[HN Gopher] CFTC sues Binance and CEO Changpeng Zhao [pdf]
___________________________________________________________________
CFTC sues Binance and CEO Changpeng Zhao [pdf]
Author : fabian2k
Score : 498 points
Date : 2023-03-27 15:31 UTC (7 hours ago)
(HTM) web link (www.docdroid.net)
(TXT) w3m dump (www.docdroid.net)
| ijidak wrote:
| Was Zhao the one chiding SBF when his legal issues started?
| TacticalCoder wrote:
| How comes they're going after _everybody_ but iFinex (Bitfinex
| /iFinex/tether/USDT)?
|
| Coinbase? Going after Coinbase but letting the gangsters that do
| both run Bitfinex and Tether roam free?
|
| SBF/FTX was a fraud and was iFinex's biggest customer. Billions
| of stolen customers money and investors funds ended directly in
| iFinex's stash. It's very likely the one that made lots of money
| when Alameda was losing it all is the iFinex gang.
|
| Why are they walking totally free, not getting sued?
|
| At this point I call monkey business.
| sdfghswe wrote:
| > How comes they're going after everybody but iFinex
| (Bitfinex/iFinex/tether/USDT)?
|
| From what I understand, the reason CFTC is involved is that
| bitcoin was ruled to be a commodity, and CFTC has authority
| over commodity derivatives. It's literally in the name.
|
| Tether on the other hand is what? Just a number. They don't
| have authority over betting on numbers.
| arcticbull wrote:
| One at a time.
|
| They don't have the resources to hit everyone at the same time.
| Just like a cop on the freeway can't stop 10 speeding cars at
| once but can pick them off one at a time.
|
| The more shenanigans the longer it takes to prepare the case.
| Just keep your popcorn warm.
| braingenious wrote:
| How do you keep popcorn warm without it burning?
| shockeychap wrote:
| > Just keep your popcorn warm.
|
| Actual LOL on that one.
| jjulius wrote:
| >Just keep your popcorn warm.
|
| At this point, we oughta just set up a couple of food trucks
| for everyone.
| harold_b wrote:
| [dead]
| graeme wrote:
| Tether is at the center of it all. They're taking down Tether's
| customers one by one. See the list below, you'll recognize a
| bunch of names now either insolvent or in jail or both.
|
| Each one of these takedowns will help build an eventual case
| against Tether. If they had gone for Tether first there would
| have been a big blowup and controversy. This way they can mop
| them up after the system around Tether has collapsed.
|
| https://protos.com/tether-papers-crypto-stablecoin-usdt-inve...
| VHRanger wrote:
| Correct.
|
| It's pretty clear Cumberland Global (largest USDT customer
| after FTX/Alameda) is "trading shop" A or B (headquarter in
| Chicago, offices in NYC, London, Singapore)
| WinstonSmith84 wrote:
| Coinbase please, first. Once (if), they are taken down, that
| will be the final nail in the coffin of the belief that Crypto
| has any place in the US.
| rossdavidh wrote:
| Several possibilities I could think of:
|
| 1) each one they take down, they get evidence that helps with
| the next one, so that's what determines the order they go in
|
| 2) they know people who need more time to get out of USDT, and
| they like those people (not a legit reason but could be the
| reason)
|
| 3) when they take down Tether, the impact on world financial
| system will be bigger than those others, for example if most of
| what they have is Chinese real estate bonds at face value,
| otherwise it's an empty shell, then they may be too nervous
| about the shockwaves from that. Instead of TooBigToFail it
| would be TooBigToMakeFail.
|
| Just a few speculations; I predict we'll find out this year
| though!
| 0xDEF wrote:
| In the past three years Coinbase has become one of the most
| aggressive lobbyists and corporate donors in DC and they're
| predominantly supporting Republicans.
|
| What did they expect would happen when the other guys are in
| power?
| ciropantera wrote:
| Well SBF was a big dem donor, let's see how that works out
| for him
| polygamous_bat wrote:
| Hypothesis: I think going after the largest exchanges cuts off
| any "escape route" Tether might have. Like, FTX is down,
| Binance and Coinbase is in the scope now, which means dumping
| fake tether in one of these exchanges to sweep up real money is
| gonna be a lot harder (hopefully). As long as these exchanges
| are alive, Tether can create billions out of thin air by
| second-hand theft of customer funds (print fake Tether, buy
| cryptocurrency, sell for real money), which makes it much
| harder to chase them down.
| MuffinFlavored wrote:
| Given the headline, you'd think Bitcoin would maybe be bothered,
| right? Wrong?
|
| Bitcoin started the year at $16.6k USD and is currently $26.9k
| USD (a return of 62% year to date).
|
| Why?
|
| Who/what is dumping money into Bitcoin that would cause this much
| demand? Can the rise in price be attributed to demand? I don't
| see how it couldn't be.
|
| How many millions of USD have been converted into "buy and hold"
| long term BTC investments? Is that the main driving force for
| this increase in price? It has to be a very sizable amount for
| BTC to be outperforming every other asset class... right?
|
| There's no way the price is artificially up 60%+? How could it
| stay propped up? I've seen it mentioned many times before that
| crypto can possibly be manipulated by whales or "smoke and
| mirrors" if you will. Coinmarketcap.com says Bitcoin volume in 24
| hours is roughly 615,000 BTC ($16b, 3% of the total circulating
| supply)
|
| Is there more money going into BTC (inflow) than
| SPY/VOO/VTI/IVV/QQQ/mutual funds? I wouldn't imagine so. Why is
| the money that _is_ making it into BTC (is the average middle
| American dollar cost averaging a portion of their paycheck bi-
| weekly into BTC through Coinbase?) able to increase BTC 60% YTD
| but a more sizable portion of money (because we can assume the
| stock market is much much larger of an investment vehicle) going
| into SPY /VOO/VTI/IVV/QQQ/mutual funds leads to a lesser return
| (SPY is up 3.95% YTD with like 1/4th of a 1.6%/year dividend in
| the process of being paid out so far, so call it 3.95% + (1.6%/4
| quarters=0.40% quarterly dividend, Q1 just being paid out) =
| 4.35% return
| NotYourLawyer wrote:
| It's the tether lending machine.
| gruez wrote:
| It wasn't operating last year when bitcoin was crashing?
| MuffinFlavored wrote:
| Why/how was Bitcoin able to recover from its last crash? I
| get that "sentiment changed". But... who? Who was "afraid"
| of Bitcoin when sam bankman-fried got arrested/FTX
| collapsed, sold their coins, waited, saw everything get
| better, bought back in? Based on the price action, we'd
| have to assume a LOT of people have done that. Like, enough
| for it to shoot fall 21k -> 15k on the FTX news, then 15k
| -> back up to 26k. I just don't get it. Who is dollar cost
| averaging into Bitcoin with their fiat (USD, EUR, GBP, JPY,
| whatever it is) every paycheck? Millions of people? Where's
| the proof, other than the fact that "the price is up"?
| flanfly wrote:
| I'm not sure whether this is sarcasm, but in case it's
| not: I do.
| MuffinFlavored wrote:
| Do you do this on top of investing U.S. equities for
| retirement? What % do you invest in equities versus
| crypto? What % of your net worth is exposed to crypto and
| what % minority are you in for perspective for doing so
| (aka, if 50% of your net worth is exposed to crypto,
| you're obviously in a very small niche group and
| "biased")
| jjulius wrote:
| >Given the headline, you'd think Bitcoin would maybe be
| bothered, right? Wrong?
|
| >Bitcoin started the year at $16.6k USD and is currently $26.9k
| USD (a return of 62% year to date).
|
| You're citing the growth in the last almost four months as
| evidence that Bitcoin isn't bothered by news that broke about
| an hour ago?
| MuffinFlavored wrote:
| I just want to learn why Bitcoin is being taken so seriously
| as an asset class that it's outperforming bonds, equities,
| gold, silver, real estate, etc. (or if it is really, or if
| the price is being manipulated, and if so, how is that
| manipulation able to operate at this scale).
| voxic11 wrote:
| People are losing faith in the dollar. High inflation and
| bank runs play into this belief.
| sleepybrett wrote:
| You mean like all the bank runs and high inflation in the
| crypto space?
| Nursie wrote:
| > Who/what is dumping money into Bitcoin that would cause this
| much demand?
|
| As usual, there's no way to tell if the demand is synthetic, or
| anything other than invented stablecoins and fake volume,
| because the entire market is deliberately opaque.
| ninepoints wrote:
| [flagged]
| bluecalm wrote:
| Most Bitcoins are not bought with USD but with Tether and other
| stable coins. Tether is printed at the pace of billions per
| week recently so no wonder it lifts all the boats in crypto
| world.
| DANmode wrote:
| Are you saying more Tether is being swapped for BTC than is
| being bought with $?
| MuffinFlavored wrote:
| > Most Bitcoins are not bought with USD but with Tether and
| other stable coins.
|
| Isn't this like a pedantic detail? How is Tether bought?
| USD/EUR/GBP/JPY, right?
|
| Fiat -> stablecoin -> BTC
|
| Fiat -> BTC
|
| basically the same journey
|
| my point is, according to this
| https://markets.chainalysis.com/ there's $3b/day in BTC
| inflows...
| Nursie wrote:
| > How is Tether bought?
|
| Nobody knows.
| from wrote:
| https://app.tether.to with wire transfer. There are high
| minimums, KYC requirements, and excluded jurisdictions
| (notably the US). Depending on your opinion these onerous
| requirements exist either for regulatory reasons or to
| prevent a bank run because Tether is not fully backed.
| lordfrito wrote:
| > _Fiat - > stablecoin -> BTC_
|
| > _Fiat - > BTC_
|
| > _basically the same journey_
|
| stablecoin == fiat is the lie that enabled and perpetuates
| the crypto madness
|
| BTC holders always had trouble getting USD due to KYC
| onramps and offramps. People couldn't get out of a volatile
| BTC position back into stable USD fast enough... so holding
| BTC just wasn't worth the risk.
|
| But Tether shows up and _voila_ the holding problem is
| solved as it 's a dollar "equivalent" that doesn't have to
| deal with pesky KYC laws slowing down USD cash-out. Let's
| trade one magic token for another on a whim, we'll deal
| with getting USD later. _They 're good for it._ "Line go
| up" madness starts.
|
| To anyone that's been actually paying attention, Tether is
| a house of cards waiting to implode. They are not worth 1
| USD each, no matter how much anyone wishes, hopes or
| screams it does.
|
| One by one the _so-called_ stablecoins are being shown to
| be the garbage /scams they are. Once the market wakes up
| and realizes that they aren't actually worth a dollar, then
| BTC has nothing left to artificially prop it up.
|
| Popcorn time.
| bluecalm wrote:
| Tether is printed and given out at will to buddies of
| scammers who run it. "Hey Paolo, can you help me with 100M
| as my exchange is in trouble?", " Sure thing, just write an
| IOU and I got you". Now Tether is "backed by commercial
| paper" and there is 100M of it in circulation to prop
| crypto.
|
| And if you think my language isn't appropriate, Tether is
| run my literal scammers: a proven financial fraud and an
| online poker cheat. Chances of it being even semi legit
| operation are zero.
| nrb wrote:
| > How is Tether bought? USD/EUR/GBP/JPY, right?
|
| The question is how much tether is originating as part of a
| cash transaction vs how much is being minted out of thin
| air specifically to buoy the price of cryptos.
| treis wrote:
| That middle step is multiplying the fiat going to BTC
| because Tether (probably) is only partially backed and
| (probably) buying crypto to make money. So your one dollar
| that goes to tether gets multiplied. Something like
|
| $1 -> 1 Tether -> $1 worth of bitcoin
|
| $1 -> $1 worth of bitcoin (as an "investment" for Tether to
| make money)
|
| $1 worth of bitcoin -> Collateral on loan to Tether ->
| $0.50 -> $0.50 worth of bitcoin
|
| We don't know exactly what Tether is doing with their money
| because they don't open their books. Safe to assume it's
| some sketchy stuff though.
| KptMarchewa wrote:
| Sounds very similar to Robinhood's 2019 infinite money
| hack.
| [deleted]
| belter wrote:
| A long, long time ago, there used to be this game, where you
| would try to come up with a Google query that would return zero
| results.
|
| Although everybody deserves their day in court, and these should
| be considered allegations until proven, the new game nowadays
| could be: Find a Crypto company with no allegations of illegal
| activities...
|
| "Web3 is Going Just Great" -
| https://web3isgoinggreat.com/?id=cftc-sues-binance-and-ceo-c...
| karlzt wrote:
| Related 3 months ago:
|
| Binance caught commingling funds between US and international
| exchanges: https://news.ycombinator.com/item?id=34079629
|
| Binance's books are a black box, filings show, as it tries to
| rally confidence: https://news.ycombinator.com/item?id=34055058
| janmo wrote:
| Reading through the complaint and everything that came to light
| recently it is clear that Binance is operating in the exact
| same way FTX did.
| nwah1 wrote:
| Some of the revelations indicate it may be much worse.
| boeingUH60 wrote:
| Somehow, the houses of cards manage to stay intact. I
| wonder what will finally pierce through it.
| [deleted]
| [deleted]
| I_am_tiberius wrote:
| This case is definitely politically motivated, especially
| considering many cases happening in the last two weeks. These
| cases also mainly involve the US. Even though there are probably
| crimes connected to these cases, you can find similar situations
| almost anywhere if you pay attention. That's no excuse but it's
| important for Americans to wake up and see that the government is
| trying to keep a broken financial system working.
| bioemerl wrote:
| The banks are doing fine right now and there are no real signs
| of a mass departure into crypto.
|
| Sounds to me more like the SVB and FTX failures lit some fire
| under the regulators asses and they're now starting to crack
| down on the bad dealings they've been ignoring.
