game of hot potato. It's not utility, it's just a lottery, which economically speaking is negative utility.
Would you say the same is true of arms trafficking or contraband in general? Personally, I can't think of a reason why a society wouldn't want to control who and what goes into and out of its territory.
Kraken has… expanded enough to reach optics.
And the FTX case is done
Remember the IRS crackdowns all started under n-1
After FTX, political support for crypto deregulation dropped to near zero. FTX, remember, was lobbying for a bill that would allow all the things for which Kraken is now in trouble. That is going absolutely nowhere now.
Also, the SEC, CFTC, and Main Justice now have their act together on cooperating to deal with crypto scams. There used to be jurisdictional issues. Now, it's just treated as crime.
[1] https://www.sec.gov/spotlight/cybersecurity-enforcement-acti...
NFTs as an investment offering are still a good way to make money it seems!
Ah well, I knew it was too good to be true. The way not to be disappointed is to not get your hopes up involving money.
Hopefully this legal albatross won’t spook them.
It's a bit of a pain. They limited your choices and now the limited choices are facing legal scrutiny.
The Japanese lawyer representing Mt. GOX customers is also collecting fees this entire time from the pool of customer funds.
I wonder if SEC is charging Coinbase soon, too?
Already happened. [1][2]
Let me explain the difference..
I had a series 63 license from The SEC. Here is what I submitted: 1. Background info form to FBI which was checked. 2. Fingerprint form
Far different when you register a company as public.
Per their own docs they review accounting not background, see
Of course, this was my first time aiding in the effort for taking a company public, so I'm not exactly a well seasoned veteran and there is a lot that I do not know. But based on what we had to provide to the SEC, I do not believe that it is strictly true that the road to publicly traded is only gated by an accounting review.
This is all about disclosure, nothing at all with business function.
I'm sure there's some math behind calculating certain values for disclosure, super important. The importance of this is because the numbers have to reflect reality for the purposes of proper disclosure.
Disclosure.
If your business is to rob trains, not the SEC's business. So long as you disclose your finances you can sell shares of your train robbing business. The criminal conspiracy charges you'll face will have nothing to do with the SEC and everything to do with your state government or the FBI if you messed with interstate commerce.
Like do you really believe that if you filed an S-1 with the SEC that said "we raise money from investors and use the proceeds to pay distributions to previous investors" that the SEC would say "sure, whatever, go ahead and IPO your ponzi scheme. We don't review background." Because I sure don't.
https://www.bloomberg.com/opinion/articles/2023-03-23/the-se... | https://archive.today/RX8aj ("The SEC Is Coming for Coinbase")
but in my opinion that's just plain stupid, it's like inviting you to my home they I can not stop you from stealing something, because that's not my thing to enforce
https://news.ycombinator.com/item?id=36212120 ("US SEC sues Coinbase, one day after suing Binance")
(To be clear, neither Coinbase nor Kraken were criminally charged. The phraseology "SEC charges" is a loaded, potentially misleading, one).
They offer many cryptocurrencies.
The SEC has indicated that it considers most, probably all, cryptocurrencies to a be securities.
The writing has been on the wall for a while -- Coinbase got a Wells letter, basically a "lawsuit is coming" warning, months ago.
It's still not super clear to me why he says Bitcoin is not a security, but that Ethereum would be a security. I'm fine with whatever ruling as long as I can understand how it's being applied. I feel pretty good about considering stable coins securities. I'm less certain about NFTs since there is receipt of a (semi)tangible product.
I wonder if the recent introduction of ordinals to Bitcoin will result in his opinion on BTC shifting soon, too?
That said, none of what we're talking about addresses the fact that, in 2018, Gensler said, quote, "Bitcoin. Ether. Litecoin. Bitcoin Cash. Why did I name those four? They’re not securities."
Since then, things have changed, and now Gensler only highlights BTC as not a security.
