SEC charges crypto entrepreneur Justin Sun and his companies for fraud

Crypto seems to have been particularly powerful at preying on women and minorities who felt like they’re missing out with mainstream finance. This kind of highly focused influencer marketing within communities must have been a major contributor to its uptake.

Last year, a colleague was talking about his ~15 year old kid insisting he wanted to buy NFTs. Said colleague had suffered FOMO from years of the rest of us talking about Bitcoin and might've therefore been primed to acquiesce.

If you look at the stock market a big part of it didn't behave that different than the crypto market and that's due FOMO. Why did people buy stocks at insane valuations? Some of them were burned and I'm sure they though they will sell just before the market is going down.

otherwise, the winery or baseball card issuer is engaged in fraud, and the seller is too, and the boss who recommended them is as well

this is what people find to be… at best … incomplete logic. there is a Howey test interpretation that would allow for this expansion, and crypto folks would gain power by having it applied congruently to those physical established artificial scarcity collections too, because Congress would reevaluate this inconvenience more holistically. There is another interpretation where the SEC makes no sense at all, and has to provide a clear exemption framework for crypto assets to navigate in order to be treated the same as wine bottles and baseball cards, ignoring the current parasocial relationship and reliance that crypto traders have with crypto project creators.

> First off, no, we wouldn’t. The boss and the other members of the team will all see that for what it is- trying to kiss ass to get ahead instead of doing your job. Particularly because (as you’re suggesting at least) the person doesn’t actually like those things and is simply trying to get ahead.

The counter-assertion relies on the axioms of

(1) "100% of people are capable of detecting 'kiss-assery'",

(2) "100% of people don't like 'kiss-assery'", and

(3) "100% of all actions of a person copying their boss' likes are due to 'kiss-assery'".

All 3 axioms are invalid: (1) is invalid because not all people can detect it properly without false positives or negatives. (2) is invalid because of the existence of narcissism & (2)'s contribution towards the affirmation of narcissism. (3) is invalid as it excludes the possibility of taking on a new like simply because of enjoying it.

> Just watch the Office. Dwight and Andy constantly try to do this to Michael and while they are occasionally successful, it hardly matters or has a lasting impact. Further, their coworkers all find them annoying (while they continue to “just do their jobs”).

The example given cannot be considered useful as its reliant on using constructed scenarios in a semi-fictional setting, and using it as evidence. Its equivalent would be the usage of the CSI episode "Fur and Loathing" as evidence of the furry fandom always being about sex & deviancy at all times, which is not the case.

Would the SEC claim that she was not good enough friends with the people who told her that to call them friends?

It's the bare minimum, but its compliant.

And the UK has (oddly) some of the stronger legislation/regulation around marking advertisements.

YMMV when it comes to advertising finserv tho, the other regulators might fuck you even if the ad disclosure is done correctly.

German streamers also ran into a separate issue with German broadcasting regulations when they tried to run a 24/7 streaming format. Turns out you need a broadcasting license for continuous scheduled programming like that.

Pretty much ends there. The SEC can say you are civilly liable, and they can assess fines in some situations and initiate civil litigation in others based on that.

But if they think you are guilty, that’s an issue they hand off to the Justice Department.

So every civil suit filed should be forced to go through trial even if the parties arrive at a mutually acceptable resolution that both sides prefer to trial?

It might be different if anybody believed these celebrities were actively trying to defraud and harm people.

The reality is more likely that these people are effectively human billboards. People pay them to read a script, and they read it. Each week a different product, different script, same deal.

So they got suckered into reading an illegal script. They get penalized (rightly) but it doesn’t necessarily need to be extreme.

And now the SEC gets to show off their win using the same billboards.

How many other high-paying tweets that look like fraud did he keep all the cash? Do we know? Was it none?

"Dang, turns out that one is a loser - they got me on that one." Can be a business expense in a profitable operation.

I see this kind of thing as fraud and there /needs/ to be conviction and jail, even a week in minimum security. There has to be consequences that aren't a business expense for getting in on fraud.

The "I'm a dumb celebrity so I didn't know" defence is just garbage, they should be terrified of accepting such "gigs". Utterly crapping themselves about how bad it could go.

https://www.sec.gov/enforcement/how-investigations-work

often times they are announced but under separate headlines on separate websites, you have to check. Other times there is not a criminal case at all.

SEC proceedings are civil; criminal violations are referred to the Department of Justice for prosecution, often in parallel to civil enforcement action.

> You can plead no contest to criminal charges

You cannot generally plead “no contest” (nolo contendere) to federal criminal charges; the court may allow it, but “before accepting a plea of nolo contendere, the court must consider the parties’ views and the public interest in the effective administration of justice.” [Federal Rules of Criminal Procedute, Rule 11]

Yes.

> The flexibility to extract a settlement from guilty people without an acknowledgement of guilt seems to be a worthless prize unless we’re enforcing legislation for revenue’s sake.

Civil charges are about liability, not guilt, and have a different standard of proof than criminal guilt. However, in a criminal trial, and admission of facts necessary for civil liability is admissible evidence. No one benefits from a system in which it is impossible for a party to accept civil liability without admitting to facts that could be used against them in other, including criminal, litigation when the civil verdict itself could not be.

And, while in this case all of the consequences may have been monetary, in civil litigation especially involving the government, there are often other consequences (such as legally binding commitments to heightened monitoring and behavioral controls) that are attained in settlements (often, in the form of “consent decrees”) of civil litigation. Making those more expensive for all sides because the defense was incentivized to go through a kabuki-dance trial even if they fully expect to lose on the civil burden of proof just to avoid making an admission to settle does not benefit anyone. Except lawyers, lawyers would love it.

I doubt it

> like Coinbase paying out billions in stock-based compensation while losing money

I really wish people put more effort into arguing their side in these discussions. Your point is absurd and lazy.

[public company] pays some % of employee salary in stock >> while "losing money" >> ??? >> customer's property is stolen.

> Did the SEC orchestrate FTX and all the other crypto failures

FTX's problems were amplified by being unregulated, outside the US. The overwhelming majority were not US residents. The SEC didn't have jurisdiction over their International firm. The US version of FTX was handled very differently, but supposedly co-mingled funds. They FAILED to protect US residents by not shutting down the US version. They could have gave warnings about the international firm, instead of working so closely with FTX's founder.

As usual, lots of hand-waving from crypto detractors. You have a clear bias. Sadly, when enough people share a bias, truth and facts are irrelevant. There's a lot to criticize about in crypto. No need to make up irrelevant associations.

https://www.reuters.com/legal/coinbase-issued-wells-notice-b...

They don't apply to all situations, and your criticism is somewhat valid for many crypto cases, but between crypto and traditional finance it's true that regulators can be too heavy-handed on some areas in crypto while being a lot more lenient on say people who run a company to ground in a leveraged buyout.

That's, in theory, a non-trivial product, given how much IPO underwriters tend to charge.

They're not serious about the storage business. If they were, they'd have visible pricing and comparison tables with other cloud storage providers.

[1] https://hub.filecoin.io/form-data-client-onboarding

You can make the same argument about the SEC.