| I_am_tiberius wrote:
| >The banks are doing fine right now
|
| It doesn't matter what people do. What matters is, that banks
| can't give deposited money back to its customers. It's just a
| bad system if a bank run can crash the entire system. Without
| switching from QT to QE again and bailing out customers two
| weeks ago, America may look much worse today.
| bioemerl wrote:
| Banks can never give back all deposited money at a moments
| notice. That's normal. What matters is that assets outpace
| liabilities and you've got insurance on your deposits.
|
| Fed's doing its job. It'll be fine.
| I_am_tiberius wrote:
| You're viewing the world as if modern monetary theory is
| the only option.
|
| Banks can give back all deposited money to its customers!
| Instead of investing deposited money, they just need to
| keep it deposited and request a fee from customers for
| this service. Like banks did 100 years ago. The
| fractional reserve banking system is just very bad and
| causes financial crises such as this one.
| nova22033 wrote:
| Ugh why didn't they release this yesterday or earlier today. Now
| we're going to have to wait an entire day for Matt Levine's take.
| abawany wrote:
| just got his article for today - it has what you're looking for
| :) - can't underestimate Matt Levine, you know.
| Balgair wrote:
| https://www.bloomberg.com/opinion/articles/2023-03-27/the-cf...
| matt_s wrote:
| I think its ironic that we're watching the fiery sunset on the
| previous gold rush tech craze just as we see the sunrise on the
| next one. This next one could very well be capable of pumping
| itself up across the internet.
| collaborative wrote:
| The next one will likely end the internet as we know it
| bmc7505 wrote:
| Fun fact: CZ is an alumnus of McGill University! Before he became
| a cryptocurrency tycoon, he was working on an EdTech platform
| called Classroom 2000. [1, 2] Maybe if he had devoted as much
| energy to replacing PowerPoint as fiat, we would have better
| presentation technology today.
|
| [1]:
| https://www.mcgill.ca/engineering/files/engineering/cv.pdf#p...
|
| [2]: https://www.cc.gatech.edu/fce/c2000/overview/
| wh0thenn0w wrote:
| You linked to the wrong CV
| phoenixreader wrote:
| It's the CV of Jeremy Cooperstock, a Professor at McGill. It
| lists Changpeng Zhao as one of his former students.
| wh0thenn0w wrote:
| Ah, thanks!
| lvl102 wrote:
| Is McGill considered a good school? Never heard of it before.
| HDThoreaun wrote:
| Maybe the best school in Canada, certainly top 5.
| misiti3780 wrote:
| waterloo is better.
| astura wrote:
| I would say it's certainly the most well known university in
| Canada.
| phoenixreader wrote:
| Yoshua Bengio studied there, and I think Doina Precup teaches
| there as well.
|
| They are ranked 31st in the world in QS (rankings are not
| that useful, but they can be a metric to whether people
| "consider" it a good school). Extremely well-known research-
| wise, at least in Canada and north-east.
| gloryjulio wrote:
| Yes, it's a pretty good uni in Quebec
| pffft8888 wrote:
| I got flagged in the other thread. It was because I said the gov
| is going mad with power. This is not about Binance. They are
| going after Coinbase, too. They are trying to severe the
| connections between tradFi and deFi. They are also trying to
| censor views they don't like on all social media. Isn't that a
| coincidence? And take out TikTok too while you're at it, so only
| place to speak out now is Twitter... and they scared everyone
| away from Twitter because they say Musk is an alt right nutjob.
| SMH. Crazy times.
| Aaronstotle wrote:
| Maybe you were flagged because of how you presented your ideas.
|
| The CFTC is going after Binance for purposeful evasion of U.S.
| regularities.
|
| The SEC is taking action on Coinbase, this one is more
| confusing because Coinbase has been asking for guidance from
| the SEC and they have refused.
|
| TikTok is a national security risk, unrelated to these other
| two issues, if you've seen the conspiracy theories being
| peddled by Elon, he does present a lot of right-wing/alt-right
| positions.
| pffft8888 wrote:
| [flagged]
| xapata wrote:
| > has been asking for guidance
|
| Coinbase has announced that they've asked for guidance. I
| find it equally plausible that the SEC hasn't decided the
| rules as that Coinbase asked for overly specific (or overly
| broad) guidance that they knew couldn't be given.
| timcavel wrote:
| [dead]
| JumpCrisscross wrote:
| > _not about Binance. They are going after Coinbase, too. They
| are trying to severe the connections between tradFi and
| deFi...Isn 't that a coincidence?_
|
| No. It's hard, politically, to go after something when it's
| making people rich. These investigations have been ongoing,
| some for years. FTX and Silvergate changed the calculus of
| watching, waiting and collecting versus pressing charges.
| pffft8888 wrote:
| It's a great smoke screen for sure. They've been wanting to
| do this for ages. Now they have an excuse. Some would even
| venture to say that they knew about FTX and let it slide
| until it blew up, same way they knew the Saudis were
| funneling money to 9/11 terrorists and did nothing, then went
| to war with Iraq. Coinbase feels like Iraq right now. LOL. I
| mean some may say this is the emergent AI of gov acting out,
| not anyone doing it consciously. Something is extremely
| disturbing about this coinciding with an FBI-coordinated mass
| censorship campaign that upholds the field of denial everyone
| is stuck in.
| JumpCrisscross wrote:
| > _been wanting to do this for ages. Now they have an
| excuse._
|
| There is always a longer list of enforcement targets than
| enforcement capacity. Learning from crises isn't a
| conspiracy, it's competence.
|
| > _they knew about FTX and let it slide until it blew up_
|
| I would 100% say this. Many people did. They weren't
| confident, however, they could prove it in court.
| NotACop182 wrote:
| Why you are probably being flagged her is you are rambling
| instead of laying out a case. You boarder conspiracy theorists
| instead of providing a constructive argument.
| robopsychology wrote:
| TikTok _is_ a threat to national security, the amount of data
| they take from people is _insane_. We have youtube shorts,
| facebook reels, instagram whatevers, and had Vine - there 's no
| reason we can't move elsewhere. Saying that I work for a
| defense contractor so can't install TikTok contractually anyway
| (:
| vuln wrote:
| Yes TikTok is a National Security issue. The issue with
| TikTok v all the social media companies you named is one
| thing.
|
| The US government cannot censor or control TikTok the same
| way they censor and control US based social media companies.
| The US alphabet boiz have all access and muscle to get the
| data these social media companies have one way or another.
| anaganisk wrote:
| Probably you got flagged because, you say "because they say
| Musk is an alt right nutjob." While he himself tweets right
| wing stuff all the time, it's not something that's made up. You
| lose your credibility with that. And who is using TikTok to
| speak out? It's the most censored platform brought to you by a
| government that loves censorship, they were caught with
| boosting "pretty stuff", and has bought a lot of nonsense
| challenges.
|
| Time and again I said this but anyone who thinks we will have
| decentralized currency are fools, who don't understand why the
| financial industry works the way it works. And why do govts
| don't like not having control over their currency.
|
| And the only place to speak out is Twitter? A boy was banned
| from the platform because he published publicly available data
| of a private jet owned by the owner of Twitter. Overnight it
| was decided what constitutes parody or joke.
| counter_factual wrote:
| The CFTC woke up and chose war. The question is why now? This
| action could have taken place in 2021 too.
|
| A hypothesis. Big tech loved crypto for the same reason they
| overpaid armies of engineers to do nothing: it prevented them
| from creating competing AI companies.
| jjtheblunt wrote:
| > why now?
|
| Is it possibly correlated that FTX and SBF donated boatloads to
| Democrats with full media coverage, and donated to Republicans
| supposedly covertly, which turned out embarrassing in the
| pissed off public opinion, so now the politicians who were on
| the take need to look like they're not complicit?
| danielvf wrote:
| A line item under reasons that Binance falls under US
| jurisdiction. "Binance relies on the Google suite of products for
| information management and email services."
|
| That's got to make companies around the world feel more
| comfortable using it!
|
| Oh, and AWS too!
| MrDunham wrote:
| I believe something similar was a major reason that a whole
| FIFA scandal was able to be taken down by US prosecutors.
|
| Despite many people never setting foot in the US a lot of them
| use the US banking system or some of the piping that is
| predominantly US-based to move money around...
|
| Meaning that the US can get involved.
|
| From what I can tell it's _extremely_ difficult to do business
| without having anything you do touch something based in the US.
| IE if you do business nearly anywhere, Uncle Sam can (almost
| certainly) prosecute
| capableweb wrote:
| > From what I can tell it's extremely difficult to do
| business without having anything you do touch something based
| in the US. IE if you do business nearly anywhere, Uncle Sam
| can (almost certainly) prosecute
|
| If you're doing business in any way that touches people from
| the US (which certainly FIFA does, one way or another), then
| it's hard.
|
| But for the rest of us, it's not really that hard. Everything
| the US has, there is a alternative for that hasn't anything
| to do with the US, from banking to hosting to productivity
| tools.
| rossdavidh wrote:
| True that, but it does not appear to be the only (or even the
| most important) reason the CFTC is citing.
| [deleted]
| [deleted]
| darawk wrote:
| If you want a serious analysis of why this is actually happening,
| and what's actually important in this document, read Matt Levine:
|
| https://archive.ph/NF8yN
|
| > The CFTC's complaint here gestures at traditional regulatory
| concerns like retail customer protection and cracking down on
| money laundering. But it is mostly about cutting off a big
| international crypto exchange from big sophisticated proprietary
| market-making firms in the US. I think the market expectation
| here was that if you are a big trading firm trading with your own
| money and your own algorithms, and you have enough lawyers and
| offshore shell entities, you can trade on any crypto exchange in
| the world from the comfort of your Chicago office: There might be
| a technical argument that it's not allowed, but your lawyers are
| aggressive and sophisticated enough to get around that
| technicality, and anyway why would the CFTC care? But the CFTC
| does care, perhaps not because it wants to protect big US high-
| frequency trading firms from the risks of trading on Binance, but
| because Binance is the biggest crypto exchange and this is a
| lever to crack down it. And the CFTC also has lawyers who are
| sophisticated and not deterred by technicalities -- here, for
| instance, the technicality that Trading Firm B's account actually
| belonged to a Jersey company.
|
| This is the actual substance of the complaint. The "terrorist
| financing" and retail stuff is a smokescreen to seem worthy of
| the CFTC's attention. Nobody is being protected here. No
| significant terrorist financing is being stopped.
| lordfrito wrote:
| > _The "terrorist financing" and retail stuff is a smokescreen
| to seem worthy of the CFTC's attention. Nobody is being
| protected here. No significant terrorist financing is being
| stopped._
|
| So enlighten me, what is the actual $$$ threshold where
| "terrorist financing" can be deemed a legitimate complaint?
|
| Crypto space is chock-full of scammers, hustlers, bad actors,
| and organized crime. Which of the crimes are worth paying
| attention to and which aren't? Has the bar slipped that low
| that some crimes are "small" and aren't worth going after?
|
| Seems like a stones throw away from whataboutism.
| hailwren wrote:
| > So enlighten me, what is the actual $$$ threshold where
| "terrorist financing" can be deemed a legitimate complaint?
|
| It seems reasonable to at least set the lower bound above
| Deutsche Bank who are frequently in the spotlight for AML and
| terrorist financing for amounts far greater than $600 and
| operating today.
| darawk wrote:
| > So enlighten me, what is the actual $$$ threshold where
| "terrorist financing" can be deemed a legitimate complaint?
|
| I don't know, more than the percentage of your average
| multinational bank? No large financial institution is going
| to have literally zero unsavory characters using its
| services.
|
| > Crypto space is chock-full of scammers, hustlers, bad
| actors, and organized crime. Which of the crimes are worth
| paying attention to and which aren't? Has the bar slipped
| that low that some crimes are "small" and aren't worth going
| after?
|
| The point of my comment and Matt Levine's article is that
| they are not going after these things. They are superficial
| artifice on top of the real thing they are going after them
| for: allowing US HFT firms to trade there.
| jevgeni wrote:
| This is a misrepresentation of Levine's article. He explains
| that it's illegal to operate a derivatives exchange without
| being registered at the very least.
| darawk wrote:
| I read the whole thing. I don't think it's a
| misrepresentation at all. You're free to quote the sections
| you think contradict it.
| _xander wrote:
| For those interested, he's mostly talking about Jump. Jane
| Street and Cumberland DRW too possibly.
| [deleted]
| pavlov wrote:
| _> "No significant terrorist financing is being stopped."_
|
| How do you know? When Binance's own Chief Compliance Officer
| was primarily in the business of helping customers avoid
| compliance, it doesn't seem like they would know very much
| about what ultimately went down on the platform. The complaint
| quotes an internal email that read: "We close our eyes."
|
| Binance was a major counterparty of Bitzlato, a crypto exchange
| that existed primarily for Russian money laundering:
| https://www.reuters.com/business/finance/binance-moved-346-m...
|
| That's probably the tip of the iceberg.
|
| The CFTC's complaint naturally focuses on the stuff that's
| easiest for them to prove. Getting evidence from hedge funds
| based in Chicago is obviously a lot easier for a civil agency
| that doesn't have enormous resources.
| darawk wrote:
| > How do you know? When Binance's own Chief Compliance
| Officer was primarily in the business of helping customers
| avoid compliance, it doesn't seem like they would know very
| much about what ultimately went down on the platform. The
| complaint quotes an internal email that read: "We close our
| eyes."
|
| I don't, but obviously the CFTC doesn't either, otherwise
| they'd have spelled it out. So, considering the party
| investigating is ignorant of any significant terrorist
| financing activity, I see no reason to think otherwise.
|
| > Binance was a major counterparty of Bitzlato, a crypto
| exchange that existed primarily for Russian money laundering:
| https://www.reuters.com/business/finance/binance-
| moved-346-m...
