SEC Threatens To Sue Coinbase Over Crypto Lending Programme (reuters.com) 30
The U.S. Securities and Exchange Commission (SEC) has threatened to sue Coinbase if the crypto exchange goes ahead with plans to launch a programme allowing users to earn interest by lending crypto assets, Coinbase said on Wednesday. From a report: The SEC has issued Coinbase with a Wells notice, an official way it tells a company that it intends to sue the company in court, Paul Grewal, the company's chief legal officer said in a blog post. He said Coinbase would delay the launch of its 'Lend' product until at least October as a result. Programmes that allow owners of cryptocurrencies to lend these in return for interest are becoming more common around the world, but some regulators, particularly in the United States have started to raise concerns, arguing that such products should comply with existing securities laws.
So this Wells Notice is real, eh? (Score:4, Interesting)
Instead of a simple yes or no, Elon responded in a desultory random manner. My heart sank, "ok Tesla is done for. " I thought. It was the last quarter of 2018, a big bond was due at the end of Mar 2019, and the automatic conversion of bond to stock did not meet the triggers, so it was sunk too.
But a VP realized the full significance of the question, stepped in, cut Elon short, and said point blank, "No. We are not in notice of Wells Notice" . It made me realize the things shorts talk about seriously, these conspiracy theories, do not even make it to the radar screen of Elon. Elon was not really following the shorts closely. He was simply frustrated at the barrage of FUD coming from all directions and was lashing out, in the 2018 - 2019 time frame.
Re: So this Wells Notice is real, eh? (Score:1)
A CEO can't afford to get frustrated. That will damage confidence. It is also an exploit. Once the CEO has a zero day vulnerability, it is potentially very destructive.
Re: (Score:2, Offtopic)
But beggars can't be choosers. We BEV supporters have to make do with Elon. It is extremely irrational for someone who struck it rich in dot com era to plunk down all those cash into BEV. Automotive business has very high barrier to entry. Normal sane people don't throw a few deci billions of personal fortune against the combined might of Oil, Auto and Electric Utilities.
So it is a given, if a BEV succeeds, it will be headed by an extremely irrational true-believer
Re: (Score:2)
Fair enough. The reasonable person shapes themselves to the world. The unreasonable person shapes the world to them. All progress depends on the unreasonable person.
The danger of the insane unreasonable person is that if they fail, that line of progress gets tainted. Sometimes irrevocably.
What is needed is a pool of marginally irrational, unreasonable people that can be the navigators through the hazards. Just sane enough to not tread on a landmine to see how it feels.
Re: (Score:2)
De-List. (Score:2)
Stupid (Score:2)
Let's just let the whole crypto industry be implemented outside the US. Let's attack our industry leaders so they are under seige while others press ahead. Really, it's no good for CB to offer crypto loans? Such BS.
Re: (Score:2)
Actually that might be the best idea ever if you want to preserve American Hegemony.
Crypto currency if it both continues to be adopted and its luminaries continue to avoid regulators attempts elsewhere to control it, is going to lead to a massive economic, humanitarian and probably environmental wipeout! China seems to get that! The smartest thing the USA could do right now is ban hammer all things crypto currency (but not basic technology like block chain etc) and let rest of the world enjoy the bubble pop
Re: (Score:2)
I'm all for sensible crypto regulation, but let's start with properly collateralizing stable coins, rug pulling and general dishonesty in the shit coin arena, not boring stuff like whether you can make interest by loaning your crypto. You can. The SEC doesn't get to decide this, as it will find out.
The USD is the currency that has the bubble, not crypto, at least not the better coins like bitcoin, etherium, ada, bnb. Markets already know that cash is trash. Companies that hold USD are already under intense
Re: (Score:2)
No contest our government seems to be bent on turning the dollar into toilet paper; but I don't for an instant believe that the spotty-at-best-regulated-crypto currency market is 'better'.
The mining isn't really the problem, they exchanges are and from a more technical perspective the clearing operations, which exist because the fundamental concept at least as far as bitcoin goes is utterly broken in that it can't handle a useful transaction volume. Given bitcoins 'promises' the existence of L2 should be en
Re: (Score:1)
You can't do fractional reserve banking unless you can mint money. This is how money is introduced into supply in practice. It's what makes banks vulnerable to a "run on the bank" and it doesn't exist in crypto. This is actually why the Treasury, SEC, and Federal Reserve are terrified of crypto lending, because it will compete favorably with the banking system. It's already the case that money in a bank making 1% interest is a stupid choice for consumers.