If the inflection point was various teams speaking publicly about their usage of funds, and those talking points shifted Gensler's opinion, then OK, but I am not aware of an official moment when his sentiment shifted. As another commenter highlights, it could also be the transition to POS for Ethereum, but, again, I am not aware of Gensler highlighting the transition as the inflection point and this rationale fails to explain LTC and BCH.
To me, it feels like chasing opinion and public sentiment - not following rigid, established legal patterns.
https://www.forbes.com/sites/jasonbrett/2023/10/01/sec-chair...
I feel we're getting a bit into the weeds, though.
Is your stance that Bitcoin is a security and that remarks made two months ago by the Chairperson of the SEC are misguided?
Or is it that Bitcoin is not a security, but Ethereum is? If so, is that for technical reasons or just due to how it's discussed and marketed?
vSeeds.emplace_back("seed.bitcoin.sipa.be."); // Pieter Wuille, only supports x1, x5, x9, and xd
vSeeds.emplace_back("dnsseed.bluematt.me."); // Matt Corallo, only supports x9
vSeeds.emplace_back("dnsseed.bitcoin.dashjr.org."); // Luke Dashjr
vSeeds.emplace_back("seed.bitcoinstats.com."); // Christian Decker, supports x1 - xf
vSeeds.emplace_back("seed.bitcoin.jonasschnelli.ch."); // Jonas Schnelli, only supports x1, x5, x9, and xd
vSeeds.emplace_back("seed.btc.petertodd.org."); // Peter Todd, only supports x1, x5, x9, and xd
vSeeds.emplace_back("seed.bitcoin.sprovoost.nl."); // Sjors Provoost
vSeeds.emplace_back("dnsseed.emzy.de."); // Stephan Oeste
vSeeds.emplace_back("seed.bitcoin.wiz.biz."); // Jason MauriceBtw, I couldn't find these on the newest version, so I'm not sure how they do it now.
There's a staggering amount of illegal mining that is never accounted for in the economic models used to determine how much control these folks have over liquidity; this entire conversation is just broadly discouraged and for whatever reason seems to have attracted very little interest even from the crypto critics out there.
The number one weapon the crypto cartel uses to shut down dangwrous critical turns developing in the story, is their ability to move the last trade price almost at will, completely opposed to any building critical narrative in order to undermine it, knowing full well that the sympathy of the media reliably lies with "number go up", not "number made up." And they can do this because they're sitting on an enormous warchest of unsold coins mined when prices were far cheaper, which they can use to fund their operations while they throttle back current coinbase sales at current prices to prop up the price.
> illegal mining
What exactly is "illegal mining"?
2023: (much smaller scale than above but still stealing over USD $150000 a year in electricity)
https://www.bangkokpost.com/thailand/general/2569745/crypto-...
This time around the authorities estimate that they've only found 1%, not 10% as they had before, of the illegal mining done in their country.
That's not exactly "staggering" or significant in the context of the Bitcoin network. Unlikely that such operations have any meaningful control over the network or liquidity, even if it's just 1% of what's known.
You seem to think that these sorts of operations are somehow connected in a large coordinated cartel the controls the industry, but given that they're illegal, isn't it far more likely that these "black market" operators are fairly small by comparison to the legitimate players in the US?
The mining ban in China a couple of years back gave us a pretty good indication of the size of the legitimate industry in that country, and it absolutely DWARFS the biggest of the illegal examples you gave.
Interesting way to word it too, "illegal mining". They're just stealing electricity. If they used that stolen electricity for heating, you wouldn't call it "illegal heating", would you?
It's been happening ever since crypto mining, especially Bitcoin, existed. Long before most anyone knew what mining was, or knew to look for it being done stealrhily on someone elses's dollar ...or baht. I didn't say I condone stealing electricity for any purpose, but there's a particular hypocrisy with crypto people who claim that mining costs chase the hash rate and difficulty adjustments ensure that everyone has a fair shot at winning a coin base. Obvious nonsense.
