Cryptodoom: SEC Wants to Sue Coinbase Over Planned Lending Service

Oh we all know why

https://twitter.com/_/status/1435634940033515523

The SEC vs. Coinbase battle started last night over its lending product resurfaces the complex question - WTF is the framework for classifying a "security"?

A 1946 Supreme Court case gives us an important foundation.

In the 1940s, W. J. Howey Co owned a large amount of land in Florida, where it would grow & farm citrus trees.

Howey came up with a clever way to finance its venture - keep half the land for itself, and sell the other half to investors - with a twist.

Howey would sell the land to investors & have them immediately lease it back, allowing Howey to farm the land without fully owning it.

Investors would share in the profits from the sale of citrus fruit on its land. Everyone was happy!

That is, until the SEC came knocking.

In 1946 the SEC sued Howey & Co in court alleging securities fraud. Regulators argued the profit-sharing aspect of the arrangement made it an investment contract, which had to be registered with the SEC.

The case made it all the way to the Supreme Court. The SEC won.

In its decision, the Supreme Court laid out its framework for classifying a security:

A security exists when there is an "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others"

Let's break this down into 4 parts:

1. An investment of money
2. A common enterprise
3. An expectation of profits
4. To be derived from the efforts of others

This list is also known as the "Howey Test", and it is the lense through which the SEC views crypto.

https://twitter.com/_/status/1435634953342095365

3. An expectation of profits - Again, pretty convincing for SEC jurisdiction here. I lend my crypto to others because I expect a profit, otherwise why lend?

4. Derived from the efforts of others - this is where ambiguity & political games begin.


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What makes a crypto profit "derived from the efforts of others"?

Is it derived from the project's developers?
The miners?
The borrowers themselves?

https://twitter.com/_/status/1435634958694035464

etc etc

Buy the dip.

Always buy all the dips.

In the market, in crypto, in metals.

I dunno about #2. When you lend money the person lending it may be using it for an "enterprise" that isn't "common". It may be that way for some, but certainly not all. In any case I could easily see an argument there.

Last Edited by Fizarak on 09/08/2021 02:13 PM

They should have took a stand when the SEC went after XRP. Instead they delisted it and STILL haven't relisted it. Now they're getting a taste of the same shit sandwich. I hope it's delicious.

Enter these guys:

Thread: INX - First Ever FULLY Regulated Crypto Exchange Is Launching / UPDATE: Now largest traded security Token in the world within 30 days

The fully regulated part is the part that kills me. You have companies that have been asking for clarity on regulations for years that haven't been able to get it. Then, here comes the guys you linked to that somehow have an inside track nobody else was able to figure out? Our government is a bunch of fucking crooked despots. They'll sabotage anything they aren't benefiting from.

They need someone to sue after getting completely demolished by XRP lawyers. Embarrassing times for the SEC cronies.