|
| There is nothing in the complaint stating that Binance
| knowingly facilitated any criminal activity of Bitzlato,
| afaik. The fact that criminal actors had an account at a
| financial institution is not prima facie evidence of any
| crime on the part of the financial institution, especially
| not for one that isn't registered in the US. Even for US
| registered entities, plenty of criminals have bank accounts.
| It's the bank's job to perform a certain level of diligence
| to stop them, not an infinite level of diligence.
|
| If the CFTC believed Binancing knowing facilitated criminal
| activity on the part of Bitzlato, that'd be in the complaint.
| It's not, therefore, they don't. Or at the very least, they
| have insufficient evidence for it.
|
| So any suggestion that significant terrorist financing is
| being stopped here is pure speculation, unsupported by
| anything in the document itself.
| dragonwriter wrote:
| > I don't, but obviously the CFTC doesn't either, otherwise
| they'd have spelled it out.
|
| Or, they _do_ know and more detail wasn't relevant at the
| complaint stage of the civil case, whereas it might be to
| the actual trial and to the parallel criminal referral that
| it has been reported that DoJ is investigating.
|
| A civil complaint is not required to be, and generally is
| not, a catalogy of every piece of relevant information the
| filing party has. And it _especially_ isn 't a catalog of
| everything they know where a civil lawsuit isn't the venue
| for addressing it.
|
| > If the CFTC believed Binancing knowing facilitated
| criminal activity on the part of Bitzlato, that'd be in the
| complaint.
|
| No, if the CFTC believed that, it would be in the criminal
| referral to DoJ, and, if DoJ could support it to the
| required level to move forward, it would be in the criminal
| indictment DoJ would seek from an appropriate grand jury.
| Those typically lag considerably behind civil action from
| the same regulatory-body investigation (sometimes with
| indictments issued after the civil complaint is settled or
| otherwise resolved.)
| darawk wrote:
| > Or, they do know and more detail wasn't relevant at the
| complaint stage of the civil case, whereas it might be to
| the actual trial and to the parallel criminal referral
| that it has been reported that DoJ is investigating.
|
| > A civil complaint is not required to be, and generally
| is not, a catalogy of every piece of relevant information
| the filing party has. And it especially isn't a catalog
| of everything they know where a civil lawsuit isn't the
| venue for addressing it.
|
| Cool, so we're back at zero evidence of any of this
| happening. We agree then.
| dragonwriter wrote:
| The complaint as it directly relates that they (1) knew
| of patterns of criminal activity (including patterns of
| terrorist financing) and specific criminal actors on the
| platform, and (2) took specific steps to actively counsel
| specific customers involved in illicit activity on steps
| to evade detection of that activity.
|
| Now, its not "evidence" because a complaint isn't a
| submission of evidence. But, taking the complaint at face
| value, it directly alleges that that is what has been
| happening, and that it is a consistent pattern (paras.
| 104-106). Now, this doesn't go into much detail in this
| area, because its not a criminal complaint or indictment
| where this conduct is the central behavior being
| addressed, but it is very much _in_ the complaint.
| JumpCrisscross wrote:
| > _Nobody is being protected here_
|
| Cracking down on a shadow derivatives exchange doing swaps with
| American institutions is _bona fide_ CFTC enforcement.
|
| Most securities law is written from an investor-protection
| perspective. Not swaps clearing. When everyone is writing
| bilateral swaps and nobody knows how much counterparty risk is
| accumulating with whom, you get a ticking time bomb. (This is
| what turned AIG into a systemic risk.) I imagine the next shoe
| to drop will be these firms' compliance departments.
| mattmaroon wrote:
| They don't need a smokescreen. Binance's CEO instructed his
| employees to teach American firms how to use a VPN to hide
| their Americanness, despite the fact that they can't legally
| offer services to American firms. (This is especially strange
| because it was for people using their API, and you'd assume
| programmers who can integrate an API to trade derivatives have
| heard of VPNs, so I have to assume they were simply unaware
| that Binance was blocking America.) He even specifically said
| to not put it in writing! Extra hilarious that he put that
| message in writing, one wonders had he done that IRL or over
| the phone where this case would be right now.
|
| I suppose you could argue about whether the CFTC's relevant
| regulations protect anyone, but they certainly think they do,
| and if so it's easy to argue that Binance was skirting those
| protections.
| hailwren wrote:
| > I suppose you could argue about whether the CFTC's relevant
| regulations protect anyone, but they certainly think they do,
| and if so it's easy to argue that Binance was skirting those
| protections.
|
| There are two weird things here. The first is that the CFTC
| does have purvue to protect the American people. However, if
| Binance were to simply say "we now accept US citizens" -- the
| trading cited here would be allowed. Market makers are
| accredited investors.
|
| It's rather because they offer services to investors who are
| not US based which, if they were offered to US investors,
| would only be allowed to be offered to Accredited Investors
| -- Binance has chosen to not offer services in the US, and
| allowed Accredited Investors (the same group who would be
| permitted if they did operate in the US).
|
| The case is interesting. Even though these traders were
| operating significant portions of their business from the US,
| the claim will be made that they were acting as their
| international subsidiary.
| JumpCrisscross wrote:
| > _if Binance were to simply say "we now accept US
| citizens" -- the trading cited here would be allowed_
|
| No, it wouldn't. Derivatives exchanges and swaps settlement
| requires licenses, _e.g._ from the CFTC. Also, the swaps
| analog for accredited investor is eligible contract
| participant (ECP) [1].
|
| [1] https://www.cftc.gov/sites/default/files/idc/groups/pub
| lic/@...
| cemerick wrote:
| Come on. Further down in the op-ed you linked, he cites
| evidence in the complaint about Binance being used to launder
| funds for Hamas and Russia. The feds happened to get Capone on
| mail fraud; if they see that they can pinch off such laundering
| with the help of some ostensibly consumer-focused CFTC
| authorities, that's what's going to happen.
| darawk wrote:
| You mean the $600 ex-post identified Hamas transaction? That
| one? He cites it grudgingly, because it's total bullshit. He
| very clearly articulates what he thinks the substance of the
| complaint is, and it is not terrorist financing.
|
| Here is the actual lead in to him quoting that part:
|
| > Anyway I said that there are only a few accusations of
| financing crimes or secretly trading against customers in the
| CFTC complaint, but there are not none, and I should quote
| them. Here's this:
|
| Judge for yourself if I am misrepresenting his view.
| mattmaroon wrote:
| It does not say that there was only one $600 transaction,
| only that a $600 transaction can barely buy a particular
| weapon. It says that they're structuring the payments to be
| small to avoid money laundering notice.
|
| 'Lim explained to a colleague that terrorists usually send
| "small sums" as "large sums constitute money laundering."
| Lim's colleague replied: "can barely buy an AK47 with 600
| bucks." And with regard to certain Binance customers,
| including customers from Russia, Lim acknowledged in a
| February 2020 chat: "Like come on. They are here for
| crime.'
|
| We have no idea from this what sort of money laundering
| Hamas was doing on Binance, or if it was found ex-post, but
| we do know that at least one Binance employee thought they
| were using it for crime.
| darawk wrote:
| We do not know that. All we know is that a Binance
| employee knew about a $600 transaction, and made a
| general statement about the behavior of groups like this.
| We know nothing beyond that.
| JumpCrisscross wrote:
| > _a Binance employee knew about a $600 transaction_
|
| Said employee being the chief compliance officer.
|
| Your broad point is correct: Binance is not being dinged
| by the CFTC for money laundering or terrorist financing.
| But the allegations they hung out are far from trivial.
| (The core charge is also nontrivial, but for technical
| reasons.)
| mattmaroon wrote:
| Tax evasion, not mail fraud.
| pavlov wrote:
| Look at the comments in these threads. It's always loaded with
| accusations of statist bootlickers and sheep brainwashed by
| American government tyranny and all the other rhetoric that could
| be equally well from Timothy McVeigh or 1960s Maoists or any
| other extremist group at either end of the political spectrum.
|
| Crypto is obviously about politics and always was. But is there
| even a technology angle left anymore? Bitcoin is frozen in amber
| and will never do anything more than it does now. Ethereum after
| the PoS transition is essentially a very slow distributed
| database owned by a special interest group. Other blockchains are
| variations of the same theme.
|
| Is it worth talking about crypto on HN at all? A total ban on
| crypto topics might be worth contemplating. Other purely
| political topics are similarly banned.
| timmytokyo wrote:
| Now that the shit is finally hitting the crypto fan, banning
| discussions of crypto on HN would be perverse.
| [deleted]
| bobobob420 wrote:
| [flagged]
| AnonMO wrote:
| Anyone that was against robinhood/citadel trading against their
| user base should support this. because trading platforms should
| not be allowed to trade against their users and binance has been
| doing it for a while and now we have proof. also they have
| evidence which something I didn't expect unlike the SEC they seem
| well prepared.
| 0xDEF wrote:
| Crypto trading platforms should also not get any of the
| benefits Coinbase is lobbying for right now.
| joyfylbanana wrote:
| I wonder how much CFTC employees were placing those crypto
| futures and options before the announcement.
| AnonMO wrote:
| If they did by options they lost all their money due to the
| greeks not enough volatility, and if they bought futures unless
| it was 100x or the had many tens of millions they also didn't
| make money. Crypto moves like this every day +-~4%. Also
| there's zero option platforms for US traders and if they traded
| futures its coinbase or kraken which are heavily regulated. Why
| take the risk?
| earnesti wrote:
| They could have opened an account at binance for sure
| pakitan wrote:
| You can't trade futures on Kraken if you're an US citizen. I
| suspect the same is true for Coinbase.
| FPrompt wrote:
| SEC & co are gonna pop all the bubbles in the coming months it
| seems.
| I_am_tiberius wrote:
| Not sure if the US benefits from this in the long term.
| ragnot wrote:
| It's hard not to see patterns emerging honestly. TikTok ban,
| Coinbase and now this. Seems like the US Gov is ramping up not
| only attacks on Chinese proxies but anything that might threaten
| US dollar reserve status.
|
| Should be interesting times.
| malermeister wrote:
| Dude they literally knew their stuff was being used for crimes
| and said, and I quote:
|
| > "Like come on. They are here for crime." - "we see the bad,
| but we close 2 eyes."
|
| This is just criminals being criminals, like all the crypto
| junk always has been beneath all the lofty rhetoric. No grand
| conspiracy theory needed, the chickens are just finally coming
| home to roost.
| ragnot wrote:
| I guess the art of geo-politics is achieving an agenda with
| plausible deniability. It's not a crackpot theory to suggest
| that the US Govt is enacting a policy change due to changing
| politics with China.
|
| Additionally, the US Govt has managed to weaponize the US
| dollar through the global financial system; allowing it to
| enforce it's will without bloodshed (even on nuclear capable
| states like Russia). It's a capability that is invaluable. So
| when you hear things like Russians selling oil in Yuan, you
| need to respond.
| JumpCrisscross wrote:
| > _TikTok ban, Coinbase and now this_
|
| How is TikTok related to dollar hegemony?
| humanizersequel wrote:
| >Chinese proxies
| JumpCrisscross wrote:
| How does one separate attacks on dollar hegemony from broad
| American interests? I'm struggling to think of what any
| country would do that _couldn 't_ be characterized as
| defending its currency.
| ragnot wrote:
| TikTok is a more conventional ban on a foreign security
| apparatus, it really has nothing to do with dollar
| hegemony. Attacks on crypto institutions is the US Govt
| defending dollar hegemony. I have no proof (obviously),
| but if you just look at the pieces together it's hard not
| to justify that this is a trend.
| JumpCrisscross wrote:
| > _if you just look at the pieces together it 's hard not
| to justify that this is a trend_
|
| You don't see anything else in the last 6 months that
| could have turned crypto into an enforcement priority?
| ragnot wrote:
| I want to say 1) I (admittedly) look at the world through
| a paranoid lens, 2) could be completely wrong. This is
| just my opinion.
|
| That being said, I think you are referring to FTX right?
| It is the natural way to look at it. You see FTX and a
| reasonable person could conclude that this is simply the
| US Govt making sure that it doesn't happen again. In
| fact, it could be the only reason.
|
| But when I see things like the TikTok CEO being dragged
| in front of Congress and multiple crypto exchanges (which
| allow for a potential way to side-step dollar hegemony)
| being attacked (legally) I like to stop and think about
| if this is the US Govt retaliating.
|
| Maybe the USG wants to shore up support after rising
| interest rates highlighted that many banks are not as
| strong as many thought (due to HTM treasury accounting
| tricks). Maybe the visits of Putin and Xi to each other
| countries is signaling an increasingly unified "new
| eastern blok" which is something that the US wants to
| weaken. I don't have the answers again. I'm just
| thinking.
|
| If you are wondering what it means for me personally, I
| am going to get out of crypto holdings entirely. I see
| this as a shift that the USG views crypto as a threat
| that can be exploited by enemies. Perhaps Bitcoin is
| safe, but that would be the only one.
| psychlops wrote:
| If they need to work so hard to keep people in the system, it
| should be a good indicator of the state of affairs.
| danielvf wrote:
| > ..."Like come on. They are here for crime." Binance's [money
| laundering reporting officer] agreed that "we see the bad, but we
| close 2 eyes."
|
| [Edit: Used to link to the PDF from the CFTC in this comment,
| removed since hn story now goes to it. Thanks, dang!]
| treis wrote:
| Seeing others be so wildly bad at their job makes me feel
| better about my performance at work.
| dang wrote:
| Is there an online link that doesn't download? We can change
| the URL if so.
|
| Edit: changed from https://web3isgoinggreat.com/?id=cftc-sues-
| binance-and-ceo-c... to the pdf linked there.
| steveBK123 wrote:
| Gonna go out n a limb and say putting "don't leave anything in
| writing" instructions, in writing, is very dumb.
| wnevets wrote:
| Crypto really is the gift that keeps on giving.
| polygamous_bat wrote:
| The *grift.
