Sorry, I thought DeFi stood for decentralized finance? Why can't we put "more complicated instruments" into wallets? Why is a bitcoin future different than a bitcoin, for these purposes?
You certainly can. DeFi typically refers to smart contract protocols for lending, borrowing, swapping, pooling, etc. DAOs also fit under the label. These are usually on the Ethereum chain because its smart contracts are considerably more powerful than Bitcoin's.
Not to mention the use of `ProxyContracts` that obfuscate changes to the actual contract implementation.
When you interact with a certain contract, you are likely interacting with the ProxyContract which relays your calls to the actual contract. The proxycontract is often under lock or has multiple signatories to amending but the "origin" contract doesn't.
So many DeFi projects get "audited by Certik" actually just get their proxy contracts audited and there is nothing in there but a single line per function, calling the origin contract.
My favorite is probably the VIP feature "prompt notification of any law enforcement inquiry concerning their account". And of course there are all the text messages indicating they knew all the things they did were illegal.
Contrary to their preferences, when 12% of your trading volume comes from a Chicago-based trader, you are square in the realm of "governed by applicable US laws".
CFTC explicitely claims that 1) that's not true, 2) CZ and rest of upper management were aware that their restrictions on US users were just for media.
If they offer their services in the US, they have to comply with US laws.
From the article:
> The CFTC has alleged that "Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to 'block' or 'restrict' customers located in the United States from accessing its platform... All the while, Binance, Zhao, and Lim, the platform's Chief Compliance Officer ('CCO'), have each known that Binance's solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law.
US financial enforcement agencies take a very expansive view of their jurisdiction. OFAC has gone after non-US companies at non-US banks for violating sanctions because US dollars were used in the process – that's enough for them to establish a US nexus.
Anyone who does business in the EU makes enough of a performative effort that they can claim to be following industry best practice, and maybe even believe it. Approximately none of them actually comply with the GDPR. (For example anyone using Google Analytics is in breach, and knows it if they're paying attention, but it'll take a few years for that to become legally official enough that they can't pretend to be ignorant)
As far as I understand US companies literally can't, as US law enforcement does not follow any of the procedures and protections required by the GDPR and can just compel the US companies to provide unchecked, unrestricted and undocumented access to whatever data they want no matter where it is stored.
Paragraph 3 (and other parts) of the complaint address the US nexus:
Since the launch of its platform in 2017, Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to “block” or “restrict” customers located in the United States from accessing its platform. Binance’s initial phase of strategically targeting the United States focused on soliciting retail customers. In a later phase, Binance increasingly relied on personnel and vendors in the United States and actively cultivated lucrative and commercially important “VIP” customers, including institutional customers, located in the United States. All the while, Binance, Zhao, and Lim, the platform’s former Chief Compliance Officer (“CCO”), have each known that Binance’s solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law. But Binance, Zhao, and Lim have all chosen to ignore those requirements and undermined Binance’s ineffective compliance program by taking steps to help customers evade Binance’s access controls.
Dollars held outside the US are absolutely subject to US regulation. The banks themselves are not subject to US banking capital requirements because they have no access to the federal reserve. If you commit a US crime with a dollar held overseas, you still fall under US jurisdiction.
the brightest minds of a generation, encoding financial crime in their fintech startups, because they couldn't be bothered to hire a lawyer or read any basic financial history or media in their life
No, they're doing it because they think they are special and clever and the US can't touch them. They wouldn't be having these discussions if they weren't already aware of what the law asks of them.
> Good thing sufficiently decentralized exchanges continue to serve US customers without interference from the government
As they should be. If they aren't laundering money for Russian criminals and designated terrorist organizations.
FinCEN seems to be on top of working to segregate compliant from non-compliant decentralized exchanges, as well as the people using and developing them.
The discussions they had.. in electronic form.. about Hamas buying AK47s and how its not money laundering if the dollar figure is small enough were.. illuminating.
This is basic stuff covered in AML training for any bank intern at a 3rd string bank 20 years ago. Just incredible.
Quite the spectacle to watch the crypto space go from pure libertarian idealism to basically speed-running the reimplementation of every banking regulation developed in the last 200 years… after people exploit their absence to defraud everyone they can as quickly as possible.
It’s almost as if modern finance is regulated for a reason.
> Quite the spectacle to watch the crypto space go
The crypto exchange space. Exchanges are really just unregulated banks in disguise: all the drawbacks and none of the benefits. They're the very same centralized banking intitutions cryptocurrencies were supposed to put an end to.
Aren't decentralized exchanges unable to handle real money? And therefore somewhat (if not completely) useless for the purposes of buying and selling crypto-currencies?
Right, but nothing in the quote suggests they're breaching gag orders. If your account is frozen, you're going to find out one way or another, especially if you're an active/VIP trader. The only thing that binance is doing is proactively letting the customer know rather than letting them find out next time they try to trade.
IANAL but telling people to run might run afoul of "interfering with investigation" laws, whereas telling their account was frozen (assuming no gag order) isn't. The difference would be that the former is an opinion/advice whereas the latter is a statement of fact. Like the gp mentioned, services telling customers that they've received law enforcement requests isn't exactly something that only shady companies do.
That one thing is the illegal bit of it. Yes, at some point you will have to tell a customer they are unable to make transactions in response to their attempts. But you're not supposed to proactively go and tell them they are unable to trade.
> The only thing that binance is doing is proactively letting the customer know rather than letting them find out next time they try to trade.
And this document directly admits that this is an attempt to covertly notify them of something that it is illegal to notify them of. Any shred of plausible deniability that procedure provided them is gone now, because this document is now public.
Is it? It seems like your impression is that Zhao directed employees to not tell customers directly to flee, and also strongly suggest to them indirectly that they should, but there's no evidence of the latter in the indictment.
The complaint doesn't claim it's illegal in and of itself, but it supports the idea that Binance more generally saw US law enforcement efforts as an annoyance to be circumvented. These kind of complaints typically try to tell a good story and not just state the unlawful activity.
It (and pretty much everything) is illegal when you do it knowing that it will, and with the specific intent to, facilitate or conceal crime, especially a specific known crime like money laundering.
Which is why, to the extent that it it might be legal otherwise, you probably don't want to make written directives documenting your specific knowledge and intent wrt crime.
You know how there are always stories where people are complaining that some financial company (often PayPal) shut their account down and won’t say why?
That’s because of AML laws.
Their account got flagged by OFAC—deservedly or not—and the company is bound from discussing anything about it under any circumstances.
The level it goes to is frankly kind of ridiculous, but that’s the legal regime financial services companies operate under. And that’s not to defend PayPal as a company either. Just that when you see people saying some company is horrible because they close accounts and give no information, it's (not always, but) very frequently one situation that’s entirely out of the company’s hands.
It should be noted that an account being flagged by OFAC is one of the many reasons a company might flag an account. And it is probably at the bottom of the list of most common reasons an account gets frozen.
So let's not give these companies too much credit since most of the time they are freezing accounts for much more benign reasons. Like: we didn't do any due diligence on your business beforehand and now a little bit of data indicates you might fall outside of our basic risk bars and we don't want to do any due diligence on you now (so we can save a couple bucks) to confirm whether that is true or not, so we are going to freeze you out and collect interest on your money for the 3-6 month maximum after which you can take your money back and go kick rocks without ever knowing why because we want to limit our legal liability.
Where does it say customers are not allowed to be notified? For example:
> 41. Should an institution tell its customer that it blocked their funds, and, if so, how does the institution explain it to them?
> An institution may notify its customer that it has blocked funds in accordance with OFAC's instructions. The customer has the right to apply for the unblocking and release of the funds.
- "Do not directly tell the user to run, just tell them their account has been unfrozen and it was investigated by XXX. If the user is a big trader, or a smart one, he/she will get the hint."
> For example, in February 2019, after receiving information "regarding HAMAS transactions" on Binance, Lim explained to a colleague that terrorists usually send "small sums" as "large sums constitute money laundering." Lim's colleague replied: "can barely buy an AK47 with 600 bucks." And with regard to certain
Binance customers, including customers from Russia, Lim acknowledged in a February 2020 chat: "Like come on. They are here for crime." Binance's MLRO agreed that "we see the bad, but we close 2 eyes."
So... some compliance officer received information about terrorists allegedly using Binance and made a light hearted comment about it? The CFTC is not going to mention whatever preventative measures they took to prevent similar transactions from occurring in the future, they're trying to make them look bad through innuendo for this lawsuit and also probably to jeopardize their banking relationships.
Seems unlikely that the target of any suspicion is directed at unaccredited futures traders since by definition, they will have to be dealing in small amounts. Large amounts would make one an accredited investor by definition since high net worth makes one accredited.
> [0]In February 2019, after receiving information "regarding HAMAS transactions" on Binance, Lim explained to a colleague that terrorists usually send "small sums" as "large sums constitute money laundering." Lin's colleague replied: "can barely buy an AK47 with 600 bucks." And with regard to certain Binance customers, including customers from Russia, Lim acknowledged in a February 2020 chat: "Like come on. They are here for crime.". Binance MLRO agreed that "we see the bad, but we close 2 eyes."
Is it illegal for me to sell gas to gang bangers in the ghetto? When is it a crime to knowingly be selling to criminals? Everyone knows there are customers in Russia, and in Camden NJ, there for crime. You know with 100% certainty when you run a gas station in a bad part of town you directly are selling to aid people to commit felonies. Hell even the road crews know when they build the interstate, they are there to amongst other things to build the road that facilitates money laundering (and indeed they take no action to stop it).
In that case they need to prosecute all the road crews and gas stations. Those people know with certainty they are providing for criminals, and they do nothing to stop it.
> they need to prosecute all the road crews and gas stations
If you don't see the difference between knowingly helping a designated terrorist organization launder money (specific and known criminal and crime) and operating an honest business in a high-crime neighborhood (statistical likelihood of aiding a criminal), you shouldn't be making business decisions or running a financial services firm. It's an obvious distinction, one that a roomful of people with basic legal instruction will agree on 99% of the time, except for the one with a profit incentive to argue the opposite.
The line gets really blurry when you see someone buying large quantities of legal products that can be compounded into other products like meth. At what point are you aiding by selling lye. That's the case here.
> line gets really blurry when you see someone buying large quantities of legal products that can be compounded into other products like meth. At what point are you aiding by selling lye. That's the case here.
I fully agree on the line, in general, being fuzzy. It's not here.
Multiple texts describe Binance helping Hamas circumvent money-laundering flags by moving small amounts, helping a Chicago-based trader hide his U.S. origin, et cetera.
If someone buys a bunch of lye, the line is blurry. If they walk in hitting a meth pipe, ask you in which aisle are the meth supplies, and when they hand you their credit card, you advise them to pay in cash so you don't have to draw up a receipt, the line isn't blurry so much as very far away.
>Multiple texts describe Binance helping Hamas circumvent money-laundering flags by moving small amounts
I was unable to find these. The only hamas bit I found in the indictment was Binance describing generally how Hamas launder in low value quantas like $600. Not texts showing they identified specific hamas accounts and developed individualized plans to assist them.
Yes, the line about "after receiving information about 'HAMAS' transactions" seems deliberately intended to withhold the actual content of the conversation about Hamas.
There is no doubt that the line is indeed pretty blurry in many cases. But if the regulators have evidence that you are taking actions specifically to evade the applicable laws, you are firmly on the wrong side of that line.
That is an example where it could be blurry, I agree. But if you are suspicious enough to have internal communications about said suspicions and don't make any effort to communicate the same to law enforcement, then the line becomes less blurry.
If I walk up to the road crew and tell them the local mob is going to be driving drugs across it the day after completion, are they then complicit when they keep going?
If the road crew discuss tipping the mob off that they're being watched and lying to the police about the date the road is scheduled to be opened to give the mob a window of opportunity, quite possibly
You are missing the point. AML laws, which apply to crypto exchanges, are not like that at all. It's not if you know. It's more like if you have the slightest suspicion, e.g. the guy who bought the knife was black and had baggie pants or had a neck tattoo. Or the guy has an Arabic name and posted a 9/11 meme on Twitter.
No they don't. The statutes for financial institutions are different and aiding and abetting requires particularized knowledge that we recognize gas stations just don't have.
While I enjoy pointing out the many, many problems[1] with the current state of Israel, I don't think CZ and Binance were banking for 'terrorist' groups out of a political principle.
And since they aren't doing out any particular political principle, it seems that they were just as happy to support 'bad' terrorist groups as they were 'good' terrorist groups.
It's one thing if you're supporting violence because you legitimately believe that its cause is just. We do that all the time. It's another when you're supporting any violent group that will pay you.
One makes you an idealist that may, or may not be on the right side of morality and history. The other simply makes you a criminal.
[1] Understatement of the century, but what those problems are isn't at all relevant to this thread.
I'm sure you heard about Russian receiving sanctions from the US but often when you look into the details it's restrictions against specific named Russian nationals. If you can name specific Isrealies that are involved in terrorism then you might be able to get sanctions against them but to just blanketly claim the whole country is guilty of an unspecified sanctionable offense isn't going to get you anywhere.
In your experience, how often do criminals come in and tell the guy behind the counter that they need gas to commit a crime? Be specific.
That’s the difference: if you are aware that they’re making the transaction to further criminal activity, then you need to worry. You will find gas station owners who were charged: they’re the ones who helped fence stolen property or launder money.
