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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.

- "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!

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

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

> 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.

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."

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

They shouldn't be cautioned not to let down their guard while texting and emailing but regarding doing illegal stuff.

There's this important context missing from this thread though, which is that the people involved in this are not (AFAIK) US citizens, do not live in the US, do not travel to the US (especially not now), have never voted in the US, and are not allowed to vote in the US. So in moral terms or in terms of the political theory that underpins democracy, there's no obligation at all for them to follow US law.

Yes, US law might say there is, and might make compelling moral arguments. And yes maybe these laws are in the interest of US voters, or a majority of people in the world. But there's no structurally legitimate democratic mechanism currently in place to make any decision about that. (The UN is not this.) Democracy is what gives laws moral legitimacy, and democracy ends at the border.

So at no point have CZ, Lim, or others here (AFAIK) taken on any commitment to follow US law. Morally, they are completely morally free to think US law is wrong and ignore it, just as I'm completely free to think a law in another country (China or Iran) or another US state (say, Mississippi, or Utah) is wrong and ignore it.

It seems that they're scared of US law, which is rational, and maybe it would be more rational of them to be more scared, but that's another question.

That's not morality, it's just power and violence.

Hamas is a great example. Right now the Western world is cheering and arming a country as it fights off a brutal occupying force with a shady territorial claim. That country published crypto addresses so that everyone in the world could help them buy drones and rocket launchers so they could maim and kill the occupiers and drive them out. I donated and I would encourage you to donate too. I spent most of 2022 watching videos on Reddit, Twitter, and Youtube of young occupiers getting killed and maimed by the drones and rocket launchers I helped buy, as an American taxpayer and as a donor. And I think this was the right thing to do, and I'm proud of it. But I'd certainly understand if someone was a bit ambivalent about this whole thing, thought it was kind of f'ed up, and didn't want to be involved.

Is it so hard to believe that some people in the world feel that Hamas is similarly worthy of support? I don't, but certainly a ton of Palestinians do; they sometimes vote Hamas into a parliamentary majority, and Hamas does very well in polls it seems. And if so, then is it so hard to believe that some people in the world are ambivalent about Hamas and talk about it flippantly in internal Slacks, even when they're afraid of US regulators?

Generally pluralism in the world is served by a diversity of opinions and legal systems. In some cases, like the Ukraine invasion, it will definitely be right to project power outside our borders and legal system. But the default should be to allow for the possibility that we're wrong and avoid imposing the conclusions of our own democratic process on those who did not participate in it.

Maybe US law is wrong about financial freedom and someday we'll look back on this period of zero financial privacy as backward and embarrassingly arbitrary.

They chose to illegally run a business in the US. Brazenly. Any moralizing about people unconnected to the US being subject to US laws is irrelevant.

how was their business 'in the US'?

You move money for Americans, then you're subject to U.S. compliance and anti-money laundering laws. It is that simple.

Obviously this is very different from saying "They chose to illegally run a business in the US."

Binance provided illegal services to US citizens living in the US. In the non-crypto world, providing services in a country usually requires setting up a legal entity in said country. Not doing so doesn't change the fact of providing services in said country, quite the opposite, it might even amount to tax fraud.

> In the non-crypto world, providing services in a country usually requires setting up a legal entity in said country.

For this statement to be true, you have to modify it to "in a pre-Internet world" or "providing financial services."

Hacker News is providing an information and communication service in almost 200 countries where it has not set up a legal entity. You can say financial services are special, and the US does. Some countries like China say that information services are special, that people shouldn't be allowed to criticize the CCP, and enforce that however they have the power to. But the world would be demonstrably worse if we said "every website in the world that is accessible to Chinese citizens living in China should follow CCP censorship laws."

Maybe the world is also worse off for the US's assertion that financial services are a special kind of website that the US can regulate globally simply because some Americans visit them.

At the very least, the rest of the world should have some say on a policy that affects what kind of online businesses they can run. But of course there's no mechanism for them to, since only US citizens can direct US policy.

Also, think about how impossible it would be to run a website if all countries enforced their local laws on all websites, simply because some of their citizens use foreign websites. The US is doing something that it would be unworkable for all countries to do, simply because it's the most powerful country. That alone should be a hint that it's a morally and politically questionable and based on raw power, not fairness; a fair policy would universalize better across countries.

> You can say financial services are special, and the US does. Some countries like China say that information services are special, that people shouldn't be allowed to criticize the CCP, and enforce that however they have the power to.

Fairness isn't the concern here. It's just a display of power and law enforcement reach. The Chinese government can (and likely will) block your website if it's criticizing the CCP and gets considerably popular, regardless of the morality of that action.

The same applies to the U.S. government. "To sell derivatives trading products to our citizens, you must register with us first". I consider the American law even fair because derivatives products are risky and a major avenue for scamming people...only licensed firms should offer them.

Note that Binance wasn't banned from selling derivatives products. All that was required was a simple registration with the CFTC, which they refused.

I'm a citizen of a small European country. I use quite a few American services. Does this mean they are subject to my country's law?

Binance used IP-based locking mechanism (easy to avoid with a VPN). Similarly, I saw US-based websites that blocked access to European customers because of GDPR, and I've circumvented their geolocks using a VPN. Does it mean that I can sue them for not following GDPR now?

I'm not trying to argue for Binance here, and I think that US compliance and anti-money laundering laws are reasonable. But I wonder if your position is that "everyone should just follow US law", or is it more nuanced.

> I'm a citizen of a small European country. I use quite a few American services. Does this mean they are subject to my country's law?

Yes, it does, and most especially if it involves moving funds. If your country decides that the platform broke their laws, they could sue just like the CFTC or even request an arrest and extradition of the alleged perpetrators.

But, in reality, European countries don't often pursue such cases as aggressively as the US. The U.S. government has a well-oiled law enforcement and military machine that it uses to pursue its targets across the globe (sometimes with bullying involved). I'm reminded of a case where a woman was extradited from the Netherlands to the U.S. and sentenced to 3 years for sending a relatively paltry $300 to the terrorist group Al-Shabab.

https://apnews.com/article/africa-netherlands-somalia-al-sha...

This is crypto in the high of the craze.

The Venn diagram of crypto bros and the "nothing matters" libertarians is almost a solid circle. They despise public servants, norms, rules, and laws. It's for cucks. These people transcended all that. The laws do not matter. They do what they want.

And obviously it comes with an unhealthy amount of hubris from watching Donald Trump and Elon Musk in action.

Word of advice - if you don't have tens of millions of dollars to clog the US legal system with procedural nonsense, don't try this at home, just don't.

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.

> I found out they were automating robo-signatures for real estate and mortgage companies.

There's a lot of unfocused "somebody must hang for this, but we don't know who" anger energy around what happened in 2008. Most of which wasn't criminal at the time or even after, merely poor business decisions. But robo-signing? This was overt fraud, perpetuated against ordinary members of the public, and everyone involved in it should have gone to jail.

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.

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.

And that $2.6 billion is behind bars to this day. Don't do the crime if you can't do the time!

