bit¢oin$

“One second of research would prove that to be false,” Paul hit back. “You can definitely hatch eggs and even breed your animals.”

lmao just the dumbest shit ever

Want a MasterShake read of that line

is this a slurp juice thing

its slurp juice adjacent

it’s also extremely On Cinema

this is one of my favorite songs

https://cointelegraph.com/news/bitcoin-core-developer-claims-to-have-lost-200-btc-in-hack/

bonus, he's a mel gibson-y "fuck this newfangled catholicism" catholic *and* a monarchist

and oh wow what's this, there was a bitcoin fundraiser for him just 5 yrs ago, after his house got dinged by hurricane irma. maybe the bitcoin-munity will pull together once again and funnel more fake dumb money to this choad.

More generally, the sentiment is that a bunch of crypto VCs are in a really bad spot regarding insider trading, something I've called out here on many occasions

It doesn't matter if they were/are securities, you can't insider trade

— Leigh Drogen (@LDrogen) January 5, 2023

what if you're in congress when you do it

then its ok

It doesn't matter if they were/are securities, you can't insider trade
— Leigh Drogen (@LDrogen) January 5, 2023

What is the basis of that statement?

I mean I will feel a bit uninformed if/when someone points it out to me, but I'm pretty sure that "insider trading" isn't just, like, a common law crime. You have to have some specific regulatory scheme involved. And if it's not a security, then what is the basis of "you can't insider trade"?

insider trading is pretty much based on caselaw, there is no statutory basis iirc https://en.wikipedia.org/wiki/Insider_trading#Court_decisions

yeah heres a matt levine column examining the issue https://www.bloomberg.com/opinion/articles/2022-06-02/don-t-insider-trade-nfts

iirc he basically says insider trading is a type of securities fraud and its really the fraud that matters, so if youre not insider trading securities its just some other type of fraud

Paywalled. Insider trading in securities is all under 10b-5 and 20A. I've never heard it suggested that you could insider trade, like, beanie babies or real estate, for example.

heres an archived one https://archive.ph/eFNP9, great service btw just put the url of the paywalled article in and its prob already there, the article is about a guy getting charged for insider trading nfts

which def arent securities

Paywalled. Insider trading in securities is all under 10b-5 and 20A. I've never heard it suggested that you could insider trade, like, beanie babies or real estate, for example.

― longtime caller, first time listener (man alive), Thursday, January 5, 2023 9:26 PM (four minutes ago)

as you know, 10b-5 doesn't define what insider trading is. and obviously, there is nothing statutory that says how to define crypto.

i'm not an expert here but it seems to me a lot of the crypto cases the SEC is bringing is trying to establish caselaw that says yes, crypto is securities - and once you get that hook you can then try to use 10b-5 (if you're the SEC). 20A appears to be private right of action only?

that insider trading NFT case isn't a 10b-5 case, they're charging the guy with wire fraud. levine's point is though that the 'fraud' in question here looks just like insider trading, which is based on a theory of fraud via caselaw under 10b-5, 20A, etc.

seems like the reason insider trading is associated with securities is because its just a good fit as far as a fraud to do theres tons of opportunity for it, as levine points out the nft case is pretty weird a byproduct of that market just being bizarre, like straight crypto coins eg bitcoin is prob not a security because its not a group investment and then if you think about the insider trading opportunities theyre just not there they way they are for stocks, like maybe if you worked for a mining company you might have some inside info to trade on i guess, but then some of the web3 stuff and crypto derivative things are obvs securities

i think you meant to say 'crypto' instead of 'securities' in the first instance

idk with crypto it seems like its often other types of fraud, a lot market manipulation stuff

you said 'insider trading is associated with securities' which is, uh, true... i think you meant to say 'crypto' instead

no thats what i meant to say

Rule 10b5-1 does define what insider trading is, fwiw
https://www.law.cornell.edu/cfr/text/17/240.10b5-1

insider trading is a good crime to do with securities, its a market where theres lots of actionable inside info

IDK if the SEC is now trying to define crypto as a security, my memory (although I didn't follow this that closely) was that both the SEC and CFTC kept dicking around on whether or not crypto is a security, commodity, or neither, and never resolved it, although I think there are specific cases of token type offerings or crypto-related products being found to be securities.

I don't think crytpo itself (bitcoin, eth, etc.) is really a good fit for "securities" fwiw.

yeah thats what i think, but like a DAO is obvs just a company and its coins are effectively stock, obvious security

insider trading is a good crime to do with securities, its a market where theres lots of actionable inside info

Rule 10b5-1 does define what insider trading is, fwiw
https://www.law.cornell.edu/cfr/text/17/240.10b5-1🕸

I’ve got some material nonpublic information about my ass I can sell you if you act now

wait what are the non-securities contexts where insider trading applies?
― 龜, Thursday, January 5, 2023 10:16 PM (twenty-one seconds ago) bookmarkflaglink

i think theres been commodity market insider cases, and of course the famous nft case from the article, but what i was tryin to say is insider trading is almost exclusively prosecuted re securities not because theyre regulated in some special way but rather because insider trading happens with securities a lot

because the opportunity exists a lot, you could say insider trading is a fundamental truth about the structure of the securities market

CFTC also has a specific regulation on insider trading though.

insider trading is exclusively prosecuted re: securities because it is a crime that was created re: securities lol

theres an underlying opportunity for fraud that was criminalized

CFTC also has a specific regulation on insider trading though.