But you are arguing, if you run a gas station, and you see a couple of dudes in a car hanging out on the opposite corner all day, and you come to believe that they are selling drugs out of their car, when they come to you to buy gas you have to refuse on the basis that you would be aiding and abetting and subject to prosecution? Is that actually what you believe?
A couple of guys sitting around does not prove a crime and even if you had strong suspicion, you’re not a cop and letting them buy gas doesn’t materially support the criminal activity – the amounts are small and it’s the same service you offer everyone. If you’ll note that’s why I used examples which have lead to criminal charges where someone did something unusual which they knew supported criminal activity.
This is why anti-money laundering laws exist in the first place. Criminals would otherwise seek out a bank which doesn’t ask questions and the bankers would be hard to charge unless they were idiots and wrote something like “They are here for crime”. AML removes the ability not to ask or report certain types of activities, which is much easier to prosecute than e.g. proving that a banker should have known there was no legal way for a small Italian restaurant to be so profitable.
> In your experience, how often do criminals come in and tell the guy behind the counter that they need gas to commit a crime? Be specific.
And do you think criminals come in and tell crypto exchanges that they are about to commit a crime? AML regulations do not apply to gas stations as they're not "money transmitters", it is that simple. I'm a bit surprised so many on HN don't seem to be aware of that. And luckily they don't, because those laws are immoral, ineffective and costly: https://news.ycombinator.com/item?id=34667051
I’m not sure where you got the impression that anyone thought AML applied to gas stations. What were talking about was that in general various criminal conspiracy laws require you to have knowledge and intent, which is actually why AML is a special regulation on banks: you can’t say that you value your clients’ privacy over a law specifically obligating you to ask and report.
That avoids the need to prove intent by setting specific easily-verified requirements which force the issue.
> And do you think criminals come in and tell crypto exchanges that they are about to commit a crime?
Well, ignoring the fact that they are unlike a gas station in having financial regulations, consider that the disbelief and mockery in this thread might have something to do with a defense based on not knowing that your customers are using you to launder money works much better when you don’t give prosecutors written statements such as "Like come on. They are here for crime." or "we see the bad, but we close 2 eyes." showing that you did in fact have knowledge.
I think there's a larger issue at play here. The standard for "knowingly selling" for AML regulated businesses and a gas station are vastly different. That's why you never heard of a gas station getting charged for that, and there probably never has been.
I believe the point was that AML regulations only apply to some categories of businesses and others not, which makes them ineffective. They can be a slight annoyance to criminals but they do not stop them. For money transmission, it is trivial to work around them. And for spending, at a gas station, there's no problem at all.
It is is just all a very costly and ineffective security theater, not to mention the many moral issues that come with it (e.g. billions of law-abiding, unbanked people).
Common law, like all law, boils down to if the state wants to fuck you they will find a way. I just enjoy pointing out the hypocrisies and double speak along the way.
I think there are a lot of examples of people the state wants to get but can't. And in many cases, common law is what saves said targets. Newer legislation that overrides common law like the Patriot Act or DMCA is what ends up being used more frequently to "get" people.
> I know programmers want to believe otherwise, but common law can’t be boiled down to single line “if statements.”
It often can, but programmers often don’t like that, either, because instead of hinging purely on acts that enable simple hacks, it often hinges on things like knowledge and intent.
What are you hinting at with your reference to France? Yes, France has a civil law legal system. Knowledge and intent are still considered when deciding on guilt and sentence. What's your point?
> When is it a crime to knowingly be selling to criminals?
When you know that the transaction you're part of is directly involved in their crimes. It's one thing to know, statistically, the some portion of your customers are doing crimes. It's an entirely different thing to know that this customer is doing that crime with your assistance.
Honest question and not trying to disagree with you here. What are the specific customers that Binance had individualized knowledge were assisting in committing crime? I'm curious to see the sources.
Their own phrasing matters, and clearly states otherwise. This is what makes these chats damning. It means that they knew they had criminals using their platform, how they were using it, and that they, as a deliberate choice, chose not to do anything.
> Binance MLRO agreed that "we see the bad, but we close 2 eyes."
You're not allowed to see illegal things happening with your service and turn a blind eye.
Having had an account that was identified as involved in illegal activity, leadership told them to make a new account. Not go away, and at least make a half-assed attempt at a ban. Make a new untainted account and be a bit more careful with your transfers, and even "here's some things to be a bit more careful about". If they had actively taken steps to ban the user, even if the user evaded the ban they could make an argument that they had done due diligence.
If there was nothing in the chats, no evidence that they were aware these things were happening, and no evidence that they were encouraging it to still happen, then the government would have a much harder case, but these chats cited seem to make it hook, line and sinker.
It shows that they very deliberately chose not to be in compliance with "Know Your Customer" (KYC) regulations, that they knew applied to them by law, knew what the risks were (ignorance is no excuse under the law, but penalties are much higher if you know what you're doing is illegal and still chose to do it), and even actively worked to help customers help them avoid it.
If you're going to do crime, writing it down, and keeping that evidence trail is just the absolute dumbest thing you can possibly do.
I don't know why you are getting down voted. It's a valid criticism of AML laws. I recently got dozens of up votes for a similar comment in another post. Goes to show certain topics attract different crowds to the comment section.
To me this strikes me as "chabuduo" culture and not understanding how seriously first world countries take these things. "move fast and break things" and fintech don't go well together, at all.
Ah, gotta love it when western expats exoticize basic things about my culture, along with exotic-sounding jargon that purports to represent something difficult to translate.
I'd like to gently, very gently float to you the idea that these people did not aid and abet criminal enterprises "because they're Chinese" or "because of Chinese culture", nor would such activities be generally permitted in Chinese culture.
Side note: the waft of casual racism from expat sites is honestly kind of hilarious.
"I found myself enmeshed in a foreign culture where - gasp - guess what, some people cut corners on their work. Holy fuck!"
I couldn’t make it past the opening without laughing out loud: “If you come from the West, you are likely used to things being done according to specifications and high standards”. This would come as news to anyone who bought an American or British car prior to the late 2000s, most American houses now, has contracted with large American consulting companies, etc. Entire western countries have stereotypes which flagrantly contradict that, like this old joke:
> In Hell: the cooks are English, the policemen are German, the mechanics are French, the lovers are Swiss and the bankers are Italian.
> In Heaven: the cooks are French, the policemen are English, the mechanics are German, the lovers are Italian and the bankers are Swiss.
thank goodness we have the US federal government to bring its weight to bear on a company in china handling a $600 transaction from a bad guy in palestine
I mean you do have to acknowledge that your platform can be used by criminals if your job is literally to stop those transactions... I don't understand what the big deal is?
What does "receiving information 'regarding HAMAS transactions' on Binance" mean? Isn't it clear that the actual context of this conversation - what the transactions were, what the information was, what the actual connection to Hamas was, has been deliberately omitted here? Like, the CFTC chose what to include, if there was anything more incriminating, they would have included it.
There's a *world* of difference between "We will vigorously defend our clients' legal and procedural rights" and "Our 'smart' criminal clients will understand our 'hints' and 'run'".
> according to Lim, Binance purposely engaged a compliance auditor that would "just do a half assed individual sub audit on geo[fencing]" to "buy us more time." As part of this audit, the Binance employee who held the title of Money Laundering Reporting Officer ("MLRO") lamented that she "need[ed] to write a fake annual MLRO report to Binance board of directors wtf." [1]
By the time you write "fake annual MLRO report" in text, you're about to be a one-person retirement plan for some attorneys.
> By the time you write "fake annual MLRO report" in text, you're about to be a one-person retirement plan for some attorneys.
How does the simple act of typing that out in a message not trigger the slightest moment of pause, self reflection and, perhaps, self preservation? Good lord.
also, people really let down their guard texting and emailing despite pleading and trainings from legal.
the other thread about people using ChatGPT with their company's confidential data has some people with their behind hanging out defending it. https://news.ycombinator.com/item?id=35330438
There's this important context missing from this thread though, which is that the people involved in this are not (AFAIK) US citizens, do not live in the US, do not travel to the US (especially not now), have never voted in the US, and are not allowed to vote in the US. So in moral terms or in terms of the political theory that underpins democracy, there's no obligation at all for them to follow US law.
Yes, US law might say there is, and might make compelling moral arguments. And yes maybe these laws are in the interest of US voters, or a majority of people in the world. But there's no structurally legitimate democratic mechanism currently in place to make any decision about that. (The UN is not this.) Democracy is what gives laws moral legitimacy, and democracy ends at the border.
So at no point have CZ, Lim, or others here (AFAIK) taken on any commitment to follow US law. Morally, they are completely morally free to think US law is wrong and ignore it, just as I'm completely free to think a law in another country (China or Iran) or another US state (say, Mississippi, or Utah) is wrong and ignore it.
It seems that they're scared of US law, which is rational, and maybe it would be more rational of them to be more scared, but that's another question.
That's not morality, it's just power and violence.
Hamas is a great example. Right now the Western world is cheering and arming a country as it fights off a brutal occupying force with a shady territorial claim. That country published crypto addresses so that everyone in the world could help them buy drones and rocket launchers so they could maim and kill the occupiers and drive them out. I donated and I would encourage you to donate too. I spent most of 2022 watching videos on Reddit, Twitter, and Youtube of young occupiers getting killed and maimed by the drones and rocket launchers I helped buy, as an American taxpayer and as a donor. And I think this was the right thing to do, and I'm proud of it. But I'd certainly understand if someone was a bit ambivalent about this whole thing, thought it was kind of f'ed up, and didn't want to be involved.
Is it so hard to believe that some people in the world feel that Hamas is similarly worthy of support? I don't, but certainly a ton of Palestinians do; they sometimes vote Hamas into a parliamentary majority, and Hamas does very well in polls it seems. And if so, then is it so hard to believe that some people in the world are ambivalent about Hamas and talk about it flippantly in internal Slacks, even when they're afraid of US regulators?
Generally pluralism in the world is served by a diversity of opinions and legal systems. In some cases, like the Ukraine invasion, it will definitely be right to project power outside our borders and legal system. But the default should be to allow for the possibility that we're wrong and avoid imposing the conclusions of our own democratic process on those who did not participate in it.
Maybe US law is wrong about financial freedom and someday we'll look back on this period of zero financial privacy as backward and embarrassingly arbitrary.
Binance provided illegal services to US citizens living in the US. In the non-crypto world, providing services in a country usually requires setting up a legal entity in said country. Not doing so doesn't change the fact of providing services in said country, quite the opposite, it might even amount to tax fraud.
> In the non-crypto world, providing services in a country usually requires setting up a legal entity in said country.
For this statement to be true, you have to modify it to "in a pre-Internet world" or "providing financial services."
Hacker News is providing an information and communication service in almost 200 countries where it has not set up a legal entity. You can say financial services are special, and the US does. Some countries like China say that information services are special, that people shouldn't be allowed to criticize the CCP, and enforce that however they have the power to. But the world would be demonstrably worse if we said "every website in the world that is accessible to Chinese citizens living in China should follow CCP censorship laws."
Maybe the world is also worse off for the US's assertion that financial services are a special kind of website that the US can regulate globally simply because some Americans visit them.
At the very least, the rest of the world should have some say on a policy that affects what kind of online businesses they can run. But of course there's no mechanism for them to, since only US citizens can direct US policy.
Also, think about how impossible it would be to run a website if all countries enforced their local laws on all websites, simply because some of their citizens use foreign websites. The US is doing something that it would be unworkable for all countries to do, simply because it's the most powerful country. That alone should be a hint that it's a morally and politically questionable and based on raw power, not fairness; a fair policy would universalize better across countries.
> You can say financial services are special, and the US does. Some countries like China say that information services are special, that people shouldn't be allowed to criticize the CCP, and enforce that however they have the power to.
Fairness isn't the concern here. It's just a display of power and law enforcement reach. The Chinese government can (and likely will) block your website if it's criticizing the CCP and gets considerably popular, regardless of the morality of that action.
The same applies to the U.S. government. "To sell derivatives trading products to our citizens, you must register with us first". I consider the American law even fair because derivatives products are risky and a major avenue for scamming people...only licensed firms should offer them.
Note that Binance wasn't banned from selling derivatives products. All that was required was a simple registration with the CFTC, which they refused.
I'm a citizen of a small European country. I use quite a few American services. Does this mean they are subject to my country's law?
Binance used IP-based locking mechanism (easy to avoid with a VPN). Similarly, I saw US-based websites that blocked access to European customers because of GDPR, and I've circumvented their geolocks using a VPN. Does it mean that I can sue them for not following GDPR now?
I'm not trying to argue for Binance here, and I think that US compliance and anti-money laundering laws are reasonable. But I wonder if your position is that "everyone should just follow US law", or is it more nuanced.
> I'm a citizen of a small European country. I use quite a few American services. Does this mean they are subject to my country's law?
Yes, it does, and most especially if it involves moving funds. If your country decides that the platform broke their laws, they could sue just like the CFTC or even request an arrest and extradition of the alleged perpetrators.
But, in reality, European countries don't often pursue such cases as aggressively as the US. The U.S. government has a well-oiled law enforcement and military machine that it uses to pursue its targets across the globe (sometimes with bullying involved). I'm reminded of a case where a woman was extradited from the Netherlands to the U.S. and sentenced to 3 years for sending a relatively paltry $300 to the terrorist group Al-Shabab.
The Venn diagram of crypto bros and the "nothing matters" libertarians is almost a solid circle. They despise public servants, norms, rules, and laws. It's for cucks. These people transcended all that. The laws do not matter. They do what they want.
