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Comment by injeolmi_love | Hacker News Reader

There are over 1.8 million crypto tokens. If the SEC is going to shut down the industry, they’ll need to at least start shutting down more projects per month than are starting up.

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Do any of them reach even 1% of Binance's size? If crypto stays a bunch of niche projects that only enthusiasts invest in, isn't that the SEC's goal accomplished? I can't imagine they would care about a coin that doesn't attract either a lot of retail customers or big financial institutions.

Binance value comes from servicing those niche projects - it’s an exchange. As long as those niche projects exist, new projects will emerge to service demand. What will change is design; future exchanges will be less regulatable. Already dexes are waiting in the wings; UNI has been in a price uptrend due to these decisions.

A smarter strategy would be to do what the US Justice dept is doing; co-opt the biggest players, install plants, and cut down any upstarts. Government enforced monopolies have worked for hundreds of years as an effective way to control industries.

All of that's assuming that demand will continue. What this will do is remove crypto from the mainstream. And without paid celebrity endorsements, where will the new dumb money inflow come from? And if that dries up, how will the mining rigs pay their electricity bills?

A lot of people use crypto for utility, which is why it doesn’t go to zero in bear markets. Not everyone needs or wants crypto tokens, but those that do form the base of the ecosystem. You can call it dumb money if you want to be elitist, but it’s the same so called dumb as any consumer activity.

If you start an ICO, you are harmless until you get someone to buy into your token. For the SEC, you are harmless until you collect "millions" of dollars. Otherwise, you are just another one of these small scams that are happening all the time regardless of it using crypto or not.

Unless they do a complete and total eradication program, that will just create a selective environment for tokens that are able to avoid SEC fines. What you’re saying does seem to be the SEC strategy, and it is probably the profit maximizing strategy in the short term. It also requires the least effort; rule making that allowed for regular fee collection instead of sporadic ones might be profitable in the long term, but it would be a complex activity the SEC might not be capable of.

Where's the tax dollars to pay for this?

If the fines are high enough, seems like it could be self-financing.

Usually this kind of enforcement attempts to reimburse victims, or failing that, goes to general funds. Anything else is a moral hazard for enforcement (eg, USA local police confiscations)

Are you trying to say USA local police confiscations don’t exist at large scale?

No, I'm saying that they are an example of moral hazard.

Sure, but one that continues to exist after decades of being used no? It’s an example of folks not caring about that hazard and doing it anyway.

So? That doesn't mean the feds should do it too.

The local seizures are run under a Federal program. [https://www.justice.gov/afp/types-federal-forfeiture] [https://www.forfeiture.gov/]

That is why it is so prevalent everywhere in the US.

The feds use it too, extensively.

Okay - worse than I thought.

That's a fair point. From the point of view of the taxpayer, though, it's still a net positive.

According to the article:

To make this palatable to the American public, those whistleblower rewards are not courtesy of the taxpayer; they’re courtesy of money seized from previous Bond villains. A portion of Binance’s settlement(s) will go to pay the whistleblowers at the next Bond villain. It’s a circle of life.

> Where's the tax dollars to pay for this?

You're kidding right? The US government is one of the biggest holder of Bitcoin. They seized insane amount of Bitcoins. And the US is a country where capital gains are taxed. The US government is making a shitload of money when cryptocurrencies go up.

You cannot have it both ways: if you tax your citizens on their capital gains made on crypto, then you prosecute the scammers like SBF when they prey on US citizens.

I don't disagree, but you're arguing that the government gives a greater share of its tax receipts to the SEC. This is a question for Congress, not the agency. The usual assertion of "let's spend more money on x" results in the obvious question "instead of what?".

OP was suggesting that the SEC ramp up the rate of actions, which will need funding (at least, initially). I don't see Congress doing that?

The SEC is largely self-funded by fees on banks, no need for tax dollars.

A government mandated fee is an excise tax, they are essentially the same thing.

The SEC is largely self-funded via fees charged to financial institutions. Funding increased enforcement of crypto entities doesn’t have to require more tax revenue.

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