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Comment by treypitt | Hacker News Reader

Coinbase and Armstrong tried for months to get the SEC to tell them if their Earn/Staking product constituted a security, and they declined to answer. Serving a Welles Notice makes it clear Gensler is a bad faith regulator

https://podcasts.google.com/feed/aHR0cHM6Ly91bmNoYWluZWQubGl...

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Why did sec need anything to say when it was clear the product was a security from the beginning?

If it's so clear, and people disagree, wouldn't it be common sense to just say it? Declining to comment makes no sense here.

Isn't howey test fairly clear as to what it is?

Because it isn't clear the product is a security at all. Coinbase earn is an IT service where Coinbase (or a contractor representing them) interacts with a protocol on your behalf in exchange for a cut of the proceeds.

https://archive.ph/RX8aj

I have read this article, and to the best of my recollection it contains zero discussion of Coinbase's Earn product.

Then read also this: https://archive.ph/KueXO

PArt of Coinbase earn is defi yield(aka lending), part of it is crypto staking.

I also suggest you to read howey yest and make your own conclusions.

>PArt of Coinbase earn is defi yield(aka lending), part of it is crypto staking.

Wrong. Nothing currently implemented in Coinbase Earn could be reasonably considered "lending". The article you linked is 2 years old and about Coinbase's prospective "Lend" product — which, as I understand it, never launched, perhaps because of a Wells notice submitted in 2021. This statement is about the one they've received more recently "regarding an unspecified portion of our listed digital assets, our staking service Coinbase Earn, Coinbase Prime, and Coinbase Wallet":

https://www.coinbase.com/blog/we-asked-the-sec-for-reasonabl...

> regarding an unspecified portion of our listed digital assets

I believe that's the first link. Most (if not exactly 100% of them) cryptocurrencies are securities as per howey test. Tron in particular, matt levine calls out, is clearly securities, among other things. Coinbase also listed a lot of other tokens that were also clearly securities.

I don't know why this is not clear.

Whether or not Coinbase is operating a securities exchange (they obviously are, despite the fact that I don't necessarily agree that "most" cryptocurrencies they list being securities by any reasonable application of the Howey test), and whether Coinbase Earn ("the product") is a security, are two distinct questions.

Which part of howey do you think Coinbase earn(not staking, but the product offered by Coinbase themselves) doesn't satisfy and is therefore not a security?

I made it explicit between staking (you staking your own money) and doing it through Coinbase.

> not staking, but the product offered by Coinbase themselves

But the product Coinbase offers is staking.

You are missing the nuance.

You can go ahead and try staking your money yourself on the protocol. But do it through coinbase equation changes.

Also coinbase earn does defi yield (which is more clear cut securities), but i am in mexico now, and can't tell if this were the case in the US or i am seeing geofenced content.

AFAICT (and I suppose it's possible I'm missing something), here in the US there is nothing on Coinbase Earn besides staking.

>do it through coinbase equation changes

Why? It's still just staking.

I'm back in US

There's DEFI yield in US. https://www.coinbase.com/earn?filter=DEFI

I clicked on the top 5 of that list and every single one is staking.

if it was that clear, why would they refuse to confirm it?

You can't argue an answer is super evident and at the same time insist that it is impossible for you to provide it.

It makes more sense for this to be adjudicated by the court systems rather than an individual in an agency like the SEC. That is too much power for the SEC after all and we really need those separations in the US -- it's literally the foundation of the US.

Anyway, the fault here is with the US congress (all of the so-called elected representatives) since they haven't drafted legislation to clear said uncertainties now in over 10+ years. Gary Gensler is doing his job, no matter how difficult it is at this time. Congress people yelling at Gensler for example is akin to a boss yelling at his employee for an outcome that was determined by the system the boss created.

When congress isn't aligned with people (whether to draft legislation for or against cryptocurrencies) one doesn't need to go so far to determine what that person's agenda actually is -- if it's not the people's agenda, it's wrong.

Gensler has publicly said “everything other than Bitcoin” is a security.

https://cryptoslate.com/sec-chair-gensler-confirms-everythin...

Is that not a clear enough answer? I'm not saying Coinbase has to agree - but there's no way they didn't know he said this.

I replied to your other comment, but posting here that this article is wrong and twists his words. He said Bitcoin is not a security, everything else is undecided. Big difference. Coinbase it taking them to court to make them decide.

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