Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: I believe, in the fullness of time, history hold Donald
Speaker 1: Trump accountable, and Mike Pennce might be part of that history.
Speaker 1: As for the first time, a former vice president is
Speaker 1: being compelled to give potentially damaging testimony against the president
Speaker 1: he once served. A judge has ordered pens to testify
Speaker 1: before the federal grand jury investigating efforts by former President
Speaker 1: Donald Trump and his allies to overturn the results of
Speaker 1: the twenty twenty election. Pence vowed last month to fight
Speaker 1: the Special Council's subpoena all the way to the US
Speaker 1: Supreme Court, but on Wednesday said he hadn't made a
Speaker 1: decision yet unwhether to appeal the order. We'll be speaking
Speaker 1: with our attorneys in Washington before the end of the
Speaker 1: week and sorting out what our next steps are. I
Speaker 1: obviously have nothing to hide. I've been speaking about those days,
Speaker 1: writing about them extensively over the last two years. But
Speaker 1: for me, it was important that we stand on that
Speaker 1: constitutional principle. My guest is Victoria North, a professor at
Speaker 1: Georgetown Law School who formerly served as chief counsel to
Speaker 1: then Vice President Joe Biden. Pence had raised a novel
Speaker 1: challenge to the subpoena based on the speech or debate clause.
Speaker 1: Tell us about that challenge. The Constitution's speech and debate
Speaker 1: clause says that you cannot be questioned for anything you
Speaker 1: say while you're in Congress. So it protects members of
Speaker 1: the House or the Senate from being arrested because they
Speaker 1: said something terrible, which is what happened in marry Old
Speaker 1: England and France before. Actually they tried to do this
Speaker 1: to some expense at the beginning of our constitutional history.
Speaker 1: But the idea was that you didn't want anyone like
Speaker 1: a king, questioning someone for what they said, because it
Speaker 1: would inhibit them. It would chill their speech about what
Speaker 1: was important. So if the Parliament wanted to say something
Speaker 1: bad about the king, then the king gage just go
Speaker 1: arrest them, and so on our constitution. We wanted to
Speaker 1: distance ourselves from that practice, and so he said the
Speaker 1: members cannot be prosecuted for anything they say while they
Speaker 1: are members. Now, Vice President Pence is arguing that he
Speaker 1: was the President of the Senate at the time of
Speaker 1: the electoral count, and therefore that is a legislative role
Speaker 1: for the Vice president the unique role under the Constitution,
Speaker 1: and he is arguing that given that he was performing
Speaker 1: that unique role, anything that he said during that period
Speaker 1: should not be used in any other prosecution. And the
Speaker 1: Speech and Debate Clause does provide very broad support for
Speaker 1: members regarding the use of their statements in other criminal prosecutions. Nevertheless,
Speaker 1: you know, not all of his statements were actually regarding
Speaker 1: what the Electoral count Act was doing, and that will
Speaker 1: matter and the ultimate determination about what he testifies to
Speaker 1: the judge did recognize the Speech and Debate Clause applies
Speaker 1: to the Vice president when he's acting as President of
Speaker 1: the Senate, so Pence won't have to answer questions relating
Speaker 1: to that. Yes, because you got to look at the
Speaker 1: facts of what was going on here. You know, I
Speaker 1: was a commentator on the January sixth hearing because I'm
Speaker 1: an expert in Congress. Then if you watch the hearings,
Speaker 1: you'll see that the Vice president was ushered out of
Speaker 1: his tiding place in the Senate. They went down to
Speaker 1: what I think is a basement and he was in
Speaker 1: his car. I've worked for a vice president, so you
Speaker 1: know the mini piast with his secret service, and there
Speaker 1: were pictures of them there. There were pictures of them
Speaker 1: exiting the Senate. So during the process of what was
Speaker 1: going on, he was not actually operating, in my view,
Speaker 1: in a legislative capacity when he was fleeing the insurrection.
Speaker 1: So there are things that the judge knows about various
Speaker 1: conversations that you know, he made that I'm sure the
Speaker 1: prosecutor suggested were made. I'm sure they have phone records, etc.
Speaker 1: From the National Archives, because those are presidential records. Whatever
Speaker 1: he phones on his official phone, showing that he made
Speaker 1: various phone calls. But those phone calls weren't necessarily in
Speaker 1: the conduct of legislative business. So he's probably calling people
Speaker 1: from and this entirely speculation on my part, but about
Speaker 1: the insurrection. He wants to know where are the forces.