And obviously it comes with an unhealthy amount of hubris from watching Donald Trump and Elon Musk in action.
Word of advice - if you don't have tens of millions of dollars to clog the US legal system with procedural nonsense, don't try this at home, just don't.
The arrogance is just off the charts. Just having these incredibly childish text conversations where they admit that their platform is being used illegally and they intend to play stupid. Maybe they're not playing. It seems disturbingly appropriate that this guy wanted to rescue FTX.
I remember working for a sketchy start-up right out of college. They were doing telecom stuff when the carriers were de-regulated in the early aughts. Even now, they were tied up with some fintech companies and some shady investors. I was a combo developer/csr/account management person at any given time depending on what was going on.
They would rarely put stuff in writing. I was always told to do stuff. Never in email, never in memo's or any other written form. It was always, "We're going need you to scrub some files from xyz database." or "I need to rewrite this contract and add these additional sections which weren't on the original document." If I needed details, they would put them on a sticky note. I remember they had someone come around and take these notes off of people's desk when the task was completed.
I remember at Christmas one of my uncle's was a stock broker and a big knocker at some financial company. He was asking what I did and where I worked. He started asking more questions and told me I needed to be very careful - what the startup was doing was either really illegal or they were operating in a very gray area. Neither of them will end well for anybody and if the SEC thinks I'm involved in any way of covering up what they were doing? Then I'm in deep shit.
I quit about three weeks later. A year or so after that, the economy collapsed. I found out they were automating robo-signatures for real estate and mortgage companies. They were changing clients contracts from fixed APR's to 3 year ARM's and a bunch of other highly illegal shit. The company went under and despite several local news reports about it, nothing happened. Pretty sure they just got lost in the myriad of other companies going under, people losing everything and the economy collapsing.
It was a good experience for me to understand and see red flags when something doesn't feel right.
A lack of integrity isn't necessarily a problem of capitalism, but it does mean that it needs active regulation. Otherwise the collection of capital and resulting accumulation of power will be abused. A knock on more controlled economies and such is that people will abuse the power that such systems give them... so we shouldn't let them get that power organically either.
Its privatized power, trying to break out the containement vessel that is a democratic society. Once it succedds it continues to build little autocratic empires in the host, similar to tumors. The whole libertarian ideolog is just that, the secretions of tumors, trying to convince the host, that this is friendly, normal and actually a net positive growth to the creature being devoured.
Of course the anti-bodies, aka taxes have to be supressed, otherwise the defenses kick and and a normal society returns.
What does capitalism have to do with this? This is a plain morality issue and human nature that does not have anything to do with the form of the economy.
The same behaviour and even worse was in plain display in every communist society.
It does. The essential feature of capitalism is the motive to make a "profit". I'm explicitly saying capitalism is focused on "profit". Since you brought up communism, it has a different ideology which is not centered on "profit".
Does that make sense?
PS: Also I do not intend to debate capitalism vs. communism, I'm trying to convey the idea of "a society driven by profit".
And my point was that "profit" is not the culprit here, and that is why I took communism as example. People will do questionable or illegal things for variuos selfish reasons. Profit being just one of them, but the people that would do those things for profit would do the same things for other non so tangible advancement of the self ego. So the problem is not that the society is driven by profit but because there is a conflict of self vs society.
I kind of lolled at the part where you thought you where at risk of the SEC going after you.
Just a reminder that Madoff ran a ponzi for more than !15 years! to the tune of 20 billion USD and the only ones to go after him where his sons who turned him in to the FBI. Note: the SEC was NOT involved in going after him (they did the opposite: they looked away).
The SEC is a marketing agency that exists to provide a false image of "fair markets". It's not actually a regulatory agency.
His sons did not "turn him in." They were complicit and eventually contacted authorities when their father revealed that the firm was completely bankrupt.
While the sons were never formally charged, they were suspected of involvement. One killed himself and the other died of cancer before the investigation was wrapped up.
Close to two dozen people were eventually charged, many went to jail, and JP Morgan paid $2.6 billion to settle their involvement.
His sons did turn him in - your own comment says as much. The public evidence suggests they turned him in as soon as they learnt of it. The case has not been made that the sons were complicit, they should be presumed innocence. That other people were jailed, or that they are now dead - all that is irrelevant to the sons' guilt. Neither son was even charged.
I was at one meeting with him during the planning the of the NASADQ marketplace.
It was the largest meeting of the whole project that I was a part of. He came in for about 10 minutes and told everyone in the room who wanted to use Sun that the video wall would run on Windows.
> I found out they were automating robo-signatures for real estate and mortgage companies.
There's a lot of unfocused "somebody must hang for this, but we don't know who" anger energy around what happened in 2008. Most of which wasn't criminal at the time or even after, merely poor business decisions. But robo-signing? This was overt fraud, perpetuated against ordinary members of the public, and everyone involved in it should have gone to jail.
The absolute funniest is the instruction in writing telling staff to inform US customers that the only way that they show up as from the US is Geo-IP, and that if they bypass that...
I guess this is what happens in remote working. You can't tell people how to break the law over lunch any more.
> doubt you'll see CZ in any country with a US extradition treaty
If he's financing terrorism, a broad extradition treaty goes from being a blocker to a diplomatic hurdle. (To be clear, I'm not suggesting kidnapping. Governments can negotiate one-off extraditions for high-value targets.)
It also appears he was knowingly financing Hamas and Russia, which makes the list of potential enemies (and people who would prefer him dead to compromised) substantial.
It really doesn't appear he was 'knowingly financing Hamas and Russia'. There is a transparent attempt by the CFTC to talk up the pretty nothingy evidence of this.
A treaty isn't required for extradition. A treaty formalizes the process but countries do routinely extradite suspects even without treaties. This especially applies to fugitive third-country nationals. The US government will sometimes negotiate special quid pro quo deals to apprehend high profile suspects.
There wasn't evidence it was willful. Looking the other way gets you fined. Texting your colleagues about laundering money shows intent, the most difficult part of most financial crimes to prove in court.
> Bernhardt alleges that HSBC evaded the OFAC filter
beginning in the early 1990s and continuing through 2009.
HSBC Bank UK implemented procedures to help sanctioned
entities access and benefit from U.S. financial services. For
instance, such entities would include a “cautionary note” in
their transactions, such as “care sanctioned country,” “do not
mention our name in NY,” or “do not mention Iran.” Based on
these notes, HSBC Bank UK would manually scrub all
references to Iran or a sanctioned entity, which would allow
otherwise illegal transactions to pass through to HSBC Bank
US. This system allowed HSBC Bank US to “process[]
thousands of ‘repaired’ transactions worth billions of dollars.”
HSBC Bank UK would also use “cover payments,” or bank-to-
bank transfers, to avoid disclosing the identity of its customers.
Could you please stop posting unsubstantive comments and flamebait? You've unfortunately been doing it repeatedly. It's not what this site is for, and destroys what it is for.
It's not literal terrorist financing, it's a CFTC enforcement action where they mentioned chat remarks including the words 'HAMAS' and 'AK47', without any context or explanation, in the complaint in order to a) get media attention, and b) gain public buy-in for prosecuting people who aren't even in the US for futures regulation rule-breaking.
Not from this case, no. Criminal cases take longer to build and have a higher standard of evidence. It is still possible for them to go to jail from criminal proceedings, but it may be months or even years after the civil proceedings wrap up.
A parallel criminal investigation of Binance has also been reported, and if there were a criminal referral from CFTC that would often take several months longer before charges are filed by the DoJ compared to CFTC filing a civil case. So, nobody is going to jail, sure, at least not yet.
I can't decide if these people put all of it is in writing because they were stupid or because they felt total and utter impunity that there would ever be consequences.
The impunity seems like a general theme with everyone involved with crypto - just flagrant wrongdoing in broad daylight.
But considering that flagrant wrongdoing in VC-land continues to result in no severe consequences (see: Kalanick, Neumann) I guess maybe we're the suckers.
> impunity seems like a general theme with everyone involved with crypto
Something is off with these folks' sense of risk. Let's put aside the illegality. By laundering for Hamas and Russian criminals, Binance's leadership has put itself on the wrong side of the United States, Israel, the Gulf monarchies and the entirety of fucking NATO. At the same time, there are powerful people in Moscow, Tehran and Beirut who would rather see them dead than captured.
> flagrant wrongdoing in VC-land continues to result in no severe consequences (see: Kalanick, Neumann)
Kalanick and Neumann didn't steal money or finance terrorists. The wrongdoing in crypto/web3 is on another level.
Russian criminals use Binance accounts (and actually every exchange, including Coinbase) registered in the names of jobless 25 year old women from CIS countries. You can buy these accounts on basically any gray market forum with a marketplace section including sites like exploit.in or even forums used by 15 year olds like mpgh and ogusers. I am doubtful that a Binance customer data leak would have anywhere near as many interesting people as say the Credit Suisse leaks.
It's also curious that there was no mention of blockchain analysis anywhere in the complaint or even an attempt to quantify the amount of criminal funds on Binance and the complaint instead relies solely on a handful of excerpted chat logs to show compliance failings (the CFTC is obviously not going to mention all the times they ended up blocking the bad accounts). They also don't even list any specific Hamas transactions or say that Binance knowingly processed them.
> Kalanick and Neumann didn't steal money or finance terrorists. The wrongdoing in crypto/web3 is on another level.
Not VC but ever hear of Marc Rich? He was ultimately pardoned after being accused of evading 8 figures (in 1983 dollars) of taxes, trading with Iraq, Iran during the hostage crisis, the USSR during the grain embargo, and South Africa during Apartheid [0]. He lived in Switzerland just fine for a couple decades and the only trouble he ever faced was attempted kidnapping by American law enforcement [1]. He paved the way for the awesome company we now know as Glencore.
> curious that there was no mention of blockchain analysis anywhere in the complaint or even an attempt to quantify the amount of criminal funds on Binance
The laundering and terrorist financing is incidental to the CFTC’s complaint. The operative allegation is the operation of an unlicensed derivatives exchange, and lying to regulators.
> For example, in February 2019, after receiving information “regarding HAMAS transactions” on Binance, Lim explained to a colleague that terrorists usually send “small sums” as “large sums constitute money laundering.” Lim’s colleague replied: “can barely buy an AK47 with 600 bucks.” And with regard to certain Binance customers, including customers from Russia, Lim acknowledged in a February 2020 chat: “Like come on. They are here for crime.”
There's a big difference between offshore crypto - where the name of the game was (apparently) to evade US KYC/AML & securities law, and domestic companies trying to operate within the law.
Binance, FTX, etc. are the former, and I'd say Coinbase is the latter... there's a big difference between wilful non-compliance, and disagreements between regulators and counsel at firms like Coinbase about interpretation of law.
The fact that all of these regulatory actions are happening at once suggests that regulators either may not appreciate the difference or may not care, which is unfortunate.
Coinbase lists tons of securities. Remember, Coinbase listed XRP before the SEC lawsuit against XRP for being a security. So how good are they at following the regulations? Not very. It's just taking some time for the SEC to really go after them.
"Binance currently offers a "Battle Function" that "allows users to compete with each other and earn points" by trading Binance derivative contracts in a "head to head battle to see who is the most profitable" in "a one-minute battle period"".
Ah, so is that something you’re universally against? Say, should you be arrested for warning a shoplifter that police are coming? Or is this only something you’re against when you want to regulate/acquire other people’s money? I notice that much of the “we need to regulate xyz for violating my privacy” crowd stay awfully silent when it comes to the government violating financial privacy, perhaps because their economic policies depend on such control being in place.
> when it comes to the government violating financial privacy
Yes, a good way to delineate pragmatic from extreme views on privacy are when they find no exceptions for designated terrorist organizations and Russian criminals.
1. Law enforcement was only targeting terrorist organizations
2. Accessing the account of someone that turned out to be innocent would guarantee they received compensation
But that’s not the case. Namely with (1), US regulators are trying to ban currency mixers, privacy coins, derivatives trading, etc so the “muh terrorism” argument is nil. Most of this has nothing to do with terrorism.
> US regulators are trying to ban currency mixers, privacy coins, derivatives trading, etc so the “muh terrorism” argument is nil
In general, sure. Here, specifically: actual, literal, documented terrorist financing.
I'm not a fan of our AML/ATF complex. But recent enforcement actions in crypto, e.g. the mixer being used by North Korea or Binance executives texting each other about laundering for Hamas, are so far over the line of reasonable law enforcement that it makes for a poor backdrop for discussing reform.
No, in this specific case. Read the document the post links to. It has nothing to do with terrorism, regulators are just upset they don't get to control what other people do with their own money.
And if you're supporting universal bans of mixers and other privacy preserving tools as the current government is attempting, then you're part of the problem. I will never support the redistribution of consequences, no matter what kind of patriot act talking points you use to justify it. We can talk about punishing terrorists if it's only about punishing terrorists and not "operating a facility for the trading or processing of swaps without being registered as a swap execution facility" (page 5).
Fair enough. The process violation is Binance saying they wouldn't sell crypto derivatives to Americans and then helping e.g. a Chicago-based client pretend he wasn't American so they could sell them crypto derivatives.
No terrorism. But also no privacy/AML angle. (We have good reasons for regulating swaps. There is also zero financial privacy pitch for crypto derivatives bought and sold on a centralized exchange.) That there is also evidence of willful terrorism financing probably pushed this up the CFTC's to-do list, however.
