You are going to see a lot of political maneuvering by the sorts of A16Z, Binance, FTX, Galaxy Digital, and — dare I say it — Y Combinator, to keep cases like this from getting very far. If all of this gets classified as general partnerships engaged in securities law violations (and worse, as per Terra/Luna), a lot of arrogant investors and market boosters will find themselves in more trouble than they imagined.
They were running it out of a Delaware LLC formed in 2017? Am I reading that correctly? That’s not standard practice now for obvious reasons. I don’t think many people in the industry will care about this case, but I could be wrong.
It’s pretty cheap common for crypto startups to incorporate as a Delaware corp. Then when you launch the protocol or token you establish a Caymans/BVI/Swiss foundation.
The Delaware corp acts as a service provider to the offshore foundation. The DAO and it’s treasury are directly tied to the BVI foundation.
The advantage of this is that if the equity ends up having value in addition to the token, then you have a nice Delaware corp to wrap that equity value in.
I've seen similarly flavored incorporation structures with crypto hedge funds, where there's a management firm LLC incorporated onshore, and a holdco offshore where any of the funds flow is happening -- the advantage there being that one can trade on any of the major exchanges without being tied to US regs.
Very interesting to see similar structures with crypto startups as they launch protocols/foundation tokens. I guess the commonalities have to do with the treasury aspects, right?
My interpretation of peyton’s comment was that the crypto industry players these days incorporate in places with more legal and regulatory flexibility than the US these days, not that something has changed in US regulations to make Delaware less favorable.
All insurance is in Bermuda. The federal reserve used cayman entities to send stimulus checks. Most not for profit orgs in the USA use Puerto Rican or offshore hedge funds to avoid withholding
Stem Cell Therapy has a fairly obvious use case though. Ten years in, the most popular use cases for crypto appear to be speculation, financial crime and money laundering.
Well, so stem cell research is avoiding US laws because of Puritanism.
Why is crypto avoiding US laws?
Edit: Also, a quick Google of top stem cell research companies show that they are based in the U.S. or Europe, so I’m not sure how correct the claim of US avoidance is. But even if they are avoiding the U.S., they are choosing Europe instead, where “legal flexibility” is still not a thing.
The US doesn’t have crypto legislation AFAIK. Just a hodgepodge of rules from various power brokers. Other jurisdictions do a better job. IANAL, so take with grain of salt.
Or in other words "wait, they actually incorporated in the US and not on the Cayman Islands or in Hong Kong or in $Obscure South Pacific Country You Never Heard Of? Amateurs!"
I think you are misunderstanding that article and the underlying case. It’s not a legal argument that all DAOs are all General Partnerships, but specifically DAOs not using or “wrapped” by a legal entity might be classified as General Partnerships. It’s no different than any sole proprietorship or business not protected by a legal entity, there can be unlimited personal liability.
No misunderstanding. A much larger number of projects than you might imagine, and a much larger portion of the oversight etc of projects that seem quite formal and structured, pass through informal structures such as DAOs.
More importantly, a large portion of the economic value of many projects passes through these informal, legally untested structures. And, as anyone who has read ICO white papers and read through the “tokenomics” can tell you, a significant portion of that economic interest is held by VC “whales” such as Binance and A16Z (greater than 5% = significant).
There may not be blood, but there will definitely be a whole lot of lobbying.
>If all of this gets classified as general partnerships
to literally mean all as opposed to only those DAOs that in fact are General Partnerships.
Either way, it’s nothing new in law nor surprising. I’m not saying their isn’t legal risk or potential liability issues, but it’s certainly not something A16Z isn’t aware of, they have written about the legal issues pertaining to DAOs extensively, just one example: https://a16zcrypto.com/wp-content/uploads/2022/06/dao-legal-...
Thanks for the link, hadn’t seen it. It actually reinforces my point — don’t you think it’s a bit weird that a 30 page “legal framework” uses the word “securities” only once, in a footnote? I can tell you as a matter of fact that IRL conversations with any competent legal counsel about DAO governance does not relegate the topic of securities to a single footnote.
These guys know they’re playing with fire. They assume they can buy their way out of legal problems — which, well, it’s America in 2022. It’s probably true!
I happen to be an attorney, also happen to have organized the first Delaware LLC that memorialized smart contracts into the Certificate of Organization (the “Articles”) pursuant to the DE Limited Liability Company Act amendment authorizing LLC records to be kept on blockchains, I’ve also worked with the SEC on a No Action Letter Request for a public offering of tokens, so I have a little insight.
Again I’m in agreement there is always potential liability and risk, and notwithstanding their activities I think we can both safely and fairly assume AZ16 has at least competent legal representation that advises them nearly every step of the way and minimizes any legal risk and potential liabilities. Beyond that, without specific examples I just wouldn’t speculate, but as a simple example going back to the idea of DAO without a legal entity being treated as a General Partnership resulting in joint and several liability, yes that could be very bad for you and me if we invested in tokens in our individual capacities because we could have unlimited personally liable, but I’d be shocked if AZ16 didn’t use separate legal entities as investment vehicles for each DAO investment, meaning under the same set of facts their liability though unlimited like you and I personally, would in practice be limited to their investment via the separate investing vehicle.