His sons did turn him in - your own comment says as much. The public evidence suggests they turned him in as soon as they learnt of it. The case has not been made that the sons were complicit, they should be presumed innocence. That other people were jailed, or that they are now dead - all that is irrelevant to the sons' guilt. Neither son was even charged.

Madoff was also chairman of the NASDAQ for a hot minute there heh.

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.

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.

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.

100% agree. At least lack of integrity will never prevail. Active regulation with fairness is increasingly more important.

…active well-funded regulation…

…since a common anti-regulatory strategy is to strangle the funding…

It needs less regulation (regimentation) and more enforcement of basic laws like the prohibition on fraud.

Regulation is just another forum that can be corrupted.

Its privatized power, trying to break out the containement vessel that is a democratic society. Once it succedds it continues to build little autocratic empires in the host, similar to tumors. The whole libertarian ideolog is just that, the secretions of tumors, trying to convince the host, that this is friendly, normal and actually a net positive growth to the creature being devoured.

Of course the anti-bodies, aka taxes have to be supressed, otherwise the defenses kick and and a normal society returns.

What does capitalism have to do with this? This is a plain morality issue and human nature that does not have anything to do with the form of the economy. The same behaviour and even worse was in plain display in every communist society.

It does. The essential feature of capitalism is the motive to make a "profit". I'm explicitly saying capitalism is focused on "profit". Since you brought up communism, it has a different ideology which is not centered on "profit".

Does that make sense?

PS: Also I do not intend to debate capitalism vs. communism, I'm trying to convey the idea of "a society driven by profit".

And my point was that "profit" is not the culprit here, and that is why I took communism as example. People will do questionable or illegal things for variuos selfish reasons. Profit being just one of them, but the people that would do those things for profit would do the same things for other non so tangible advancement of the self ego. So the problem is not that the society is driven by profit but because there is a conflict of self vs society.

The absolute funniest is the instruction in writing telling staff to inform US customers that the only way that they show up as from the US is Geo-IP, and that if they bypass that...

I guess this is what happens in remote working. You can't tell people how to break the law over lunch any more.

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.

The most disturbing (for FTX...) is that even this group said, no FTX is messed up...

I would not assume goodwill. This action made FTX even more likely to fail.

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.

FTX was mismanaged. It doesn’t seem like Binance is mismanaged, just getting around laws (and in a habit of writing it down)

FTX was fraudulent.

Getting dangerously close to the ITYSL insider trading sketch

Oh, no. This is a lot funnier.

Reminds me of some of the NSA leaks.

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/2020/10/29/l...

Context clip from The Wire: https://mobile.twitter.com/TheWireStripped/status/1164385139...

(He was taking notes because they’re following Robert’s Rules of Order, lol)

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

> 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

I doubt you'll see CZ in any country with a US extradition treaty any time soon.

> 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.

And when you’re dealing with entities like that they just might decide to save everyone the expense of a trial.

He'll probably want to stay away from high-floor windows.

Or more than waist deep bodies of water. Or railways.

It really doesn't appear he was 'knowingly financing Hamas and Russia'. There is a transparent attempt by the CFTC to talk up the pretty nothingy evidence of this.

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.

You say that, but ask Andrew Tate how that's working out for him.

The BitMex guys pulled a similar move…they all paid fines and avoided jail.

> 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

This is a civil case. Nobody is going to jail.

> 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.

It's not literal terrorist financing, it's a CFTC enforcement action where they mentioned chat remarks including the words 'HAMAS' and 'AK47', without any context or explanation, in the complaint in order to a) get media attention, and b) gain public buy-in for prosecuting people who aren't even in the US for futures regulation rule-breaking.

>Literal terrorist financing.

No one from HSBC went to jail, either.

> 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.

Lol.

> Bernhardt alleges that HSBC evaded the OFAC filter beginning in the early 1990s and continuing through 2009. HSBC Bank UK implemented procedures to help sanctioned entities access and benefit from U.S. financial services. For instance, such entities would include a “cautionary note” in their transactions, such as “care sanctioned country,” “do not mention our name in NY,” or “do not mention Iran.” Based on these notes, HSBC Bank UK would manually scrub all references to Iran or a sanctioned entity, which would allow otherwise illegal transactions to pass through to HSBC Bank US. This system allowed HSBC Bank US to “process[] thousands of ‘repaired’ transactions worth billions of dollars.” HSBC Bank UK would also use “cover payments,” or bank-to- bank transfers, to avoid disclosing the identity of its customers.

[flagged]

Could you please stop posting unsubstantive comments and flamebait? You've unfortunately been doing it repeatedly. It's not what this site is for, and destroys what it is for.

If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.

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.

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.

> 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"

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.

> 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.

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...

> 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

The laundering and terrorist financing is incidental to the CFTC’s complaint. The operative allegation is the operation of an unlicensed derivatives exchange, and lying to regulators.

> 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.”

> The wrongdoing in crypto/web3 is on another level.

This is Binance, just one of many crypto exchanges. Basically a bank with a different name. Separate from cryptocurrencies themselves.

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.

Coinbase lists tons of securities. Remember, Coinbase listed XRP before the SEC lawsuit against XRP for being a security. So how good are they at following the regulations? Not very. It's just taking some time for the SEC to really go after them.

Kalanick or Neumann did nothing wrong

A company protecting the interest of their customers? Horrible!

> [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

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...

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!"

I couldn’t make it past the opening without laughing out loud: “If you come from the West, you are likely used to things being done according to specifications and high standards”. This would come as news to anyone who bought an American or British car prior to the late 2000s, most American houses now, has contracted with large American consulting companies, etc. Entire western countries have stereotypes which flagrantly contradict that, like this old joke:

> In Hell: the cooks are English, the policemen are German, the mechanics are French, the lovers are Swiss and the bankers are Italian.

> In Heaven: the cooks are French, the policemen are English, the mechanics are German, the lovers are Italian and the bankers are Swiss.

Casual racism is disgusting, and I smell it in that blog, too.

Those people aided and abetted criminal enterprises out of greed and ego, which delightfully transcend all race and culture, as far as I can tell.

I do hope they get severely punished.

I didn't realize that chabuduo culture included overtly and knowingly supporting criminal activity.

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

What does "receiving information 'regarding HAMAS transactions' on Binance" mean? Isn't it clear that the actual context of this conversation - what the transactions were, what the information was, what the actual connection to Hamas was, has been deliberately omitted here? Like, the CFTC chose what to include, if there was anything more incriminating, they would have included it.

I mean you do have to acknowledge that your platform can be used by criminals if your job is literally to stop those transactions... I don't understand what the big deal is?

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).

> 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."

> 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.

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!

What are you hinting at with your reference to France? Yes, France has a civil law legal system. Knowledge and intent are still considered when deciding on guilt and sentence. What's your point?

https://xkcd.com/1494/

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.

It doesn't seem like you're very good at it.

Perhaps not, but I've heard the best way to get better at something is to practice.

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.

> 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.

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.

Same question. I see nothing in there that says they knew of their actual crimes, only that they might be criminals.