| from wrote:
| I've been scouring this 74 page document for a while and I cannot
| for the life of me find the victims of Binance's alleged conduct.
| Anyone want to help me out?
| hackerlight wrote:
| Turning a blind eye to money laundering, therefore helping
| criminal and terrorist orgs which have victims.
|
| Also the gamification aspects they mention would have hurt a
| lot of people with gambling problems.
| 2OEH8eoCRo0 wrote:
| Fraud is ok as long as nobody has lost money yet? Laws don't
| matter until someone is harmed?
| from wrote:
| Ctrl-f for fraud reveals three matches that are not related
| to the charged conduct.
| [deleted]
| realworldperson wrote:
| [dead]
| garbagecoder wrote:
| Is you takin notes on a criminal fuckin conspiracy?
| paulpauper wrote:
| Yet again, crypto proves to be more trouble than it's worth and
| inferior to stocks. I will stick to a large cap diversified tech
| portfolio like QQQ. More upside and less volatility. Crypto has
| too many risks to make it worthwhile from an investment
| standpoint, imho.
| reducesuffering wrote:
| Diversified as in 55% in 10 companies and 75% in tech and
| retail? Large cap sure...
| [deleted]
| mikelovenotwar wrote:
| Beautiful idiocy. I can't wait for this scam to fail completely
| habosa wrote:
| I've said it before but: everyone knew this. In 2017 when the
| first monster crypto run happened it seemed like everyone's
| onboarding/KYC protocols were blocking new US users besides
| Binance. I had an account with them purely because they seemed to
| be willfully ignoring financial regulations (not that I was doing
| anything wrong, I was just impatient and wanted to buy some
| coins).
|
| Surprise! They were.
| rinze wrote:
| This is good for Bitcoin.
| tripplyons wrote:
| They also are referring to ETH and LTC as commodities in the
| complaint, which is good for them.
| pid-1 wrote:
| Few understand
| VHRanger wrote:
| r/buttcoin is leaking into HN!
| [deleted]
| incrudible wrote:
| It might be good for DeFi, which has derivatives trading too,
| at this point.
| sdfghswe wrote:
| Wait, I thought bitcoin was decentralized?
| SSLy wrote:
| BTC is just wallets, DeFi here refers to more complicated
| instruments.
| sdfghswe wrote:
| Sorry, I thought DeFi stood for decentralized finance?
| Why can't we put "more complicated instruments" into
| wallets? Why is a bitcoin future different than a
| bitcoin, for these purposes?
| aftbit wrote:
| You certainly can. DeFi typically refers to smart
| contract protocols for lending, borrowing, swapping,
| pooling, etc. DAOs also fit under the label. These are
| usually on the Ethereum chain because its smart contracts
| are considerably more powerful than Bitcoin's.
| henry2023 wrote:
| You can. https://www.ribbon.finance/
| joyfylbanana wrote:
| The so-called DeFi is full of centralized choke points, such
| as stablecoins and other centrally issued securities
| therein wrote:
| Not to mention the use of `ProxyContracts` that obfuscate
| changes to the actual contract implementation.
|
| When you interact with a certain contract, you are likely
| interacting with the ProxyContract which relays your calls
| to the actual contract. The proxycontract is often under
| lock or has multiple signatories to amending but the
| "origin" contract doesn't.
|
| So many DeFi projects get "audited by Certik" actually just
| get their proxy contracts audited and there is nothing in
| there but a single line per function, calling the origin
| contract.
| cryptoboy2283 wrote:
| Care to share an example?
| arbol wrote:
| Proxy contracts are necessary to perform upgrades to
| functionality over time. However auditing the proxy only
| is shady
| m00dy wrote:
| Trading futures on Defi is absolute future.
|
| P.S.: I'm an investor/liqudity provider for most of protocols
| doing this.
| rjzzleep wrote:
| Maybe for the longterm, but short term?
| dgellow wrote:
| It's a common catchphrase in the Bitcoin community
|
| https://knowyourmeme.com/memes/this-is-good-for-bitcoin
| timcavel wrote:
| [dead]
| sleepybrett wrote:
| Came here to say this, but now just here to watch the people
| who don't understand the meme.
| r00fus wrote:
| Is it a derivative of the "this is good for John McCain" meme
| from 2008?
| paxys wrote:
| "Here's how Bernie can still win"
| pffft8888 wrote:
| The message with the FBI coordinating with social media platforms
| to censor Americans and now gov agencies going after Coinbase
| (the company that has tried hard to stick to the letter of the
| law, which is a valid position in a capitalist country) tells me
| that we are entering a phase where the gov is simply going mad
| with power. Down vote all you want I don't care (or I care more
| about sharing my observation than your disapproval.)
| 2OEH8eoCRo0 wrote:
| > Coinbase (the company that has tried hard to stick to the
| letter of the law
|
| Where is their HQ?
| seydor wrote:
| Is Remote unlawful?
| [deleted]
| [deleted]
| kodah wrote:
| In SF last I checked
| 2OEH8eoCRo0 wrote:
| I was confused and talking about Binance. Coinbase does
| appear to be law abiding.
| loeg wrote:
| You can still edit your comment.
| chatmasta wrote:
| Coinbase's whole shtick is to be the law-abiding crypto
| exchange, so it's kind of alarming to see the sudden SEC
| action against them, when their entire value is based on
| the goal of working in good-faith with regulators to
| bring crypto into the mainstream economy.
| JumpCrisscross wrote:
| > _when their entire value is based on the goal of
| working in good-faith with regulators_
|
| Armstrong spends his day tweeting insults at the SEC. I
| know Gemini and Coinbase positioned themselves, to users
| and investors, as regulatory friendly and compliant. But
| they didn't behave the way compliance-obsessed firms do.
| chatmasta wrote:
| > Armstrong spends his day tweeting insults at the SEC.
|
| I don't follow Armstrong on Twitter. Can you cite some
| examples? I took a brief look through his Tweets
| mentioning "SEC" [0] and didn't see any Tweet that a
| reasonable person would consider an "insult."
|
| Also, the rate of his Tweets containing "SEC" seems much
| lower than what you'd expect from someone who "spends his
| day" tweeting at the SEC - surely such a person would
| mention the SEC in their Tweets more than a few times per
| year.
|
| [0] https://twitter.com/search?q=from%3A%40brian_armstron
| g%20SEC...
| JumpCrisscross wrote:
| The "really sketchy behavior" rant came to mind [1]. This
| isn't someone who's trying to build regulatory
| relationships. It's someone who wants to look like he has
| them. (Similar to SBF's political donations not
| resembling someone who wants to build political goodwill.
| Just someone who wants to appear as much.)
|
| Note: I'm not arguing Armstrong had no points. But if
| you're going to air out your regulatory complaints _ex
| ante_ and in public, you 're not playing in the good-and-
| compliant lane.
|
| [1] https://twitter.com/brian_armstrong/status/1435439291
| 7153587...
| renewiltord wrote:
| The rant seems to be _ex post_ , though. It is _after_ he
| received notification that his company would be sued if
| they launched the product and _after_ they wouldn 't
| explain the rules after he asked.
|
| It's not like he jumped right into it. And especially
| notable is that they let other exchanges operate the same
| feature.
| chatmasta wrote:
| Based on the content of his Tweets, many of which are
| complaining about lack of communication from SEC, I
| assume he didn't _start_ by airing the complaints in
| public.
|
| They're also a public regulatory agency, so I'm skeptical
| of the premise that it's somehow wrong to communicate
| publicly with them. Arguably he has a duty to his
| shareholders to do so, or at least to let his
| shareholders know the status of pending or current
| enforcement actions against Coinbase.
| JumpCrisscross wrote:
| > _I 'm skeptical of the premise that it's somehow wrong
| to communicate publicly with them_
|
| It's not. But it's not "working in good-faith with
| regulators." Coinbase has been antagonistic with the SEC
| from the outset.
| martin8412 wrote:
| Well, if they wanted to stick to the letter of the law, they'd
| immediately stop selling unregistered securities. It's not like
| it's difficult to register a security with the SEC.
| pffft8888 wrote:
| Who gets to define them as unregistered securities? The SEC
| claimed BUSD is a security and shut it down. If stabelcoins
| pegged against the dollar with provable 1:1 reserves are a
| security then... SEC needs to be dismantled or reset.
| martin8412 wrote:
| BUSD are two different currencies operated by different
| entities, while pretending it was the same, or it was
| anyway. The one backed 1:1 was offered by Paxos in the US
| and the other printed by Binance as they saw fit, while
| pretending it was the same. That's why it was killed off.
| chatmasta wrote:
| FedNow is launching in July. I think the motivations here are
| pretty obvious.
| xfour wrote:
| Is this confirmed that it's really launching in July, do you
| have a source?
| chatmasta wrote:
| https://www.federalreserve.gov/newsevents/pressreleases/oth
| e...
| localplume wrote:
| [dead]
| can16358p wrote:
| Don't know which is scarier... Binance ignoring potential crime
| on its platform, or a US entity having power over someone at the
| other side of the world.
|
| While I don't support the first point, second is way more scary
| IMO. We need to stop US ruling the world as if it's its own,
| seriously.
| choppaface wrote:
| Binance.us and United States Binance users cause harm in US
| markets, so it's a US problem. If the harm were tiny or really
| hard to fight, e.g. all the existing off-shore credit card
| fraud, ad spam fraud, robocalls etc then the response might be
| different. Here the threat is one well-defined entity.
| can16358p wrote:
| Well if they really want to block US persons from using
| Binance (which is against freedom btw) they can simply block
| access, watch out for bank transfers to/from within US etc.
|
| While there are always workarounds, if people want to use
| something, they should be allowed to use it (as long as it
| doesn't harm others of course, which doesn't in this case).
|
| In no way US should be able to do anything to CZ as long as
| he doesn't enter US soil, physically in person.
| code_runner wrote:
| They operated in the US illegally right? Seems like they're the
| ones who screwed up here...
| can16358p wrote:
| Internet should be free and anyone willing to participate in
| a platform should be allowed.
|
| This is against freedom. Ironic for a country where owning
| and carrying a gun is a right.
| AnonMO wrote:
| I mean no one is forcing him to show up to court. if he doesn't
| come its a defacto win for the CFTC This will lead to stronger
| enforcement of US entities interactions with binance or he
| shows and settle and moves on. The Eu, China, etc... can do the
| same. Also as stated by cz as per the filing 20-30% of traffic
| comes from the US that enough grounds for action.
| [deleted]
| noisy_boy wrote:
| > Lim, Binance's CCO from 2018 through 2022, is charged with
| willfully aiding and abetting Binance's violations through
| intentional conduct that undermined Binance's compliance program.
| Lim is also charged with conducting activities to willfully evade
| or attempt to evade applicable provisions of the CEA, including
| promoting the use of "creative means" to assist customers in
| circumventing Binance's compliance controls and implementing a
| corporate policy that instructed Binance's U.S. customers to
| access the trading facility through a virtual private network to
| avoid Binance's IP address-based controls or create "new"
| accounts through off-shore shell companies to evade Binance's
| KYC-based controls.
|
| Chief Compliance Officer promoting "creative means" of
| circumventing compliance controls. You just can't make this up.
| somenameforme wrote:
| A good accountant will not only encourage, but directly
| facilitate and aid in tax avoidance. Tax evasion is what is
| illegal - that's not paying taxes you owe. Tax avoidance is
| using every possible loophole, trick, and structure to minimize
| what you owe. Large corporations, for instance, often pay tax
| rates of near 0%, by using all sorts of "creative" structuring,
| classifications, and so on to try to avoid taxation. And that
| is all completely legal.
|
| The point of this is that "sounds dodgy" or "done only to avoid
| a legal obligation" and "is illegal" are two very different
| things. Which it is, is a question I think few are capable of
| giving an even remotely informed opinion on. It's a global
| company being sued by the one country in the world they don't
| [nominally] offer service to.
| robocat wrote:
| In New Zealand, there are anti-avoidance provisions, so some
| avoidance is illegal. If you are engineering your finances in
| a contrived or artificial manner, purely for the purpose of
| reducing taxes, you might find your tax avoidance techniques
| are illegal.
|
| Take care in your own jurisdiction to get good tax advice,
| since perhaps "avoidance" is a grey area!!!
| FreeTrade wrote:
| Didn't CZ recently bring down SBF. The same SBF who was
| defrauding cypto investors and handing out their money to
| democrat politicians. The same SBF who got kid gloves treatment
| from the democrat NYT? CZ is one of the better guys in crypto and
| this whole thing stinks.
| JumpCrisscross wrote:
| > _CZ recently bring down SBF_
|
| Did he? FTX went to CZ for help. CZ looked at their
| notoriously-shit balance sheet and ran scared.
| PaywallBuster wrote:
| he was certainly a key player
|
| > SBF jokes CZ couldn't visit the US
|
| > CZ announces he will sell his full stake in FTT (a huge
| percent of the float)
|
| > Alameda was extremely leveraged _based on their FTT
| holdings_, once FTT started crashing they went under water on
| their leverage and started fire selling assets at a loss
|
| > some of those assets belonged to FTX custumers
| FreeTrade wrote:
| I wonder if some of the well connected beneficiaries of
| SBF's largesse were happy about this.
| perfect_kiss wrote:
| from CFTC complaint (reading at
| https://www.cftc.gov/media/8351/%20enfbinancecomplaint032723...)
|
| > Certain digital assets, including BTC, ETH, LTC, and at least
| two fiat-backed stablecoins, tether ("USDT") and the Binance USD
| ("BUSD"), as well as other virtual currencies as alleged herein,
| are "commodities," as defined under Section 1a(9) of the Act, 7
| U.S.C. SS 1a(9).
|
| This is interesting, it appears ETH was named a commodity in some
| US federal legal document. Interesting to see how this will play
| out in court. Should this override SEC statements about ETH being
| a security ?
| aftbit wrote:
| IMO this is more a case of who you ask and what their current
| goal is.