In terms of not mentioning securities in that publication, no I’m not surprised. Not because it isn’t a very important issue, but securities issues and analysis is independent of the legal framework being discussed, which they are defining as the legal entity, tax and operational considerations. They might have other publications with respect to securities, but if I were their lawyer, I’d advise against it.
Broadly classifying everything as a general partnership is not going to happen. Number one, there are already states such as Wyoming that have laws on the books allowing you to register a DAO as a DAO LLC. Number two, much of crypto is international and lawsuit will have no jurisdiction there.
This is simply not true. US has very long arms when it comes to fraud or violations. If it's consumers are harmed, they might seek criminal charges even.
Fraud is criminal activity, I'm not talking about that. Corporate shield does not protect you from criminal law. Do Kwon probably should do jail time. The comment I was referring to had to do with a civil lawsuit.
I don't think they knew they were putting money in a Ponzi scheme. They thought the gains were coming from real investments.
People who spent money on Terra/Luna knew it was a cryptocurrency that used magic computer maths to make numbers get bigger (until number got small), same as all the other cryptocurrencies.
That's a ponzi too, and no, your ordinary American only looked at the large yield and said oh, i should get in on that, even though, it was some sort of ponzi with funny dynamics.
So no, it's still a ponzi, and no, most people had no idea.
Precisely. If the US doesn't have juristiction they will just seek extradition and generally get it unless they fuck up the case horribly (like the Kim Dotcom situation).
Depends on the country. Some countries do not extradite their citizens and some others only if what they are accused of is also illegal in their own jurisdiction...
Everything. They couldn't for the life of them work out how to follow procedure so they got crucified by the NZ courts.
If they had just done shit by the book they would have had him on US soil with no problems at all.
FWIW I don't agree that he -should- be able to be extradited. Just stating the fact that if the US had just not screwed the pooch they would have been successful in doing so.
And how are they going to enforce it or serve it? At any rate, no, there is no way that any online organized group of people (dao is a loosely defined word, except where legally defined and protected as in Wyoming) will be determined to be legally and universally and internationally jointly and severally liable.
That's not to say that some suits won't be brought but even if bzx lost their case it would not be necessarily a reflection on other legal or political arrangements.
> And how are they going to enforce it or serve it?
Have you, uh, met America?
Not only is America litigious, the long arm, when sufficiently motivated, will get you anywhere on the face of the planet. Just ask Assange. Not that I support this behavior, or this privilege, but I'm not ostrich enough to pretend it's not on the table.
> dao is a loosely defined word, except where legally defined and protected as in Wyoming
That may matter in Wyoming, but in America, I assure you, the 'ill defined' nature won't stop the prosecutors.
I mostly agree, but one place people can escape to is Moscow, where Edward Snowden has relocated to. Of course, Russia has become less attractive recently.
I'm not a huge fan of Snowden's; I'm not sure what to think of him. It's tempting to mock him for ending up in Russia of all places - one of the top 3 countries for suppressing dissent. But he didn't go there because he thinks the Russian government is morally superior; he went there because it allows him to stay of out prison.
I don't think he dedicated his life to denouncing all morally questionable government actions everywhere. He ruined his own life by denouncing what the NSA was allegedly doing back then. I'm not sure I can demand that he should ruin his life even more by annoying the Russian government.
Indeed although one could argue that exile in Russia in and of itself is punishment. Especially since thanks to the long arm of Uncle Sam, you won’t be boarding an international flight any time soon - lest you find it diverted to Cuba.
It seems that if they wanted to, the Russians could make him fake passport with Snowden's picture and a made-up name and he could go wherever he wants. He shows up in the passenger manifest with some random name and the plane doesn't get diverted.
But he probably doesn't get any favors from Russia because he's not useful to them.
I suspect Putin would hand someone over from Russia for the right price; Snowden currently provides more value to Russia by annoying the US than he would handed over.
> (dao is a loosely defined word, except where legally defined and protected as in Wyoming)
Looking very closely at the link you give in another document, you have to specifically go through a registration process to register as a DAO in Wyoming, and get the legal benefits of becoming a LLC.
> At any rate, no, there is no way that any online organized group of people will be determined to be legally and universally and internationally jointly and severally liable.
That's not how the law works. If you've got (a) two or more people that (b) agree to do something in partnership [it does not need to even be a written agreement], then by default, you have created a general partnership. An "online organized group of people" is--you guessed it--a group of two or more people that agreed to do something in partnership, so you've got a general partnership, unless someone has a quantum of legal knowledge and takes steps to form any kind of legal governance other than a general partnership. And you've got any legal knowledge, you'll avoid a general partnership, because that means every partner is jointly and severally liable.
Sure, you can override this if you take the proper legal steps. But given how much the crypto community seems to spend trying to claim the law doesn't apply to them (e.g., code is law), I'm skeptical that very many DAOs have taken the appropriate legal steps to avoid forming a general partnership.