― longtime caller, first time listener (man alive), Thursday, January 5, 2023 10:26 PM (two minutes ago) bookmarkflaglink

yeah because people are always doing it because its a nice crime

insider trading is pretty much based on caselaw, there is no statutory basis iirc https://en.wikipedia.org/wiki/Insider_trading#Court_decisions

― 龜, Thursday, January 5, 2023 7:18 PM (two hours ago)

Insider Trading Sanctions Act of 1984 - Amends the Securities Exchange Act of 1934 to permit the Securities and Exchange Commission, whenever it appears that any person has traded in securities while in possession of material nonpublic information, to seek an order in a district court action requiring the violator, or anyone who aided and abetted the violation, to pay a civil penalty of up to three times the profit gained or loss avoided as a result of the unlawful transaction.

https://www.congress.gov/bill/98th-congress/house-bill/559

…and?

many lawyers itt, but only one true philosopher of the law (me)

sorry, just wanted a clarification on what you mean that there is not statutory basis? Isn't that statue specifically directed towards insider trading?

that is a statue that specifies what kind of penalties can be recovered from insider trading crime-doers. it doesn’t actually create a crime of insider trading that prosecutors can bring charges under

so where do the criminal penalties the Insider Trading Sanctions Act provides arise from, if there is no crime to be charged?

you mean civil penalties, and they arise from insider trading cases brought under rule 10b-5, which is not a statute passed into law by congress but is a rule created by the securities and exchange commission pursuant to authority granted to it by congress under the securities exchange act of 1934

so insider trading is only "statutory" for civil penalties and not criminal? how are criminal cases charged then?

Securities fraud is statutory under Section 10(b) of the securities exchange act of 1934 (a statute and is passed by congress). Insider trading is not mentioned in Section 10(b) but came about later in SEC Rule 10b-5, which defined that insider trading is a form of securities fraud. SEC Rule 10b-5 is a regulation promulgated by an agency (SEC) under authority granted by the statute, not directly passed by congress, so it is regulatory, not statutory. Interesting from Wiki:

In 1942, SEC lawyers in the Boston Regional Office learned that a company president was issuing pessimistic statements about company earnings while simultaneously purchasing the company's stock. Although the Securities Act of 1933 prohibited fraudulent sales of securities, no regulation existed at that time which would have precluded fraudulent purchases. Rule 10b-5, issued by the SEC under section 10(b) of the Exchange Act, was implemented to fill this regulatory void. The commissioners approved the rule without debate or comment, with the exception of Commissioner Sumner Pike who indicated approval of the rule by asking, "Well, we are against fraud, aren't we?"

so insider trading is only "statutory" for civil penalties and not criminal? how are criminal cases charged then?

Well, as my White Collar Crime professor drilled into us, the most common federal crime is violating 18 USC 1001, which criminalizes lying to government agents. So if you insider trade and the FBI stops by and asks if you insider traded and you say anything materially false, like, "I got the information from my dog," they got you.

My favorite insider trading case is US v. Switzer, involving former U of OK and Dallas Cowboys Coach Barry Switzer:

41. Sometime in the afternoon, after his last conversation with G. Platt, Switzer laid down on a row of bleachers behind the Platts to sunbathe while waiting for his son's next event. While Switzer was sunbathing, he overheard G. Platt talking to his wife about his trip to New York the prior day. In that conversation, G. Platt mentioned Morgan Stanley and his desire to dispose of or liquidate Phoenix. G. Platt further talked about several companies bidding on Phoenix. Switzer also overheard that an announcement of a "possible" liquidation of Phoenix might occur the following Thursday. Switzer remained on the bleachers behind the Platts for approximately twenty minutes then got up and continued to move about.

10b-5 didn't establish insider trading is a form of fraud, it just said it's unlawful to "employ any device, scheme or artifice to defraud" and other prohibitions around fraud.

§ 240.10b-5 Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.

the actual law of insider trading involving tippees, misappropriation of information, all the stuff you read about in the cases, comes about from what the courts have read into 10b-5.

haha that switzer anecdote - michael mann movie about insider trading.

so insider trading is only "statutory" for civil penalties and not criminal? how are criminal cases charged then?

― bulb after bulb, Thursday, January 5, 2023 11:32 PM (yesterday)

i'm getting ahead of my skis but there is a provision in the exchange act that allows for criminal penalties, but the insider trading still has to fit under the 10b-5 caselaw. this law journal article that is very riveting and interesting (as all law journal articles are) gives a good overview, even though it's old: https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=6290&context=jclc

anyway, the point is that federal law prohibits fraud but doesn't say anything about the act of 'insider trading'. instead, prosecutors have said various fact patterns that we now recognize as looking like insider trading is a form of fraud, and the caselaw has developed organically from there.

you'll notice the NFT insider trading case up there was not brought under 10b-5 or any statutes involving securities, it's a wire-fraud case where they're saying the fraud looks just like the fact patterns we associate with insider trading cases, and the defense would be hey hold up, NFTs are not securities so why does it even matter if it looks like insider trading, which is about fraudulently trading securities.

so the problem with trying to prosecute these crypto cases is what law are they violating, because there isn't anything on the books yet regarding crypto. the SEC has an interest in making crypto look like securities because there's a whole well-known body of law there, and i think there's a good argument that a lot of crypto out there with voting rights etc. does look like a security, but then there's a lot of weird in-between and edge cases. and of course the law moves very slowly, and we all feel that a lot of fraud and insider trading type stuff was going on during the crypto bubble, but trying to fit that into the law we have is going to take a lot of time and a lot of cases brought and tried to see what sticks under our current regime.