Episode Transcript
[00:00:00] Speaker A: Out of cycle update Coinbase customers side with the SEC cryptotalk FM my name is Leister, I'm your host. Six customers of Coinbase are siding with the SEC, filed a lawsuit against Coinbase claiming that Coinbase is violating securities laws. This is interesting. This is a very interesting situation. You have people who are customers of it who are essentially backing what the SEC is saying. Is there some smoke behind that? I can't say for sure. I'm just sharing what it is. So the assets specifically in question on this business, Solana, is at the top of the list. Polygon matic, the near protocol token Mana, which is Decentraland, Algorand, Uniswap's token, Tezos, XTZ and XLM. Stellar plaintiffs argue that these constitute, quote, investment contracts and as such are subject to state securities laws. Here's the funny thing. They read in the terms and in the agreement with Coinbase that Coinbase themselves describes what they do as being a securities broker in the user agreement. That's the impetus behind this, that you're saying that you're a securities broker, you're selling these assets that are effectively securities, in our opinion. And so we believe that you're breaking the law here. And so we're suing you because we want this whole thing settled and dealt with.
Its entire business model has been built upon a lie and a dream. The lie is that we don't sell securities. And the dream is that knowing it would eventually be caught in the lie is better to ask for forgiveness than permission, claiming that Coinbase, quote, knowingly, intentionally and repeatedly violated state security law and deceived its users. This is all taking place in California courts. California courts do tend to be very anti business in nature. That's why it's very intriguing seeing this. They're seeking full rescission, as in cancel the purchase agreement and get statutory damages. So get out of the situation and get some money off of it. You know, trying to get the money off of it, I don't know that's gonna really happen. You know, Coinbase, mind you, just to refresh, is already fighting the SEC on different fronts, where the SEC is claiming that they violated securities laws. Having this lawsuit supporting what the SEC is doing may help strengthen the case. Coinbase encounter says that secondary sales, as in resales of cryptocurrency assets, don't constitute securities. So what they're referring to is essentially these are assets that were sold to them that they're reselling on a secondary market. It's not that Coinbase themselves is presenting this directly to the buyer and as such does not qualify as a security. That's kind of the counter that Coinbase is doing. Do I think they're going to win that argument? No, because the SEC doesn't seem to include that in the definition. Some people feel that the securities argument, the securities Exchange Commission's argument doesn't hold water either. We'll have to wait and see what happens with this one. I think this is going to be an intriguing outcome. This has the opportunity to kind of shift the game overall for cryptocurrency, especially if these customers, like we're talking customers, happen to win the case. Think about what that would do in support of the SEC. Think of the precedent that that would set and many of the assets. If you look at what's really listed. Notice Ethereum was not listed in this. I found that interesting. Why wouldn't you list Ethereum? When SEC swears up and down Ethereum is a security and then ones that I'll look at that, I'll call out myself. So Uniswap token.
I wouldn't consider that a security myself for what it does. Essentially, it's a token that supports a decentralized exchange. It's not like it's doing anything other than what it already does. You know, Algorand, it's kind of a middle ground. Mana Decentraland. Based on what? Because if you say Mona decentraland must.
[00:04:09] Speaker B: Be, then why wouldn't things like Zilliqa so it seems like they're picking and choosing assets.
[00:04:15] Speaker A: I suspect the list specifically was chosen.
[00:04:19] Speaker B: Because of the rate that Coinbase gives you for staking. And the staking is not like in wallet staking, it's the staking that they.
[00:04:28] Speaker A: Offer on the platform that you actually have to opt out of. So what would happen is when you have the Coinbase card as an example, you can say, you know, I want to get money back, you know, some of the money back as I swipe the card in different places. And the ones I see listed are at the top of the list, the ones that were eligible, at least back when I was using Coinbase, I dropped it like a bad habit, you know, over a year ago. But maybe that's where this coming from. If that's the angle, then they don't have a lead to stand on. Because in that same interface, Coinbase even said multiple times, if you don't want this, this rebate offer, this little deal that we're offering, you need to opt out of it, but it's automatically on. Then they changed it to where it wasn't given, like it would change and rotate. And so if it's around that benefit, I don't think they have a leg to stand on. We're going to watch this one and see where this one goes, because there is probably people out there who use Coinbase, and they're really curious about what what's going on with that world. And Coinbase is under attack on multiple sides. Let's hope it's just a simple nothing.
[00:05:31] Speaker B: Burger of a bunch of people who.
[00:05:33] Speaker A: Are playing the game of SEc, or maybe insiders. And Coinbase is able to hold the line and stand firm, because if Coinbase is forced to get rid of a lot of these different tokens, it's going to really harm the price of cryptocurrency overall, I believe, because it has significant.
[00:05:48] Speaker B: Volume running through it, and you might.
[00:05:51] Speaker A: Have a rush away from it if they happen to start losing these cases.
