SEC v ARISE: The Trial of The Century?steemCreated with Sketch.

in #bitcoin7 years ago (edited)

Well, it's not exactly OJ Simpson, but the stakes couldn't be higher.
I'd put it up there with SEC v HOWIE.

The stakes are huge. A literal fight for survival between the SEC and Cryptodom. If the SEC wins, the growth of the promising crypto industry could be seriously stunted - with losses in the trillions over the coming decade in lost opportunities and ballooning legal efforts. If Arise wins, the stage will be set for sharply curtailing the SEC’s infamous power and ability to strangle its rival crypto industry under the guise of "protecting" clueless investors.

It's not that Cryptodom doesn't need regulators. The scams and criminal abuse that have cropped up in the past year beg for honest, impartial, and compassionate referees to come in and sort it out. The problem is in finding that kind of referee. Right now, you can be ejected from the game, nay jailed for years, for one flinch of movement before the ball is snapped. Remember your facts differently than the FBI, like Martha Stewart, and you go to jail for 5 months. There is no sense of compassion or fairness, only domination and vengeance. I fear that the Self Regulating Body of the old financial system may be trying to regulate its competition out of existence. Who can we trust?

DISCLAIMER: This article is only my opinion, which is based on limited knowledge of what is going on behind the scenes. I have only spent about 24 hours over the past month or so studying the AriseBank situation as part of the due diligence one must do when considering doing business with another company. This all happened right under my nose as I was talking with their small group of software geeks about how their planned products might fit into our ecosystem. I am not as smart as the SEC and I have not spent more than three weeks combing through the company's emails as one of their agents claims to have done. I'm just an old rocket scientist who quickly concluded that the FEDs must not be using their vast mental and investigative resources on this case. The material errors written into their complaint are overwhelming and obvious. The draconian means they are using to prevent the company from defending itself and to smear its image in the public's eye, makes my spidy senses light up. I won't recount those errors, but you can see a summary of the worst of them at this link. Here's another synopsis: What We Know

Apparently the FEDs did not feel the need to check their facts before launching its vendetta and blocking the intended use of an alleged $600M from innocent supporters who will now have to wait years to get their money back into productive use in a rapidly growing industry. Seems to me that the damage already done by the FEDs far exceeds the damage they merely suspect Jared may have done to his allegedly unsophisticated but crypto-literate supporters.

Howie and Arise Case Essentials

You'll recall from third grade civics class that HOWIE was a 7 to 1 Supreme Court ruling which held that "An investment contract under the Securities Act of 1933 is one that involves an investment of money from an expectation of profits arising from a common enterprise depending solely on the efforts of a promoter or third party."

All exquisitely reasoned, no doubt, but the net effect was that the owner of an orchard in Howie-in-the-Hills, Florida isn't allowed to sell you a row of orange trees if he simultaneously offers you the optional services of another company to take care of them for you.

Really?

And with that, an all-powerful SEC was unleashed, able to intrude into all sorts of businesses using that simple, "well-settled" case law.

What's significant about SEC v ARISE is that it could turn out to be the opposite bookend to HOWIE. The one that puts some sort of limits on runaway intrusion into areas of American life that don't really require great sacrifice of freedom for highly questionable level's of "protection" from our government.

AriseBank is just a pawn in this proxy war. It is a perfect, ideal proxy. A striped chess piece that if played well could win the day for either side.

The Perfect Legal Test Case

To make an ideal legal precedence test case you need the perfect set of representatives from the two sides who are battling it out in the courts. It should balance on an edge, so that the real issues are exposed, leaving no room for the courts and our lawmakers to avoid fixing the underlying root of the problem. We need a totalitarian regime and a rebel victim. A compassionate regime or a reputable victim simply won't have the same beneficial outcome.

For example, in SEC v ARISE, the SEC appears carefully chosen a case that it felt it could win easily, presumably in order to establish its rights to move in and take over a competing industry or at least to intimidate it into submission. They needed someone they could smear in the eyes of the public and his peers, someone who they could box into a defenseless corner by seizing all his personal assets, and someone they could get people to hate for everything he stands for. Jared Rice fit the bill perfectly. He has long record from growing up in a tough neighborhood and several failed attempts to pull himself up by his own bootstraps. He has a street fighting temperament and a trash-talking persona to go with it. He has enemies and an ex wife who are doing their best to undermine his reputation, apparently for child custody reasons. Despite the fact that he is a Bible scholar who has written a book about his climb up from the hood and has a loyal group of software engineers convinced of his innocence, he makes a perfect target to turn into a villain for the purpose of winning a power-grabbing court case with ease.