It's hypocrisy that crypto people, who like to think of themselves as some sort of sophisticated financial visiinary class, are so hopelessly naive that it would never even occur to them to consider that being rationally self interested will inevitably and swiftly devolve into outright theft, and the obfuscated consolidation of power favors the venal corrupt and those who are willing to benefit from wholesale theft, which is why such people are entrenched at the center of this so-called decentralized system.
the papers studying the amount of black market activity in Bitcoin have consistently shown Bitcoin to be cleaner than the economies in virtually every country on the planet, except for the occasional ultra-clean tiny european state.
literally every bitcoiner since the first roll-out of the Silk Road and the resulting senatorial attacks on them, have been ultra-interested in exactly how much of their hobby is black market and how much is criminality. literally every single one of them is heavily invested in knowing more about the nature and extent of bitcoin criminality. to say that it didn't occur to them that self-interested criminals are operating in BitcoinLand is .. stupid.
I think there is lots of manipulation, but could you elaborate on how you can, for example, pump the BTC price up when you hold lots of BTC, but no USD? Leveraged futures on crypto-only exchanges?
This is not even getting into the circus known as tether, which I believe is a significant factor but actually quite a bit of an over-stated red herring serving (along with constant exchange clownery) as a distraction away from the much bigger influence that is the enormous subjective control miners have over the order book price of the coin.
The protocol development happens through BIPs (Bitcoin improvement proposals): https://github.com/bitcoin/bips
BIPs are discussed for years, before (and if) they are implemented, and basically everyone needs to agree on them, because no one wants to fork the blockchain, which could be devastating.
Sources:
https://github.com/orgs/bitcoin/people
https://bitcoin.stackexchange.com/questions/35907/bitcoin-no...
The sentiment is an integral part of the established legal pattern - the Howey test is about "expectation of profit".
Even if based purely on vibes, I think the man on the Clapham omnibus might well say: someone buying Bitcoin today, or Ethereum in 2018, is not expecting to profit from the efforts of their respective dev team, whereas someone buying Ethereum today is expecting to profit from the efforts of their dev team. (I mean, I didn't even know Bitcoin still had a dev team - isn't it basically "finished" at this point, and has been for years?)
At this point Ethereum doesn't really have "a dev team." There are about ten independent client teams, who have public meetings to come to agreement on upgrades, plus an open research community.
When you say that an ETH buyer is "expecting to profit from the efforts of the dev team" which wasn't the case in 2018, are you talking about proof of stake? Because it's not all that different from proof of work. You run a client, process transactions, and get rewarded for doing that. Instead of buying a server rack you stake some ETH, but what you get rewarded for is running the protocol.
You don't get rewarded for just holding ETH. Unless the value of ETH goes up, but that's the same with Bitcoin and with Ethereum in 2018.
The Howey test, incidentally, is also about an investment contract. That's why an equity is a security, but a bar of gold is not, even if you bought the gold as an investment. Lack of contract is why the SEC lost their case against Ripple recently.
Not proof of stake qua proof of stake, but the fact that substantial changes to ethereum (like proof of stake) - things that change the usability of the network, and so could be reasonably expected to change the value of ethereum tokens - are still being worked on.
> The Howey test, incidentally, is also about an investment contract.
No, it's the definition of an investment contract. If it included whether something was an investment contract that would be circular.
> That's why an equity is a security, but a bar of gold is not, even if you bought the gold as an investment.
No, the reason gold isn't a security is there's no common enterprise and, more importantly, no efforts of others. You might buy it as an investment, but the investment isn't because you think the gold devs are going to add new features that make gold more useful.
> Lack of contract is why the SEC lost their case against Ripple recently.
Whatever you think about Ripple or cryptocurrency in general, that ruling was just utterly bizarre. You can make reasonable arguments for why these things aren't securities (even if I don't agree with you) but that judgement wasn't it. It's not a precedent for anything, it's just crazy.