> if you're supporting universal bans of mixers
Straw man–nobody is proposing a universal ban. The harshest proposals would require KYC at mixers. The best solution is probably something lighter, though pitching financial privacy as a basic right against e.g. the backdrop of the likes of Binance isn't doing the industry any favors.
Requiring KYC at mixers lol. That's crazy. The best solution is to go after terrorists and not redistribute the consequences of their actions to innocent people. I should be able to trade anonymously if I want to. Those proposals are really no different then the EU's chat control.
> should be able to trade anonymously if I want to
In a vacuum, sure. But that anonymity has costs in making it easy for the wealthy to embezzle, evade taxes and commit crime. We’re not doing a great job of balancing that cost and benefit. But there is no consensus, theoretically or politically, for the view espoused by crypto-mixer enthusiasts that non-cash transactions should be held to the same standard as political speech.
>In a vacuum, sure. But that anonymity has costs in making it easy for the wealthy to embezzle, evade taxes and commit crime.
And removing financial privacy gives governments the ability to destroy anyone financially. Need I remind you that in the 20th century governments killed orders of magnitudes more people than terrorists or criminals, almost 100 million in China and Russia alone. Giving power to the government is a far greater risk than letting some white collar criminals get away with it.
"Designated" by who, following what process, with what kind of oversight and safeguards?
If thinking the government shouldn't be able to deprive people arbitrarily of their livelihood without having to follow the same kind of procedures they'd do so to put them in prison makes one an extremist, I guess I'm an extremist. A blacklist that people can be put on without due process is no way for a democratic government to conduct itself.
Designated terrorist organisation just means someone America doesn't like. The US murdered in cold blood hundreds of thousands of civilians in Iraq yet nobody's trying to restrict the financial dealing of the US government.
Idk, I really don't understand the surprised tone of all the comments. It seems very much like a cognitive distortion to believe that somewhere in financial industry there are clever and professional people doing things in a very adult and responsible way. Especially not texting about committing million dollar crimes (or just moving millions legally) in the same language as discussing memes in Discord with friends.
If you believe people must be responsible and professional just because they handle a lot of money, it's your problem, not theirs.
"People don't want to accept it" seems incompatible with "it's already normalized" to me
The message isn't directed towards people for whom it's normalized, right? Therefore "it's normalized, get with it" is an act of further normalization.
Should banks and financial platforms decide who is and who isn't doing illegal things? The more we expect financial institutions to take on this task, the more they need to crack down on anyone who even looks like they're doing something criminal. This is how you end up with those situations where random people get their financial accounts frozen with absolutely no recourse. Just imagine, if you accepted an international wire from a family member in another country and next thing you know all your accounts are frozen. Do you really want your financial institution to be the judge, jurry and executioner?
There's a time and place to go after criminals but I don't think that financial institutions are the ones who should be making the final decisions on these things - that should be left for law enforcement.
No, they shouldn't. But various entities under the US government are claiming the authority to force private businesses (even businesses operating outside of their jurisdiction) to enforce their rules and bear the compliance overhead. And as you can see in this thread, whenever tyranny is making gains, """hacker""" news is laughing and applauding like a bunch of circus seals.
I don't get why that would be wrong. If law enforcement asked Binance about my account, of course I would want to know, and would choose an exchange that does tell me vs. one that doesn't tell me.
Maybe it's illegal, but then I prefer that over a legal exchange.
> according to Binance’s own documents for the month of August 2020 the platform earned $63 million in fees from derivatives transactions and approximately 16% of its accounts were held by customers Binance identified as being located in the United States.
hm. 16% of users make $63M in a month? In any case CZ can dispense this unprofitable 16% and move somewhere in russia or intl waters now. Assuming that canada and EU break all ties with him
Attacking the onramps to crypto in the middle of a bank crisis is not giving out the best of vibes
(Thanks for the flagging but i m not debating this either way; i know HN is anticrypto)
> In May 2021, Binance’s monthly revenue earned $1.14 billion from derivatives transactions, up from $63 million in August 2020, the CFTC noted. Of that amount, about 16% of Binance’s accounts were held by U.S. customers.
OK so the US is going after them for ~120M (for 2020) , when their profits were ~20B?
In any case this is contrary to the main accusation that "Much of Binance’s reported trading volume, and its profitability, has come from its extensive solicitation of and access to customers located in the United States"
AFAIK throughout the years they were publicly sending users to binance.us and did not encourage breaking the rule. Didn't seem like "Extensive solicitation"
One of the allegations in the complaint is that they did indeed encourage breaking the rule, walking high-value customers through the process of falsifying their location. For example, the CFTC has an alleged quote:
> VIP team member: Hi CZ . . . I went through list of affected API clients, it
includes a number of large strategic accounts including [a Chicago-headquartered
trading firm] who is currently is a top 5 client and 12% of our volume
> Zhao: Give them a heads up to ensure they don’t connect from a us Ip. Don’t
leave anything in writing. They have non us entities. Let’s also make sure we
don’t hit the biggest market makers with that email first. Do you have signal?
Using a US IP for trading is probably not illegal in itself, people travel. In another passage they are saying that their VIP customers created offshores to use for trading and that binance was notifying customers that looked like US to do the same. I am reading the evidence for entertainment and it seems a bit try-hard tbh
Right. The CFTC's characterization of that behavior, which I think is correct, is that VIP customers created offshore shell companies to falsify their locations and Binance encouraged them to do so.
Not to mention sophisticated trading firms are not necessarily sending orders/instructions from the same IP. A lot of them have multiple network interfaces set up for each exchange they're trading on.
The message with the FBI coordinating with social media platforms to censor Americans and now gov agencies going after Coinbase (the company that has tried hard to stick to the letter of the law, which is a valid position in a capitalist country) tells me that we are entering a phase where the gov is simply going mad with power. Down vote all you want I don't care (or I care more about sharing my observation than your disapproval.)
Coinbase's whole shtick is to be the law-abiding crypto exchange, so it's kind of alarming to see the sudden SEC action against them, when their entire value is based on the goal of working in good-faith with regulators to bring crypto into the mainstream economy.
> when their entire value is based on the goal of working in good-faith with regulators
Armstrong spends his day tweeting insults at the SEC. I know Gemini and Coinbase positioned themselves, to users and investors, as regulatory friendly and compliant. But they didn’t behave the way compliance-obsessed firms do.
> Armstrong spends his day tweeting insults at the SEC.
I don't follow Armstrong on Twitter. Can you cite some examples? I took a brief look through his Tweets mentioning "SEC" [0] and didn't see any Tweet that a reasonable person would consider an "insult."
Also, the rate of his Tweets containing "SEC" seems much lower than what you'd expect from someone who "spends his day" tweeting at the SEC - surely such a person would mention the SEC in their Tweets more than a few times per year.
The "really sketchy behavior" rant came to mind [1]. This isn't someone who's trying to build regulatory relationships. It's someone who wants to look like he has them. (Similar to SBF's political donations not resembling someone who wants to build political goodwill. Just someone who wants to appear as much.)
Note: I'm not arguing Armstrong had no points. But if you're going to air out your regulatory complaints ex ante and in public, you're not playing in the good-and-compliant lane.
Based on the content of his Tweets, many of which are complaining about lack of communication from SEC, I assume he didn't start by airing the complaints in public.
They're also a public regulatory agency, so I'm skeptical of the premise that it's somehow wrong to communicate publicly with them. Arguably he has a duty to his shareholders to do so, or at least to let his shareholders know the status of pending or current enforcement actions against Coinbase.
The rant seems to be ex post, though. It is after he received notification that his company would be sued if they launched the product and after they wouldn't explain the rules after he asked.
It's not like he jumped right into it. And especially notable is that they let other exchanges operate the same feature.
Well, if they wanted to stick to the letter of the law, they'd immediately stop selling unregistered securities. It's not like it's difficult to register a security with the SEC.
Who gets to define them as unregistered securities? The SEC claimed BUSD is a security and shut it down. If stabelcoins pegged against the dollar with provable 1:1 reserves are a security then... SEC needs to be dismantled or reset.
BUSD are two different currencies operated by different entities, while pretending it was the same, or it was anyway. The one backed 1:1 was offered by Paxos in the US and the other printed by Binance as they saw fit, while pretending it was the same. That's why it was killed off.
Given the headline, you'd think Bitcoin would maybe be bothered, right? Wrong?
Bitcoin started the year at $16.6k USD and is currently $26.9k USD (a return of 62% year to date).
Why?
Who/what is dumping money into Bitcoin that would cause this much demand? Can the rise in price be attributed to demand? I don't see how it couldn't be.
How many millions of USD have been converted into "buy and hold" long term BTC investments? Is that the main driving force for this increase in price? It has to be a very sizable amount for BTC to be outperforming every other asset class... right?
There's no way the price is artificially up 60%+? How could it stay propped up? I've seen it mentioned many times before that crypto can possibly be manipulated by whales or "smoke and mirrors" if you will. Coinmarketcap.com says Bitcoin volume in 24 hours is roughly 615,000 BTC ($16b, 3% of the total circulating supply)
Is there more money going into BTC (inflow) than SPY/VOO/VTI/IVV/QQQ/mutual funds? I wouldn't imagine so. Why is the money that is making it into BTC (is the average middle American dollar cost averaging a portion of their paycheck bi-weekly into BTC through Coinbase?) able to increase BTC 60% YTD but a more sizable portion of money (because we can assume the stock market is much much larger of an investment vehicle) going into SPY/VOO/VTI/IVV/QQQ/mutual funds leads to a lesser return (SPY is up 3.95% YTD with like 1/4th of a 1.6%/year dividend in the process of being paid out so far, so call it 3.95% + (1.6%/4 quarters=0.40% quarterly dividend, Q1 just being paid out) = 4.35% return
Why/how was Bitcoin able to recover from its last crash? I get that "sentiment changed". But... who? Who was "afraid" of Bitcoin when sam bankman-fried got arrested/FTX collapsed, sold their coins, waited, saw everything get better, bought back in? Based on the price action, we'd have to assume a LOT of people have done that. Like, enough for it to shoot fall 21k -> 15k on the FTX news, then 15k -> back up to 26k. I just don't get it. Who is dollar cost averaging into Bitcoin with their fiat (USD, EUR, GBP, JPY, whatever it is) every paycheck? Millions of people? Where's the proof, other than the fact that "the price is up"?
Do you do this on top of investing U.S. equities for retirement? What % do you invest in equities versus crypto? What % of your net worth is exposed to crypto and what % minority are you in for perspective for doing so (aka, if 50% of your net worth is exposed to crypto, you're obviously in a very small niche group and "biased")
I just want to learn why Bitcoin is being taken so seriously as an asset class that it's outperforming bonds, equities, gold, silver, real estate, etc. (or if it is really, or if the price is being manipulated, and if so, how is that manipulation able to operate at this scale).
> Who/what is dumping money into Bitcoin that would cause this much demand?
As usual, there's no way to tell if the demand is synthetic, or anything other than invented stablecoins and fake volume, because the entire market is deliberately opaque.
Most Bitcoins are not bought with USD but with Tether and other stable coins. Tether is printed at the pace of billions per week recently so no wonder it lifts all the boats in crypto world.
https://app.tether.to with wire transfer. There are high minimums, KYC requirements, and excluded jurisdictions (notably the US). Depending on your opinion these onerous requirements exist either for regulatory reasons or to prevent a bank run because Tether is not fully backed.
The point is that nobody can really say that all tether is bought this way, that there is a genuine flow from cash to the tether company to exchanges, and there are very reasonable suspicions that tether is just magicked into existence for use on friendly/complicit exchanges to help control the price.
Perhaps I should have said it's less a question of how tether is bought and more a question of if tether can be said to be bought, at its point of origin.
The question is how much tether is originating as part of a cash transaction vs how much is being
minted out of thin air specifically to buoy the price of cryptos.
That middle step is multiplying the fiat going to BTC because Tether (probably) is only partially backed and (probably) buying crypto to make money. So your one dollar that goes to tether gets multiplied. Something like
$1 -> 1 Tether -> $1 worth of bitcoin
$1 -> $1 worth of bitcoin (as an "investment" for Tether to make money)
$1 worth of bitcoin -> Collateral on loan to Tether -> $0.50 -> $0.50 worth of bitcoin
We don't know exactly what Tether is doing with their money because they don't open their books. Safe to assume it's some sketchy stuff though.
Tether is printed and given out at will to buddies of scammers who run it. "Hey Paolo, can you help me with 100M as my exchange is in trouble?", "
Sure thing, just write an IOU and I got you". Now Tether is "backed by commercial paper" and there is 100M of it in circulation to prop crypto.
And if you think my language isn't appropriate, Tether is run my literal scammers: a proven financial fraud and an online poker cheat. Chances of it being even semi legit operation are zero.
stablecoin == fiat is the lie that enabled and perpetuates the crypto madness
BTC holders always had trouble getting USD due to KYC onramps and offramps. People couldn't get out of a volatile BTC position back into stable USD fast enough... so holding BTC just wasn't worth the risk.
But Tether shows up and voila the holding problem is solved as it's a dollar "equivalent" that doesn't have to deal with pesky KYC laws slowing down USD cash-out. Let's trade one magic token for another on a whim, we'll deal with getting USD later. They're good for it. "Line go up" madness starts.
To anyone that's been actually paying attention, Tether is a house of cards waiting to implode. They are not worth 1 USD each, no matter how much anyone wishes, hopes or screams it does.