Their own phrasing matters, and clearly states otherwise. This is what makes these chats damning. It means that they knew they had criminals using their platform, how they were using it, and that they, as a deliberate choice, chose not to do anything.

> Binance MLRO agreed that "we see the bad, but we close 2 eyes."

You're not allowed to see illegal things happening with your service and turn a blind eye.

It goes beyond that though. https://twitter.com/web3isgreat/status/1640380291817635843/p...

Having had an account that was identified as involved in illegal activity, leadership told them to make a new account. Not go away, and at least make a half-assed attempt at a ban. Make a new untainted account and be a bit more careful with your transfers, and even "here's some things to be a bit more careful about". If they had actively taken steps to ban the user, even if the user evaded the ban they could make an argument that they had done due diligence.

If there was nothing in the chats, no evidence that they were aware these things were happening, and no evidence that they were encouraging it to still happen, then the government would have a much harder case, but these chats cited seem to make it hook, line and sinker.

It shows that they very deliberately chose not to be in compliance with "Know Your Customer" (KYC) regulations, that they knew applied to them by law, knew what the risks were (ignorance is no excuse under the law, but penalties are much higher if you know what you're doing is illegal and still chose to do it), and even actively worked to help customers help them avoid it.

If you're going to do crime, writing it down, and keeping that evidence trail is just the absolute dumbest thing you can possibly do.

> 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#cite_note-...

Name one gas station that ever got charged for selling gas to a criminal.

In your experience, how often do criminals come in and tell the guy behind the counter that they need gas to commit a crime? Be specific.

That’s the difference: if you are aware that they’re making the transaction to further criminal activity, then you need to worry. You will find gas station owners who were charged: they’re the ones who helped fence stolen property or launder money.

> In your experience, how often do criminals come in and tell the guy behind the counter that they need gas to commit a crime? Be specific.

And do you think criminals come in and tell crypto exchanges that they are about to commit a crime? AML regulations do not apply to gas stations as they're not "money transmitters", it is that simple. I'm a bit surprised so many on HN don't seem to be aware of that. And luckily they don't, because those laws are immoral, ineffective and costly: https://news.ycombinator.com/item?id=34667051

I’m not sure where you got the impression that anyone thought AML applied to gas stations. What were talking about was that in general various criminal conspiracy laws require you to have knowledge and intent, which is actually why AML is a special regulation on banks: you can’t say that you value your clients’ privacy over a law specifically obligating you to ask and report. That avoids the need to prove intent by setting specific easily-verified requirements which force the issue.

> And do you think criminals come in and tell crypto exchanges that they are about to commit a crime?

Well, ignoring the fact that they are unlike a gas station in having financial regulations, consider that the disbelief and mockery in this thread might have something to do with a defense based on not knowing that your customers are using you to launder money works much better when you don’t give prosecutors written statements such as "Like come on. They are here for crime." or "we see the bad, but we close 2 eyes." showing that you did in fact have knowledge.

I think there's a larger issue at play here. The standard for "knowingly selling" for AML regulated businesses and a gas station are vastly different. That's why you never heard of a gas station getting charged for that, and there probably never has been.

I believe the point was that AML regulations only apply to some categories of businesses and others not, which makes them ineffective. They can be a slight annoyance to criminals but they do not stop them. For money transmission, it is trivial to work around them. And for spending, at a gas station, there's no problem at all.

It is is just all a very costly and ineffective security theater, not to mention the many moral issues that come with it (e.g. billions of law-abiding, unbanked people).

But you are arguing, if you run a gas station, and you see a couple of dudes in a car hanging out on the opposite corner all day, and you come to believe that they are selling drugs out of their car, when they come to you to buy gas you have to refuse on the basis that you would be aiding and abetting and subject to prosecution? Is that actually what you believe?

A couple of guys sitting around does not prove a crime and even if you had strong suspicion, you’re not a cop and letting them buy gas doesn’t materially support the criminal activity – the amounts are small and it’s the same service you offer everyone. If you’ll note that’s why I used examples which have lead to criminal charges where someone did something unusual which they knew supported criminal activity.

This is why anti-money laundering laws exist in the first place. Criminals would otherwise seek out a bank which doesn’t ask questions and the bankers would be hard to charge unless they were idiots and wrote something like “They are here for crime”. AML removes the ability not to ask or report certain types of activities, which is much easier to prosecute than e.g. proving that a banker should have known there was no legal way for a small Italian restaurant to be so profitable.

This isn’t really a valid argument. Scale is clearly going to be a factor.

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.

> 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.

The road crew knowingly helps DTOs launder money by building the interstate system known to assist with exactly that.

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.

> 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.

>Multiple texts describe Binance helping Hamas circumvent money-laundering flags by moving small amounts

I was unable to find these. The only hamas bit I found in the indictment was Binance describing generally how Hamas launder in low value quantas like $600. Not texts showing they identified specific hamas accounts and developed individualized plans to assist them.

Yes, the line about "after receiving information about 'HAMAS' transactions" seems deliberately intended to withhold the actual content of the conversation about Hamas.

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.

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.

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.

You are missing the point. AML laws, which apply to crypto exchanges, are not like that at all. It's not if you know. It's more like if you have the slightest suspicion, e.g. the guy who bought the knife was black and had baggie pants or had a neck tattoo. Or the guy has an Arabic name and posted a 9/11 meme on Twitter.

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?

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

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.

Ok, what about Israel?

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.

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.

Foreign states are generally not subject to US criminal law.

Are you actually trying to equate selling gas at a public store with being a knowing accomplice to money laundering?

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...

I don't know why you are getting down voted. It's a valid criticism of AML laws. I recently got dozens of up votes for a similar comment in another post. Goes to show certain topics attract different crowds to the comment section.

I prefer to go where everyone hates what I say. If I go somewhere where people agree with me, I start to get worried I'm in an echo chamber.

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.

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Why should I care that they're facilitating transactions for Hamas?

Yeah, to quote Hindenburg Research's recent post:

All these companies are doing a great service aiding the historically "underbanked": criminals.

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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.

> 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."

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.

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'".

"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.

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.

Binance is not the financial industry.

This sounds like you're trying to normalize major financial crimes?

It sounds like they're saying it is already normalized, people just don't want to accept it.

"People don't want to accept it" seems incompatible with "it's already normalized" to me

The message isn't directed towards people for whom it's normalized, right? Therefore "it's normalized, get with it" is an act of further normalization.

Why is that one illegal? Didn't Google notify its users if their accounts were under legal review as well?

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.

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.

Where does it say customers are not allowed to be notified? For example:

> 41. Should an institution tell its customer that it blocked their funds, and, if so, how does the institution explain it to them? > An institution may notify its customer that it has blocked funds in accordance with OFAC's instructions. The customer has the right to apply for the unblocking and release of the funds.

https://home.treasury.gov/policy-issues/financial-sanctions/...

This is why you should just bank with HSBC! ;-)

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.

In AML/CTF context it's very illegal, and much of CFTC claims are related to that.

It depends. Often law enforcement investigations come with gag orders so the service provider cannot tell the customer they are under investigation.

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.