Speaker 1: He may have called the president, and that might cause
Speaker 1: another objection. But not all of his activity was in
Speaker 1: the conduct of legislative purposes. You know, he wasn't calling
Speaker 1: anyone to order. He wasn't standing there with the gavel.
Speaker 1: He wasn't answering objections, which is what the vice president
Speaker 1: does in the House and the Clentate. He wasn't acting
Speaker 1: in a legislative role for a good part of that time,
Speaker 1: which I'd assumed the prosecutor is very interested in. Why,
Speaker 1: because the prosecutor wants to know what the thought processes
Speaker 1: were of the president at the time when he did
Speaker 1: not act to quell the insurrection. So let's say that
Speaker 1: there is a call came in from the president or
Speaker 1: he called the president and said, what's going on here?
Speaker 1: You know, why aren't you sending forces here? Etc. Etc.
Speaker 1: Would he have to testify to that call? Well, that depends. Okay,
Speaker 1: so there's also a claim of executive privilege that he
Speaker 1: might make. But you know, that's been further into a crime,
Speaker 1: a conspiracy to obstruct an electoral proceeding, so the electoral
Speaker 1: counting that is an official proceeding, and there are various
Speaker 1: charges now being made again participants in the insurrection. And
Speaker 1: if you agree to something like that, and you may
Speaker 1: take a substantial step or any act toward it, really
Speaker 1: you're guilty of a conspiracy, and executive privilege is not
Speaker 1: applied to crime. So that's really what's going to go on.
Speaker 1: If there's a specific phone call to the president. I
Speaker 1: think the prosecutor also doesn't necessarily want that. If I
Speaker 1: were Pence and I'm just again speculation, and I'm sitting
Speaker 1: there in the basement, I'm assuming it's a basement with
Speaker 1: my secret Service and my daughter and a few other
Speaker 1: friends whoever was in with him. I'm worried for my
Speaker 1: own life, and I'm worried for my country. I'm not
Speaker 1: necessarily calling someone who had told me also to bad
Speaker 1: things on a phone earlier. But I think that they
Speaker 1: had divided on this issue quite sharply in the weeks before,
Speaker 1: and he had Council take their position, and he was
Speaker 1: firm and what he was going to do. He wasn't
Speaker 1: going to invoke the twelfth Amendments and violate the statute
Speaker 1: and all of the things he would have had to
Speaker 1: do to change the electoral count. And given that, I
Speaker 1: expect that you would see him calling, you know, perhaps
Speaker 1: COD or you know, assuming the role of the president,
Speaker 1: which is what I vice President is trained to do,
Speaker 1: which is in the emergency, they take control. And you know,
Speaker 1: I mean Patriot would call the DOT or the National
Speaker 1: Guard or I mean everybody else was Nancy Pelosi was
Speaker 1: calling when the Virginia governor was on the line with
Speaker 1: somebody else and Murray Ol Bowser. So I would assume
Speaker 1: that he made those kinds of calls, and that those
Speaker 1: kinds of calls, since they're not in the course of
Speaker 1: his official duties as President of the Senate, are things
Speaker 1: that he could testify to. But I assume that what
Speaker 1: the Special Council is interested in is his calls with
Speaker 1: the president, yeah, or the president's aids, and some of
Speaker 1: them have already been directed. Mark Meadows has already been
Speaker 1: directed to testify because of the relationship to a crime. Okay,
Speaker 1: So ordinarily a vice president cannot be compelled to testify
Speaker 1: about his conversations with the president because of this notion
Speaker 1: that there's an executive privilege around the close people to
Speaker 1: the president that can be overcome in a court of
Speaker 1: law if there's a special need for it. But it
Speaker 1: also can be overcome, and this was the Nixon case.