One by one the so-called stablecoins are being shown to be the garbage/scams they are. Once the market wakes up and realizes that they aren't actually worth a dollar, then BTC has nothing left to artificially prop it up.
Very little Tether (if any these days) is bought with USD. Tether admits themselves they don't hold USD reserves to cover it if it wasn't obvious already from other sources (there is much more Tether being printed than the whole inflow of money to Bahamas banks of which Deltec (Tether's bank) is just one.
It's hard not to see patterns emerging honestly. TikTok ban, Coinbase and now this. Seems like the US Gov is ramping up not only attacks on Chinese proxies but anything that might threaten US dollar reserve status.
How does one separate attacks on dollar hegemony from broad American interests? I'm struggling to think of what any country would do that couldn't be characterized as defending its currency.
TikTok is a more conventional ban on a foreign security apparatus, it really has nothing to do with dollar hegemony. Attacks on crypto institutions is the US Govt defending dollar hegemony. I have no proof (obviously), but if you just look at the pieces together it's hard not to justify that this is a trend.
I want to say 1) I (admittedly) look at the world through a paranoid lens, 2) could be completely wrong. This is just my opinion.
That being said, I think you are referring to FTX right? It is the natural way to look at it. You see FTX and a reasonable person could conclude that this is simply the US Govt making sure that it doesn't happen again. In fact, it could be the only reason.
But when I see things like the TikTok CEO being dragged in front of Congress and multiple crypto exchanges (which allow for a potential way to side-step dollar hegemony) being attacked (legally) I like to stop and think about if this is the US Govt retaliating.
Maybe the USG wants to shore up support after rising interest rates highlighted that many banks are not as strong as many thought (due to HTM treasury accounting tricks). Maybe the visits of Putin and Xi to each other countries is signaling an increasingly unified "new eastern blok" which is something that the US wants to weaken. I don't have the answers again. I'm just thinking.
If you are wondering what it means for me personally, I am going to get out of crypto holdings entirely. I see this as a shift that the USG views crypto as a threat that can be exploited by enemies. Perhaps Bitcoin is safe, but that would be the only one.
Dude they literally knew their stuff was being used for crimes and said, and I quote:
> "Like come on. They are here for crime." - "we see the bad, but we close 2 eyes."
This is just criminals being criminals, like all the crypto junk always has been beneath all the lofty rhetoric. No grand conspiracy theory needed, the chickens are just finally coming home to roost.
I guess the art of geo-politics is achieving an agenda with plausible deniability. It's not a crackpot theory to suggest that the US Govt is enacting a policy change due to changing politics with China.
Additionally, the US Govt has managed to weaponize the US dollar through the global financial system; allowing it to enforce it's will without bloodshed (even on nuclear capable states like Russia). It's a capability that is invaluable. So when you hear things like Russians selling oil in Yuan, you need to respond.
Anyone that was against robinhood/citadel trading against their user base should support this. because trading platforms should not be allowed to trade against their users and binance has been doing it for a while and now we have proof. also they have evidence which something I didn’t expect unlike the SEC they seem well prepared.
A recurring notion in the crypto community was that CFTC is the good cop to SEC’s bad cop. If only all crypto were under CFTC’s purview, everything would be awesome. I don’t know how this kind of action affects that belief.
> notion in the crypto community was that CFTC is the good cop to SEC’s bad cop
The SEC has an order of magnitude more employees than the CFTC [1][2]. Crypto favored the latter not because it was a good cop, but because it is a weaker one.
What do you think are the odds this goes beyond fines? I get the feeling other agencies are gonna pile on and then there will be a huge global settlement to resolve all the cases but the Hamas stuff and the fact that they weren’t even checking OFAC list or countries makes me think there’s a sealed indictment with at least the compliance officer and probably CZs name on it too.
The crypto community prefers the CFTC over the SEC because they beleive that many tokens (ex: BTC and Eth) and commodities and not securities. It has nothing to do with relative strength of the groups or whether they're the good or bad cops.
I got flagged in the other thread. It was because I said the gov is going mad with power. This is not about Binance. They are going after Coinbase, too. They are trying to severe the connections between tradFi and deFi. They are also trying to censor views they don't like on all social media. Isn't that a coincidence? And take out TikTok too while you're at it, so only place to speak out now is Twitter... and they scared everyone away from Twitter because they say Musk is an alt right nutjob. SMH. Crazy times.
Maybe you were flagged because of how you presented your ideas.
The CFTC is going after Binance for purposeful evasion of U.S. regularities.
The SEC is taking action on Coinbase, this one is more confusing because Coinbase has been asking for guidance from the SEC and they have refused.
TikTok is a national security risk, unrelated to these other two issues, if you've seen the conspiracy theories being peddled by Elon, he does present a lot of right-wing/alt-right positions.
Coinbase has announced that they've asked for guidance. I find it equally plausible that the SEC hasn't decided the rules as that Coinbase asked for overly specific (or overly broad) guidance that they knew couldn't be given.
> not about Binance. They are going after Coinbase, too. They are trying to severe the connections between tradFi and deFi...Isn't that a coincidence?
No. It’s hard, politically, to go after something when it’s making people rich. These investigations have been ongoing, some for years. FTX and Silvergate changed the calculus of watching, waiting and collecting versus pressing charges.
It's a great smoke screen for sure. They've been wanting to do this for ages. Now they have an excuse. Some would even venture to say that they knew about FTX and let it slide until it blew up, same way they knew the Saudis were funneling money to 9/11 terrorists and did nothing, then went to war with Iraq. Coinbase feels like Iraq right now. LOL. I mean some may say this is the emergent AI of gov acting out, not anyone doing it consciously. Something is extremely disturbing about this coinciding with an FBI-coordinated mass censorship campaign that upholds the field of denial everyone is stuck in.
Why you are probably being flagged her is you are rambling instead of laying out a case. You boarder conspiracy theorists instead of providing a constructive argument.
TikTok is a threat to national security, the amount of data they take from people is insane. We have youtube shorts, facebook reels, instagram whatevers, and had Vine - there's no reason we can't move elsewhere. Saying that I work for a defense contractor so can't install TikTok contractually anyway (:
Yes TikTok is a National Security issue. The issue with TikTok v all the social media companies you named is one thing.
The US government cannot censor or control TikTok the same way they censor and control US based social media companies. The US alphabet boiz have all access and muscle to get the data these social media companies have one way or another.
Probably you got flagged because, you say "because they say Musk is an alt right nutjob." While he himself tweets right wing stuff all the time, it's not something that's made up. You lose your credibility with that. And who is using TikTok to speak out? It's the most censored platform brought to you by a government that loves censorship, they were caught with boosting "pretty stuff", and has bought a lot of nonsense challenges.
Time and again I said this but anyone who thinks we will have decentralized currency are fools, who don't understand why the financial industry works the way it works.
And why do govts don't like not having control over their currency.
And the only place to speak out is Twitter? A boy was banned from the platform because he published publicly available data of a private jet owned by the owner of Twitter. Overnight it was decided what constitutes parody or joke.
The CFTC woke up and chose war. The question is why now? This action could have taken place in 2021 too.
A hypothesis. Big tech loved crypto for the same reason they overpaid armies of engineers to do nothing: it prevented them from creating competing AI companies.
Is it possibly correlated that FTX and SBF donated boatloads to Democrats with full media coverage, and donated to Republicans supposedly covertly, which turned out embarrassing in the pissed off public opinion, so now the politicians who were on the take need to look like they're not complicit?
If they did by options they lost all their money due to the greeks not enough volatility, and if they bought futures unless it was 100x or the had many tens of millions they also didn’t make money. Crypto moves like this every day +-~4%. Also there’s zero option platforms for US traders and if they traded futures its coinbase or kraken which are heavily regulated. Why take the risk?
> Lim, Binance’s CCO from 2018 through 2022, is charged with willfully aiding and abetting Binance’s violations through intentional conduct that undermined Binance’s compliance program. Lim is also charged with conducting activities to willfully evade or attempt to evade applicable provisions of the CEA, including promoting the use of “creative means” to assist customers in circumventing Binance’s compliance controls and implementing a corporate policy that instructed Binance’s U.S. customers to access the trading facility through a virtual private network to avoid Binance’s IP address-based controls or create “new” accounts through off-shore shell companies to evade Binance’s KYC-based controls.
Chief Compliance Officer promoting "creative means" of circumventing compliance controls. You just can't make this up.
A good accountant will not only encourage, but directly facilitate and aid in tax avoidance. Tax evasion is what is illegal - that's not paying taxes you owe. Tax avoidance is using every possible loophole, trick, and structure to minimize what you owe. Large corporations, for instance, often pay tax rates of near 0%, by using all sorts of "creative" structuring, classifications, and so on to try to avoid taxation. And that is all completely legal.
The point of this is that "sounds dodgy" or "done only to avoid a legal obligation" and "is illegal" are two very different things. Which it is, is a question I think few are capable of giving an even remotely informed opinion on. It's a global company being sued by the one country in the world they don't [nominally] offer service to.
In New Zealand, there are anti-avoidance provisions, so some avoidance is illegal. If you are engineering your finances in a contrived or artificial manner, purely for the purpose of reducing taxes, you might find your tax avoidance techniques are illegal.
Take care in your own jurisdiction to get good tax advice, since perhaps “avoidance” is a grey area!!!
And structuring is another terrible example of "good legislation". It is yet another failure on the same scale as "civil asset forfeiture". That is, law so generalised and broad that it can be applied selectively and punitively.
As I understand it, when there's a law that says something like "the bank has to report cash transactions over $10K", and you divide all your transactions into chunks of $9999 to evade it, then there's a law that says you can't do that. Even if every one is at a different bank.
While it does seem to involve intent, a lot of laws do.
"operatives...who scurry from bank to bank making these structured deposits are known as “smurfs” because, like the little blue cartoon characters, they’re everywhere"
There are similar things in the UK, and if an avoidance scheme is found to be non-compliant after the fact, you can suddenly find yourself oweing a lot of back taxes and penalties. For instance there are rules about how much company turnover needs to be before you have to start collecting VAT. If you start a second company and start funneling transactions through that to avoid this threshold, your little 'hack' is illegal, despite it being perfectly legal to own and run two companies.
As a contractor, I had several schemes attempt to woo me to use them, with ludicrous promises like "Keep 92% of your gross earnings!". I always said no thanks. Now I read on contractor forums as people panic that HMRC has evaluated their magic tax avoidance strategy and they want back taxes plus interest and I have no sympathy - they were high earners and they were trying to avoid contributing their share.
The worst are the loan schemes - You give all your earnings to an offshore entity, and it gives 95% back as an interest free 'loan' that is never expected to be repaid. No tax! W00t! But now not only are the tax authorities interested in you, but when some of these schemes wind down an external liquidator takes a look at the books and decides "Hey, there's all these loans outstanding, we need to recover these funds for shareholders!". Ruh-roh.
I think it can be summarized that they knowingly traded securities with US entities, and intentionally circumvented legal and technical restrictions to make those trades happen.
Didn't CZ recently bring down SBF. The same SBF who was defrauding cypto investors and handing out their money to democrat politicians. The same SBF who got kid gloves treatment from the democrat NYT?
CZ is one of the better guys in crypto and this whole thing stinks.
> CZ announces he will sell his full stake in FTT (a huge percent of the float)
> Alameda was extremely leveraged _based on their FTT holdings_, once FTT started crashing they went under water on their leverage and started fire selling assets at a loss
> Certain digital assets, including BTC, ETH, LTC, and at least two fiat-backed stablecoins,
tether (“USDT”) and the Binance USD (“BUSD”), as well as other virtual currencies as alleged
herein, are “commodities,” as defined under Section 1a(9) of the Act, 7 U.S.C. § 1a(9).
This is interesting, it appears ETH was named a commodity in some US federal legal document. Interesting to see how this will play out in court. Should this override SEC statements about ETH being a security ?
IMO this is more a case of who you ask and what their current goal is.
CFTC regulates commodities, so of course they will say things they want to regulate are commodities. OTOH SEC regulates securities, so they will say things are securities.
See also the way any kind of fraud can become "securities fraud" if you have investors. Basically, if your business involves defrauding customers, that is likely going to negatively impact stock price when it comes out, and if you lied and told shareholders you were not defrauding customers, you are also defrauding shareholders thus securities fraud thus SEC jurisdiction.
No. If others have copies of the messages, that's not surprising at all. It's not an encryption problem if you give an incriminating secret to someone and then they tell the authorities.
591 comments
[ 5.0 ms ] story [ 273 ms ] threadWhen you interact with a certain contract, you are likely interacting with the ProxyContract which relays your calls to the actual contract. The proxycontract is often under lock or has multiple signatories to amending but the "origin" contract doesn't.
So many DeFi projects get "audited by Certik" actually just get their proxy contracts audited and there is nothing in there but a single line per function, calling the origin contract.
https://twitter.com/CertiKAlert/status/1640974656696991745?c...
`This upgrade was not within the scope of our audit.`
P.S.: I'm an investor/liqudity provider for most of protocols doing this.
https://knowyourmeme.com/memes/this-is-good-for-bitcoin
https://twitter.com/web3isgreat/status/1640373566322491393
My favorite is probably the VIP feature "prompt notification of any law enforcement inquiry concerning their account". And of course there are all the text messages indicating they knew all the things they did were illegal.