>> there is no way that any online organized group of people (dao is a loosely defined word, except where legally defined and protected as in Wyoming) will be determined to be legally and universally and internationally jointly and severally liable.
That's an assertion that may be tested when there are tens or hundred of millions of dollars at stake. In our everyday lives how you would go after something like a DAO is not at all obvious. But that doesn't mean there are ways.
And you are right to say it will be a reflection of other legal and political arrangements.
Why not? Not a lawyer but isn't it fairly normal in criminal law, for example, with a terrorist or criminal organization (and a fair amount of international cooperation there, too)? To be clear not saying DAOs etc. are in any way falling in that area (criminals aside), but why would the method of organization provide a shield unless created by law (such as an LLC)?
As I mentioned above, there are already laws on the books in the United States explicitly protecting DAOs from personal liability when they are registered as a DAO: https://sos.wyo.gov/Business/Docs/DAOs_FAQs.pdf
So there's already an exception to disprove this "universal, international, jointly and severally liable" theory that is going on in this thread. OP was mentioning A16z and the like as if they are not shielded from personal liability for lawsuits targeting the companies they invest in. That's not to say that a16z cannot be sued. But the individual investors that are part of it, that participate in rounds, being sued on a personal level as if they are "jointly and severally liable partners", that is not going to happen. Sorry. Even if Bzx loses their case, the facts of the case are material. The facts of each unique situation matter. Even within the United States.
Just as a thought experiment: if a DAO was created by 7 random people on the internet from Dubai, Latvia, Colombia, Australia, Singapore, Switzerland, and Taiwan, how exactly would you go about bringing a lawsuit against them from the United States? And how would you target them on a "jointly and severally liable" basis?
> Just as a thought experiment: if a DAO was created by 7 random people on the internet from Dubai, Latvia, Colombia, Australia, Singapore, Switzerland, and Taiwan, how exactly would you go about bringing a lawsuit against them from the United States? And how would you target them on a "jointly and severally liable" basis?
Sue the Australian in the Australian court--common law jurisdiction, so it's going to be quite similar to US laws, and personal jurisdiction over them in Australia isn't going to be hard to establish. I get the judgement against them for the full amount, and it's their problem to get the other 6 people to pony up their share. That's what "jointly and severally liable" means: I only need to go after one person for any claims I have; it's their problem to get the pain distributed.
> are already laws on the books in the United States explicitly protecting DAOs from personal liability when they are registered as a DAO
Isn't this only relevant when ash organization takes the legal steps to register as a DAO in Wyoming? If that is not the explicit corporate governance model, then a default structure is assumed.
Analogously, my state (Virginia) has laws on the books limiting my personal liability for judgments against my business iff I register that business as an LLC. If I don't do so, then the business is considered a sole proprietorship, and I can be sued personally for harms my business causes.
Thanks for the explanation. As I said, not a lawyer/not very familiar with US domestic law.
For your thought experiment: maybe try to use something from the CFT spectrum, because that you can make stick with a lot of places in some form or another? So not really simple civil law and probably not straight forward (could it even work?)
It's incredible to me, but I have a friend who's still suggesting buying stablecoins that "pay" 9-12% interest after this. It's like some people are congenitally incapable of recognizing a ponzi scheme. When I pointed out that it was a lot of risk to trust a ponzi just to keep up with inflation, his response was "haters gonna hate".
Look, Zhou Tong ran off with some of my money (Bitcoinica). GOX ran off with some of it. The obfuscation around the scam has evolved, the language and instruments have become more complicated (mostly for the purpose of suckering people who think they're not suckers, I suppose), but the basic scam is exactly the same.
It's almost like crypto has become a living thought experiment in how many times people can be scammed and keep on believing.
People want money more than ever. But financial education and common sense is at all time lows. But also people have access to applications that allow for rapid investing at the speed of thought. And Crypto provides a vehicle for obfuscating transfers of wealth, from fools to scammers. Barriers to entry in creating a scam are very low. Social media allows for rapid propagation to unwary victims. Governments don’t do anything to protect people.
Scams are much easier to pull off if the victims are desperate and I think it’s the golden age of scamming because people have gotten much more desperate as the value of labour has been rapidly dropping compared to capital.
Every day they see value of housing, stocks and cryptos skyrocketing while their wage remains stagnant. They don’t believe they could ever catch up and they feel obliged take riskier and stupid bets like stable coins.
It also doesn’t help that they don’t trust sensible financial advice because those advocate investing in the old system that had failed them. Hence the “haters gonna hate” attitudes from some crypto dudes.
I'll go one further and say that with the exception of a few honorable pizza delivery services and casinos that were bound by their reputation, almost every enterprise involving crypto has been one kind of pump-and-dump scheme or another since day one. And I've got a metric fuckton of chat transcripts from early bitcoin founders in 2011 to prove it (some of whom are household names now, most of whom are wildly rich).