With proof of stake, a staker eventually gets an opportunity to follow the validation rules and put some transactions in a block. If they don't properly follow the rules, they will get slashed. If they don't submit a block when it is their turn, they will get gently slashed.
In proof of work it is a free-for-all with whoever has the most hashing power winning block submission more frequently. If they submit a block that doesn't follow the validation rules they keep all of their (physical silicon) hashing power and the block is ignored.
Take that further to airline points and Chipotle points. If the stablecoin does not provide returns to the holder, how is it an investment contract?
No-one is holding those with an "expectation of profit". Whereas essentially the only use of "stablecoins" is as investment schemes; even if someone isn't expecting the value of their stablecoin to rise against USD, they're expecting it to rise against something.
Coinbase, who co-founded USDC, absolutely pays interest on USDC: https://www.coinbase.com/usdc
(they call it rewards instead of interest in an attempt to avoid regulation, but it is functionally the same thing)
> Whereas essentially the only use of "stablecoins" is as investment schemes; even if someone isn't expecting the value of their stablecoin to rise against USD, they're expecting it to rise against something.
Stablecoins are very frequently used as transfer tokens for remittances, wages and ecommerce. We pay overseas staff in USDC for example (it's quicker and easier than bank transfers).
Regardless, that's not why people hold stable coins.
The SEC’s first strategy was to go after the companies creating the crypto. Most that are targeted settled and exchanges delisted those crypto assets that were ruled to be securities - registered or not - then the SEC went after well funded, more professional and less risk averse ones and have been losing in court.
So this is a war of attrition so the SEC then just went with blanket statements and goes after the exchanges, without telling them which ones are securities. The SEC also has not been winning at this second strategy.
All anybody has been asking is for the SEC to tell them the difference between the assets. How can a crypto asset be issued compliantly as only a product, and when does it transition into not being a security if so?
The SEC has fumbled over its words as if trained on 10 years of HN crypto comments, and the courts say its arbitrary and capracious.
So the SEC just claiming they are isn’t going to win any court. Their goal is really to drain funds and get companies to settle. Because the SEC isn’t supposed to determine what is a security
they lose because they cant articulate when they are securities and when they're not securities
their theory does play into a trap you pointed out, in that there are plenty of non crypto products that function the same way - limited supply runs sold by corporate issuer where a ton of speculator collectors hope the price goes up based on the actions of the issuer - that the SEC never bothered with. Either they're all securities or none of them are. The SEC has been asked to explain the difference and fails. People on this forum played devils advocate on a supposed legal difference just because they dont like crypto, but their arbiter - the SEC - fails to find those points strong enough to argue its position at all! the courts and the senate are like “wait, you don’t have an argument at all? good lord”
but like an abusive spouse it just keeps circling over the same word salad of “you’re supposed to know what I want, its been sufficiently clear the entire time” instead of articulating themselves using their words, to the shock of the couples counselor who already had a bias towards the spouse but can’t come up with anything to help their ridiculous case
You can read the act yourself, a cryptocurrency (depending on the type) is not a security by the definition provided. Nor does the cryptographic token have an issuer. Quite literally, most crypto has none of what’s defined under the SEC scope.
That said, sure _some_ of the crypto tokens would could count as securities. But even then it’s not clear the exchanges should be the ones being targeted.
Funny, that describes virtually every cryptocurrency token I'm aware of.
But for all practical purposes, you shouldn't be looking at the definition in the law itself, you should be looking at the case law behind it, where of course the ruling test is the Howey test... "an investment of money in a common enterprise with a reasonable expectation of profit derived from the efforts of others."
Your interpretation is far removed from reality but I appreciate the enthusiasm
the act regulates the nature of a specific transaction and therefore does not need a description of the asset itself. It never needed to imagine crypto, or fungible orange groves as the howey test was about, or anything.
The SEC will argue they just enforce the law and aren't required to tell them how to comply. Buuut they are professionally obligated to tell them, especially when the law is so ambiguous. It's obvious the SEC is being a bully, so the judiciary and public will hopefully side with Kraken.
