I don't think I would dare take an executive level role with any Crypto firm. Even if the companies behaviour was exemplary, I wouldn't want to be in a business with such a lack of regulatory clarity whilst having potential criminal and civil liability.
I too would probably avoid working with an organization trying to finesse with regulating authorities in order to do what every other firm regulated by these authorities is prohibited from doing.
Even if you successfully finesse your way around regulatory constraints, the reason for these constraints emerges eventually [1].
There is regulatory clarity now, just not the kind they want. They are no different from other financial institutions, and have to abide with all the same rules. They can't market unregistered securities to retail investors. That it is difficult to comply with because of the distributed nature is irrelevant.
CFTC considers most crypto to be a commodity not a security. The SEC previously agreed with them on a large number of different cryptos, then changed their mind without warning.
What would you call it when regulators can't agree with each other and are prone to sudden major shifts in thinking, if not a lack of regulatory clarity?
Upcoming court cases. The lawyers for the exchanges will have to argue for their interpretation of why it's not securities and the SEC will have to argue why the believe it is. The courts will decide based on the facts. If the courts find they're not securities, then CFTC rules will apply.
The regulatory agencies aren't there to help you find a way to do business legally, that's a job for your lawyers. If there is not established case law, then you're risking very expensive trials.
Firstly the CFTC calls things a commodity to reserve the right to regulate those things. If the SEC also claims jurisdiction that doesn’t actually make the regulation more lax, it means to stay on the right side of the regulation you have to satisfy both regulators.
Normal financial firms trading normal financial products deal with this all the time and are very familiar with jurisdictional disputes between their regulators. For example every US bank is more than familiar with keeping the OCC and their state Fed happy. This is BAU in US bank regulation.
It looks and acts like a commodity but the SEC desperately wants to call it a security. The facts won't matter much here as this is a political issue engulfed in the SEC's regulatory land grab.
The point here is regulators don’t have to get the court to rule on that to get whatever outcome they want with any one of these exchanges so they probably will go out of their way to avoid pressing that.
Their strategy seems to be to go after smaller fish, governance tokens, ICO tokens etc: things which the exchanges have clearly marketed as investments. Since all the exchanges have traded some of these they don’t have to press the matter about Eth and bitcoin so they don’t run the risk of losing that.
The two former Binance US CEOs (Brian Brooks and Catherine Coley) are already cooperating with the SEC and CFTC. I doubt they’ll hesitate if the DOJ comes calling.
Do you have any proof of this? As far as I know, Catherine Coley has been missing since early 2021. I haven't seen any evidence that she's alive, let alone cooperating with the SEC and CFTC
Is scam the right term? The article suggests they are accused of not enforcing financial repression (sanctions, anti-money laundering laws, etc). I can see how that can get them in trouble, but it doesn't mean it's a scam. FTX was a scam.
Allowed my mind to wander for a moment - imagine if try DoJ and others had come down on the likes of Purdue pharma or big tobacco with the same zeal as they’re going after crypto.
Don’t get me wrong, I’m not making excuses - just wondering why enforcement doesn’t seem to be consistent.
The SEC and DOJ let crypto scams, ponzis, unregistered securities linger for 15 years. They barely did anything. It's only now that they're starting to go after crypto after billions swindled.
If anything, SEC and DOJ have been too lenient on crypto. They should have regulated crypto as securities 12-13 years ago.
it pretty intense how much they are tightening things. I just signed up for crypto.com and it's mfa, id upload, mfa on every transaction, and a 3d face scan now (so much for anonymous bitcoin, haha). A bunch of exchanges avoid US like the plague now, can't register. I knew the USG would never ever ever tolerate any "distributed finance" except with draconian KYC and bolted to the traditional system.
I can even see them shutting down any transfers to "unauthorized" addresses eventually, you will only be allowed to play with party-approved "tokens" after you pass a full cavity search.
An interestimg implication is people already in crypto from early on may be given access to services later comers can’t get. If dollars are not freely exchangeable with crypto it’s very difficult to buy a large and growing set of goods and services. Something similar exists in some countries that have an official currency used for state stuff and an unofficial one (usually usd) that’s for everything else. The old joke being that in Cuba, it’s better to marry hotel staff than a doctor.
There was an attempt. Dems introduced a bill (the SACKLER Act) was that would stop the bankruptcy judge in the case from granting members of the Sackler family legal immunity during the bankruptcy proceedings, however it failed to gain support.
Crypto has existed for 14 years, but it has only become mainstream in the last 6 years. Binance, for instance, was founded in 2017. So 6 years from founding to crackdown. OxyContin was invented in 96. The effects were already terrible in the early 2000s. A bill in 21 is too little too late.
Can you educate me what the idea of the SACKLER act was?
If the Sackler family committed a felony, then surely no type of bankruptcy (corporate or personal) can shield them from that, so that's not what the act is about.
If not, then is it trying to pierce through the limited liability of a limited liability corporation? That sounds to me as potentially having huge implications. Did the Democrats really want that? Or did they just want to score some political points, and secretly did not intend to act to pass?
The Sackler family got the bankruptcy judge to give them and all of their companies personal immunity from a situation because the corporation was going bankrupt.
Why can a bankruptcy proceeding for one entity shield another entity from being sued?
If that entity was protected by an LLC shield such protection wouldn't be needed by the bankruptcy court.
This isn't about piercing the viel or about avoiding bankruptcy. This is about bankruptcy of one entity somehow protecting theoretically unrelated entities.
After all as you mentioned they should be shielded by the viel already, why give them explicit immunity?
On guess would be that there has already been a time where the DoJ went after those industries hard, but by now both sides have adapted to each other that obvious conflict is no longer evident?
Big tobacco employs thousands of people in the US and pays taxes. They have more senators than Binance could ever dream of. And I'm not even talking about the culture war "poisoning my body is a human right damn you liberals".
With what zeal? Tokenbros had extremely easy life for more than a decade, despite it being obvious that almost all of them are unregistered securities. Imagine selling a contaminated pills, or advertise and sell drugs to minors for 15 years, just like scammers in tokenbro industry. Oh, wait...
Quoted tweet by quitting "chief strategy officer" ends in: "Blockchain and crypto is here to stay and I am excited to watch it explode in the years ahead."
The dual-use word "explode" highly unlikely to be accidental.
This is what is really nice about crypto: many things "explode", in the destructive sense of the term, and on a very regular basis.
Most interpret this as crypto being bad.
I don't.
Instead, I see creative destruction (see Schumpeter's Gale [1]) at its best, or to look at it another way, accelerated Darwinisn, where only the truly useful things (e.g. Bitcoin) survive the permanent turmoil unscathed.
Not for the faint of heart, for sure, but damn interesting.
I would bet Binance will not explode in the positive sense, so using that word is either a lame foreshadowing pun, an inside joke to the prosecutors and guilty parties, a contorted attempt at I told you so, weak support for plausible deniability, or fan service.
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