I only got into taking Bitcoin because UIGEA cut my real-money gaming startup off at the knees right when I'd finished 3 years of coding and beta testing. I spent a lot of time in the gambling world with sharks, but Bitcoin was a whoooole other pit of snakes. And those [early Bitcoin] guys at least understood the technology and believed in the libertarian ethos of it, even if they were also the first to understand how to manipulate the market. What's gross is watching a whole generation of scammers and marks who don't even fundamentally understand what's going on.
IMHO financial education is pretty simple: Don't take on debt. Don't invest in people who take on debt. Don't invest in something that's too good to be true. Save as much as you can. Save something from every paycheck. Buy stocks that pay dividends, reinvest and don't touch them until you're dead. Don't dip into capital. Don't ever sell real estate. It's not hard, it's not complicated, it's just not fast. If it's fast, it's too good to be true; see step 3.
In an system centered on printing money and distributing it via the banking industry to whichever group is preferred by the current government? Might be the worst advice I have seen. Mortgages are free money and if you aren't using that you are going to become poor within a generation.
Yeah, the real advance with crypto has turned out to be decentralized scams, where it can be difficult to prove even afterwards that it was an intentionally executed scam.
But when the pattern repeats time and time again, you gotta start to realize what it is, even if you can't define or prove it.
Financial education and common sense are at all time highs at a global, hundred years zoom level. If you are trying to make a claim about your region on a shorter time scale, I could believe it.
Same for "people want money more than ever". Could be true for your bubble, country, etc but is not globally/100 year window. But of course this claim is hard to measure.
I think you’re right. Smartphones and the internet make it easier to scam before, but why do people want money more than ever? I’ve noticed it. It was a lot different 20 years ago. What happened?
Ever met someone who keeps falling for MLMs? Cut from the same cloth. Likewise those who follow prosperity preachers. Naïve, greedy, and a sucker for a smooth talker.
> It's almost like crypto has become a living thought experiment in how many times people can be scammed and keep on believing.
So it's just like the perpetually insolvent fractional reserve banking system that creates not only massive inflation and inequality but also global recessions and yet continues on with complete impunity. Cryptocurrency is only slightly more unhinged by comparison.
I mean casinos don't try to hide it and people still plow money into them. I think that's a lot of crypto investor's (psychopathic) play, even if they don't really believe in the technology, they think (and they may be right) that they can fallback to running unregulated online casinos.
Look at the afterlife of LUNA. That tanked trying to support his stablecoin. So, a way was found to undo the crash, sort of.[1] You thought blockchains were immutable? No. Rename old token something else. Create new token called LUNA. Initialize new LUNA with balances from old LUNA as of 7 May 2022, referred to in the hype as the "pre-attack" date.
So what happened? New LUNA crashed. Opened around US$20, now around US$3.
> Hard to find a reason for new LUNA to exist now that the stablecoin idea did not work and collapsed.
Except there is no more fervent pursuit than the pursuit of the greater fool. So that race will continue until laws finally catch up and close the staggeringly massive incentives to continue to lie, cheat and steal from those who believe themselves one step removed from the greatest fool.
The only kind of stablecoin that can work 100% of the time is one that's backed 100% by the currency it purports to maintain a peg to. Anything less than that cannot work 100% of the time. And that can be ok, but at minimum, the only one I'd touch with a ten-foot pole would be audited (AFAIK only the Gemini dollar is), and hold itself to the same standards as a proper money market fund.
I'm still amazed that this whole algorithmic stablecoin hype as really managed to make Tether look reputable in comparison.
"Well yes, we might be pulling most of our money out of thin air, but at least we're not pulling all of it out of nothing like the new guys do".
Based on that, I wouldn't be surprised if the next thing is that something even more sketchy and handwavy than algorithmic stablecoins will appear and continue the scam.
Self-collateralized stablecoin futures?
Multi-pegged multi-chain coins with auto-arbitrage?
> GUSD's site claims audits - under a heading titled "Review the Gemini dollar reserve-funds independent accountant audits" but links to attestations (example: https://assets.ctfassets.net/jg6lo9a2ukvr/3ZfEIugZkOLsArm4JK..., "conducted in accordance with attestation standards").
With rising interest rates the party issuing the stablecoin has an opportunity to get rich with the yield of the collateral. The question why would people want to buy large amounts of a non-yielding stablecoin.
> not a single deposit dollar was lost in a bank collapse
The federal reserve will print money in order to inject liquidity into banks. This means they are creating money out of nowhere, inflating the currency, essentially taxing everyone holding USD in order to maintain the illusion that banks are solvent.
That's not how deposit insurance works. The FDIC has a $125B fund (the BIF) that banks pay into, to insure against a default. If that's somehow not enough, the FDIC does have a $100B credit facility with the Fed.
However, in the event of an actual, real-wold bank collapse, the Office of Thrift Supervision (OTS) will take ownership of the bank and sell the book to someone else. That's how WaMu's collapse in 2008 was mitigated (WaMu -> OTS -> JPMorgan Chase) without ever drawing on the BIF let alone the credit facility at the Fed.