This is correct.
> Buuut they are professionally obligated to tell them,
No, they aren't.
> especially when the law is so ambiguous.
If the law is actually vague that's not an argument SEC has to tell them how to comply, its an argument that the law is unenforceable.
If its not actually vague, then the government isn't obligated to tell them how to comply other than with the law (including statute and regulation.)
Non-Security Deposits are interest-bearing products that are not securities.
Non-Security Deposits: CD Certificates of Deposit, MMA Money Market Accounts, Treasury Bills, Savings accounts, Checking Accounts
Do banks require SEC registration to offer interest-bearing Non-Security Deposit products?
Have banks ever been required to qualify interest-bearing products as securities contracts, after qualifying each product for list in each US State of operation?
This also is about unregistered securities and not interest bearing accounts although that too is an issue because they're not banks.
edit: They're Money Services Businesses and that's it. They might have some state-level lending licenses but I'm fuzzy on that.
> The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks.
https://www.sifma.org/resources/general/firms-guide-to-the-c.... :
> Any broker-dealer that is a member of a national securities exchange or Financial Industry Regulatory Authority (FINRA) and handles orders must report to CAT. Eligible securities include NMS stocks, listed options, and over-the-counter (OTC) equity securities.
Interledger Protocol works with any type of ledger, has a defined messaging spec, and has multi-hop audit trails: https://westurner.github.io/hnlog/#comment-36503888
> Do banks require SEC registration to offer interest-bearing Non-Security Deposit products?
No, because they are registered and regulated as banks.
[1] https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp...
In 1999, GLBA [2] changed the 1933 Glass-Steagall rule [3] that had prevented banks from investing Savings deposits in order to ensure that they would have enough to prevent another run. (As depicted in "It's a Wonderful Life" (1946); Clarence the angel or Mr. Potter's Potterville)
I'm not sure that it's anywhere explicitly stated that the banks' socialist FDIC corporation justified allowing investing of savings deposits. They created a large shared prepaid credit line for themselves in order to operate safely.
Banks invest in non-securities; without any agreement for future performance.
Banks invest in treasuries, which are tokenizable non-security deposits.
(Some time later, the dotcom boom busted and the US went to war/oil/defense instead of clean energy (like the solar panels that were on the roof until 1980 (due to the oil crisis CPI hostage situation, when it became necessary to defensively meddle in the ME with blowback left for Obama to handle, and not pay for)))
[2] https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bl...
[3] https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legisla...
https://help.coinbase.com/en/coinbase/other-topics/other/cli... :
> How is client cash stored at Coinbase? The vast majority of Coinbase client cash is stored in FDIC-insured bank accounts and U.S. government money market funds to keep it safe and liquid. Like all assets on Coinbase, we hold client cash 1:1 and your assets are your assets.
https://support.kraken.com/hc/en-us/articles/360001372126-Ar... :
> Are balances stored on Kraken insured? Cryptocurrency exchanges do not qualify for deposit insurance programs because exchanges are not savings institutions. Exchanges are not even meant to be cryptocurrency wallets.
https://www.investopedia.com/kraken-vs-coinbase-5120700 says that Kraken ended staking services in the US in February 2023.
There is yet no FDIC protection for any stablecoin, and yet no CBDC (just FedNow), but US banks are specifically allowed to provide crypto custody services.
> As alleged in the complaint, Kraken commingles its customers’ money with its own, including paying operational expenses directly from accounts that hold customer cash.
Didn't FTX/SBF do same?
That seldom ends well.
I could borrow $10 from Jim, and $20 from Sue, and deposit them both into the same Chase account which now has $30. As long as the balance stays above $30, everything is fine.
If you’re claiming to hold the funds on their behalf and do otherwise (like “investing” them in your less than arm’s length hedge fund), then you’re breaking your fiduciary obligations.
https://www.kraken.com/proof-of-reserves
https://proof-of-reserves.trustexplorer.io/clients/kraken
If there's any crypto company out there that "gets it" and is doing things right, it's them. The SEC is going after the big one this time. I can't wait to see how it shakes out.
