I'm not sure that quite follows. Yes, cryptocurrencies are currently a wild west, and there are a lot of scams, but I don't think it's fair to paint the whole space with the brush of a single particularly-blatant scam. It's like... when the whole Theranos thing came crashing down, it wouldn't be fair to say "well of course, most claimed medical advances are scams"; Theranos was a scam, and had some fairly major signs of being a scam, but that doesn't mean that most medical advances are scams. Likewise, Celsius was a scam, and AIUI looked like a scam pretty early on, just like a lot of other things in cryptocurrency are scams, but that doesn't mean "people involved in crypto" == "scam artists".
And the most amazing part --- it's not even a scam.
He really didn't cash out anything that was legal tender --- what he cashed out was a bunch of play money. Technically, this isn't a crime because it wasn't "real" money.
The DOJ is going after folks for front running [edit: better wording: insider trading, thx jcpham2 for pointing out my lazy language] NFTs on Coinbase. This is not a defense (“not real money”). Can’t have it both ways, that they’re digital assets when you want to scam, but it’s play money when you get caught.
These people will be charged with a crime, and the government is going to find something that sticks. Securities fraud, wire fraud, whatever fits.
Imho we should be careful of using this term front running.
If I buy a thing (simply becqause I can) and then turn around and sell it at artificially high limit sell orders, does this mean I'm front running or market making? Spoofing?
It's as "funny money" as any other security. Just because you feel they may be "funnier" doesn't affect the laws around selling and trading securities.
Your post is based on an assumption --- that crypto is legally defined as a "security".
Do you have any reference to support this?
If this is true, then the crypto market is subject to existing security laws. And government needs to launch an extensive investigation of crypto exchanges who have been operating without the required authorization or oversight.
As I said, this cuts to the very core of the crypto market.
> As noted above, in categorizing the tokens as a security, the SEC’s complaint makes reference to the Howey Test, under which a digital asset, including a “crypto asset security” will be deemed a security “if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others.” The DOJ’s complaint alleges that “the defendants made illegal trades in at least twenty-five different crypto assets and realized ill-gotten gains totaling approximately $1.5 million.” The SEC’s complaint claims that at least nine of the 25 crypto assets were “crypto asset securities,” and therefore the defendants’ insider trading of securities fell within the SEC’s “broad jurisdiction to regulate the securities markets and to bring actions for violations of the federal securities laws, including fraud and insider trading.”
> None of the issuers of the nine “crypto asset securities,” or Coinbase itself, are named as a defendant in Wahi as this is an insider trading case. Issuers and exchanges of tokens should take caution, however, as the SEC’s stance in Wahi reiterates the SEC’s a broad view of digital assets as securities and its ability to regulate them.
As duped mentions, if it's not a security, it's a commodity falling under the regulation of the CFTC.
What is the point that you're trying to make? People put in real money that they won't get back because they believed in Celsius. Execs made real money by cashing out before closing the doors. That's called a scam.
"I convinced them to pay real money for fake money, stole the fake money, and exchanged it afterwards for real money" is not an argument that is likely to convince the SEC (or a jury).
not an argument that is likely to convince the SEC (or a jury).
Mainly because your argument is wrong all the way around.
Celsius never accepted any "real money" from anyone. Any "fake money" they allegedly "stole" came from their own account, not those of their customers.
That doesn't pass the sniff test: people clearly entered the market with actual money (even if they didn't directly pay Celsius), and left with none.
You can argue (perhaps correctly) that they shouldn't have traded their real money for funny money, but it's ultimately no different from any other financial instrument.
Let's say my company has $400,000 in earnings left over. I could pay it to myself but then I have to pay income tax and all that jazz.
So, instead I buy something fungible-ish that isn't on anybodys immediate radar as a 'security', say, some Black Lotus cards from Magic the Gathering, and I then give those to myself.
HA! I dodged it all!
.... no. The spirit of the law is that this is a financial transaction just the same.
BitCoin and all the other crypto currencies are no different. It's all play money.
A story as old as time. For example, in the past (and even today), you can buy pricey paintings. Still fraud if you use that to dodge taxes. Still fraud if you steal a painting, and not because it's a physical object. It's something that is considered to have value, based on the notion that it is not hard to sell.
What do you call it when you abuse your insider role to close your own position in your failing investment fund, while hanging your customers out to dry?
> What do you call it when you abuse your insider role to close your own position in your failing investment fund, while hanging your customers out to dry?
Web3. Ask me a hard one next time.
Less-flippantly: Probably fraud, regardless of how many disclaimers your website has in 4pt font.