> 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”?

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.

> 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."

>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?

> 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.

>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.

"Don't tell them to run but tell them something we intend them to understand means run" is blatant conspiracy to do just that.

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.

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.

People are forgetting that Binance is not a US company nor a bank

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.

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".

I’m pretty curious who their large client in Chicago was. Might be Jump Trading but who knows?

That's probably Binance.US.

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.

Also, even if it were, having a subsidiary does not magically launder things the parent company does.

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.

And when GDPR does it they pick up the pitchforks

Anyone who does business in the EU complies with GDPR.

Also, anyone who complies with any paperwork-heavy law complains about it.

Anyone who does business in the EU makes enough of a performative effort that they can claim to be following industry best practice, and maybe even believe it. Approximately none of them actually comply with the GDPR. (For example anyone using Google Analytics is in breach, and knows it if they're paying attention, but it'll take a few years for that to become legally official enough that they can't pretend to be ignorant)

As far as I understand US companies literally can't, as US law enforcement does not follow any of the procedures and protections required by the GDPR and can just compel the US companies to provide unchecked, unrestricted and undocumented access to whatever data they want no matter where it is stored.

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.

Good thing sufficiently decentralized exchanges continue to serve US customers without interference from the government.

> 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.

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.

Quite the spectacle to watch the crypto space go from pure libertarian idealism to basically speed-running the reimplementation of every banking regulation developed in the last 200 years… after people exploit their absence to defraud everyone they can as quickly as possible.

It’s almost as if modern finance is regulated for a reason.

> Quite the spectacle to watch the crypto space go

The crypto exchange space. Exchanges are really just unregulated banks in disguise: all the drawbacks and none of the benefits. They're the very same centralized banking intitutions cryptocurrencies were supposed to put an end to.

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?

I’m glad we agree it’s not the governments place to regulate exchanges that don’t transact real money.

pretty sure you can take USD, you can have USD bank accounts everywhere

(Not subject to US regulation, Eurodollar is a thing)

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.

> If you commit a US crime with a dollar held overseas, you still fall under US jurisdiction.

This sentence doesn't make any sense.

I know right? But believe the Parent Poster, that's actually the case!

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

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.

Yeah that's even dumber then. Understand enough to know they are breaking laws, but think they'll get away with it.

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.

if you transact in dollars, prepare to be subject to the long arm of US securities law

> 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.

which among other things handles commodities in the US hence why the CFTC

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.

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.

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.

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.

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.

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.

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.

I don't get why that would be wrong. If law enforcement asked Binance about my account, of course I would want to know, and would choose an exchange that does tell me vs. one that doesn't tell me.

Maybe it's illegal, but then I prefer that over a legal exchange.

https://threadreaderapp.com/thread/1640373566322491393.html

wow, these people make SBF look good in comparison.

Just wait for THE real one - Tether !

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.

> 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.

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.

> 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.

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).

> 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.

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.

> should be able to trade anonymously if I want to

In a vacuum, sure. But that anonymity has costs in making it easy for the wealthy to embezzle, evade taxes and commit crime. We’re not doing a great job of balancing that cost and benefit. But there is no consensus, theoretically or politically, for the view espoused by crypto-mixer enthusiasts that non-cash transactions should be held to the same standard as political speech.

>In a vacuum, sure. But that anonymity has costs in making it easy for the wealthy to embezzle, evade taxes and commit crime.

And removing financial privacy gives governments the ability to destroy anyone financially. Need I remind you that in the 20th century governments killed orders of magnitudes more people than terrorists or criminals, almost 100 million in China and Russia alone. Giving power to the government is a far greater risk than letting some white collar criminals get away with it.

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"Designated" by who, following what process, with what kind of oversight and safeguards?

If thinking the government shouldn't be able to deprive people arbitrarily of their livelihood without having to follow the same kind of procedures they'd do so to put them in prison makes one an extremist, I guess I'm an extremist. A blacklist that people can be put on without due process is no way for a democratic government to conduct itself.

>designated terrorist organizations

Designated terrorist organisation just means someone America doesn't like. The US murdered in cold blood hundreds of thousands of civilians in Iraq yet nobody's trying to restrict the financial dealing of the US government.

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.

What exchange do you currently use?

None. Hardware wallet. I haven't heard anything bad about Kraken and it's been around for awhile. Coinbase seems stable

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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.

Ah yes, the evils of [checks notes] empiricism.

"You must learn from the mistakes of others—you will never live long enough to make them all yourself." A certain amount of scepticism of second-hand knowledge is a virtue, but it can easily be carried into vice.

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

> 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

FTX looks like theft in the veneer of childish incompetence. It's like SBF read in a book that as long as you smile and nod and act dumb, you can't have mens rea.

>FTX, in comparison, looks like childish incompetence.

no, it isn't. It's a scheme designed - from day one - to take retail dollars and gamble them on crypto markets because line (was) go up. And then when line went down, everyone's money was lost. It was built on a lie - from day one!! - making it a deliberate fraud and a scam. That's not childish, it's criminal, and the incompetence was thinking crypto line go up forever and FTX/Alameda can play heads I win, tails you lose.

alright fair enough - reading it in detail now as well - this doesn't look like 'uncontrolled growth' and more like criminal intend

>FTX, in comparison, looks like childish incompetence.

Key phrase: "looks like"

FTX took customer deposits and invested them in their failing hedge fund which lost tons of money. That was not childish incompetence, that was malicious and calculated fraud.

Very apt comparison of the two.

Maybe Fintech companies should stop trying to apply the "growth at all costs" mindset to finance and instead focus on not scamming their users?

Focus on "not doing crimes" is a pretty solid baseline for any business, I would think. And yet I keep getting surprised.

Sure, yes, it is, on its face, much easier & cheaper to operate without proper compliance/legal/fraud departments.

And yet..

> I don't think it's so much a conscious decision against compliance

You haven't even bothered glancing at any of the linked material, have you?

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.

> 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.

> 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.

Certainly I agree with you that, in principle, this is legitimate enforcement. They do have the authority to regulate this as you are saying they do. But you and I both know that there are no serious concerns within the CFTC about counterparty risk here, and that has nothing to do with their motivations.

They are very clearly not trying to protect anyone - at least not from derivatives counterparty risk. And they are most definitely not trying to protect Citadel, Jump, et al, nor anyone else from them.

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.

> 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.

> 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/public/@...

Right, my point is that the allegedly “protected” parties in this case would still be able to trade with Binance if Binance were licensed.

> the allegedly “protected” parties in this case would still be able to trade with Binance if Binance were licensed

Correct. Except those parties would have their own risk disclosure obligations which the CFTC could check.

It’s easy to hide leverage in swaps. They also uniquely accumulate counterparty risk, since the standard way to close out a swap isn’t to cancel the original swap, but to enter into a new, counter-balancing one. This means even a minor party failing can lead to systemic risk as positions their counterparties assumed were hedged are now levered and open. Add in opaqueness, and any swap participant going under leads to legitimate concerns about everyone else. This happened in 2008. The rules Binance helped institutions evade are the ones that were written to prevent that form of crisis re-emerging.