> The SEC alleges that Kraken “commingled” its own funds with its clients’. This is a similar allegation already made of other crypto trading platforms. The SEC cannot and does not allege that any customer funds are missing, or any loss has occurred. Nor does it allege that any loss will occur. *The complaint itself concedes that this so-called “commingling” is no more than Kraken spending fees it has already earned.*
https://blog.kraken.com/news/kraken-continues-to-fight-for-i...
It is ironic that now when you try to use some of the crypto services it asks you if you are in Iran, North Korea, US, etc... I don't think all they were in the same list before.
In 2020, I received an interview invitation from Kraken and subsequently received invitations five times in 2022. The engineering managers I conversed with took pride in having one of the largest Rust development teams in the tech industry, in addition to a substantial number of Go developers. Due to my professional experience with both languages, they expressed considerable interest in bringing me on board. However, I faced rejection twice after accepting two of their invitations in 2022. The first time was due to my preference for utilizing basic yet stable features in Rust, as opposed to the alpha features anticipated by their interviewers. The second rejection occurred because I did not exhibit sufficient interest in their crypto business. While this aligns with their business focus, it seemed like a convenient excuse, given that I had consistently communicated my limited interest in the product, and both the technology and hiring manager appeared to be accepting of that fact.
I mean, I don't necessarily align with Apple's mission, but I still got the job there.
Kraken is my favorite exchange. They appear to put a lot of effort into abiding by local regulations in all countries they operate.
> I had consistently communicated my limited interest in the product, and both the technology and hiring manager appeared to be accepting of that fact
This sentence is so weird for me. Why would you want to work for a company if you seemingly don’t care about their product. And conversely, why would anyone ever hire someone for a role if the person looking to get hired doesn’t care about the product?
For money, of course. A company’s mission doesn’t pay for my groceries or rent.
A substantial compensation package serves as a strong incentive to perform well.
> And conversely, why would anyone ever hire someone for a role if the person looking to get hired doesn’t care about the product?
That is a good question for the companies that hired me during the last decade to lead some of their projects.
I can only speculate that if a company observes a person with a proven track record of successfully leading and delivering products that significantly contribute to revenue, they would prioritize hiring that individual, even if they lack enthusiasm for the product. Of course, it’s ideal to hire someone with both experience and genuine interest, but in my experience, such individuals are the exception rather than the rule.
If companies exclusively hired people passionate about their products, they might struggle to find suitable candidates.
I understand the importance of aligning with the vision of a product, service, or company when working with a team.
I genuinely try to do the best job I can with my skills despite lacking genuine interest in the products I have touched. I acknowledge the significance of shared enthusiasm for a product, but I wonder if there could be merit in having individuals with differing perspectives, even if they don’t personally resonate with the product. It could provide valuable contrast and potentially lead to innovative solutions.
Perhaps I might be an outlier in this regard.
I couldn’t really feel any personal excitement about the product i worked on for my first 4 years out of college. It is kind of difficult to feel personal excitement about a product whose customers are all just enterprises of various sizes, and the product was for managing their internal docs/storage/admin stuff/etc. with tons of legacy stuff on top.
However, I deeply cared about the quality of the work I produced for it, about what customers said and feedback they provided (and I acted on it), and the architecture of the product/health of the codebase.
Of course, you shouldn’t tell the interviewer that you don’t care about the product. That’s just weird and feels borderline antisocial. How can you even claim you don’t care about the product, unless you closely worked with it and know enough about it to feel excited.
I think it is pretty common in general to not be super into something unless you are exposed enough to it. I can definitely say it holds true for me for music, for example. Some of my most favorite current artists were initially not even something i was into even slightly, upon the first few listens.
Aside from registering as a securities exchange/broker/dealer in the U.S., which the SEC clearly believes they are.