Remember, the fractional reserve is where the supply of currency in the economy comes from so this is a pretty big misunderstanding of modern monetary policy. Dollars are backed by the obligation to repay the fractional reserve loans that created the dollars in the first place, and the entire social system on which it is built.
> As part of national fiscal policy response to the Great Recession, governments and central banks, including the Federal Reserve, the European Central Bank and the Bank of England, provided then-unprecedented trillions of dollars in bailouts and stimulus, including expansive fiscal policy and monetary policy to offset the decline in consumption and lending capacity, avoid a further collapse, encourage lending, restore faith in the integral commercial paper markets, avoid the risk of a deflationary spiral, and provide banks with enough funds to allow customers to make withdrawals.
> The Federal Reserve created then-significant amounts of new currency as a method to combat the liquidity trap.
Your article and body is completely unrelated to deposit insurance, which is the case you were trying to make.
As for the bailouts you were alluding to, they were managed at least in the US by the treasury, not the fed, and they were loans, not grants - that have since been repaid yielding $100B in profit, with more to come.
Fiscal policy and monetary policy are different things managed by different entities. Any new money that was created to support the stimulus was unrelated (after all the treasury could have apportioned any money) and has since blinked out of existence as the loans have been repaid.
In addition to the FDIC backstop mentioned by some of the other responding comments, there's also another significant factor here which is that the U.S. banking system is ultimately backed by the strength of the U.S. military. I think this serves as something like an inductive base case that is more important than it might seem at first glance.
And the FDIC is backstopped by the Fed. They have a $100B line of credit there.
In the WaMu case actually no money was lost by anyone - and they didn't even touch the Bank Insurance Fund. The Office of Thrift Supervision took control of WaMu and sold it JPMC.
In practise, people aren't going to try and withdraw 100% of the coins to USD. As another commenter pointed out, we would have the same problem in banks if everyone came to withdraw all of their money at the same time. It's probably not as risky as Terra. I agree that we should wait for auditing though.
amid all of this, people have completely forgotten about the South African brothers who ran away with $3.6B of investor funds from their now-defunct exchange [0].
I'm done with crypto. Scamming is so easy that its almost incentivized.
Those alleged orphans aren't going to allegedly save themselves while providing a convenient cover story for why you allegedly died in a notoriously corrupt jurisdiction.
The vast majority of the people in crypto are "Kwon Artists," looking to book some gainz from whatever bagholder they can find. I feel bad for the normie grandparents who saw something on CNBC and bought in, but not for the crypto shills and grifters who lost their shirts in this.
In a "true free market", a vast majority of people would get eaten up because they have no idea how to use their own brains and judgement to evaluate things.
Is it okay to publicly joke on someone’s name in the US? Didn’t Basecamp got criticism for not even public and mostly English sounding name jokes a few months ago? I find this quite offensive to do this to a foreigner with a non English sounding name.
My gut as a white American (incidentally, my partner is Asian) is that this doesn't pass the smell test and I'd avoid it. I actually came to this thread specifically to see if anyone else felt that way.
It's a very specific joke that's only relevant for a very specific person. It would've been the same joke if his name was Connor, race is not relevant at all for this joke.
But yes, "all jokes" is probably too broad of a statement.
Meh, I'm OK with it. And to be frank a "kwon artist" is several levels nicer than what thousands of Korean "crypto investors" would be calling him right now.
It’s a low-effort pun enabled by the coincidence of his name rhyming with con. And he is almost certainly a shameless con artist. What exactly is offensive about this?
What I find offensive is indeed the rhyming without consideration of what it means in the source language. I find myself not too sensitive or PC, if my name was “Lecoq” (or if I had an Asian friend named “Phuk”) I would of course find it okay if an English speaker had an innocent giggle, but not if they took that more seriously and wrote that down as a public joke to shame me.
I find this moralizing over an inconsequential pun in the face of a brazen financial fraud to be bizarre (not to mention illogical since your two examples have nothing to do with meaning in the source language).
The tone of the article is unprofessional, sure. But, respectfully, so what? Kwon’s own actions have sullied his name more than any blog title ever could.
Korean here. Bring it on! We actually love making puns out of people's names. Our own media do it all the time. Some of those puns might be offensive in one way or another, but that has nothing to do with racism in general. Our language and naming conventions just happen to be perfect for multilingual punning and we know it. :)
It’s roughly the same as calling the French President Emmanuel Macaroon during a hypothetical baked goods scandal or Emmanuel Bacon during a hypothetical pork belly scandal.
Con man = Kwon man
I’m not sure how a rhyming pun is offensive, could you elaborate on why it is? Would it be racist if he was a European person named Walter Kahn and the headline had Kahn Man in the title?
Now that you bring it’s maybe a cultural difference because I can’t really remember the last time I saw or heard a pun on a politician name in the news, even of opposite sides. Making fun of someone family name is of very poor taste and is not something you will find in public. So I guess my gut reaction as a French seeing a pun on family name (not okay in the first place) + foreign sounding name was it’s racist, because honestly only real racists could attempt that here. I know that sound maybe too sensitive which is quite paradoxical because I usually find Americans generally way more PC on these subjects than us.
