from the commodities-or-securities-that-is-the-question dept.
Crypto and the US Government Are Headed for a Decisive Showdown:
If you have paid casual attention to crypto news over the past few years, you probably have a sense that the crypto market is unregulated—a tech-driven Wild West in which the rules of traditional finance do not apply.
If you were Ishan Wahi, however, you would probably not have that sense.
Wahi worked at Coinbase, a leading crypto exchange, where he had a view into which tokens the platform planned to list for trading—an event that causes those assets to spike in value. According to the US Department of Justice, Wahi used that knowledge to buy those assets before the listings, then sell them for big profits. In July, the DOJ announced that it had indicted Wahi, along with two associates, in what it billed as the "first ever cryptocurrency insider trading tipping scheme." If convicted, the defendants could face decades in federal prison.
On the same day as the DOJ announcement, the Securities and Exchange Commission made its own. It, too, was filing a lawsuit against the three men. Unlike the DOJ, however, the SEC can't bring criminal cases, only civil ones. And yet it's the SEC's civil lawsuit—not the DOJ's criminal case—that struck panic into the heart of the crypto industry. That's because the SEC accused Wahi not only of insider trading, but also of securities fraud, arguing that nine of the assets he traded count as securities.
This may sound like a dry, technical distinction. In fact, whether a crypto asset should be classified as a security is a massive, possibly existential issue for the crypto industry. The Securities and Exchange Act of 1933 requires anyone who issues a security to register with the SEC, complying with extensive disclosure rules. If they don't, they can face devastating legal liability.
The article continues with a detailed discussion about whether some crypto coins are a security as classified by the SEC and the implications of that determination.
(Score: 4, Insightful) by Sigmonfury on Monday August 15 2022, @03:52PM (4 children)
crypto-currency will NEVER be what it was touted to be. It's not going to happen folks. Ever. Government will find a way to control it or your ability to use it.
(Score: 4, Insightful) by aafcac on Monday August 15 2022, @06:56PM (1 child)
As well, it should, if they can't manage that, then it just becomes an incredibly efficient way of laundering money and profiting off of crime. At least with cash money, the amount that drug cartels are dealing in is extremely hard to move around without anybody noticing. A million dollars in cash is a fairly large volume. A million in cryptocurrency can easily fit on a thumbdrive.
(Score: 1, Funny) by Anonymous Coward on Tuesday August 16 2022, @12:36AM
Honestly, I'm rooting for the criminals at this point.
(Score: 2) by darkfeline on Tuesday August 16 2022, @06:20PM (1 child)
> Government will find a way to control it or your ability to use it.
Except they can't. That's the point.
Even after they sanctioned Tornado Cash, people have been using it to send cryptocurrency to celebrities. Maybe it's "illegal". They still can't stop it.
Try sending frozen bank funds.
Join the SDF Public Access UNIX System today!
(Score: 1) by aafcac on Sunday August 21 2022, @05:12PM
They can force the banks to stop accepting the proceeds. Without the ability to convert directly, you're stuck finding other, less convenient ways of converting it into cash to then desposit in a bank. And if it's above the threshold all the usual money laundering reporting happens. Sure, you'd still be able to "use it" but the inconvenience of it would render it largely useless for the things that people want it for.
(Score: 0) by Anonymous Coward on Tuesday August 16 2022, @12:03AM
"The Securities and Exchange Act of 1933 requires anyone who issues a security to register with the SEC"
It's the Securities and Exchange Act of 1944. There is also such thing as restricted securities and qualified institutional buyers (a type of institutional investor).
https://www.investopedia.com/terms/q/qib.asp [investopedia.com]
"Rule 144A modifies restrictions for the purchase and sale of privately placed securities among qualified institutional buyers without the need for SEC registrations."
https://www.investopedia.com/terms/r/rule144a.asp [investopedia.com]
Also consider an Accredited Investor
"An accredited investor is an individual or a business entity that is allowed to trade securities that may not be registered with financial authorities."
"To become accredited certain criteria must be met, such as having an average yearly income over $200,000 or working in the financial industry."
https://www.investopedia.com/terms/a/accreditedinvestor.asp [investopedia.com]
Bottom line, if you make/have more money you can do things that people that make/have less money aren't allowed to legally do. We explicitly have two sets of laws, one for the rich and one for the poor, and these laws are officially written as two sets of laws on the books.