This is a nice story but it's just not true. The amount of leverage built up in the derivatives market on Binance is completely transparent. The trading shops named in the CFTC suit are very unlikely to blow themselves up in anything remotely resembling the way 2008 unfolded, and the CFTC regulations are not designed to catch anything important that might realistically be going on under the surface here.

The point of this CFTC lawsuit is to attack crypto, no more, no less. If you don't like crypto, you may think that's a good thing, but I'd argue that it's always a bad thing when regulators leverage technicalities to achieve political ends. And make no mistake, that is exactly what is happening here.

Yes, I mean it would be absurd to argue that there isn’t more systemic risk in crypto markets.

The question I keep pointing at though is, why does it matter? These are not retail traders. They’re institutions that are considered experts in their field and hold no customer deposits (aside from accredited investors, who are again considered knowledgeable enough to not need government oversight to invest).

Everyone here ostensibly knows the risks and their crash won’t tank i.e. the housing market or pension funds.

> “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.

> 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.

> 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.)

> 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.

>Cool, so we're back at zero evidence of any of this happening. We agree then.

Yeah, we have no idea whether or not CFTC is looking into this or has any evidence, which means...

>I don't [know], but obviously the CFTC doesn't either, otherwise they'd have spelled it out.

... that that statement is not so obvious.

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.

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.

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.

OP suggests that the point of the article is that CFTC is doing that just to exert control onto Binance and finds tenuous reasons to do so. That's not the case as I've said in my previous comment.

For those interested, he's mostly talking about Jump. Jane Street and Cumberland DRW too possibly.

I had originally misread that as a New Jersey company, and it makes more sense now that I realize it must mean the Channel island.

> 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.

> 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.

> 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.

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.

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.

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.

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.

> a Binance employee knew about a $600 transaction

Said employee being the then 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.)

If the core charge is that Binance allowed some of the most sophisticated firms in the world to trade on it derivatives exchange without oversight from US regulators, we're just going to have to agree to disagree about that being trivial.

It does not say that there actually was a $600 Hamas transaction at all, you just invented that in your head. It just said that one couldn’t purchase an AK with one. It was a hypothetical example of a small sum because he was saying that’s how terrorists do it to avoid notice.

Isn't it more the other way around here?

The CFTC want to prosecute Binance for violating restrictions on allowing US persons to buy and sell derivatives, but they are aware that this is somewhat weak sauce, because the people buying and selling are all sophisticated institutional players, and Binance themselves are only very dubiously subject to US jurisdiction.

So they make it into a case about 'funding terrorism' based on a casual remark from a chat log.

Tax evasion, not mail fraud.

> 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.

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.

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!!!

There are similar things in the UK, and if an avoidance scheme is found to be non-compliant after the fact, you can suddenly find yourself oweing a lot of back taxes and penalties. For instance there are rules about how much company turnover needs to be before you have to start collecting VAT. If you start a second company and start funneling transactions through that to avoid this threshold, your little 'hack' is illegal, despite it being perfectly legal to own and run two companies.

As a contractor, I had several schemes attempt to woo me to use them, with ludicrous promises like "Keep 92% of your gross earnings!". I always said no thanks. Now I read on contractor forums as people panic that HMRC has evaluated their magic tax avoidance strategy and they want back taxes plus interest and I have no sympathy - they were high earners and they were trying to avoid contributing their share.

The worst are the loan schemes - You give all your earnings to an offshore entity, and it gives 95% back as an interest free 'loan' that is never expected to be repaid. No tax! W00t! But now not only are the tax authorities interested in you, but when some of these schemes wind down an external liquidator takes a look at the books and decides "Hey, there's all these loans outstanding, we need to recover these funds for shareholders!". Ruh-roh.

> If you are engineering your finances in a contrived or artificial manner, purely for the purpose of reducing taxes

nothing scream like "We failed at legislation so we're going to resort to arbitrary decisions"

Unless they define what contrived or artificial manner means exactly, which I doubt.

I'm not a lawyer, but the traditional "Circular 230 Disclaimer" in the US suggests to me that either the US works similarly or many people think so.

You know about "structuring"?

And structuring is another terrible example of "good legislation". It is yet another failure on the same scale as "civil asset forfeiture". That is, law so generalised and broad that it can be applied selectively and punitively.

Once, while sitting with my accountant, I asked, in passing, the sum of two numbers ("how much is X and Y?").

Without looking up or pausing he responded "How much do you want it to be?"

You can read the official opinion of the US legal team here -

https://storage.courtlistener.com/recap/gov.uscourts.ilnd.43...

I think it can be summarized that they knowingly traded securities with US entities, and intentionally circumvented legal and technical restrictions to make those trades happen.

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!

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

Which is why, for better or worse, there are increasing pushes to break the dollar of being the world reserve currency. Time will tell if that happens. Any non-aligned country looks at what happened to Russia and Iran and wants to avoid that risk.

> 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.

Banking was the interesting one — the FIFA execs moved money and most bank wires (or ACH... I forget) end up going through the U.S. in one way or another if they're international.

Most bank wires/ACH using USD I can belive, but you can buy/sell/trade/transfer in other currencies, which in fact, lots of parts outside of the US constantly does :) In fact, the second largest market in the world trades mostly in EUR.

All US wire transfers go through a US custodian bank, so if you're sending USD, it's making a trip through the records of (generally) Wells Fargo. And then, bam, you're under US jurisdiction.

True that, but it does not appear to be the only (or even the most important) reason the CFTC is citing.

so they should use Zoho

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

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.

Some of the revelations indicate it may be much worse.

Somehow, the houses of cards manage to stay intact. I wonder what will finally pierce through it.

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/

Is McGill considered a good school? Never heard of it before.

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.

Maybe the best school in Canada, certainly top 5.

waterloo is better.

For CS, absolutely. The McGill brand spanks Waterloo's for most other domains. Note I said "brand". What you do with your diploma has little to do with the university you graduated from.

agreed.

Yes, it's a pretty good uni in Quebec

I would say it's certainly the most well known university in Canada.

Slides is a digitized version of the old practices.

Better presentation technology will not be found here, as much as I detest Powerpoint, I'm willing to admit that it is the pinnacle of slide presentation.

To reach a better presentation and flowing of information across the society, the answer is to ditch slides altogether. Which I am not envisioning how as I'm not a product manager or a salesman but for myself I'm doing perfectly fine with markdown and other text based means of communicating information.

In classroom settings, slides are a poor local optimum. Personally I feel that professors rely on slides too heavily and would strongly them to use chalk. Writing in real-time forces you to teach at the pace of human thought.

This also allows students to take notes and actually absorb the material - otherwise, there is a tendency to pack too much into slides and you end up loosing half your audience. Although sometimes helpful for giving visual intuitions, more often than not, slides just get in the way.

When there really is no alternative to slides (e.g., for workshops and conference presentations), I find LaTeX/Beamer much easier to handle. It has good defaults and does not require fiddling with transitions and formatting and superficial but ultimately pointless settings.