Edit: for more cultural background I think maybe it’s because there are common French family names literally translating as “Thefat”, “Chicken”, “Myass”, “Thegay”, “Sausage”, “Thewhite”… so it’s learned early in school to be respectful of others names.
For anyone who hasn't figured it out by now, every coin with some guy or team or venture capitalist or a combination thereof behind it is a scam for self-enrichment, and eventual rug pool or a failure, after they've sold their pre-minded coins, Bitcoin is the only truly decentralized, secure, digital gold. Are just scams that won't eventually go the way of Luna and the others
It's not inherently racist, but I would conjecture that these puns occur more frequently with Asian names (unfortunate spellings are pretty popular e.g. Phuc, Bich, Wang, etc. despite pronunciation being completely different). One factor is probably due to their rarity in comparison to Anglo names.
I think it's manifest that they are. This person doesn't find puns as a linguistic tool to be offensive. Their angle is that the use of a Korean name to address a Korean person with that name makes this pun racist.
If I made a pun about a guy named John is that racist? The only way that could be justified is if you somehow think it's shameful to be named John for some weird racial reason.
I’m not interested in a factual dispute over what the GP claimed. I’m only pointing out that they clearly took issue with the pun, and not the name itself.
The headline struck me as unusually crass for HN even before I saw the parent comment. I was a bit surprised it wasn’t rewritten. So, I guess I’m a second person.
Maybe it’s generational, but I was taught to avoid using names in puns. I definitely grew up with people who would make last name puns like this to put undue emphasis on race.
If folks doesn’t even see why that would be a problem these days, I’ll take it as a win for society - but I think the question was in good faith.
Yep. Making fun of "foreign" names is casual xenophobia. The fact that it's a pun doesn't excuse it. More generally, making fun of people's names is intellectual laziness and unprofessional at the very least.
I had the same reaction as you. Not that it's "crass" or "racist" or any other particular -ist or -ic, just that it adds nothing and seems like a childish pun attached to a serious story.
I don't think it's racist at all, that word gets overused so much that I can understand the reaction to the question.
That out of the way, I generally agree that it's poor taste. I was taught not to poke fun at things people didn't choose and can't change - their smile, laugh, handicaps, color, name, etc. Low hanging fruit, and potentially really devastating to people.
Duetsche Bank was fined $700 million for helping launder $10 billion out of Russia. This is an astronomical sum and is merely one of innumerable cases of our largest government regulated banks assisting enormous crime at monumental scale.
Yet crypto, a very small industry in comparison to other sectors, is despised and singled out as if technology by itself is suspect.
Do Kwon may be a scammer and those that believed in a 20% guaranteed return may have been rubes. But crypto is a technology and financial crime existed well before the advent of crypto and will continue to exist whether crypto keeps existing or not.
I think there is a certain myopia among technologists because crypto intersects so openly with economic activity whereas the traditional financial sector is opaque and wrapped in credentialed white collar employees wearing suits. Human nature - greed, ambition, desire, and all - exists regardless of the time and technology.
One reason I am so intrigued by crypto is that for the first time engineers can hack on finance without any permission, licenses, approvals, regulations, borders, etc. This may turn out to be a bad thing. But I believe technology is neutral and overall I want to see how this experiment turns out.
And as you are seeing with Do Kwon, and hundreds of other cases brought by the SEC and other regulators, criminals can be discovered and brought to prosecution even in the crypto space. This is not an industry that is immune to prosecution.
So I’m apt to let the space develop. As engineers you are not required to work in the space just as you are not required to work in any other. Crypto has incentivized the research and improvement in decentralized systems, consensus, decentralized governance, advanced crypto specifically zero knowledge proofs and new curves not corrupted by government cryptographers. I am intrigued by what is happening and am not afraid by the negative events.
The victim of crypto crimes are normal clueless people.
I absolutely loved and adored bitcoin as a technology from a technical perspective and all the ways it could change things for better. But what it had become is an abomination.
Also, “engineers hacking on finance” would've been very noble 20 years ago in a world where engineer/hacker was reminiscent of free software, mozilla, gnu, linux, wikipedia, etc.
Yes I also followed BTC from the early days, 2009 or so. Was on the IRC channel, usually lurking but I was very interested in it as a concept. As a college student I thought it was revolutionary, and neat things could be built on top of it. The future and equitable financial system, or so I thought.
Sadly it has fallen far from the tree, as they say, and became another Internet grift.
With its halving block subsidies, the bitcoin emission was never equitable. For that, look for a fixed block subsidy, i.e. pure linear emission, which leaves the majority of supply to later generations.
most DeFi projects are just engineers reading the first paragraph of a finance Wikipedia article and thinking that they can do better.
There's a misplaced belief that all regulations around money just popped out of nowhere.