For the sake of my present philosophical analysis, lets pretend that he has the worst possible character imaginable, just so we have the strongest possible point about the evil of smearing someone's reputation so you can deny them their rights.

This is much better than picking on, say, a humble and lovable retired Sunday School teacher with an established reputation in the industry and four decades of passing the FBI background investigations necessary to obtain the highest security clearances as a rocket scientist in the aerospace industry. If harsh treatment were applied to such a Sunday School teacher, it might create greater public outcry, but it would not be as good a precedent for reigning in the abuse of power that is increasingly evident throughout the US government.

No, what you want is a case where a person with a highly smearable reputation gets pounded into the ground over the moral equivalent of jaywalking. Hold that up to the bright lights of public scrutiny, win the case, and then take it to Washington to point out the need for reform. Even smearable people are innocent until proven guilty and have rights to be treated with compassion and minimum necessary force. Even more, they have the right to not have their doors kicked in and assets frozen unless proven guilty after due process. This is American Civil Liberties 101.

That's why SEC v. Arise is such a pivotal case. It could backfire on the SEC in unexpected ways and bring in long needed reform to an unelected Deep State government that has grown far too powerful and uncountable to its people. The complaints against King George III enshrined in the American Declaration of Independence pale beside the abuses Americans must endure from their government today:

Mitigating Forces

"In shadowy silent distance grew the Iceberg too..."
-- Thomas Hardy, Convergence of the Twain

The reason I believe that SEC v HOWIE is a total game changer is that off in the distance another iceberg is forming, intent on keeping the SEC from harming the digital currency industry by getting congress to bar them from jurisdiction. Twelve State Senators and Representatives from Wyoming, backed by the state’s Speaker of the House, have introduced a bill, H.B.0070, designed to counter the current problems we’re seeing in the regulatory handling of cryptocurrencies. You can read about it here: Wyoming Senators Introduce Bill Exempting Tokens from Securities Laws.

On top of that, President Trump is taking the SEC to the Supreme Court over its practice of using its own in-house judges to handle cases instead of a neutral court venue. You heard that right. I'm not making this up: Reuters - SEC In-house Judges

If the SEC should wind up exposed as another example of deep-state corruption and abuse of power - following on the heels of IRS v. Tea Party and FBI v. Trump and Trump v SEC, we may finally achieve the critical mass motivation to clean house among the unelected bureaucrats that covet power at all costs. It would appear that the wheels are already in motion in Wyoming and Washington. It could gather huge momentum with a shocking David v. Goliath win by AriseBank. Of course, it might backfire even more should the SEC win using its venomous array of dirty tricks.

On top of that, major law firms with winning track records against the SEC are lining up to be a part of this historic case. They smell blood in the water, horrific government overreach and an opportunity to strike a blow for freedom before it is too late. Social justice champions from around the world are rallying to the cause. Arise appears to be assembling a dream team to help David take on Goliath. (I suspect it has nothing to do with Arise. It was not David that won that battle.)

1 Samuel 17:45 David said to the Philistine, “You come against me with sword and spear and javelin, but I come against you in the name of the Lord Almighty, the God of the armies of Israel, whom you have defied. 46 This day the Lord will deliver you into my hands, and I’ll strike you down and cut off your head. This very day I will give the carcasses of the Philistine army to the birds and the wild animals, and the whole world will know that there is a God in Israel. 47 All those gathered here will know that it is not by sword or spear that the Lord saves; for the battle is the Lord’s, and he will give all of you into our hands.”

Yeah, that's kind of how Jared talks smack too. Giants don't like that.

"And nine, nine three-letter agencies were gifted to the race of men,
who above all else desire power." -- Lady Galadriel, Lord of the Rings

Badly Needed Reforms

I'll finish up with some of the reforms that might come out of a Trial of The Century where the Deep State is caught once again abusing its power to gain more power to abuse.

  • The government has nearly infinite time and legal resources. Individuals are quite limited. This is not what I would call a level playing field. I think there needs to be some sort of reform that puts limits on prosecutorial resources that bring that closer to “fair and balanced”.