|
| CFTC regulates commodities, so of course they will say things
| they want to regulate are commodities. OTOH SEC regulates
| securities, so they will say things are securities.
|
| See also the way any kind of fraud can become "securities
| fraud" if you have investors. Basically, if your business
| involves defrauding customers, that is likely going to
| negatively impact stock price when it comes out, and if you
| lied and told shareholders you were not defrauding customers,
| you are also defrauding shareholders thus securities fraud thus
| SEC jurisdiction.
| [deleted]
| fabian2k wrote:
| There is more commentary by Molly White on Twitter, quoting
| various parts of the complaint:
|
| https://twitter.com/web3isgreat/status/1640373566322491393
|
| My favorite is probably the VIP feature "prompt notification of
| any law enforcement inquiry concerning their account". And of
| course there are all the text messages indicating they knew all
| the things they did were illegal.
| bitL wrote:
| Why is that one illegal? Didn't Google notify its users if
| their accounts were under legal review as well?
| wmf wrote:
| It depends. Often law enforcement investigations come with
| gag orders so the service provider cannot tell the customer
| they are under investigation.
| gruez wrote:
| Right, but nothing in the quote suggests they're breaching
| gag orders. If your account is frozen, you're going to find
| out one way or another, especially if you're an active/VIP
| trader. The only thing that binance is doing is proactively
| letting the customer know rather than letting them find out
| next time they try to trade.
| treis wrote:
| That one thing is the illegal bit of it. Yes, at some
| point you will have to tell a customer they are unable to
| make transactions in response to their attempts. But
| you're not supposed to proactively go and tell them they
| are unable to trade.
| JumpCrisscross wrote:
| > _only thing that binance is doing is proactively
| letting the customer know rather than letting them find
| out next time they try to trade_
|
| That's what you see when you read "do not directly tell
| the user to run"?
| gruez wrote:
| IANAL but telling people to run might run afoul of
| "interfering with investigation" laws, whereas telling
| their account was frozen (assuming no gag order) isn't.
| The difference would be that the former is an
| opinion/advice whereas the latter is a statement of fact.
| Like the gp mentioned, services telling customers that
| they've received law enforcement requests isn't exactly
| something that only shady companies do.
| JumpCrisscross wrote:
| > _telling customers that they 've received law
| enforcement requests isn't exactly something that only
| shady companies do_
|
| And if that's all they'd done, they _might_ have skated
| by with just fines. Then they wrote down "do not
| directly tell the user to run."
| gruez wrote:
| >Then they wrote down "do not directly tell the user to
| run."
|
| How's that different than AML regulations that require
| banks to "not directly tell" customers they're being
| investigated?
| banannaise wrote:
| > The only thing that binance is doing is proactively
| letting the customer know rather than letting them find
| out next time they try to trade.
|
| And this document directly admits that this is an attempt
| to covertly notify them of something that it is illegal
| to notify them of. Any shred of plausible deniability
| that procedure provided them is gone now, because this
| document is now public.
| gruez wrote:
| >And this document directly admits that this is an
| attempt to covertly notify them of something that it is
| illegal to notify them of.
|
| There's literally nothing in there that says they're
| breaking gag orders.
| mrguyorama wrote:
| "Don't tell them to run but tell them something we intend
| them to understand means run" is blatant conspiracy to do
| just that.
| gruez wrote:
| Is it? It seems like your impression is that Zhao
| directed employees to not tell customers directly to
| flee, and also strongly suggest to them indirectly that
| they should, but there's no evidence of the latter in the
| indictment.
| seydor wrote:
| People are forgetting that Binance is not a US company nor
| a bank
| owenmarshall wrote:
| US financial enforcement agencies take a very expansive
| view of their jurisdiction. OFAC has gone after non-US
| companies at non-US banks for violating sanctions because
| US dollars were used in the process - that's enough for
| them to establish a US nexus.
| seydor wrote:
| And when GDPR does it they pick up the pitchforks
| arcticbull wrote:
| Anyone who does business in the EU complies with GDPR.
| JumpCrisscross wrote:
| Also, anyone who complies with any paperwork-heavy law
| complains about it.
| steveBK123 wrote:
| Cryptobros are forgetting you can't run an unregistered
| derivatives exchange domiciled in US, OR taking USD, OR
| customers in US.
|
| It's pretty simple.
| seydor wrote:
| pretty sure you can take USD, you can have USD bank
| accounts everywhere
|
| (Not subject to US regulation, Eurodollar is a thing)
| vkou wrote:
| Pretty sure any bank that ever wants to receive or send a
| USD wire transfer from/to any other bank needs to play
| ball with Uncle Sam.
| selectodude wrote:
| Dollars held outside the US are absolutely subject to US
| regulation. The banks themselves are not subject to US
| banking capital requirements because they have no access
| to the federal reserve. If you commit a US crime with a
| dollar held overseas, you still fall under US
| jurisdiction.
| steveBK123 wrote:
| the brightest minds of a generation, encoding financial
| crime in their fintech startups, because they couldn't be
| bothered to hire a lawyer or read any basic financial
| history or media in their life
| mrguyorama wrote:
| No, they're doing it because _they think they are special
| and clever and the US can 't touch them_. They wouldn't
| be having these discussions if they weren't already aware
| of what the law asks of them.
| steveBK123 wrote:
| Yeah that's even dumber then. Understand enough to know
| they are breaking laws, but think they'll get away with
| it.
| lottin wrote:
| > If you commit a US crime with a dollar held overseas,
| you still fall under US jurisdiction.
|
| This sentence doesn't make any sense.
| steveBK123 wrote:
| if you transact in dollars, prepare to be subject to the
| long arm of US securities law
| alphanullmeric wrote:
| Good thing sufficiently decentralized exchanges continue
| to serve US customers without interference from the
| government.
| lottin wrote:
| Aren't decentralized exchanges unable to handle real
| money? And therefore somewhat (if not completely) useless
| for the purposes of buying and selling crypto-currencies?
| alphanullmeric wrote:
| I'm glad we agree it's not the governments place to
| regulate exchanges that don't transact real money.
| JumpCrisscross wrote:
| > _Good thing sufficiently decentralized exchanges
| continue to serve US customers without interference from
| the government_
|
| As they should be. If they aren't laundering money for
| Russian criminals and designated terrorist organizations.
|
| FinCEN seems to be on top of working to segregate
| compliant from non-compliant decentralized exchanges, as
| well as the people using and developing them.
| steveBK123 wrote:
| The discussions they had.. in electronic form.. about
| Hamas buying AK47s and how its not money laundering if
| the dollar figure is small enough were.. illuminating.
|
| This is basic stuff covered in AML training for any bank
| intern at a 3rd string bank 20 years ago. Just
| incredible.
| mikeyouse wrote:
| Contrary to their preferences, when 12% of your trading
| volume comes from a Chicago-based trader, you are square
| in the realm of "governed by applicable US laws".
| psychlops wrote:
| That's probably Binance.US.
| KptMarchewa wrote:
| CFTC explicitely claims that 1) that's not true, 2) CZ
| and rest of upper management were aware that their
| restrictions on US users were just for media.
| bobthepanda wrote:
| Also, even if it were, having a subsidiary does not
| magically launder things the parent company does.
| dragonwriter wrote:
| > People are forgetting that Binance is not a US company
| nor a bank
|
| No, its an exchange, which among other things handles
| commodities, hence why the CFTC, not banking regulators,
| is suing.
| HWR_14 wrote:
| which among other things handles commodities _in the US_
| hence why the CFTC
| dragonwriter wrote:
| Paragraph 3 (and other parts) of the complaint address
| the US nexus:
|
| _Since the launch of its platform in 2017, Binance has
| taken a calculated, phased approach to increase its
| United States presence despite publicly stating its
| purported intent to "block" or "restrict" customers
| located in the United States from accessing its platform.
| Binance's initial phase of strategically targeting the
| United States focused on soliciting retail customers. In
| a later phase, Binance increasingly relied on personnel
| and vendors in the United States and actively cultivated
| lucrative and commercially important "VIP" customers,
| including institutional customers, located in the United
| States. All the while, Binance, Zhao, and Lim, the
| platform's former Chief Compliance Officer ("CCO"), have
| each known that Binance's solicitation of customers
| located in the United States subjected Binance to
| registration and regulatory requirements under U.S. law.
| But Binance, Zhao, and Lim have all chosen to ignore
| those requirements and undermined Binance's ineffective
| compliance program by taking steps to help customers
| evade Binance's access controls._
| dgellow wrote:
| If they offer their services in the US, they have to
| comply with US laws.
|
| From the article:
|
| > The CFTC has alleged that "Binance has taken a
| calculated, phased approach to increase its United States
| presence despite publicly stating its purported intent to
| 'block' or 'restrict' customers located in the United
| States from accessing its platform... All the while,
| Binance, Zhao, and Lim, the platform's Chief Compliance
| Officer ('CCO'), have each known that Binance's
| solicitation of customers located in the United States
| subjected Binance to registration and regulatory
| requirements under U.S. law.
|
| That seems to be what CFC is arguing here.
| KptMarchewa wrote:
| In AML/CTF context it's very illegal, and much of CFTC claims
| are related to that.
| stouset wrote:
| You know how there are always stories where people are
| complaining that some financial company (often PayPal) shut
| their account down and won't say why?
|
| That's because of AML laws.
|
| Their account got flagged by OFAC--deservedly or not--and the
| company is bound from discussing _anything_ about it under
| _any_ circumstances.
|
| The level it goes to is frankly kind of ridiculous, but
| that's the legal regime financial services companies operate
| under. And that's not to defend PayPal as a company either.
| Just that when you see people saying some company is horrible
| because they close accounts and give no information, it's
| (not always, but) very frequently one situation that's
| entirely out of the company's hands.
| jjeaff wrote:
| It should be noted that an account being flagged by OFAC is
| one of the many reasons a company might flag an account.
| And it is probably at the bottom of the list of most common
| reasons an account gets frozen.
|
| So let's not give these companies too much credit since
| most of the time they are freezing accounts for much more
| benign reasons. Like: we didn't do any due diligence on
| your business beforehand and now a little bit of data
| indicates you might fall outside of our basic risk bars and
| we don't want to do any due diligence on you now (so we can
| save a couple bucks) to confirm whether that is true or
| not, so we are going to freeze you out and collect interest
| on your money for the 3-6 month maximum after which you can
| take your money back and go kick rocks without ever knowing
| why because we want to limit our legal liability.
| nr2x wrote:
| This is why you should just bank with HSBC! ;-)
| SpicyLemonZest wrote:
| The complaint doesn't claim it's illegal in and of itself,
| but it supports the idea that Binance more generally saw US
| law enforcement efforts as an annoyance to be circumvented.
| These kind of complaints typically try to tell a good story
| and not just state the unlawful activity.
| [deleted]
| dragonwriter wrote:
| It (and pretty much _everything_ ) is illegal when you do it
| knowing that it will, and with the specific intent to,
| facilitate or conceal crime, especially a specific known
| crime like money laundering.
|
| Which is why, to the extent that it it might be legal
| otherwise, you probably don't want to make written directives
| documenting your specific knowledge and intent wrt crime.
| hyperpape wrote:
| What I don't think it being said very explicitly in other
| responses is that it depends on the law and the
| circumstances.
|
| In the case of anti-money laundering laws, my belief[0] is
| that it is very illegal to tell a customer they are being
| flagged.
|
| On the other hand, if it's a copyright thing, or some kind of
| contract dispute? You're normally totally free to tell the
| customer.
|
| [0] No professional experience involved, just a lot of
| reading patio11/Matt Levine.
| [deleted]
| helaoban wrote:
| "Binance currently offers a "Battle Function" that "allows
| users to compete with each other and earn points" by trading
| Binance derivative contracts in a "head to head battle to see
| who is the most profitable" in "a one-minute battle period"".
|
| LOL.
| tomcar288 wrote:
| Should banks and financial platforms decide who is and who
| isn't doing illegal things? The more we expect financial
| institutions to take on this task, the more they need to crack
| down on anyone who even looks like they're doing something
| criminal. This is how you end up with those situations where
| random people get their financial accounts frozen with
| absolutely no recourse. Just imagine, if you accepted an
| international wire from a family member in another country and
| next thing you know all your accounts are frozen. Do you really
| want your financial institution to be the judge, jurry and
| executioner?
|
| There's a time and place to go after criminals but I don't
| think that financial institutions are the ones who should be
| making the final decisions on these things - that should be
| left for law enforcement.
| nr2x wrote:
| There are literally hundreds of laws around the world that
| require banks to monitor for, and report, money laundering.
| This has been true for decades.
| dan-robertson wrote:
| This seems quite unrelated to the rule that if you want to
| run a futures exchange for US customers, you need a license
| from the CFTC.
| glerk wrote:
| No, they shouldn't. But various entities under the US
| government are claiming the authority to force private
| businesses (even businesses operating outside of their
| jurisdiction) to enforce their rules and bear the compliance
| overhead. And as you can see in this thread, whenever tyranny
| is making gains, """hacker""" news is laughing and applauding
| like a bunch of circus seals.
| nr2x wrote:
| wow, these people make SBF look good in comparison.
| TheAlchemist wrote:
| Just wait for THE real one - Tether !
| perihelions wrote:
| - _" Do not directly tell the user to run, just tell them their
| account has been unfrozen and it was investigated by XXX. If
| the user is a big trader, or a smart one, he/she will get the
| hint."_
|
| The phrasing! LMFAO
|
| They put this _in writing_!
| glerk wrote:
| A company protecting the interest of their customers?
| Horrible!