From the article:
> The CFTC has alleged that "Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to 'block' or 'restrict' customers located in the United States from accessing its platform... All the while, Binance, Zhao, and Lim, the platform's Chief Compliance Officer ('CCO'), have each known that Binance's solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law.
That seems to be what CFC is arguing here.
No, its an exchange, which among other things handles commodities, hence why the CFTC, not banking regulators, is suing.
Since the launch of its platform in 2017, Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to “block” or “restrict” customers located in the United States from accessing its platform. Binance’s initial phase of strategically targeting the United States focused on soliciting retail customers. In a later phase, Binance increasingly relied on personnel and vendors in the United States and actively cultivated lucrative and commercially important “VIP” customers, including institutional customers, located in the United States. All the while, Binance, Zhao, and Lim, the platform’s former Chief Compliance Officer (“CCO”), have each known that Binance’s solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law. But Binance, Zhao, and Lim have all chosen to ignore those requirements and undermined Binance’s ineffective compliance program by taking steps to help customers evade Binance’s access controls.
It's pretty simple.
(Not subject to US regulation, Eurodollar is a thing)
This sentence doesn't make any sense.
As they should be. If they aren't laundering money for Russian criminals and designated terrorist organizations.
FinCEN seems to be on top of working to segregate compliant from non-compliant decentralized exchanges, as well as the people using and developing them.
This is basic stuff covered in AML training for any bank intern at a 3rd string bank 20 years ago. Just incredible.
It’s almost as if modern finance is regulated for a reason.
The crypto exchange space. Exchanges are really just unregulated banks in disguise: all the drawbacks and none of the benefits. They're the very same centralized banking intitutions cryptocurrencies were supposed to put an end to.
That’s what you see when you read “do not directly tell the user to run”?
And if that's all they'd done, they might have skated by with just fines. Then they wrote down "do not directly tell the user to run."
How's that different than AML regulations that require banks to "not directly tell" customers they're being investigated?
And this document directly admits that this is an attempt to covertly notify them of something that it is illegal to notify them of. Any shred of plausible deniability that procedure provided them is gone now, because this document is now public.
There's literally nothing in there that says they're breaking gag orders.
Which is why, to the extent that it it might be legal otherwise, you probably don't want to make written directives documenting your specific knowledge and intent wrt crime.
That’s because of AML laws.
Their account got flagged by OFAC—deservedly or not—and the company is bound from discussing anything about it under any circumstances.
The level it goes to is frankly kind of ridiculous, but that’s the legal regime financial services companies operate under. And that’s not to defend PayPal as a company either. Just that when you see people saying some company is horrible because they close accounts and give no information, it's (not always, but) very frequently one situation that’s entirely out of the company’s hands.
So let's not give these companies too much credit since most of the time they are freezing accounts for much more benign reasons. Like: we didn't do any due diligence on your business beforehand and now a little bit of data indicates you might fall outside of our basic risk bars and we don't want to do any due diligence on you now (so we can save a couple bucks) to confirm whether that is true or not, so we are going to freeze you out and collect interest on your money for the 3-6 month maximum after which you can take your money back and go kick rocks without ever knowing why because we want to limit our legal liability.
> 41. Should an institution tell its customer that it blocked their funds, and, if so, how does the institution explain it to them? > An institution may notify its customer that it has blocked funds in accordance with OFAC's instructions. The customer has the right to apply for the unblocking and release of the funds.
https://home.treasury.gov/policy-issues/financial-sanctions/...
In the case of anti-money laundering laws, my belief[0] is that it is very illegal to tell a customer they are being flagged.
On the other hand, if it's a copyright thing, or some kind of contract dispute? You're normally totally free to tell the customer.
[0] No professional experience involved, just a lot of reading patio11/Matt Levine.
The phrasing! LMFAO
They put this in writing!
All these companies are doing a great service aiding the historically "underbanked": criminals.
Yes, that all seems pretty horrible to me.
[0] https://twitter.com/web3isgreat/status/1640379218461589506
Yes. At a minimum, it's aiding and abetting [1]. What's going on here looks like terrorist financing and willful sanctions evasion.
[1] https://en.wikipedia.org/wiki/Aiding_and_abetting#cite_note-...
If you don't see the difference between knowingly helping a designated terrorist organization launder money (specific and known criminal and crime) and operating an honest business in a high-crime neighborhood (statistical likelihood of aiding a criminal), you shouldn't be making business decisions or running a financial services firm. It's an obvious distinction, one that a roomful of people with basic legal instruction will agree on 99% of the time, except for the one with a profit incentive to argue the opposite.
I fully agree on the line, in general, being fuzzy. It's not here.
Multiple texts describe Binance helping Hamas circumvent money-laundering flags by moving small amounts, helping a Chicago-based trader hide his U.S. origin, et cetera.
If someone buys a bunch of lye, the line is blurry. If they walk in hitting a meth pipe, ask you in which aisle are the meth supplies, and when they hand you their credit card, you advise them to pay in cash so you don't have to draw up a receipt, the line isn't blurry so much as very far away.
I was unable to find these. The only hamas bit I found in the indictment was Binance describing generally how Hamas launder in low value quantas like $600. Not texts showing they identified specific hamas accounts and developed individualized plans to assist them.
If you know the criminal, you sell that criminal knives, and after police come looking you tell the criminal, you are at the very least complicit.
And since they aren't doing out any particular political principle, it seems that they were just as happy to support 'bad' terrorist groups as they were 'good' terrorist groups.
It's one thing if you're supporting violence because you legitimately believe that its cause is just. We do that all the time. It's another when you're supporting any violent group that will pay you.
One makes you an idealist that may, or may not be on the right side of morality and history. The other simply makes you a criminal.
[1] Understatement of the century, but what those problems are isn't at all relevant to this thread.
I'm sure you heard about Russian receiving sanctions from the US but often when you look into the details it's restrictions against specific named Russian nationals. If you can name specific Isrealies that are involved in terrorism then you might be able to get sanctions against them but to just blanketly claim the whole country is guilty of an unspecified sanctionable offense isn't going to get you anywhere.
That’s the difference: if you are aware that they’re making the transaction to further criminal activity, then you need to worry. You will find gas station owners who were charged: they’re the ones who helped fence stolen property or launder money.
This is why anti-money laundering laws exist in the first place. Criminals would otherwise seek out a bank which doesn’t ask questions and the bankers would be hard to charge unless they were idiots and wrote something like “They are here for crime”. AML removes the ability not to ask or report certain types of activities, which is much easier to prosecute than e.g. proving that a banker should have known there was no legal way for a small Italian restaurant to be so profitable.
And do you think criminals come in and tell crypto exchanges that they are about to commit a crime? AML regulations do not apply to gas stations as they're not "money transmitters", it is that simple. I'm a bit surprised so many on HN don't seem to be aware of that. And luckily they don't, because those laws are immoral, ineffective and costly: https://news.ycombinator.com/item?id=34667051
> And do you think criminals come in and tell crypto exchanges that they are about to commit a crime?
Well, ignoring the fact that they are unlike a gas station in having financial regulations, consider that the disbelief and mockery in this thread might have something to do with a defense based on not knowing that your customers are using you to launder money works much better when you don’t give prosecutors written statements such as "Like come on. They are here for crime." or "we see the bad, but we close 2 eyes." showing that you did in fact have knowledge.
I believe the point was that AML regulations only apply to some categories of businesses and others not, which makes them ineffective. They can be a slight annoyance to criminals but they do not stop them. For money transmission, it is trivial to work around them. And for spending, at a gas station, there's no problem at all.
It is is just all a very costly and ineffective security theater, not to mention the many moral issues that come with it (e.g. billions of law-abiding, unbanked people).
If only there were an entire profession and legal system that has been asking and answering questions like this for hundreds of years.
I know programmers want to believe otherwise, but common law can't be boiled down to single line "if statements."
It often can, but programmers often don’t like that, either, because instead of hinging purely on acts that enable simple hacks, it often hinges on things like knowledge and intent.
Civil law is an interesting solution to that problem. Lets go live to Paris, France to ask them how it's going!
When you know that the transaction you're part of is directly involved in their crimes. It's one thing to know, statistically, the some portion of your customers are doing crimes. It's an entirely different thing to know that this customer is doing that crime with your assistance.
> Binance MLRO agreed that "we see the bad, but we close 2 eyes."
You're not allowed to see illegal things happening with your service and turn a blind eye.
It goes beyond that though. https://twitter.com/web3isgreat/status/1640380291817635843/p...
Having had an account that was identified as involved in illegal activity, leadership told them to make a new account. Not go away, and at least make a half-assed attempt at a ban. Make a new untainted account and be a bit more careful with your transfers, and even "here's some things to be a bit more careful about". If they had actively taken steps to ban the user, even if the user evaded the ban they could make an argument that they had done due diligence.
If there was nothing in the chats, no evidence that they were aware these things were happening, and no evidence that they were encouraging it to still happen, then the government would have a much harder case, but these chats cited seem to make it hook, line and sinker.
It shows that they very deliberately chose not to be in compliance with "Know Your Customer" (KYC) regulations, that they knew applied to them by law, knew what the risks were (ignorance is no excuse under the law, but penalties are much higher if you know what you're doing is illegal and still chose to do it), and even actively worked to help customers help them avoid it.
If you're going to do crime, writing it down, and keeping that evidence trail is just the absolute dumbest thing you can possibly do.
So for example you don’t have any real obligation to inquire about source of funds when someone comes into your shack to buy a burger and a shake.
If they come into your shack to open a financial account or do any kind of exchanging of financial instruments then you do.
Just like any other service you might sell to him. Except you know, for services for which there is a law...
https://www.chinaexpatsociety.com/culture/the-chabuduo-minds...
I'd like to gently, very gently float to you the idea that these people did not aid and abet criminal enterprises "because they're Chinese" or "because of Chinese culture", nor would such activities be generally permitted in Chinese culture.
Side note: the waft of casual racism from expat sites is honestly kind of hilarious.
"I found myself enmeshed in a foreign culture where - gasp - guess what, some people cut corners on their work. Holy fuck!"
Those people aided and abetted criminal enterprises out of greed and ego, which delightfully transcend all race and culture, as far as I can tell.
I do hope they get severely punished.
> In Hell: the cooks are English, the policemen are German, the mechanics are French, the lovers are Swiss and the bankers are Italian.
> In Heaven: the cooks are French, the policemen are English, the mechanics are German, the lovers are Italian and the bankers are Swiss.
> Rule 1: If you're going to do crimes, don't put them in writing.
> Rule 2: If you're going to put them in writing, don't write them in "I CAN HAZ CHEEZEBURGER" style writing, it's embarrassing.
https://twitter.com/web3isgreat/status/1640378422483472386
> according to Lim, Binance purposely engaged a compliance auditor that would "just do a half assed individual sub audit on geo[fencing]" to "buy us more time." As part of this audit, the Binance employee who held the title of Money Laundering Reporting Officer ("MLRO") lamented that she "need[ed] to write a fake annual MLRO report to Binance board of directors wtf." [1]
By the time you write "fake annual MLRO report" in text, you're about to be a one-person retirement plan for some attorneys.
[1] https://twitter.com/web3isgreat/status/1640378422483472386
How does the simple act of typing that out in a message not trigger the slightest moment of pause, self reflection and, perhaps, self preservation? Good lord.
the other thread about people using ChatGPT with their company's confidential data has some people with their behind hanging out defending it. https://news.ycombinator.com/item?id=35330438
Yes, US law might say there is, and might make compelling moral arguments. And yes maybe these laws are in the interest of US voters, or a majority of people in the world. But there's no structurally legitimate democratic mechanism currently in place to make any decision about that. (The UN is not this.) Democracy is what gives laws moral legitimacy, and democracy ends at the border.
So at no point have CZ, Lim, or others here (AFAIK) taken on any commitment to follow US law. Morally, they are completely morally free to think US law is wrong and ignore it, just as I'm completely free to think a law in another country (China or Iran) or another US state (say, Mississippi, or Utah) is wrong and ignore it.
It seems that they're scared of US law, which is rational, and maybe it would be more rational of them to be more scared, but that's another question.
That's not morality, it's just power and violence.
Hamas is a great example. Right now the Western world is cheering and arming a country as it fights off a brutal occupying force with a shady territorial claim. That country published crypto addresses so that everyone in the world could help them buy drones and rocket launchers so they could maim and kill the occupiers and drive them out. I donated and I would encourage you to donate too. I spent most of 2022 watching videos on Reddit, Twitter, and Youtube of young occupiers getting killed and maimed by the drones and rocket launchers I helped buy, as an American taxpayer and as a donor. And I think this was the right thing to do, and I'm proud of it. But I'd certainly understand if someone was a bit ambivalent about this whole thing, thought it was kind of f'ed up, and didn't want to be involved.
Is it so hard to believe that some people in the world feel that Hamas is similarly worthy of support? I don't, but certainly a ton of Palestinians do; they sometimes vote Hamas into a parliamentary majority, and Hamas does very well in polls it seems. And if so, then is it so hard to believe that some people in the world are ambivalent about Hamas and talk about it flippantly in internal Slacks, even when they're afraid of US regulators?
Generally pluralism in the world is served by a diversity of opinions and legal systems. In some cases, like the Ukraine invasion, it will definitely be right to project power outside our borders and legal system. But the default should be to allow for the possibility that we're wrong and avoid imposing the conclusions of our own democratic process on those who did not participate in it.