You linked to the wrong CV

It's the CV of Jeremy Cooperstock, a Professor at McGill. It lists Changpeng Zhao as one of his former students.

Ah, thanks!

"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...!

> ...“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!]

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.

Seeing others be so wildly bad at their job makes me feel better about my performance at work.

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.

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.

https://www.bloomberg.com/opinion/articles/2023-03-27/the-cf...

just got his article for today - it has what you're looking for :) - can't underestimate Matt Levine, you know.

This is good for Bitcoin.

Came here to say this, but now just here to watch the people who don't understand the meme.

Is it a derivative of the "this is good for John McCain" meme from 2008?

"Here's how Bernie can still win"

Few understand

r/buttcoin is leaking into HN!

They also are referring to ETH and LTC as commodities in the complaint, which is good for them.

Maybe for the longterm, but short term?

It’s a common catchphrase in the Bitcoin community

https://knowyourmeme.com/memes/this-is-good-for-bitcoin

[dead]

It might be good for DeFi, which has derivatives trading too, at this point.

The so-called DeFi is full of centralized choke points, such as stablecoins and other centrally issued securities

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.

Proxy contracts are necessary to perform upgrades to functionality over time. However auditing the proxy only is shady

Care to share an example?

MMF was one of many. I reckon the recent SafeMoon incident was also under a similar cover of "audited but not audited".

https://twitter.com/CertiKAlert/status/1640974656696991745?c...

`This upgrade was not within the scope of our audit.`

Wait, I thought bitcoin was decentralized?

BTC is just wallets, DeFi here refers to more complicated instruments.

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?

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.

You can. https://www.ribbon.finance/

Trading futures on Defi is absolute future.

P.S.: I'm an investor/liqudity provider for most of protocols doing this.

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.

Crypto trading platforms should also not get any of the benefits Coinbase is lobbying for right now.

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.

> 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...

Then why is it the CFTC going after Binance and not the SEC?

> people claim NASA is some kind of cash-cow that drags its feet to get more money

Weaker by comparison, not weak per se.

because Binance is violating the CEA

and the crypto space could use services that are not violating the CEA

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.

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.

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.

Can you really read those messages and claim they are the "bad cop"?

This is the CFTC, not SEC.

that ended when half of the CFTC staff was utterly embarrassed by their public groveling of SBF

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.

The original report in English, linked in the article https://transparency.org.ru/en/news/from-moscow-city-with-cr...

Which, I think, is a pretty good use case.

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.

You're unnecessarily narrowing your viewpoint, blinding yourself to the bigger picture.

Bigger picture: transfer of value without a middle-man or central authority.

Now that's something.

Why are russians punished for the sins of their government? Should americans get the same treatment then?

> 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.

Easy to say when your government has committed worse atrocities and you've never suffered for it

It’s true that I’ve never personally suffered for any of the bad deeds of the US government. There are several reasons for that, some nakedly political, but for the most part because when someone in the US government does something horrible it’s not officially approved nor is it accepted and lauded by the people.

Take Abu Ghraib, clearly wrongdoing on the part of the government. The folks involved were exposed, prosecuted, and punished. The revelations of the incident kicked off a top down investigation of how military interrogations are performed and a public report on the matter. Politicians were unseated and hands on perpetrators were imprisoned.

Contrast that with the current situation where Putin receives widespread support from Russian people for committing war crimes while invading Ukraine and the perpetrators were rewarded. I cannot think of any “worse atrocities” the US has committed in my living memory.

There are arguably several situations in US history that should have led to prosecutions that didn’t, such as how we behaved regarding Iraq as another commenter pointed out. I do bear responsibility for that with other Americans, but as you have pointed out we did not suffer the consequences, mostly for political reasons.

Weren't most americans supporting the "war on terror"?

And weren't all your president approving drone strikes on kids and families for decades?

The level of propaganda that americans consume is not to different to the one of russians.

Ofc it didn't help that Ukraine was harboring entire Nazi battalions.

Just think if China was putting a military base in the mexican border and Mexico hired Nazis to fight for them. What would the international response would be like? Not too difficult to imagine eh?

Ah okay, you're not legitimately criticizing the US, you're a Russian troll. I see. You played your hand a little too strong there.

Ukraine was not harboring "Nazi battalions". The US has never intentionally targeted children with drone strikes. Both of these things are ridiculous to even state.

The news media in the US absolutely engages in propaganda, however it's usually for the benefit of the wealthy, not so much for the benefit of the government. In the US, you get unedited access to news from around the world, it is a trivial matter to read Channel NewsAsia (from Singapore), Al Jazeera (from Qatar), or Der Spiegel (from Germany) in English on the Internet, all of which are much less friendly to US policy interests globally and are more than happy to write scathingly about US behaviors abroad.

Good luck to you.

Ever heard of the Azov battalion?

Oh sorry the US does it constantly by mistake. Its just stuck on a loop.

As if the government and the wealthy weren't extremely closely related. One even might say "twins"

What about Venezuela? Should its citizens be punished for Maduro's actions?

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".

Respect for your honesty about both the situation and in answer to your friend.

Not too different from americans believing the war on terror was about freedom.

Did they get any sanctions? Nah

Always a nice thing to tell your friends.

> From my point of view, there is nothing good about evading sanctions against russia

So, starving folks who may or may not agree with their governments politics is a good thing in your book?

You clearly have the moral high ground here.

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.

Gonna go out n a limb and say putting "don't leave anything in writing" instructions, in writing, is very dumb.

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.

So you're encouraging a panic run?

It's sensible advice. You shouldn't use exchanges to hold your crypto anyway

Where else should I hold it? It's typically safer at an exchange with 2fa

If you're going to store in the cloud, there are plenty of secret storing companies that might be a better option than crypto exchanges, which are prone to hacks and shutdowns.

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?

Fraud is ok as long as nobody has lost money yet? Laws don't matter until someone is harmed?

Ctrl-f for fraud reveals three matches that are not related to the charged conduct.

Every other exchange that played by the rules and missed out on becoming the #1 exchange. It is easy to win when you cheat.

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.

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. § 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 ?

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.

Crypto really is the gift that keeps on giving.

The *grift.

Do docdroid.net URLs last longer than 60 days with no views. Do they get archived by IA. Here's text-only version of the complaint, at a permanent URL that gets archived at IA:

https://www.courtlistener.com/docket/67092867/1/commodity-fu...

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.

SEC & co are gonna pop all the bubbles in the coming months it seems.

Not sure if the US benefits from this in the long term.

CFTC said that they got some deleted messages from a Signal app. Isn't this bigger news?

> CFTC said that they got some deleted messages from a Signal app. Isn't this bigger news?

No. Informants, possibly even confederates.

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.

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.

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.

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.

A mole? I'd rather call them whistleblowers.

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.

Crypto Exchanges are horrible . They act as brokers, custodian and exchanges all in one. The industry claims they need USA regulation but they don’t engage in a reasonable manner. I still think ftx was the worst but I will shed no tears if Binance goes down. While I’m ranting… it’s time for bft systems not based on blockchain. These systems are all:

1) poorly tested. Btc, the best of them would never be shipped at a top tech company with such bad docs/testing 2) barely available. The rpc end points for most of these chains are barely up at three 9s. 3) hardly distributed or censorship resistant . The idea that govt can’t stop these networks is laughable

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.