There are really "safe" ways in crypto to make 15%+ i
Re: (Score:1, Insightful)
No, there are zero safe ways to make 15% interest on ANY product. The crypto sphere runs on fake money. Tether. $65 BILLION worth printed out of thin air. $2.5 BILLION printed just yesterday to prevent the collapse?
I'm old enough to remember when the purpose of crypto was to avoid censorous/tyrannical governments. When it did turn into high-yield vehicles for momentum flippers?
I know, "number just go up!"
Re: (Score:2)
To this day, i'm still looking for an explanation on how "stablecoins" are not a massive scam.
Re: (Score:2)
Once you start crypto lending, you are just one very small step away from fractional reserve banking in the crypto space.
That small step is being able to transfer your Coinbase balance, or a part of it, to someone else.
Re: (Score:2)
Of course you can do fraction al reserve without the ability to mint.
I start a bank. Bill Deposits 5btc, Ted wants to borrow 4btc. I lend Ted 4 bitcoins leaving me with 1btc in the 'vault' as long as Bill does not come asking to withdraw more than 1btc before Ted pays back most of the principle I am fine... No minting required.
Re: (Score:2)
The smartest thing the USA could do right now is ban hammer all things crypto currency
At some point we will have to do exactly that before every company, school, hospital and government department is eaten alive by ransomware.
The SEC is a joke (Score:3)
Their director has been all over the media about their "concern" about dark pool trading being used against retail investors, but won't even shut down the market makers sending retail buy orders to a dark pool.
Now this being /., I expect some well akshually neckbeard to start pedantically lecturing on how this is super grey, but technically razor thin legal, but that's not the point. It's bold, in-your-face market manipulation of the sort the SEC was charged with crushing with an iron fist.
For those that don't know what a dark pool is, it's an off the main market trading system designed to allow institutional investors to shift millions of shares without bothering retail. They're basically a large pool where the whales can trade and fight without causing upheaval. They are NOT supposed to be used to fulfill normal retail purchases in part because they are not reported promptly to the pricing mechanisms in the open, "lit" markets like the NYSE and Nasdaq. The market makers ARE, however, reporting all sales in real time to the lit exchanges which is preventing accurate reporting on demand. No matter how you feel about meme stonks, the fact is that they are being brutally manipulated by corporations that have an open conflict of interest as they operate hedge funds that are underwater and market maker functions in the Payment For Order Flow ecosystem. We're not talking theory here; things that should be literally impossible like Gamestop dropping in periods where it has a 10:1 buy vs sell ratio are happening.
And what is the director of the SEC doing? Sitting in his office trying to see if he can fit both his thumbs and his toes up his ass. This is not going to end well because their refusal to unwind these brazenly criminal operations is going to result in a nuclear double tap on the financial system when the next major correction happens and hedge funds get margin called.
Re: (Score:2)
Re: (Score:3, Interesting)
If you have bitcoin, you have all the investment risks associated with that.
If you have a debt investment denominated in bitcoin, you have all the risks associated with bitcoin and additional credit risk.
If the value of bitcoin goes down. That is bad news.
If the value of bitcoin goes up, that is bad news for the person who borrowed the bitcoin, and there is a very good chance they won't be able to repay you. So bad news for you as well.
So you have the worst of both worlds.
Re: (Score:1)
Re: (Score:2)
It's bold, in-your-face ... the sort the SEC was charged with crushing with an iron fist.
What amazes me is how many people do not understand that there is nothing magic about denominating a transaction, or a loan, in dollars. If you denominate a loan in chickens, rocks, conks, or buttcoins, it is still a transaction, or a loan. It is still regulated in the same way, by the same agencies, with all the same rules. The government has been clear about this time and again, both historically with wooden nickels, local currency, and bartering, and more recently with digital currency.
The executive who thought they can be some sort of financial exchange and also give out loans, without doing some paperwork first, is a fucking moron who really should have known better given their line of work.
The first step to allow shorting (Score:2)
Re: (Score:3)
Lending is the basis of short selling.
Sort of. Lending securities is done with different types of contracts. The lender gives up rights to subsequently trade their securities for the term of the loan. This (CoinBase) sounds like it might be coming close to fractional reserve banking. Where the depositor (lender) maintains the right to withdraw their deposit while the loan is still outstanding. If this is the case, regulations (or contractual agreements) need to be put in place to ensure that CB maintains sufficient reserves to cover demands.