Maybe US law is wrong about financial freedom and someday we'll look back on this period of zero financial privacy as backward and embarrassingly arbitrary.
For this statement to be true, you have to modify it to "in a pre-Internet world" or "providing financial services."
Hacker News is providing an information and communication service in almost 200 countries where it has not set up a legal entity. You can say financial services are special, and the US does. Some countries like China say that information services are special, that people shouldn't be allowed to criticize the CCP, and enforce that however they have the power to. But the world would be demonstrably worse if we said "every website in the world that is accessible to Chinese citizens living in China should follow CCP censorship laws."
Maybe the world is also worse off for the US's assertion that financial services are a special kind of website that the US can regulate globally simply because some Americans visit them.
At the very least, the rest of the world should have some say on a policy that affects what kind of online businesses they can run. But of course there's no mechanism for them to, since only US citizens can direct US policy.
Also, think about how impossible it would be to run a website if all countries enforced their local laws on all websites, simply because some of their citizens use foreign websites. The US is doing something that it would be unworkable for all countries to do, simply because it's the most powerful country. That alone should be a hint that it's a morally and politically questionable and based on raw power, not fairness; a fair policy would universalize better across countries.
Fairness isn't the concern here. It's just a display of power and law enforcement reach. The Chinese government can (and likely will) block your website if it's criticizing the CCP and gets considerably popular, regardless of the morality of that action.
The same applies to the U.S. government. "To sell derivatives trading products to our citizens, you must register with us first". I consider the American law even fair because derivatives products are risky and a major avenue for scamming people...only licensed firms should offer them.
Note that Binance wasn't banned from selling derivatives products. All that was required was a simple registration with the CFTC, which they refused.
Binance used IP-based locking mechanism (easy to avoid with a VPN). Similarly, I saw US-based websites that blocked access to European customers because of GDPR, and I've circumvented their geolocks using a VPN. Does it mean that I can sue them for not following GDPR now?
I'm not trying to argue for Binance here, and I think that US compliance and anti-money laundering laws are reasonable. But I wonder if your position is that "everyone should just follow US law", or is it more nuanced.
Yes, it does, and most especially if it involves moving funds. If your country decides that the platform broke their laws, they could sue just like the CFTC or even request an arrest and extradition of the alleged perpetrators.
But, in reality, European countries don't often pursue such cases as aggressively as the US. The U.S. government has a well-oiled law enforcement and military machine that it uses to pursue its targets across the globe (sometimes with bullying involved). I'm reminded of a case where a woman was extradited from the Netherlands to the U.S. and sentenced to 3 years for sending a relatively paltry $300 to the terrorist group Al-Shabab.
https://apnews.com/article/africa-netherlands-somalia-al-sha...
And obviously it comes with an unhealthy amount of hubris from watching Donald Trump and Elon Musk in action.
Word of advice - if you don't have tens of millions of dollars to clog the US legal system with procedural nonsense, don't try this at home, just don't.
They would rarely put stuff in writing. I was always told to do stuff. Never in email, never in memo's or any other written form. It was always, "We're going need you to scrub some files from xyz database." or "I need to rewrite this contract and add these additional sections which weren't on the original document." If I needed details, they would put them on a sticky note. I remember they had someone come around and take these notes off of people's desk when the task was completed.
I remember at Christmas one of my uncle's was a stock broker and a big knocker at some financial company. He was asking what I did and where I worked. He started asking more questions and told me I needed to be very careful - what the startup was doing was either really illegal or they were operating in a very gray area. Neither of them will end well for anybody and if the SEC thinks I'm involved in any way of covering up what they were doing? Then I'm in deep shit.
I quit about three weeks later. A year or so after that, the economy collapsed. I found out they were automating robo-signatures for real estate and mortgage companies. They were changing clients contracts from fixed APR's to 3 year ARM's and a bunch of other highly illegal shit. The company went under and despite several local news reports about it, nothing happened. Pretty sure they just got lost in the myriad of other companies going under, people losing everything and the economy collapsing.
It was a good experience for me to understand and see red flags when something doesn't feel right.
I'm sad to say this - but most capitalism operates like this more or less, and capitalism runs the world. There is not enough integrity.
…since a common anti-regulatory strategy is to strangle the funding…
Regulation is just another forum that can be corrupted.
Of course the anti-bodies, aka taxes have to be supressed, otherwise the defenses kick and and a normal society returns.
Does that make sense?
PS: Also I do not intend to debate capitalism vs. communism, I'm trying to convey the idea of "a society driven by profit".
Just a reminder that Madoff ran a ponzi for more than !15 years! to the tune of 20 billion USD and the only ones to go after him where his sons who turned him in to the FBI. Note: the SEC was NOT involved in going after him (they did the opposite: they looked away).
The SEC is a marketing agency that exists to provide a false image of "fair markets". It's not actually a regulatory agency.
While the sons were never formally charged, they were suspected of involvement. One killed himself and the other died of cancer before the investigation was wrapped up.
Close to two dozen people were eventually charged, many went to jail, and JP Morgan paid $2.6 billion to settle their involvement.
There's a lot of unfocused "somebody must hang for this, but we don't know who" anger energy around what happened in 2008. Most of which wasn't criminal at the time or even after, merely poor business decisions. But robo-signing? This was overt fraud, perpetuated against ordinary members of the public, and everyone involved in it should have gone to jail.
I guess this is what happens in remote working. You can't tell people how to break the law over lunch any more.
They seem not to have learned the lessons from The Wire about "taking notes a criminal conspiracy."
[edit] Oh man I wonder if we're going to find out where ex-Binance US CEO Catherine Coley has been hiding all these years.
[1] https://www.forbes.com/sites/michaeldelcastillo/2020/10/29/l...
(He was taking notes because they’re following Robert’s Rules of Order, lol)
It really comes down to who is willing to take the most risk on behalf of investors
Watch: This CEO will come back in a few years with another scheme that is backed by millions in venture money, just like Kalanick
If some of these allegations [1] are credible, he and everyone in his orbit are going to jail.
[1] https://news.ycombinator.com/item?id=35329117
If he's financing terrorism, a broad extradition treaty goes from being a blocker to a diplomatic hurdle. (To be clear, I'm not suggesting kidnapping. Governments can negotiate one-off extraditions for high-value targets.)
It also appears he was knowingly financing Hamas and Russia, which makes the list of potential enemies (and people who would prefer him dead to compromised) substantial.
It looks like a combination of ongoing criminal trials, home confinement and probation [1].
[1] https://en.wikipedia.org/wiki/BitMEX
This case isn't putting them in jail. But they're going to jail. Literal terrorist financing.
No one from HSBC went to jail, either.
There wasn't evidence it was willful. Looking the other way gets you fined. Texting your colleagues about laundering money shows intent, the most difficult part of most financial crimes to prove in court.
> Bernhardt alleges that HSBC evaded the OFAC filter beginning in the early 1990s and continuing through 2009. HSBC Bank UK implemented procedures to help sanctioned entities access and benefit from U.S. financial services. For instance, such entities would include a “cautionary note” in their transactions, such as “care sanctioned country,” “do not mention our name in NY,” or “do not mention Iran.” Based on these notes, HSBC Bank UK would manually scrub all references to Iran or a sanctioned entity, which would allow otherwise illegal transactions to pass through to HSBC Bank US. This system allowed HSBC Bank US to “process[] thousands of ‘repaired’ transactions worth billions of dollars.” HSBC Bank UK would also use “cover payments,” or bank-to- bank transfers, to avoid disclosing the identity of its customers.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
There is a reason why someone way funnier than me came up with "Dunning-Krugerrand"
The impunity seems like a general theme with everyone involved with crypto - just flagrant wrongdoing in broad daylight.
But considering that flagrant wrongdoing in VC-land continues to result in no severe consequences (see: Kalanick, Neumann) I guess maybe we're the suckers.
Something is off with these folks' sense of risk. Let's put aside the illegality. By laundering for Hamas and Russian criminals, Binance's leadership has put itself on the wrong side of the United States, Israel, the Gulf monarchies and the entirety of fucking NATO. At the same time, there are powerful people in Moscow, Tehran and Beirut who would rather see them dead than captured.
> flagrant wrongdoing in VC-land continues to result in no severe consequences (see: Kalanick, Neumann)
Kalanick and Neumann didn't steal money or finance terrorists. The wrongdoing in crypto/web3 is on another level.
It's also curious that there was no mention of blockchain analysis anywhere in the complaint or even an attempt to quantify the amount of criminal funds on Binance and the complaint instead relies solely on a handful of excerpted chat logs to show compliance failings (the CFTC is obviously not going to mention all the times they ended up blocking the bad accounts). They also don't even list any specific Hamas transactions or say that Binance knowingly processed them.
> Kalanick and Neumann didn't steal money or finance terrorists. The wrongdoing in crypto/web3 is on another level.
Not VC but ever hear of Marc Rich? He was ultimately pardoned after being accused of evading 8 figures (in 1983 dollars) of taxes, trading with Iraq, Iran during the hostage crisis, the USSR during the grain embargo, and South Africa during Apartheid [0]. He lived in Switzerland just fine for a couple decades and the only trouble he ever faced was attempted kidnapping by American law enforcement [1]. He paved the way for the awesome company we now know as Glencore.
0. https://www.congress.gov/event/107th-congress/house-event/LC... 1. https://www.swissinfo.ch/eng/-king-of-oil--discloses-his--se...
The laundering and terrorist financing is incidental to the CFTC’s complaint. The operative allegation is the operation of an unlicensed derivatives exchange, and lying to regulators.
This is Binance, just one of many crypto exchanges. Basically a bank with a different name. Separate from cryptocurrencies themselves.
Binance, FTX, etc. are the former, and I'd say Coinbase is the latter... there's a big difference between wilful non-compliance, and disagreements between regulators and counsel at firms like Coinbase about interpretation of law.
The fact that all of these regulatory actions are happening at once suggests that regulators either may not appreciate the difference or may not care, which is unfortunate.
LOL.
Yes, a good way to delineate pragmatic from extreme views on privacy are when they find no exceptions for designated terrorist organizations and Russian criminals.
1. Law enforcement was only targeting terrorist organizations
2. Accessing the account of someone that turned out to be innocent would guarantee they received compensation
But that’s not the case. Namely with (1), US regulators are trying to ban currency mixers, privacy coins, derivatives trading, etc so the “muh terrorism” argument is nil. Most of this has nothing to do with terrorism.
In general, sure. Here, specifically: actual, literal, documented terrorist financing.
I'm not a fan of our AML/ATF complex. But recent enforcement actions in crypto, e.g. the mixer being used by North Korea or Binance executives texting each other about laundering for Hamas, are so far over the line of reasonable law enforcement that it makes for a poor backdrop for discussing reform.
And if you're supporting universal bans of mixers and other privacy preserving tools as the current government is attempting, then you're part of the problem. I will never support the redistribution of consequences, no matter what kind of patriot act talking points you use to justify it. We can talk about punishing terrorists if it's only about punishing terrorists and not "operating a facility for the trading or processing of swaps without being registered as a swap execution facility" (page 5).
Fair enough. The process violation is Binance saying they wouldn't sell crypto derivatives to Americans and then helping e.g. a Chicago-based client pretend he wasn't American so they could sell them crypto derivatives.
No terrorism. But also no privacy/AML angle. (We have good reasons for regulating swaps. There is also zero financial privacy pitch for crypto derivatives bought and sold on a centralized exchange.) That there is also evidence of willful terrorism financing probably pushed this up the CFTC's to-do list, however.
> if you're supporting universal bans of mixers
Straw man–nobody is proposing a universal ban. The harshest proposals would require KYC at mixers. The best solution is probably something lighter, though pitching financial privacy as a basic right against e.g. the backdrop of the likes of Binance isn't doing the industry any favors.
In a vacuum, sure. But that anonymity has costs in making it easy for the wealthy to embezzle, evade taxes and commit crime. We’re not doing a great job of balancing that cost and benefit. But there is no consensus, theoretically or politically, for the view espoused by crypto-mixer enthusiasts that non-cash transactions should be held to the same standard as political speech.
And removing financial privacy gives governments the ability to destroy anyone financially. Need I remind you that in the 20th century governments killed orders of magnitudes more people than terrorists or criminals, almost 100 million in China and Russia alone. Giving power to the government is a far greater risk than letting some white collar criminals get away with it.
If thinking the government shouldn't be able to deprive people arbitrarily of their livelihood without having to follow the same kind of procedures they'd do so to put them in prison makes one an extremist, I guess I'm an extremist. A blacklist that people can be put on without due process is no way for a democratic government to conduct itself.
Designated terrorist organisation just means someone America doesn't like. The US murdered in cold blood hundreds of thousands of civilians in Iraq yet nobody's trying to restrict the financial dealing of the US government.
If you believe people must be responsible and professional just because they handle a lot of money, it's your problem, not theirs.
The message isn't directed towards people for whom it's normalized, right? Therefore "it's normalized, get with it" is an act of further normalization.
There's a time and place to go after criminals but I don't think that financial institutions are the ones who should be making the final decisions on these things - that should be left for law enforcement.
Maybe it's illegal, but then I prefer that over a legal exchange.
hm. 16% of users make $63M in a month? In any case CZ can dispense this unprofitable 16% and move somewhere in russia or intl waters now. Assuming that canada and EU break all ties with him
Attacking the onramps to crypto in the middle of a bank crisis is not giving out the best of vibes
(Thanks for the flagging but i m not debating this either way; i know HN is anticrypto)
https://techcrunch.com/2023/03/27/binance-and-ceo-changpeng-...