| function_seven wrote:
| > [0] _In February 2019, after receiving information
| "regarding HAMAS transactions" on Binance, Lim explained to
| a colleague that terrorists usually send "small sums" as
| "large sums constitute money laundering." Lin's colleague
| replied: "can barely buy an AK47 with 600 bucks." And with
| regard to certain Binance customers, including customers
| from Russia, Lim acknowledged in a February 2020 chat:
| "Like come on. They are here for crime.". Binance MLRO
| agreed that "we see the bad, but we close 2 eyes."_
|
| Yes, that all seems pretty horrible to me.
|
| [0]
| https://twitter.com/web3isgreat/status/1640379218461589506
| zoklet-enjoyer wrote:
| Why should I care that they're facilitating transactions
| for Hamas?
| nyolfen wrote:
| thank goodness we have the US federal government to bring
| its weight to bear on a company in china handling a $600
| transaction from a bad guy in palestine
| neither_color wrote:
| To me this strikes me as "chabuduo" culture and not
| understanding how seriously first world countries take
| these things. "move fast and break things" and fintech
| don't go well together, at all.
|
| https://www.chinaexpatsociety.com/culture/the-chabuduo-
| minds...
| potatolicious wrote:
| Ah, gotta love it when western expats exoticize basic
| things about my culture, along with exotic-sounding
| jargon that purports to represent something difficult to
| translate.
|
| I'd like to gently, very gently float to you the idea
| that these people did not aid and abet criminal
| enterprises "because they're Chinese" or "because of
| Chinese culture", nor would such activities be generally
| permitted in Chinese culture.
|
| Side note: the waft of casual racism from expat sites is
| honestly kind of hilarious.
|
| "I found myself enmeshed in a foreign culture where -
| gasp - guess what, _some people cut corners on their
| work_. Holy fuck! "
| JohnFen wrote:
| I didn't realize that chabuduo culture included overtly
| and knowingly supporting criminal activity.
| notch898a wrote:
| Is it illegal for me to sell gas to gang bangers in the
| ghetto? When is it a crime to knowingly be selling to
| criminals? Everyone knows there are customers in Russia,
| and in Camden NJ, there for crime. You know with 100%
| certainty when you run a gas station in a bad part of
| town you directly are selling to aid people to commit
| felonies. Hell even the road crews know when they build
| the interstate, they are there to amongst other things to
| build the road that facilitates money laundering (and
| indeed they take no action to stop it).
| lordnacho wrote:
| Well there's no law saying you have to report a gas sale
| to a criminal.
|
| Just like any other service you might sell to him. Except
| you know, for services for which there is a law...
| [deleted]
| k2enemy wrote:
| > When is it a crime to knowingly be selling to
| criminals?
|
| If only there were an entire profession and legal system
| that has been asking and answering questions like this
| for hundreds of years.
|
| I know programmers want to believe otherwise, but common
| law can't be boiled down to single line "if statements."
| notch898a wrote:
| Common law, like all law, boils down to if the state
| wants to fuck you they will find a way. I just enjoy
| pointing out the hypocrisies and double speak along the
| way.
| jjeaff wrote:
| I think there are a lot of examples of people the state
| wants to get but can't. And in many cases, common law is
| what saves said targets. Newer legislation that overrides
| common law like the Patriot Act or DMCA is what ends up
| being used more frequently to "get" people.
| badrequest wrote:
| It doesn't seem like you're very good at it.
| dragonwriter wrote:
| > I know programmers want to believe otherwise, but
| common law can't be boiled down to single line "if
| statements."
|
| It often can, but programmers often don't like that,
| either, because instead of hinging purely on _acts_ that
| enable simple hacks, it often hinges on things like
| knowledge and intent.
| letsdothisagain wrote:
| Uh you do realize "judicial review" is a thing. And also
| "judges completely ignoring the law" is another.
|
| Civil law is an interesting solution to that problem.
| Lets go live to Paris, France to ask them how it's going!
| bioemerl wrote:
| https://xkcd.com/1494/
| CPLX wrote:
| The burden shifts when you're engaging in financial
| services.
|
| So for example you don't have any real obligation to
| inquire about source of funds when someone comes into
| your shack to buy a burger and a shake.
|
| If they come into your shack to open a financial account
| or do any kind of exchanging of financial instruments
| then you do.
| favsq wrote:
| [flagged]
| meepmorp wrote:
| Are you actually trying to equate selling gas at a public
| store with being a knowing accomplice to money
| laundering?
| function_seven wrote:
| > _When is it a crime to knowingly be selling to
| criminals?_
|
| When you know that the transaction you're part of is
| directly involved in their crimes. It's one thing to
| know, statistically, the some portion of your customers
| are doing crimes. It's an entirely different thing to
| know that _this_ customer is doing _that_ crime with your
| assistance.
| notch898a wrote:
| Honest question and not trying to disagree with you here.
| What are the specific customers that Binance had
| individualized knowledge were assisting in committing
| crime? I'm curious to see the sources.
| qorrect wrote:
| Same question. I see nothing in there that says they knew
| of their actual crimes, only that they might be
| criminals.
| JumpCrisscross wrote:
| > _is it a crime to knowingly be selling to criminals_
|
| Yes. At a minimum, it's aiding and abetting [1]. What's
| going on here looks like terrorist financing and willful
| sanctions evasion.
|
| [1] https://en.wikipedia.org/wiki/Aiding_and_abetting#cit
| e_note-...
| zoklet-enjoyer wrote:
| Ok, what about Israel?
| lesuorac wrote:
| How do you expect to jail an entire state?
|
| I'm sure you heard about Russian receiving sanctions from
| the US but often when you look into the details it's
| restrictions against specific named Russian nationals. If
| you can name specific Isrealies that are involved in
| terrorism then you might be able to get sanctions against
| them but to just blanketly claim the whole country is
| guilty of an unspecified sanctionable offense isn't going
| to get you anywhere.
| vkou wrote:
| While I enjoy pointing out the many, _many_ problems[1]
| with the current state of Israel, I don 't think CZ and
| Binance were banking for 'terrorist' groups out of a
| _political_ principle.
|
| And since they aren't doing out any particular political
| principle, it seems that they were just as happy to
| support 'bad' terrorist groups as they were 'good'
| terrorist groups.
|
| It's one thing if you're supporting violence because you
| legitimately believe that its cause is just. We do that
| all the time. It's another when you're supporting _any_
| violent group that will pay you.
|
| One makes you an idealist that may, or may not be on the
| right side of morality and history. The other simply
| makes you a criminal.
|
| [1] Understatement of the century, but what those
| problems are isn't at all relevant to this thread.
| dragonwriter wrote:
| Foreign states are generally not subject to US criminal
| law.
| notch898a wrote:
| In that case they need to prosecute all the road crews
| and gas stations. Those people know with certainty they
| are providing for criminals, and they do nothing to stop
| it.
| illiarian wrote:
| If you sell knives, and a criminal walks in, buys a
| knife, and then kills someone, you are not guilty.
|
| If you _know_ the criminal, you sell that criminal
| knives, and after police come looking you tell the
| criminal, you are at the very least complicit.
| notch898a wrote:
| If I walk up to the road crew and tell them the local mob
| is going to be driving drugs across it the day after
| completion, are they then complicit when they keep going?
| notahacker wrote:
| If the road crew discuss tipping the mob off that they're
| being watched and lying to the police about the date the
| road is scheduled to be opened to give the mob a window
| of opportunity, quite possibly
| wbl wrote:
| No they don't. The statutes for financial institutions
| are different and aiding and abetting requires
| particularized knowledge that we recognize gas stations
| just don't have.
| JumpCrisscross wrote:
| > _they need to prosecute all the road crews and gas
| stations_
|
| If you don't see the difference between knowingly helping
| a designated terrorist organization launder money
| (specific and known criminal and crime) and operating an
| honest business in a high-crime neighborhood (statistical
| likelihood of aiding a criminal), you shouldn't be making
| business decisions or running a financial services firm.
| It's an obvious distinction, one that a roomful of people
| with basic legal instruction will agree on 99% of the
| time, except for the one with a profit incentive to argue
| the opposite.
| ipaddr wrote:
| The line gets really blurry when you see someone buying
| large quantities of legal products that can be compounded
| into other products like meth. At what point are you
| aiding by selling lye. That's the case here.
| WJW wrote:
| There is no doubt that the line is indeed pretty blurry
| in many cases. But if the regulators have evidence that
| you are taking actions specifically to evade the
| applicable laws, you are firmly on the wrong side of that
| line.
| jjeaff wrote:
| That is an example where it could be blurry, I agree. But
| if you are suspicious enough to have internal
| communications about said suspicions and don't make any
| effort to communicate the same to law enforcement, then
| the line becomes less blurry.
| JumpCrisscross wrote:
| > _line gets really blurry when you see someone buying
| large quantities of legal products that can be compounded
| into other products like meth. At what point are you
| aiding by selling lye. That 's the case here._
|
| I fully agree on the line, in general, being fuzzy. It's
| not here.
|
| Multiple texts describe Binance helping Hamas circumvent
| money-laundering flags by moving small amounts, helping a
| Chicago-based trader hide his U.S. origin, _et cetera_.
|
| If someone buys a bunch of lye, the line is blurry. If
| they walk in hitting a meth pipe, ask you in which aisle
| are the meth supplies, and when they hand you their
| credit card, you advise them to pay in cash so you don't
| have to draw up a receipt, the line isn't blurry so much
| as very far away.
| notch898a wrote:
| The road crew knowingly helps DTOs launder money by
| building the interstate system known to assist with
| exactly that.
| perihelions wrote:
| There's a *world* of difference between _" We will
| vigorously defend our clients' legal and procedural
| rights"_ and _" Our 'smart' criminal clients will
| understand our 'hints' and 'run'"_.
| hn_throwaway_99 wrote:
| Yeah, to quote Hindenburg Research's recent post:
|
| All these companies are doing a great service aiding the
| historically "underbanked": criminals.
| glerk wrote:
| [flagged]
| jjeaff wrote:
| Seems unlikely that the target of any suspicion is
| directed at unaccredited futures traders since by
| definition, they will have to be dealing in small
| amounts. Large amounts would make one an accredited
| investor by definition since high net worth makes one
| accredited.
| malermeister wrote:
| > For example, in February 2019, after receiving
| information "regarding HAMAS transactions" on Binance,
| Lim explained to a colleague that terrorists usually send
| "small sums" as "large sums constitute money laundering."
| Lim's colleague replied: "can barely buy an AK47 with 600
| bucks." And with regard to certain Binance customers,
| including customers from Russia, Lim acknowledged in a
| February 2020 chat: "Like come on. They are here for
| crime." Binance's MLRO agreed that "we see the bad, but
| we close 2 eyes."
| from wrote:
| So... some compliance officer received information about
| terrorists allegedly using Binance and made a light
| hearted comment about it? The CFTC is not going to
| mention whatever preventative measures they took to
| prevent similar transactions from occurring in the
| future, they're trying to make them look bad through
| innuendo for this lawsuit and also probably to jeopardize
| their banking relationships.
| arcticbull wrote:
| They also extensively documented their set-up for avoiding
| compliance in the Tai Chi Document. [1]
|
| They seem not to have learned the lessons from The Wire about
| "taking notes a criminal conspiracy."
|
| [edit] Oh man I wonder if we're going to find out where ex-
| Binance US CEO Catherine Coley has been hiding all these
| years.
|
| [1] https://www.forbes.com/sites/michaeldelcastillo/2020/10/2
| 9/l...
| quickthrowman wrote:
| Context clip from The Wire: https://mobile.twitter.com/TheW
| ireStripped/status/1164385139...
|
| (He was taking notes because they're following Robert's
| Rules of Order, lol)
| hn_throwaway_99 wrote:
| That whole thread is gold. Molly White is truly doing the
| Lord's work:
|
| > Rule 1: If you're going to do crimes, don't put them in
| writing.
|
| > Rule 2: If you're going to put them in writing, don't write
| them in "I CAN HAZ CHEEZEBURGER" style writing, it's
| embarrassing.
|
| https://twitter.com/web3isgreat/status/1640378422483472386
| meowface wrote:
| Reminds me of some of the NSA leaks.
| tehwebguy wrote:
| Getting dangerously close to the ITYSL insider trading
| sketch
| throwanem wrote:
| Oh, no. This is a _lot_ funnier.
| at-fates-hands wrote:
| I remember working for a sketchy start-up right out of
| college. They were doing telecom stuff when the carriers
| were de-regulated in the early aughts. Even now, they were
| tied up with some fintech companies and some shady
| investors. I was a combo developer/csr/account management
| person at any given time depending on what was going on.
|
| They would _rarely_ put stuff in writing. I was always told
| to do stuff. Never in email, never in memo 's or any other
| written form. It was always, "We're going need you to scrub
| some files from xyz database." or "I need to rewrite this
| contract and add these additional sections which weren't on
| the original document." If I needed details, they would put
| them on a sticky note. I remember they had someone come
| around and take these notes off of people's desk when the
| task was completed.
|
| I remember at Christmas one of my uncle's was a stock
| broker and a big knocker at some financial company. He was
| asking what I did and where I worked. He started asking
| more questions and told me I needed to be _very_ careful -
| what the startup was doing was either really illegal or
| they were operating in a very gray area. Neither of them
| will end well for anybody and if the SEC thinks I 'm
| involved in any way of covering up what they were doing?
| Then I'm in deep shit.
|
| I quit about three weeks later. A year or so after that,
| the economy collapsed. I found out they were automating
| robo-signatures for real estate and mortgage companies.
| They were changing clients contracts from fixed APR's to 3
| year ARM's and a bunch of other highly illegal shit. The
| company went under and despite several local news reports
| about it, nothing happened. Pretty sure they just got lost
| in the myriad of other companies going under, people losing
| everything and the economy collapsing.
|
| It was a good experience for me to understand and see red
| flags when something doesn't feel right.
| stevofolife wrote:
| What a great anecdote.
|
| I'm sad to say this - but most capitalism operates like
| this more or less, and capitalism runs the world. There
| is not enough integrity.