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.

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.

If they need to work so hard to keep people in the system, it should be a good indicator of the state of affairs.

> TikTok ban, Coinbase and now this

How is TikTok related to dollar hegemony?

>Chinese proxies

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.

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.

> 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?

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.

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.

The next one will likely end the internet as we know it

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...

"Google wacking"

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.

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...

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)

Wait, where is trading shop A or B mentioned? Have not had time to read the complaint. Tried searching it but if it's in there it uses another keyword.

This is news to me, haven't heard anyone mention Cumberland global recently? I know they're up to their neck in it, I just mean they seemed to have skated by without much notice.

Look at pp. 48 and on for their mention. IDK why it doesnt show up with ctrl+f in the pdf.

Two of those firms are clearly cumberland and jump crypto.

Cumberland has been the reverse of Alameda -- they're an offshoot of DRW and very professional about their business as far as we know (though shady as hell -- look at CFTC complaints on DRW).

We know most new USDT sent to Binance on Tron directly from the mint address were to Cumberland. We dont know the terms of the deals they're buying it on.

Also, I wrote this piece which went viral last year:

https://www.singlelunch.com/2022/01/09/an-anatomy-of-bitcoin...

The leading suspects for culprits are cumberland. I thought it was Alameda but they've exposed themselves as likely too incompetent to pull something like that off. DRW we know has the technical competency to do momentum ignition.

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.

> Just keep your popcorn warm.

Actual LOL on that one.

>Just keep your popcorn warm.

At this point, we oughta just set up a couple of food trucks for everyone.

How do you keep popcorn warm without it burning?

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!

Tether USDT is a drop in the ocean of global capital.

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.

They are not taking Binance down. They are hair-cutting its dominance. It has happened before with Bitfinex and Bitmex. Both platforms still operate. My take is that Binance will keep operating but the crack down will significantly impact its business.

This seems like a conspiracy theory: every time an exchange gets too big, the US cracks down on it. But it might be the US is concerned that something gets too big to get out of its control? We already know that P2P and small exchanges are out of control due to sheer size.

They already went after iFinex. Tether and Bitfinex were fined by the CFTC in 2021 [1]. Bitfinex was also fined by the CFTC in 2016 and shortly after cut off US persons from the platform [2]. Don't you think they would have already caught "the gangsters" if regulators investigated and fined iFinex at least twice over a five year period?

> SBF/FTX was a fraud and was iFinex's biggest customer.

It's very likely that the FTX creditors will be very happy to receive their USDt that they held on FTX when they receive whatever amount of it from bankruptcy. They'll be able to redeem 1 USDt for $1 from Tether.

[1] https://www.cftc.gov/PressRoom/PressReleases/8450-21

[2] https://www.cftc.gov/sites/default/files/idc/groups/public/@...

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?

~All firms with major lobbying arms pay both sides.

It's not about ideology for them, it's quid-pro-quo.

Well SBF was a big dem donor, let's see how that works out for him

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.

[dead]

> 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.

Tether's day is coming.

Yea. Tether should reach $80B in market cap sometime this week. Exciting!

Was Zhao the one chiding SBF when his legal issues started?

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.

They operated in the US illegally right? Seems like they're the ones who screwed up here...

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.

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.

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.

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.

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.

Diversified as in 55% in 10 companies and 75% in tech and retail? Large cap sure...

Yeah, they do say "tech portfolio" but I wouldn't recommend outsized investment in tech vs like, VTI (Vanguard total market).

It is illegal in California to have a casino. It is not, however, illegal for me to go out of my way to drive to Nevada to in turn go to a casino. In this case, neither the casino nor I are doing anything wrong.

Now, maybe it could be illegal for me to gamble. Sometimes, this means it is then illegal for me to "jursdiction shop" by going on vacation somewhere specially with the purpose of doing something that would be illegal for me to do here.

I think, as an example, it is illegal for me to be in any way involve in betting on some kind of animal fight. This is something that I understand is legal in some other countries. I can appreciate jurisdiction shopping to be illegal.

But like, that's on me, right? If it is illegal for me to do something then I am the one at blame for doing whatever it is that was wrong. It isn't up to the random people in the other country to prevent me from doing the thing.

I thereby am having a very hard time thinking the US should have international jurisdiction over the entire world of people to require a non-US company from allowing US users to even use its site, requiring ID checks.

I admit: I like crypto. But I also hate both gambling and gamification. It is important to understand that the REASON I like crypto is because of stuff like this: I do not believe one country should have such global power.

Either it should be illegal for the firms in New York to set up all the shell companies and the individual retail traders to use VPNs to do a thing that could be illegal for them to do even if they jurisdiction shop...

...which would mean that any and all enforcement should be directed at them, not Binance, who wasn't trying hard to prevent anyone from doing this but frankly is doing more than I think the US has any right to demand!...

...or it should be narrowly illegal for someone in the US fo provide a venue for doing it. Saying it is illegal for anyone anywhere in the world to allow people from the US to do something "for their own good" is inane.

But so, I imagine a lot of people on this website are in at least some western country if not the US, and so it feels good to spread Western values everywhere; and hell: this website is also anti-crypto in general.

But to give you another example: are you selling software online? If you do, you have to KYC all of the people you sell to and collect VAT so you can remit it to the correct European authorities in each country.

There is sometimes a de minimus threshold, but the threshold isn't that high, it has been going down over time, and AFAIK some of the EU countries do not have any threshold. It isn't something you are supposed to ignore.

There is also a "convenient" one-stop shop so you can have a single registration and remit all of your taxes in a single currency, as the alternative before they started moving in this direction was complete madness.

But like, it isn't legal for you to be selling digital services and downloadable software with nothing but e-mail and PayPal: you need to be using IP addresses and billing addresses and then collecting/reporting.

Maybe that example--where right now many of the people on this website are doing something illegal today and maybe should be contacting some accountants and some international lawyers to figure it out--is elucidating.

The full force of the federal gov't is coming for CZ.

I spoke with several people who work at various AGs and folks in DC.

It seems they will come down hard on him for a variety of reasons and through a variety of methods.

Beautiful idiocy. I can't wait for this scam to fail completely

I'm just here to enjoy the fact that the complaint uses Western Name Order[1]. For some strange reason, AP and a bunch of other style guides use pinyin when dealing with Chinese subjects, which in this case is...just not correct.

If you're writing in English, to an English speaking audience, anything other than Western Order is nonsense, because referring to someone you've never met by just their last name is really sketchy.

[1]: https://en.wikipedia.org/wiki/Personal_name#Western_name_ord...

> because referring to someone you've never met by just their last name is really sketchy

That's an interesting observation. Since you are talking about the order of names, do you mean "last name" as in surname or given name? Because the document does use surnames (which is what "last name" means in western order) to refer to people, apart from the first time when their full names are used.