In reality, all those regulations were built up over time in response to different scams and schemes. And crypto wants to erase all that learned experience and start from scratch.
The goal of a healthy regulatory environment is not to prevent everyone from frittering their money all the time. It's to keep the worst schemes from affecting as many people as possible.
> Yet crypto, a very small industry in comparison to other sectors, is despised and singled out as if technology by itself is suspect.
This omits why it's singled out: at current proportions, the sheer amount of fraud in the cryptocurrency space would dwarf everything that we see in conventional finance, were cryptocurrency to grow to the same size.
Minuscule scale is not in itself important (other than being a hallmark of under-delivering); what matters is proportions.
And lest this be used to claim that I think Deutsche Bank's fine is perfectly sufficient: they ought to have paid back every single cent they laundered, plus fines. But I won't let the perfect be the enemy of the good, particularly when the "perfect" in this instance is the same group of tools, just not wearing suits.
But you are not advocating for outlawing banking, which despite the centuries of regulations and oversight, still recently in our modern age conducted crime at vast scale.
Yet crypto should be banned? When we are throwing them in jail?
You're making a false assumption, which is that I don't want to throw a lot of bankers in jail. Or really just prohibit them from doing banking anymore, since I don't really like jails.
Did you read their post? They specifically stated that what’s important is proportion of fraud to useful activity. There’s fraud in banking, but in proportion to the useful activity it’s small.
> One reason I am so intrigued by crypto is that for the first time engineers can hack on finance without any permission, licenses, approvals, regulations, borders, etc.
False. Anyone has always been allowed to issue their own magic beans, crypto has nothing to do with this.
It is the same white collar suits pumping up crypto daily on CNBC. That's why I'm skeptical of it, just like people were skeptical of watered stock during the wild west days of finance in the USA.
The wise among us will put their wealth in index funds. The less wise may dabble in options and stock picking. The foolish may buy BTC and ETH. But not everyone who picks stocks and not everyone who bought BTC were foolish. And this is why letting me gamble my money on stocks, options, and crypto (or the casino) is not illegal.
I wouldn’t be opposed to forcing everyone who wants to buy crypto to sign a letter saying (paraphrased) “I’m an idiot and if I lose everything I deserve it”. I’d rather you let the individual gamble rather than ban all speculation and risky endeavors.
I'm all for the free market and personal accountability, but there should be some safety measures in place to protect the most vulnerable, naive, etc from being destroyed financially by adverse selection.
Schwab or Ameritrade won't just let you trade forex and commodities futures, futures options, and stock/etf options unless the application has been reviewed and the investor discloses they know the risk. It should be the same for crypto IMHO.
I am a freedom-oriented person. This includes legalizing LBGTQ marriages, interracial marriages, and enabling adults of solid mental state to ingest substances of their choosing.
Because the problem is not the access to drugs. Sure, it's illegal, but you can find weed, heroin, cocaine, lsd, shrooms, anything you want provided you know the right sellers.
Only heroin is in the sweet spot of strong kick, immense pain relief and extremely cheap. People take cheap drugs because they're poor, not because they don't want to get their hands on pure colombian coke.
I guess the issue is that there's a perception that a large proportion of cryptocurrency ventures are fraudulent from the start, or veer towards fraud shortly thereafter.
I'm not saying if that perception is correct or not, but it's real. Question for people in the cryptocurrency space is a) why and b) how do you fix it?
> One reason I am so intrigued by crypto is that for the first time engineers can hack on finance without any permission, licenses, approvals, regulations, borders, etc. This may turn out to be a bad thing. But I believe technology is neutral and overall I want to see how this experiment turns out.
A bigger overnight loss for ordinary investors than Madoff's entire scam, and you still want to wait and see how it turns out?
Yes, people should be able to play with this stuff, no it's clearly not in a state where anyone should be able to advertise any of these services to the general public.
Sure, let the space develop, but take action to prevent people being scammed, and certainly take action to prevent, for instance, investment into crypto tokens by the regulated finance industry. Keep pension funds away by force of law.
IMO the bigger scam here was not Anchor but Stablegains. They gave magnitudes more everyday people access to the Anchor scam who had no idea what they were getting in to.
For the people who actually went through the process of opening a Coinbase account, depositing USD, buying UST, transferring to an Ethereum wallet, bridging to a Terra wallet via shuttle bridge, and depositing in Anchor protocol… they knew full well the risks involved.
If you read any crypto forum, the people there know very well that their investment could go to zero.
The SEC’s “accredited investor” laws are often criticized as discriminatory, since they legally restrict some of the best investment opportunities to only the 1%. In the same vein, while the crypto space needs more regulation, I think it would be a mistake to ban all retail investors from buying crypto.
> The SEC’s “accredited investor” laws are often criticized as discriminatory, since they legally restrict some of the best investment opportunities to only the 1%.