  • Use of governmental power to hobble an individual’s ability to defend himself is reprehensible. If unlimited FED resources isn't bad enough, the FEDs then turn around and seize all the target individual's assets and block others from helping with his defense any way they can. Jared currently cannot buy or sell without the Mark of the Beast. This is naked abuse of power.

  • A self-regulating body for one industry cannot be allowed to regulate a competing industry. There's a clear conflict of interest. The SEC is staffed by members of the existing financial industry who apparently don't want to see more efficient and transparent competition gain traction. Recent SEC actions have had a chilling effect as many companies are rethinking their entry into the industry. The Arise case is clearly meant to send that message, since it has no other merit.

  • Compassionate and Fair Referees are needed. Getting thrown out of the game for flinching before the snap has got to stop. There is no sense of proportionality. Martha Stewart gets a jail sentence for a misstatement in an FBI interview and lethal gang members are caught and released in sanctuary cities.

  • Abuse of power needs to be punished. Harsh actions harm the investor. There needs to be an automatic appeal process whenever an accused person is subject to devious and draconian pre-trial actions. If the FEDs are found to be harassing a defendant and preventing him from defending himself - the FEDs should go to jail.

  • Abolish In-house Judges It is patently unfair to be denied one's constitutional right to a trial by a jury of your peers and instead be taken to a kangaroo court that just rubber stamps your conviction.

Social media discussions had already highlighted every possible issue and Arise was freely offering explanations and refunds. There was no reason to intervene. This question could have been handled in a conference room or coffee shop, not at the point of a gun.

SEC v ARISE could provide the impetus to put Babylon the Great back in its cage.

Then again, it might not.

"For we wrestle not against flesh and blood,
but against principalities, against powers,
against the rulers of the darkness of this world,
against spiritual wickedness in high places."

Here's a video interview I did with Crypto Connie Willis just before posting this:
https://steemit.com/bitshares/@bluerocktalk/breaking-news-arisebak-petition-to-sign-and-stan-larimer

Here's how you can help: MoveOn.org Petition

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Thanks for the input @stan and I am glad you are posting on here.

I have no idea what is going on with Arise...whether it was for real or a total ruse.

What I do know is many piled on against Arise (and in turn against you) without looking at the facts. They simply saw government shut down and felt that was cause to jump on the bandwagon.

WTF?

How can anyone draw a conclusion based upon the action of the government? Especially those who are on the blockchain here. You would think that these people would know not to trust the government. They post about it all the time on here.

Yet when their money is on the line, all of a sudden Arise is the bad guy (scam) because the government said so. Again, WTF?

Ironic that BTS price didnt drop a bit due to the Arise situation (it did drop, but what hasnt). Yet these people allowed feared to cause them to lash out.

The government is only an arm for the banksters. That is what is behind this entire thing. If the SEC (I am sure at the urging of its master) can cause Arise to go under, the likes of JPM and GS are safe.

I think you are right...the tide is turning. We are seeing too much abuse from un-elected officials.

I am rooting for Arise...not because I know it is innocent but because I know its opponent is guilty.

This clash raises a lot of issues, ones that I had to spend some time mulling over before responding here.

Of course, the SEC is going to jump in. As the Dank Guide to Civics explains, people with power are motivated to seek more power. They always have a vision of the good, a vision that correlates well with their power growing. The Howey decision liberated that desire in the SEC, as it gave them license to wander out of Wall Street and exert their jurisdiction elsewhere. That's what we're seeing with SEC v. Arise.

The conflict of interest factor you highlighted, I didn't think of. Instead, after skimming the facts and mulling over, it occurred to me that the SEC is acting like an overweening legacy agency -like that part of the legacy media that wants special First Amendment protections denied to citizen journalists but kept for professional journalists. Unless said journalists resemble this lady, of course.

The SEC is legacy in two ways:

  • Its institutional memory and customs bind it to the industry which it regulates.... as of the time that it became a dominant force in that industry. Interestingly, the SEC has been criticized both for being too heavy-handed and for being too forbearing. Undoubtedly, the believers in its mission - like the supporters of the legacy media - brandish criticism from both sides as evidence that it's in the zone of the happy medium. But it's a zone that's centered on old-style Wall Street, one where a new company proceeds in an orderly paper-strewn way from private company to public company. The SEC is grounded in an age which was much slower than today's.