An either way, in what sense is that sketchy? I know that referring to people by their given name only is a sign of intimacy, but I don't associate either with sketchiness. Do you think it imply sketchiness in the speaker's relation to the spoken, or sketchiness with regard to the subject themself?

> Since you are talking about the order of names, do you mean "last name" as in surname or given name?

Exactly.

For people you don't know well, 'getting formal' is never really going to steer you wrong. Many of the Romance languages (Spanish being one I know best, also because my brother's wife is originally from Panama) have the concept of a formal and informal pronoun "you".

To an older person, I might say, "¿Como esta usted?" instead of "¿Como estas?" as a sign of respect or deference.

For the record, I know precisely zilch about the rules in pinyin, and by coincidence didn't really grasp that "Standard Chinese"[1] is really an offshoot of Mandarin until a couple of years ago.

Seeing "Crouching Tiger" in Mandarin somehow got me in the mindset that this was "old" Chinese to fit with the time period of the film.

Not so much.

To the point about last names, it's also culturally off-putting.[1] This is a different context obviously, but the idea is the same.

"In most of the English speaking world it is not considered polite to open letters to a Mr. Joel Spolsky by writing “Dear Spolsky.” One might write “Dear Mr. Spolsky,” or “Dear sir,” or perhaps, “Hi Joel!” But “Dear Spolsky” is usually followed by some story about embezzled funds and needing to borrow my bank account."

[1]:https://www.joelonsoftware.com/2004/01/26/getting-your-resum...

SBF + CZ = dumb and dumber

All the smartest people are working on AI. At least until they are laid off. Desperation sets in. What next. Hype, hype, hype. Never give up.

> 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)

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.

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"

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?

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

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.

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.

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.

depends, by that metric all the Swiss banks are illegal

Well, Binance clearly knew the risks, so it's hard to see why they would chase US customers unless they were very profitable.

Is you takin notes on a criminal fuckin conspiracy?

It's not over until $usdt falls - but Binance was basically a more competent FTX so this is a good development

CFTC sues Binance The Commodity Futures Trade Committee has brought a civil action suit to Binance, Changpeng Zhao, and the CCO Samuel Lim. The lawsuit is because Binance ,as an organization, has been actively soliciting and profiting off the United States customer base without complying with United States securities compliances. I saw this coming after the accidental investigation of Sam Bankman-Fried, and after Shou Zi Chew couldn’t take the heat in congress for Tik Tok. It’s a nice cocktail of the two ventures, but this still looks the same. As a recent graduate starting my entrepreneurial endeavors, it almost seems necessary to clash with authorities or at least impossible to avoid them. A key to successful business I have watched thus far is positive momentum. In large part, that comes from your sales team andthe biggest salesmen of them all, your CEO. But momentum on a plane you are engineering in the sky, does not seem like the smartest thing to do. But I know that is the trend and the basic blueprint of a money-making start-up. The companies that shoot up to our watchlist, the companies that have their tickers’ trending on Twitter. Those companies started like how Bernie Madoff started and were forced to comply afterward. Mark Zuckerberg is inspirational in his early rise to the top of tech. From hacking his father’s computer to the Harvard University Campus databases, Mark only acted and thought about it when he got called to the office. Bill Gates is the perfect example, and it’s perfectly hidden from most of the public. Did you know Bill Gates “stole” the idea of a graphical user interface that would become Windows? It is not legally enforceable because the Xerox Research Facility basically gave their ideas away by not protecting them. Steve Jobs was there as well, I’m sure. They sold those ideas and made it their own. But this is not a slight to those legends who took the American Dream to heart (except Madoff). This is the recognition of the role of the CEO, in my eyes, the person in the company who can sell the mission without anyone seeing it, the person selling someone on a dream with their eyes open, facing reality. Is that wrong? Yes, that is wrong. Patience is a virtue. Planning and being ten steps ahead of your counterparts in reality is smart. Selling someone with truth is groundbreaking. Changpeng Zhao made the common mistake these commercial CEOs make, which is the lack of planning ahead. I’m sure Zhao knew he would want United States consumers to have Binance accounts. That means you plan with United States Compliance right after mastering technology. According to Samuel Lim, Zhao’s priority for commercial success over U.S. compliance was a “biz-decision” this makes sense when the mantra is “you need money to make money,”. I aim to be a CEO in my own way, but I don’t expect it anytime soon. You can plan it first. Put it in God’s hands. - Real

it’ll be very very funny if this is what undoes tether and de facto destroys the cryptocurrency cartels

USDT is actually from "Bitfinex", not from "Binance".

It would still be funny, though.

I was told "funds are safu"

Damn. Time to HODL?

Popcorn time!

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.)

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.

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.

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.

FedNow is launching in July. I think the motivations here are pretty obvious.

Is this confirmed that it's really launching in July, do you have a source?

https://www.federalreserve.gov/newsevents/pressreleases/othe...

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> Coinbase (the company that has tried hard to stick to the letter of the law

Where is their HQ?

Is Remote unlawful?

In SF last I checked

I was confused and talking about Binance. Coinbase does appear to be law abiding.

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.

> 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.

> 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_armstrong%20SEC...

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/14354392917153587...

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.

> 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.

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.

You can still edit your comment.

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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.

Someone probably send conventional SMS over the Signal app.

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I wonder how much CFTC employees were placing those crypto futures and options before the announcement.

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?

You can't trade futures on Kraken if you're an US citizen. I suspect the same is true for Coinbase.

They could have opened an account at binance for sure

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.

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.

>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.

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.

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.

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.

> CZ recently bring down SBF

Did he? FTX went to CZ for help. CZ looked at their notoriously-shit balance sheet and ran scared.

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

I wonder if some of the well connected beneficiaries of SBF's largesse were happy about this.

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.

Now that the shit is finally hitting the crypto fan, banning discussions of crypto on HN would be perverse.

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.

> 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?

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.

> 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.

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.

> 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.

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.

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 (:

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.

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.

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.

> 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.

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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

>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?

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).

People are losing faith in the dollar. High inflation and bank runs play into this belief.

You mean like all the bank runs and high inflation in the crypto space?

> 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.

It’s the tether lending machine.

It wasn't operating last year when bitcoin was crashing?

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"?

I'm not sure whether this is sarcasm, but in case it's not: I do.

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")

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.

> 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...

> 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.

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.

> 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.

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.

Sounds very similar to Robinhood's 2019 infinite money hack.

> How is Tether bought?

Nobody knows.

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.

The point is that nobody can really say that all tether is bought this way, that there is a genuine flow from cash to the tether company to exchanges, and there are very reasonable suspicions that tether is just magicked into existence for use on friendly/complicit exchanges to help control the price.

Perhaps I should have said it's less a question of how tether is bought and more a question of if tether can be said to be bought, at its point of origin.

Are you saying more Tether is being swapped for BTC than is being bought with $?

Very little Tether (if any these days) is bought with USD. Tether admits themselves they don't hold USD reserves to cover it if it wasn't obvious already from other sources (there is much more Tether being printed than the whole inflow of money to Bahamas banks of which Deltec (Tether's bank) is just one.

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