Note: the “accredited investor” restrictions are for US persons. I think foreigners don’t have the same restrictions (although the max 500 investors rule is likely to kick in instead if too many small foreign investors). For example[1] “The Investor is: (i) an ‘accredited Investor’ as such term is defined in Rule 501(a) of Regulation D under the Securities Act; or (ii) not a U.S. person within the meaning of Rule 902 of Regulation S under the Securities Act.”
Correct, different countries have different laws in this area, but many/most have some sort of provision about what can and can't be marketed to the public as an investment, and how that marketing looks.
I think we should ban 18 year olds from going $200k in debt for English degrees from our most illustrious universities. An albatross around the neck of incompetent rubes yet this is not outlawed.
I can play this game all day. Why do we let the poor go to casinos? NYC is about to open a massive casino in Manhattan, guaranteed to ruin lives and families.
You may know what’s best for you, but not what’s best for me.
> You may know what’s best for you, but not what’s best for me
Cool, lets remove all laws and regulations around everything then, after all, government is just other people saying they know what's best for you. Job done.
Your argument is also fallacious in its assumptions that I don't think those other things are bad or require action.
> Why do we let the poor go to casinos? NYC is about to open a massive casino in Manhattan, guaranteed to ruin lives and families
We shouldn't. Many other countries don't allow that. Putting profits above human wellbeing is how the US got to this place. The US even allowed open MLMs like Amway. The people shilling these scams have immense amount of lobbying against any kind of financial regulations, which is exactly what crypto is doing
I feel like I'm going to be fighting the fight to dispel this idiotic headline for the rest of my life. You posted a link to subscriber-only content that isn't currently searchable on archive.is, but I'm going to guess it's the thing about inter-LOA transfers not being fully auditable within GFEBS.
I was in the 1st CAV Comptroller's office as a budget officer when this headline first started circulating. It was during the initial GFEBS onboarding, and the push to produce GAAP-compliant auditable financial statements was coming out for the first time in the DoD. You have to understand what that entails. Historically, before GFEBS existed, all purchases and funds transfers were recorded in one of many distinct information systems that were independently procured and not interoperable. Many of those were just "receipts in a filing cabinet somewhere."
The effort to get records from all of these disparate legacy systems into GFEBS, which is the government's custom version of an SAP ERP procured from Oracle, involved manual export of records into a human readable form, then that human typing them into GFEBS. For paper records, it involved digging into filing cabinets and doing the same thing, manually transcribing records into GFEBS. We were asked to do all of this in the same year the sequester happened, which involved having the entire civilian budget office staff furloughed. That meant soldiers had to do it. Except those soldiers also had to do stuff like train to be soldiers and deploy to Afghanistan.
So yeah, we didn't meet the deadline. I'm very sorry that the three-person staff I had couldn't find and transcribe every record from a universe of legacy systems that largely may not even be accessible without special hardware, plus filing cabinets in the attic of the division headquarters, while also being asked to do their normal job, too.
It's not that the records don't exist. It's not that no one actually knows where that money went. It's that transcribing into the current system of record involves probably millions of labor hours that Congress doesn't want to fund, but wants us to do anyway. Rumsfeld isn't wrong here. It's inefficient and stupid and shameful that we have this universe of legacy record-keeping systems that don't use any kind of standard format and don't interoperate with each other digitally. But fixing that involves more than just paying Oracle a bunch of money to produce one ERP to rule them all. The existing records still need to be transcribed, and there is no way to get around the human labor that requires.
But it's quite a far cry from "receipts and approval records for transactions only exist in a complex web of outdated information systems that don't interoperate and require manual human labor to transcribe between" to saying $X trillion "disappeared." The money wasn't lost.
Clearly you know more than me about this so I think I'll let you read it and you tell me if anything changes. Then I'll see about reading the rest of your comment.
For context, OP is CTO of an NFT company. Doesn't determine which way intent goes in this post, but you've gotta believe this to take such a strong financial stake in the space.
> But crypto is a technology and financial crime existed well before the advent of crypto and will continue to exist whether crypto keeps existing or not.
Sure. The difference is, crypto has no other useful use except crime.
> for the first time engineers can hack on finance without any permission, licenses, approvals, regulations, borders, etc.
Regulations exist for a reason. Even beyond regulations, one of the (many) appalling aspects of crypto is it's rediscovering rules that have been extremely well known and documented for decades, or centuries. Terra-Luna is a perfect example of a death spiral, for example.
> I want to see how this experiment turns out.
Isn't it clear already how this experiment is turning out? How many more time do we need?
Whataboutism isn't going to excuse shitty behavior. Crypto will continue to get deserved criticism while scams and greedy people are allowed to exist. Same with the banking industry. Do folks (beside the wealthy, and financial media) love what banks are doing? No.
https://www.skadden.com/insights/publications/2022/05/putati...
You are going to see a lot of political maneuvering by the sorts of A16Z, Binance, FTX, Galaxy Digital, and — dare I say it — Y Combinator, to keep cases like this from getting very far. If all of this gets classified as general partnerships engaged in securities law violations (and worse, as per Terra/Luna), a lot of arrogant investors and market boosters will find themselves in more trouble than they imagined.