When it announced on July 25, 2017 that The DAO 'is' a security, was I the only one who felt like a binge watcher who saw the interjection of a last-season story arc that had already been closed? By July '17, The Dao had long been turned into a simple refund contract via Ethereum ledger overwriting.

  • The SEC is also legacy sociologically. It gained critical sway over financial markets at a time when it was seen as the protector of proverbial widows and orphans: people who literally did not know a stock from a bond. Its institutional worldview is a world wherein slick-talking sophisticates take advantage of lamblike naifs.

As a result, its worldview is profoundly paternalistic - although in its defense, it tries to be 'paternalistic' in a way that an executor of a widow's trust would be. We need not question their motives to realize that their proper milieu is a world where the masses are essentially passive: potential playthings of smart-brained and silver-tongued sophisticates.

In other words, the SEC is a legacy institute of managerial society : a society split into a managerial class and ordinary folks. One wherein the latter accept their lot as people whose destinies are shaped by the former.

The clash between the SEC and Arise is the clash between the old world and the social revolution embodied by cryptocurrency. At stake is, do we have the right to direct our money as we see fit, at the cost of paying hard for our mistakes? Or do we not have that right, because of an imbalance of power at our expense which the SEC is there to ameliorate?

I hope it's the former. The latter does protect us, true, but it also condemns us to the role of wards.

Thanks for sharing this article @stan. It's really interesting to read about this case!

I honestly am not sure how I feel about it, and I'm definitely going to read in to it in more detail, but from what I do understand, this is my point of view:

A lot of the public did seem to be biased against arise in the beginning, but I'm not sure why. I work full time in ICO consulting, online cryptocurrency course creation and now blogging - from talking to friends who would be quite well educated in the industry they too seemed to side against Arise, but some are coming around.

Arise appears to be assembling a dream team to help David take on Goliath.

I love that part of the article, it really sums up the situation extremely well! Personally, I feel that regulations are needed in this space, but I'm not sure in what way, shape or form. It's an interesting topic, but I do not think that the SEC is the right body to implement such regulations.

Thanks again for sharing this! Personally, I think that Arise Bank could help the whole market grow exponentially in the coming years, but we will have to see how things go.

Yeah that is a great line.

It is interesting to note@lukebrn, that certain segments of the government in the US are losing reputation with the average person. Of course, we still have the ideologues who will do anything to protect their party (and their representatives). However, departments like the SEC, IRS, FBI, FDA, and USDA all have been caught either exceeding their authority or being biased because of payoffs or some other type of influence.

Decentralized banking will end up taking place at some point...it just might have to be down the road.

As more of the public gets accustomed to decentralization, I think the centralized institutions, especially those that rape their own customers i.e. the banksters, will fall out of favor quickly.

We simply have to keep spreading the word of decentralization.

And keep buying Bitshares....that will be a force in decentralizing the financial industry.

That is interesting to not @taskmaster4450, thanks for letting me know! I completely agree there, I know that a lot of banks are looking in to the blockchain as a viable option at the moment, but I agree that it will be a good amount of time before it becomes a reality.

I too think that we need to keep spreading the word about decentralisation in a positive manner and the world will catch on. And yes I think Bitshares is great!

Thanks again for the comment.

Let's hope we don't see the government make an example out of Arise like they did with Ross Ulbricht and the Silk Road case. Here's to a more free and peaceful world where the needs of all are met. Onward and upward!

Perversely, that would be exactly what is needed to maximize the reform potential.

AriseBank is the greatest gift the working class could ask for.

I stand with AriseBank!

Appreciate your perspective. Thanks for sharing.

Nice post :-)

Thanks for the post Stan. I mostly agree with you - especially this point -

"A self-regulating body for one industry cannot be allowed to regulate a competing industry."

Both the SEC and Federal Reserve are composed of pre-selected individuals from their respective industries. It is simply anticompetitive to permit incumbents to regulate competitive businesses out of existence.

In a nutshell - we must not permit "regulatory capture" to chop at the young roots of this movement.

You've hit the nail on the head with this article. If the SEC succeeds in setting legal precedent that ICOs are in fact securities, this will have huge ramifications for the the entire cryptocurrency market.