| majormajor wrote:
| A lack of integrity isn't necessarily a problem _of_
| capitalism, but it does mean that it needs active
| regulation. Otherwise the collection of capital and
| resulting accumulation of power _will_ be abused. A knock
| on more controlled economies and such is that people will
| abuse the power that such systems give them... so we
| shouldn 't let them get that power organically either.
| stevofolife wrote:
| 100% agree. At least lack of integrity will never
| prevail. Active regulation with fairness is increasingly
| more important.
| gregw2 wrote:
| ...active _well-funded_ regulation...
|
| ...since a common anti-regulatory strategy is to strangle
| the funding...
| bboygravity wrote:
| I kind of lolled at the part where you thought you where
| at risk of the SEC going after you.
|
| Just a reminder that Madoff ran a ponzi for more than !15
| years! to the tune of 20 billion USD and the only ones to
| go after him where his sons who turned him in to the FBI.
| Note: the SEC was NOT involved in going after him (they
| did the opposite: they looked away).
|
| The SEC is a marketing agency that exists to provide a
| false image of "fair markets". It's not actually a
| regulatory agency.
| arcticbull wrote:
| Madoff was also chairman of the NASDAQ for a hot minute
| there heh.
| detourdog wrote:
| I was at one meeting with him during the planning the of
| the NASADQ marketplace. It was the largest meeting of the
| whole project that I was a part of. He came in for about
| 10 minutes and told everyone in the room who wanted to
| use Sun that the video wall would run on Windows.
| mike_d wrote:
| His sons did not "turn him in." They were complicit and
| eventually contacted authorities when their father
| revealed that the firm was completely bankrupt.
|
| While the sons were never formally charged, they were
| suspected of involvement. One killed himself and the
| other died of cancer before the investigation was wrapped
| up.
|
| Close to two dozen people were eventually charged, many
| went to jail, and JP Morgan paid $2.6 billion to settle
| their involvement.
| letsdothisagain wrote:
| And that $2.6 billion is behind bars to this day. Don't
| do the crime if you can't do the time!
| x0x0 wrote:
| Holy shit, it just keeps going
|
| > _according to Lim, Binance purposely engaged a compliance
| auditor that would "just do a half assed individual sub
| audit on geo[fencing]" to "buy us more time." As part of
| this audit, the Binance employee who held the title of
| Money Laundering Reporting Officer ("MLRO") lamented that
| she "need[ed] to write a fake annual MLRO report to Binance
| board of directors wtf."_ [1]
|
| By the time you write "fake annual MLRO report" in text,
| you're about to be a one-person retirement plan for some
| attorneys.
|
| [1]
| https://twitter.com/web3isgreat/status/1640378422483472386
| Arrath wrote:
| > By the time you write "fake annual MLRO report" in
| text, you're about to be a one-person retirement plan for
| some attorneys.
|
| How does the simple act of typing that out in a message
| not trigger the slightest moment of pause, self
| reflection and, perhaps, self preservation? Good lord.
| omegaworks wrote:
| You underestimate the degree to which high-level
| executive success is dependent on responding to the boss
| that tells you to jump with "how high."
| bobthepanda wrote:
| also, people really let down their guard texting and
| emailing despite pleading and trainings from legal.
|
| the other thread about people using ChatGPT with their
| company's confidential data has some people with their
| behind hanging out defending it.
| https://news.ycombinator.com/item?id=35330438
| tootie wrote:
| The arrogance is just off the charts. Just having these
| incredibly childish text conversations where they admit
| that their platform is being used illegally and they intend
| to play stupid. Maybe they're not playing. It seems
| disturbingly appropriate that this guy wanted to rescue
| FTX.
| belter wrote:
| The most disturbing (for FTX...) is that even _this_
| group said, no FTX is messed up...
| usefulcat wrote:
| Maybe? Pretty sure it's possible to be a complete
| sociopath and still be able to recognize a very negative
| balance sheet when you see one.
| potatolicious wrote:
| I can't decide if these people put all of it is in writing
| because they were stupid or because they felt total and utter
| impunity that there would ever be consequences.
|
| The impunity seems like a general theme with everyone
| involved with crypto - just flagrant wrongdoing in broad
| daylight.
|
| But considering that flagrant wrongdoing in VC-land continues
| to result in no severe consequences (see: Kalanick, Neumann)
| I guess maybe we're the suckers.
| deltree7 wrote:
| Kalanick or Neumann did nothing wrong
| JumpCrisscross wrote:
| > _impunity seems like a general theme with everyone
| involved with crypto_
|
| Something is off with these folks' sense of risk. Let's put
| aside the illegality. By laundering for Hamas and Russian
| criminals, Binance's leadership has put itself on the wrong
| side of the United States, Israel, the Gulf monarchies and
| the entirety of fucking NATO. At the same time, there are
| powerful people in Moscow, Tehran and Beirut who would
| rather see them dead than captured.
|
| > _flagrant wrongdoing in VC-land continues to result in no
| severe consequences (see: Kalanick, Neumann)_
|
| Kalanick and Neumann didn't steal money or finance
| terrorists. The wrongdoing in crypto/web3 is on another
| level.
| from wrote:
| Russian criminals use Binance accounts (and actually
| every exchange, including Coinbase) registered in the
| names of jobless 25 year old women from CIS countries.
| You can buy these accounts on basically any gray market
| forum with a marketplace section including sites like
| exploit.in or even forums used by 15 year olds like mpgh
| and ogusers. I am doubtful that a Binance customer data
| leak would have anywhere near as many interesting people
| as say the Credit Suisse leaks.
|
| It's also curious that there was no mention of blockchain
| analysis anywhere in the complaint or even an attempt to
| quantify the amount of criminal funds on Binance and the
| complaint instead relies solely on a handful of excerpted
| chat logs to show compliance failings (the CFTC is
| obviously not going to mention all the times they ended
| up blocking the bad accounts). They also don't even list
| any specific Hamas transactions or say that Binance
| knowingly processed them.
|
| > Kalanick and Neumann didn't steal money or finance
| terrorists. The wrongdoing in crypto/web3 is on another
| level.
|
| Not VC but ever hear of Marc Rich? He was ultimately
| pardoned after being accused of evading 8 figures (in
| 1983 dollars) of taxes, trading with Iraq, Iran during
| the hostage crisis, the USSR during the grain embargo,
| and South Africa during Apartheid [0]. He lived in
| Switzerland just fine for a couple decades and the only
| trouble he ever faced was attempted kidnapping by
| American law enforcement [1]. He paved the way for the
| awesome company we now know as Glencore.
|
| 0. https://www.congress.gov/event/107th-congress/house-
| event/LC... 1. https://www.swissinfo.ch/eng/-king-of-oil
| --discloses-his--se...
| cal5k wrote:
| There's a big difference between _offshore_ crypto - where
| the name of the game was (apparently) to evade US KYC /AML
| & securities law, and domestic companies trying to operate
| within the law.
|
| Binance, FTX, etc. are the former, and I'd say Coinbase is
| the latter... there's a big difference between wilful non-
| compliance, and disagreements between regulators and
| counsel at firms like Coinbase about interpretation of law.
|
| The fact that all of these regulatory actions are happening
| at once suggests that regulators either may not appreciate
| the difference or may not care, which is unfortunate.
| AndrewKemendo wrote:
| The idea that these people are more intelligent than everyone
| else has to be a joke at this point
|
| It really comes down to who is willing to take the most risk
| on behalf of investors
|
| Watch: This CEO will come back in a few years with another
| scheme that is backed by millions in venture money, just like
| Kalanick
| JumpCrisscross wrote:
| > _Watch: This CEO will come back in a few years with
| another scheme_
|
| If some of these allegations [1] are credible, he and
| everyone in his orbit are going to jail.
|
| [1] https://news.ycombinator.com/item?id=35329117
| glerk wrote:
| This is a civil case. Nobody is going to jail.
| ensignavenger wrote:
| Not from this case, no. Criminal cases take longer to
| build and have a higher standard of evidence. It is still
| possible for them to go to jail from criminal
| proceedings, but it may be months or even years after the
| civil proceedings wrap up.
| JumpCrisscross wrote:
| > _This is a civil case. Nobody is going to jail_
|
| _This_ case isn 't putting them in jail. But they're
| going to jail. Literal terrorist financing.
| zoklet-enjoyer wrote:
| USA is the biggest terrorist organization. I don't go to
| jail for paying them taxes
| p_j_w wrote:
| >Literal terrorist financing.
|
| No one from HSBC went to jail, either.
| JumpCrisscross wrote:
| > _No one from HSBC went to jail, either_
|
| There wasn't evidence it was willful. Looking the other
| way gets you fined. Texting your colleagues about
| laundering money shows intent, the most difficult part of
| most financial crimes to prove in court.
| dragonwriter wrote:
| A parallel criminal investigation of Binance has also
| been reported, and if there were a criminal referral from
| CFTC that would often take several months longer before
| charges are filed by the DoJ compared to CFTC filing a
| civil case. So, nobody is going to jail, sure, at least
| _not yet_.
| boeingUH60 wrote:
| The BitMex guys pulled a similar move...they all paid
| fines and avoided jail.
| JumpCrisscross wrote:
| > _BitMex guys pulled a similar move...they all paid
| fines and avoided jail_
|
| It looks like a combination of ongoing criminal trials,
| home confinement and probation [1].
|
| [1] https://en.wikipedia.org/wiki/BitMEX
| chatmasta wrote:
| I doubt you'll see CZ in any country with a US
| extradition treaty any time soon.
| nradov wrote:
| A treaty isn't required for extradition. A treaty
| formalizes the process but countries do routinely
| extradite suspects even without treaties. This especially
| applies to fugitive third-country nationals. The US
| government will sometimes negotiate special _quid pro
| quo_ deals to apprehend high profile suspects.
| JumpCrisscross wrote:
| > _doubt you 'll see CZ in any country with a US
| extradition treaty_
|
| If he's financing terrorism, a broad extradition treaty
| goes from being a blocker to a diplomatic hurdle. (To be
| clear, I'm not suggesting kidnapping. Governments can
| negotiate one-off extraditions for high-value targets.)
|
| It also appears he was knowingly financing Hamas and
| Russia, which makes the list of potential enemies (and
| people who would prefer him dead to compromised)
| substantial.
| bombcar wrote:
| And when you're dealing with entities like that they just
| might decide to save everyone the expense of a trial.
| [deleted]
| beefield wrote:
| > The idea that these people are more intelligent than
| everyone else has to be a joke at this point
|
| There is a reason why someone way funnier than me came up
| with "Dunning-Krugerrand"
| chrisbolt wrote:
| https://threadreaderapp.com/thread/1640373566322491393.html
| alphanullmeric wrote:
| Ah, so is that something you're universally against? Say,
| should you be arrested for warning a shoplifter that police are
| coming? Or is this only something you're against when you want
| to regulate/acquire other people's money? I notice that much of
| the "we need to regulate xyz for violating my privacy" crowd
| stay awfully silent when it comes to the government violating
| financial privacy, perhaps because their economic policies
| depend on such control being in place.
| JumpCrisscross wrote:
| > _when it comes to the government violating financial
| privacy_
|
| Yes, a good way to delineate pragmatic from extreme views on
| privacy are when they find no exceptions for designated
| terrorist organizations and Russian criminals.
| alphanullmeric wrote:
| I would support it if:
|
| 1. Law enforcement was only targeting terrorist
| organizations
|
| 2. Accessing the account of someone that turned out to be
| innocent would guarantee they received compensation
|
| But that's not the case. Namely with (1), US regulators are
| trying to ban currency mixers, privacy coins, derivatives
| trading, etc so the "muh terrorism" argument is nil. Most
| of this has nothing to do with terrorism.
| JumpCrisscross wrote:
| > _US regulators are trying to ban currency mixers,
| privacy coins, derivatives trading, etc so the "muh
| terrorism" argument is nil_
|
| In general, sure. Here, specifically: actual, literal,
| documented terrorist financing.
|
| I'm not a fan of our AML/ATF complex. But recent
| enforcement actions in crypto, _e.g._ the mixer being
| used by North Korea or Binance executives texting each
| other about laundering for Hamas, are so far over the
| line of reasonable law enforcement that it makes for a
| poor backdrop for discussing reform.
| alphanullmeric wrote:
| No, in this specific case. Read the document the post
| links to. It has nothing to do with terrorism, regulators
| are just upset they don't get to control what other
| people do with their own money.
|
| And if you're supporting _universal bans_ of mixers and
| other privacy preserving tools as the current government
| is attempting, then you 're part of the problem. I will
| never support the redistribution of consequences, no
| matter what kind of patriot act talking points you use to
| justify it. We can talk about punishing terrorists if
| it's only about punishing terrorists and not "operating a
| facility for the trading or processing of swaps without
| being registered as a swap execution facility" (page 5).
| JumpCrisscross wrote:
| > _has nothing to do with terrorism_
|
| Fair enough. The process violation is Binance saying they
| wouldn't sell crypto derivatives to Americans and then
| helping _e.g._ a Chicago-based client pretend he wasn 't
| American so they could sell them crypto derivatives.
|
| No terrorism. But also no privacy/AML angle. (We have
| good reasons for regulating swaps. There is also zero
| financial privacy pitch for crypto derivatives bought and
| sold on a centralized exchange.) That there is also
| evidence of willful terrorism financing probably pushed
| this up the CFTC's to-do list, however.
|
| > _if you 're supporting universal bans of mixers_
|
| Straw man-nobody is proposing a universal ban. The
| harshest proposals would require KYC at mixers. The best
| solution is probably something lighter, though pitching
| financial privacy as a basic right against _e.g._ the
| backdrop of the likes of Binance isn 't doing the
| industry any favors.
| alphanullmeric wrote:
| Requiring KYC at mixers lol. That's crazy. The best
| solution is to go after terrorists and not redistribute
| the consequences of their actions to innocent people. I
| should be able to trade anonymously if I want to. Those
| proposals are really no different then the EU's chat
| control.