> In May 2021, Binance’s monthly revenue earned $1.14 billion from derivatives transactions, up from $63 million in August 2020, the CFTC noted. Of that amount, about 16% of Binance’s accounts were held by U.S. customers.
In any case this is contrary to the main accusation that "Much of Binance’s reported trading volume, and its profitability, has come from its extensive solicitation of and access to customers located in the United States"
AFAIK throughout the years they were publicly sending users to binance.us and did not encourage breaking the rule. Didn't seem like "Extensive solicitation"
> VIP team member: Hi CZ . . . I went through list of affected API clients, it includes a number of large strategic accounts including [a Chicago-headquartered trading firm] who is currently is a top 5 client and 12% of our volume
> Zhao: Give them a heads up to ensure they don’t connect from a us Ip. Don’t leave anything in writing. They have non us entities. Let’s also make sure we don’t hit the biggest market makers with that email first. Do you have signal?
I only point this out because your comment read as if this was a smoking gun.
Where is their HQ?
Armstrong spends his day tweeting insults at the SEC. I know Gemini and Coinbase positioned themselves, to users and investors, as regulatory friendly and compliant. But they didn’t behave the way compliance-obsessed firms do.
I don't follow Armstrong on Twitter. Can you cite some examples? I took a brief look through his Tweets mentioning "SEC" [0] and didn't see any Tweet that a reasonable person would consider an "insult."
Also, the rate of his Tweets containing "SEC" seems much lower than what you'd expect from someone who "spends his day" tweeting at the SEC - surely such a person would mention the SEC in their Tweets more than a few times per year.
[0] https://twitter.com/search?q=from%3A%40brian_armstrong%20SEC...
Note: I'm not arguing Armstrong had no points. But if you're going to air out your regulatory complaints ex ante and in public, you're not playing in the good-and-compliant lane.
[1] https://twitter.com/brian_armstrong/status/14354392917153587...
They're also a public regulatory agency, so I'm skeptical of the premise that it's somehow wrong to communicate publicly with them. Arguably he has a duty to his shareholders to do so, or at least to let his shareholders know the status of pending or current enforcement actions against Coinbase.
It's not. But it's not "working in good-faith with regulators." Coinbase has been antagonistic with the SEC from the outset.
It's not like he jumped right into it. And especially notable is that they let other exchanges operate the same feature.
Bitcoin started the year at $16.6k USD and is currently $26.9k USD (a return of 62% year to date).
Why?
Who/what is dumping money into Bitcoin that would cause this much demand? Can the rise in price be attributed to demand? I don't see how it couldn't be.
How many millions of USD have been converted into "buy and hold" long term BTC investments? Is that the main driving force for this increase in price? It has to be a very sizable amount for BTC to be outperforming every other asset class... right?
There's no way the price is artificially up 60%+? How could it stay propped up? I've seen it mentioned many times before that crypto can possibly be manipulated by whales or "smoke and mirrors" if you will. Coinmarketcap.com says Bitcoin volume in 24 hours is roughly 615,000 BTC ($16b, 3% of the total circulating supply)
Is there more money going into BTC (inflow) than SPY/VOO/VTI/IVV/QQQ/mutual funds? I wouldn't imagine so. Why is the money that is making it into BTC (is the average middle American dollar cost averaging a portion of their paycheck bi-weekly into BTC through Coinbase?) able to increase BTC 60% YTD but a more sizable portion of money (because we can assume the stock market is much much larger of an investment vehicle) going into SPY/VOO/VTI/IVV/QQQ/mutual funds leads to a lesser return (SPY is up 3.95% YTD with like 1/4th of a 1.6%/year dividend in the process of being paid out so far, so call it 3.95% + (1.6%/4 quarters=0.40% quarterly dividend, Q1 just being paid out) = 4.35% return
>Bitcoin started the year at $16.6k USD and is currently $26.9k USD (a return of 62% year to date).
You're citing the growth in the last almost four months as evidence that Bitcoin isn't bothered by news that broke about an hour ago?
As usual, there's no way to tell if the demand is synthetic, or anything other than invented stablecoins and fake volume, because the entire market is deliberately opaque.
Isn't this like a pedantic detail? How is Tether bought? USD/EUR/GBP/JPY, right?
Fiat -> stablecoin -> BTC
Fiat -> BTC
basically the same journey
my point is, according to this https://markets.chainalysis.com/ there's $3b/day in BTC inflows...
Nobody knows.
Perhaps I should have said it's less a question of how tether is bought and more a question of if tether can be said to be bought, at its point of origin.
The question is how much tether is originating as part of a cash transaction vs how much is being minted out of thin air specifically to buoy the price of cryptos.
$1 -> 1 Tether -> $1 worth of bitcoin
$1 -> $1 worth of bitcoin (as an "investment" for Tether to make money)
$1 worth of bitcoin -> Collateral on loan to Tether -> $0.50 -> $0.50 worth of bitcoin
We don't know exactly what Tether is doing with their money because they don't open their books. Safe to assume it's some sketchy stuff though.
And if you think my language isn't appropriate, Tether is run my literal scammers: a proven financial fraud and an online poker cheat. Chances of it being even semi legit operation are zero.
> Fiat -> BTC
> basically the same journey
stablecoin == fiat is the lie that enabled and perpetuates the crypto madness
BTC holders always had trouble getting USD due to KYC onramps and offramps. People couldn't get out of a volatile BTC position back into stable USD fast enough... so holding BTC just wasn't worth the risk.
But Tether shows up and voila the holding problem is solved as it's a dollar "equivalent" that doesn't have to deal with pesky KYC laws slowing down USD cash-out. Let's trade one magic token for another on a whim, we'll deal with getting USD later. They're good for it. "Line go up" madness starts.
To anyone that's been actually paying attention, Tether is a house of cards waiting to implode. They are not worth 1 USD each, no matter how much anyone wishes, hopes or screams it does.
One by one the so-called stablecoins are being shown to be the garbage/scams they are. Once the market wakes up and realizes that they aren't actually worth a dollar, then BTC has nothing left to artificially prop it up.
Popcorn time.
Should be interesting times.
How is TikTok related to dollar hegemony?
You don't see anything else in the last 6 months that could have turned crypto into an enforcement priority?
That being said, I think you are referring to FTX right? It is the natural way to look at it. You see FTX and a reasonable person could conclude that this is simply the US Govt making sure that it doesn't happen again. In fact, it could be the only reason.
But when I see things like the TikTok CEO being dragged in front of Congress and multiple crypto exchanges (which allow for a potential way to side-step dollar hegemony) being attacked (legally) I like to stop and think about if this is the US Govt retaliating.
Maybe the USG wants to shore up support after rising interest rates highlighted that many banks are not as strong as many thought (due to HTM treasury accounting tricks). Maybe the visits of Putin and Xi to each other countries is signaling an increasingly unified "new eastern blok" which is something that the US wants to weaken. I don't have the answers again. I'm just thinking.
If you are wondering what it means for me personally, I am going to get out of crypto holdings entirely. I see this as a shift that the USG views crypto as a threat that can be exploited by enemies. Perhaps Bitcoin is safe, but that would be the only one.
> "Like come on. They are here for crime." - "we see the bad, but we close 2 eyes."
This is just criminals being criminals, like all the crypto junk always has been beneath all the lofty rhetoric. No grand conspiracy theory needed, the chickens are just finally coming home to roost.
Additionally, the US Govt has managed to weaponize the US dollar through the global financial system; allowing it to enforce it's will without bloodshed (even on nuclear capable states like Russia). It's a capability that is invaluable. So when you hear things like Russians selling oil in Yuan, you need to respond.
The SEC has an order of magnitude more employees than the CFTC [1][2]. Crypto favored the latter not because it was a good cop, but because it is a weaker one.
[1] https://www.sec.gov/strategic-plan/about
[2] https://www.eeoc.gov/federal-sector/commodity-futures-tradin...
Weaker by comparison, not weak per se.
and the crypto space could use services that are not violating the CEA
But those too will be settled with fines and constructively financed and non-prison sentencing.
For context, look at Arthur Hayes with Bitmex. That got very dicey and was way smaller than Binance, big but smaller.
Binance caught commingling funds between US and international exchanges: https://news.ycombinator.com/item?id=34079629
Binance's books are a black box, filings show, as it tries to rally confidence: https://news.ycombinator.com/item?id=34055058
The CFTC is going after Binance for purposeful evasion of U.S. regularities.
The SEC is taking action on Coinbase, this one is more confusing because Coinbase has been asking for guidance from the SEC and they have refused.
TikTok is a national security risk, unrelated to these other two issues, if you've seen the conspiracy theories being peddled by Elon, he does present a lot of right-wing/alt-right positions.
Coinbase has announced that they've asked for guidance. I find it equally plausible that the SEC hasn't decided the rules as that Coinbase asked for overly specific (or overly broad) guidance that they knew couldn't be given.
No. It’s hard, politically, to go after something when it’s making people rich. These investigations have been ongoing, some for years. FTX and Silvergate changed the calculus of watching, waiting and collecting versus pressing charges.
There is always a longer list of enforcement targets than enforcement capacity. Learning from crises isn't a conspiracy, it's competence.
> they knew about FTX and let it slide until it blew up
I would 100% say this. Many people did. They weren't confident, however, they could prove it in court.
The US government cannot censor or control TikTok the same way they censor and control US based social media companies. The US alphabet boiz have all access and muscle to get the data these social media companies have one way or another.
Time and again I said this but anyone who thinks we will have decentralized currency are fools, who don't understand why the financial industry works the way it works. And why do govts don't like not having control over their currency.
And the only place to speak out is Twitter? A boy was banned from the platform because he published publicly available data of a private jet owned by the owner of Twitter. Overnight it was decided what constitutes parody or joke.
A hypothesis. Big tech loved crypto for the same reason they overpaid armies of engineers to do nothing: it prevented them from creating competing AI companies.
Is it possibly correlated that FTX and SBF donated boatloads to Democrats with full media coverage, and donated to Republicans supposedly covertly, which turned out embarrassing in the pissed off public opinion, so now the politicians who were on the take need to look like they're not complicit?
[Edit: Used to link to the PDF from the CFTC in this comment, removed since hn story now goes to it. Thanks, dang!]
Edit: changed from https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-c... to the pdf linked there.
Chief Compliance Officer promoting "creative means" of circumventing compliance controls. You just can't make this up.
The point of this is that "sounds dodgy" or "done only to avoid a legal obligation" and "is illegal" are two very different things. Which it is, is a question I think few are capable of giving an even remotely informed opinion on. It's a global company being sued by the one country in the world they don't [nominally] offer service to.
Take care in your own jurisdiction to get good tax advice, since perhaps “avoidance” is a grey area!!!
nothing scream like "We failed at legislation so we're going to resort to arbitrary decisions"
Unless they define what contrived or artificial manner means exactly, which I doubt.
You know about "structuring"?
While it does seem to involve intent, a lot of laws do.
"operatives...who scurry from bank to bank making these structured deposits are known as “smurfs” because, like the little blue cartoon characters, they’re everywhere"
https://www.kentucky.com/news/local/crime/article223878770.h...
As a contractor, I had several schemes attempt to woo me to use them, with ludicrous promises like "Keep 92% of your gross earnings!". I always said no thanks. Now I read on contractor forums as people panic that HMRC has evaluated their magic tax avoidance strategy and they want back taxes plus interest and I have no sympathy - they were high earners and they were trying to avoid contributing their share.
The worst are the loan schemes - You give all your earnings to an offshore entity, and it gives 95% back as an interest free 'loan' that is never expected to be repaid. No tax! W00t! But now not only are the tax authorities interested in you, but when some of these schemes wind down an external liquidator takes a look at the books and decides "Hey, there's all these loans outstanding, we need to recover these funds for shareholders!". Ruh-roh.
https://storage.courtlistener.com/recap/gov.uscourts.ilnd.43...
I think it can be summarized that they knowingly traded securities with US entities, and intentionally circumvented legal and technical restrictions to make those trades happen.
Without looking up or pausing he responded "How much do you want it to be?"
Did he? FTX went to CZ for help. CZ looked at their notoriously-shit balance sheet and ran scared.
> SBF jokes CZ couldn't visit the US
> CZ announces he will sell his full stake in FTT (a huge percent of the float)
> Alameda was extremely leveraged _based on their FTT holdings_, once FTT started crashing they went under water on their leverage and started fire selling assets at a loss
> some of those assets belonged to FTX custumers
> Certain digital assets, including BTC, ETH, LTC, and at least two fiat-backed stablecoins, tether (“USDT”) and the Binance USD (“BUSD”), as well as other virtual currencies as alleged herein, are “commodities,” as defined under Section 1a(9) of the Act, 7 U.S.C. § 1a(9).
This is interesting, it appears ETH was named a commodity in some US federal legal document. Interesting to see how this will play out in court. Should this override SEC statements about ETH being a security ?
CFTC regulates commodities, so of course they will say things they want to regulate are commodities. OTOH SEC regulates securities, so they will say things are securities.
See also the way any kind of fraud can become "securities fraud" if you have investors. Basically, if your business involves defrauding customers, that is likely going to negatively impact stock price when it comes out, and if you lied and told shareholders you were not defrauding customers, you are also defrauding shareholders thus securities fraud thus SEC jurisdiction.