| reisse wrote:
| Idk, I really don't understand the surprised tone of all the
| comments. It seems very much like a cognitive distortion to
| believe that somewhere in financial industry there are clever
| and professional people doing things in a very adult and
| responsible way. Especially not texting about committing
| million dollar crimes (or just moving millions legally) in the
| same language as discussing memes in Discord with friends.
|
| If you believe people must be responsible and professional just
| because they handle a lot of money, it's your problem, not
| theirs.
| sainttookmoon wrote:
| [flagged]
| 0xDEF wrote:
| Someone probably send conventional SMS over the Signal app.
| jxf wrote:
| No. If others have copies of the messages, that's not
| surprising at all. It's not an encryption problem if you give
| an incriminating secret to someone and then they tell the
| authorities.
| ssalka wrote:
| I was told "funds are safu"
| sainttookmoon wrote:
| CFTC said that they got some deleted messages from a Signal app.
| Isn't this bigger news?
| chc4 wrote:
| They don't say they have deleted messages. They say that CZ has
| disappearing messages turned on, and they have his phone and
| some messages - it might just be that they only have messages
| that are within the disappearing window, or some conversations
| that were in seperate chats without disappearing messages
| enabled, or messages from backups or some of the counterparties
| that were saved, etc.
| cguess wrote:
| Signal is encrypted in transit, only sorta at rest. If someone
| gets your device you're already in serious trouble.
| Disappearing messages is the best bet against it, but if
| someone takes screenshots or the app isn't opened after the
| time as elapsed and the SQLite database is extracted, you're
| out of luck.
| [deleted]
| rvnx wrote:
| There is a real technical possibility for Signal or Google to
| push an update to specific targets, but it's unlikely for this
| type of crimes (the technique better be kept for terrorism).
| Most likely a mole in the organisation.
| hef19898 wrote:
| A mole? I'd rather call them whistleblowers.
| JumpCrisscross wrote:
| > _CFTC said that they got some deleted messages from a Signal
| app. Isn 't this bigger news?_
|
| No. Informants, possibly even confederates.
| mikeyouse wrote:
| Likely not -- the US Government wouldn't admit to an exploit of
| that magnitude in a CFTC filing so it was surely either a
| seized phone or a collaborating witness providing them chat
| logs.
| jxf wrote:
| No. If others have copies of the messages, that's not
| surprising at all. It's not an encryption problem if you give
| an incriminating secret to someone and then they tell the
| authorities.
| danielodievich wrote:
| For those who speak russian, Meduza has a recent short story
| describing how crypto is used to move money in and out of Russia
| now in a replica.
| https://meduza.io/episodes/2023/03/17/rasskazyvaem-o-sheme-p....
| A reimplementation of Hawala system with cryptotokens.
|
| My crypto-friendly friend found this to be the only way to supply
| his parents with remittances out of Australia.
|
| As I told him, besides gambling, theft and paying for drugs, this
| is all it is good for.
| Sandworm5639 wrote:
| The original report in English, linked in the article
| https://transparency.org.ru/en/news/from-moscow-city-with-cr...
| BLKNSLVR wrote:
| Which, I think, is a pretty good use case.
| pizzalife wrote:
| From my point of view, there is nothing good about evading
| sanctions against russia. It's supposed to be painful, and
| ideally impossible, for Australians to send money to russians
| in russia.
| stickfigure wrote:
| Are there a lot of Australians trying to send money to
| Russia? I always imagined crypto would work the other way
| around, people trying to send value _out_ of Russia.
| eldenwrong wrote:
| Why are russians punished for the sins of their government?
| Should americans get the same treatment then?
| tristor wrote:
| > Why are russians punished for the sins of their
| government?
|
| Because they are participating in this governance.
| Countries bear responsibility collectively for their
| actions. And yes, absolutely Americans should be held to
| the same standards.
| isubkhankulov wrote:
| What about Venezuela? Should its citizens be punished for
| Maduro's actions?
| danielodievich wrote:
| That was exactly the anguished complaint of my friend in
| Australia, who is trying to help his family - and with
| whom he actually does not see eye to eye on the war
| situation (they are pro or at least acquiescent, he is
| adamantly against). But they have no money and he wants
| to help. Just rereading our thread from last year where
| he says "yeah, they're Zed patriots, they are also sure
| that their government is fighting global Nazism and
| global USA hegemony for the betterment of everyone, but
| should they go hungry because of their beliefs?". My
| answer was "yes".
| [deleted]
| janmo wrote:
| Even tho this is only civil and Binance is operating offshore, I
| would highly recommend every one (who hasn't done it already) to
| withdraw their coins and monies from the exchange.
|
| There is a chance that every one runs for the exit in the coming
| days and that Binance is not 100% backed.
| bananapub wrote:
| it'll be very very funny if this is what undoes tether and de
| facto destroys the cryptocurrency cartels
| danielvf wrote:
| USDT is actually from "Bitfinex", not from "Binance".
| cwp wrote:
| It would still be funny, though.
| asciii wrote:
| _" Binance is so effective at obfuscating its location and the
| identities of its operating companies that it has even confused
| its own Chief Strategy Officer."_
|
| Can't be too bad...
|
| _" For example, in September 2022 he was quoted as saying that
| "Binance is a Canadian company." The Chief Strategy Officer's
| statement was quickly corrected by a Binance spokesperson, who
| clarified that Binance is an "international company."_
|
| Oh boy...!
| pavlov wrote:
| A recurring notion in the crypto community was that CFTC is the
| good cop to SEC's bad cop. If only all crypto were under CFTC's
| purview, everything would be awesome. I don't know how this kind
| of action affects that belief.
| PretzelPirate wrote:
| The crypto community prefers the CFTC over the SEC because they
| beleive that many tokens (ex: BTC and Eth) and commodities and
| not securities. It has nothing to do with relative strength of
| the groups or whether they're the good or bad cops.
| JumpCrisscross wrote:
| > _notion in the crypto community was that CFTC is the good cop
| to SEC's bad cop_
|
| The SEC has an order of magnitude more employees than the CFTC
| [1][2]. Crypto favored the latter not because it was a good
| cop, but because it is a weaker one.
|
| [1] https://www.sec.gov/strategic-plan/about
|
| [2] https://www.eeoc.gov/federal-sector/commodity-futures-
| tradin...
| TheBlight wrote:
| Then why is it the CFTC going after Binance and not the SEC?
| yieldcrv wrote:
| because Binance is violating the CEA
|
| and the crypto space could use services that are not
| violating the CEA
| from wrote:
| What do you think are the odds this goes beyond fines? I
| get the feeling other agencies are gonna pile on and then
| there will be a huge global settlement to resolve all the
| cases but the Hamas stuff and the fact that they weren't
| even checking OFAC list or countries makes me think
| there's a sealed indictment with at least the compliance
| officer and probably CZs name on it too.
| yieldcrv wrote:
| There will probably be criminal indictments.
|
| But those too will be settled with fines and
| constructively financed and non-prison sentencing.
|
| For context, look at Arthur Hayes with Bitmex. That got
| very dicey and was way smaller than Binance, big but
| smaller.
| JumpCrisscross wrote:
| > _people claim NASA is some kind of cash-cow that drags
| its feet to get more money_
|
| Weaker by comparison, not weak _per se_.
| [deleted]
| tempsy wrote:
| that ended when half of the CFTC staff was utterly embarrassed
| by their public groveling of SBF
| KptMarchewa wrote:
| Can you really read those messages and claim they are the "bad
| cop"?
| jefftk wrote:
| This is the CFTC, not SEC.
| nabakin wrote:
| Oh I have a Binance story. Back when Binance was smaller, they
| had a system to let cryptocurrencies compete to join their
| platform. Every month or so, the cryptocurrency community which
| bought the most BNB was added to their platform. They presented
| it as a fair competition, saying the intention was to add the
| most popular cryptocurrencies through votes and only one BNB per
| user was allowed. When I discovered a cryptocurrency community
| was blatantly cheating the system, creating fake accounts,
| spending thousands of dollars in BNB funded by the creators of
| the cryptocurrency (in a public Discord server), I contacted
| Binance to get them disqualified or at least a warning, but
| despite mountains of evidence, Binance did nothing. It was just a
| scam to prop up BNB. From that point, I knew what kind of company
| Binance was and never trusted them with my money.
| harold_b wrote:
| [dead]
| BillyTheKing wrote:
| I mean.. yes - but have you ever worked in a 2-year old start-
| up/Fintech? Those companies aren't even remotely ready
| structurally for the traffic and volumes that they're handling
| (successful ones that is). I don't think it's so much a
| conscious decision against compliance as it is just one in
| favour of volumes, that's unfortunately a necessary decision to
| make for a 2-year old Fintech, but it usually comes back to
| bite them at some point in the future - question is just how
| devastating is that bite
| nabakin wrote:
| Maybe Fintech companies should stop trying to apply the
| "growth at all costs" mindset to finance and instead focus on
| not scamming their users?
| polygamous_bat wrote:
| Focus on "not doing crimes" is a pretty solid baseline for
| any business, I would think. And yet I keep getting
| surprised.
| steveBK123 wrote:
| Sure, yes, it is, on its face, much easier & cheaper to
| operate without proper compliance/legal/fraud departments.
|
| And yet..
| JumpCrisscross wrote:
| > _don 't think it's so much a conscious decision against
| compliance_
|
| I presumed as much until I read the CFTC's allegations.
| Unfortunately, Binance looks like a criminal enterprise [1].
| FTX, in comparison, looks like childish incompetence.
|
| [1] https://news.ycombinator.com/item?id=35329117
| BillyTheKing wrote:
| alright fair enough - reading it in detail now as well -
| this doesn't look like 'uncontrolled growth' and more like
| criminal intend
| jjulius wrote:
| >FTX, in comparison, looks like childish incompetence.
|
| Key phrase: "looks like"
| boringg wrote:
| Very apt comparison of the two.
| onlyrealcuzzo wrote:
| This is a good story & example of Binance being shady - but
| it's interesting you needed to see it first hand to not trust
| them.
| p0pcult wrote:
| Ah yes, the evils of [checks notes] empiricism.
| kmod wrote:
| I said this when FTX collapsed: I think FTX at least made a token
| effort to be legitimate, and Binance does not. Binance just
| hadn't gotten caught yet -- I think they will end up being worse
| than FTX. In behavior at least; the crypto ecosystem has a very
| high tolerance for bad behavior, so they might not see the crisis
| of confidence that FTX did.
| seydor wrote:
| > according to Binance's own documents for the month of August
| 2020 the platform earned $63 million in fees from derivatives
| transactions and approximately 16% of its accounts were held by
| customers Binance identified as being located in the United
| States.
|
| hm. 16% of users make $63M in a month? In any case CZ can
| dispense this unprofitable 16% and move somewhere in russia or
| intl waters now. Assuming that canada and EU break all ties with
| him
|
| Attacking the onramps to crypto in the middle of a bank crisis is
| not giving out the best of vibes
|
| (Thanks for the flagging but i m not debating this either way; i
| know HN is anticrypto)
| xmodem wrote:
| Well, Binance clearly knew the risks, so it's hard to see why
| they would chase US customers unless they were very profitable.
| [deleted]
| [deleted]
| overthrow wrote:
| I think you read that wrong. $63M makes up 100%, not 16%. It's
| clearer here (and also the numbers went way up between 2020 and
| 2021):
|
| https://techcrunch.com/2023/03/27/binance-and-ceo-changpeng-...
|
| > In May 2021, Binance's monthly revenue earned $1.14 billion
| from derivatives transactions, up from $63 million in August
| 2020, the CFTC noted. Of that amount, about 16% of Binance's
| accounts were held by U.S. customers.
| seydor wrote:
| OK so the US is going after them for ~120M (for 2020) , when
| their profits were ~20B?
|
| In any case this is contrary to the main accusation that
| "Much of Binance's reported trading volume, and its
| profitability, has come from its extensive solicitation of
| and access to customers located in the United States"
|
| AFAIK throughout the years they were publicly sending users
| to binance.us and did not encourage breaking the rule. Didn't
| seem like "Extensive solicitation"
| SpicyLemonZest wrote:
| One of the allegations in the complaint is that they did
| indeed encourage breaking the rule, walking high-value
| customers through the process of falsifying their location.
| For example, the CFTC has an alleged quote:
|
| > VIP team member: Hi CZ . . . I went through list of
| affected API clients, it includes a number of large
| strategic accounts including [a Chicago-headquartered
| trading firm] who is currently is a top 5 client and 12% of
| our volume
|
| > Zhao: Give them a heads up to ensure they don't connect
| from a us Ip. Don't leave anything in writing. They have
| non us entities. Let's also make sure we don't hit the
| biggest market makers with that email first. Do you have
| signal?
| seydor wrote:
| Using a US IP for trading is probably not illegal in
| itself, people travel. In another passage they are saying
| that their VIP customers created offshores to use for
| trading and that binance was notifying customers that
| looked like US to do the same. I am reading the evidence
| for entertainment and it seems a bit try-hard tbh
| ironyman wrote:
| Not to mention sophisticated trading firms are not
| necessarily sending orders/instructions from the same IP.
| A lot of them have multiple network interfaces set up for
| each exchange they're trading on.
| SpicyLemonZest wrote:
| Right. The CFTC's characterization of that behavior,
| which I think is correct, is that VIP customers created
| offshore shell companies to falsify their locations and
| Binance encouraged them to do so.
| seydor wrote:
| depends, by that metric all the Swiss banks are illegal
| tric wrote:
| it's not uncommon for lawful hedge funds trading equities
| to have offshore shell companies. Employees of those
| funds have these types of accounts too.
|
| I only point this out because your comment read as if
| this was a smoking gun.
___________________________________________________________________
(page generated 2023-03-27 23:00 UTC)