Speaker 1: It's not absolute. There's never an absolute executive privilege, just
Speaker 1: particularly not an absolute privilege when there's a crime. I mean,
Speaker 1: it disappears so and this was the case with Nixon,
Speaker 1: who ordered a burglary. Right, We're in a similar situation here,
Speaker 1: which is to say that perhaps Pens called Meadows, in
Speaker 1: which case that would be relevant. Meadows himself I think
Speaker 1: is going to testify again to what happened in those
Speaker 1: conversations or other people the Secret Service that might be relevant,
Speaker 1: And you know, we don't know, but I assume that
Speaker 1: what's going on here is the same thing that's gone
Speaker 1: on with some of these other claims of executive privilege,
Speaker 1: which during the impeachment, which I wrote a book about
Speaker 1: for law students, were wildly exaggerated. I mean, the Nixon
Speaker 1: case is the only case we really have, but it
Speaker 1: is clearer on one thing. If the president is implicated
Speaker 1: in a crime, right he has to testify. And that's
Speaker 1: why Nixon released the tape, because the Watergate burglars demanded
Speaker 1: that they be handed over, and the Supreme Court of
Speaker 1: the United States said yes, because for the pursuit of justice,
Speaker 1: you're going to send these people away to jail. The
Speaker 1: president is not above the law. They reaffirmed that in
Speaker 1: Clinton on his impeachment. Even though this court is not
Speaker 1: exactly has changed dramatically. I don't see them as undermining
Speaker 1: that very basic principle that executive privilege, or even the
Speaker 1: speech and debate clause goes away when there's a crime.
Speaker 1: And as I say, most of what they're interested in
Speaker 1: is not, in my view, not statements that were made
Speaker 1: during the official proceeding, but perhaps before and after. As
Speaker 1: far as executive privilege, Trump's legal team separately made objections
Speaker 1: to the subpoena on executive privilege grounds, and the judge
Speaker 1: completely rejected those. Can Penn still make executive privileged claims
Speaker 1: in response to specific questions, he can try that. It'll
Speaker 1: basically be eliminated, as I said, because it's associated with crime,
Speaker 1: and that's already been litigated in the Meadow state. So
Speaker 1: if it's related to a crime, there is no executive privilege.
Speaker 1: The president doesn't have a privilege to commit a crime
Speaker 1: against the government. This is a crime, not just a
Speaker 1: burglary like an ordinary crime. This is a crime to
Speaker 1: halt the proceedings of the United States and electing a
Speaker 1: president during January sixth. So it's a very serious crime.
Speaker 1: And you know it's a court ordered Nixon to release
Speaker 1: his case. I don't see why the court wouldn't find
Speaker 1: that as controlling President Pence, you know, has spoken extensively
Speaker 1: about Trump's pressure campaign to get him to try to
Speaker 1: reject the electoral count, and even a book, I would
Speaker 1: have thought that there was sort of a waiver of
Speaker 1: any kind of claim because he's already spoken so much
Speaker 1: about it. Well, waiver relays to the specific time and
Speaker 1: the specific content, so they could argue that other things
Speaker 1: that he said, let's say, when he was in the basement,
Speaker 1: which he hasn't revealed as far as I know, I
Speaker 1: haven't read that book, so you'll have to correct me
Speaker 1: if I'm don't read that book either. Okay, So you know,
Speaker 1: the only reason he's raising the privileges he doesn't want
Speaker 1: to testify, and which is interesting. I mean to me,
Speaker 1: if I were him, i'd just go in there and testify. Now,
Speaker 1: obviously some people have had some interest in you know,
Speaker 1: some lawyers have said, well, I my client is the institution,
Speaker 1: and you know he doesn't want to pit vice presidents
Speaker 1: against president. That's true. Vice president should feel very free
Speaker 1: to give of all people, forget about the staff, you know,
Speaker 1: of all people, clear statements to the president, and they
Speaker 1: shouldn't be open in my view. But this is a crime.
Speaker 1: That's the big difference here. So let's say that a
Speaker 1: vice president told the president, oh, well, you know, I
Speaker 1: think the court is going to strike that down. My
Speaker 1: lawyers are telling me that well, you don't want that
Speaker 1: revealed because it looks like they're undivided. I did about
Speaker 1: their litigation strategy, right, but no one really knows. They're
Speaker 1: just hypothesizing. So that's certainly fair game to keep within
Speaker 1: the confines of executive privilege and the vice president's dissenting
Speaker 1: role in the administration, which is to say no. Spiden
Speaker 1: always wanted to be the last person in the room
Speaker 1: with President Obama because he wanted to say, look, the
Speaker 1: staff is telling you X, Y and Z, and I'm
Speaker 1: telling you, based on my experience for thirty years in Watchington,
Speaker 1: that's not going to happen. And that seems to me
Speaker 1: something that is important of all of the staff privileges
Speaker 1: for executive privilege. But we don't know the precise statements
Speaker 1: of the prosecutors looking for I expect it's during the
Speaker 1: time when the former occupant of the office did nothing
Speaker 1: to quell the insurrection, sat watching the television. According to
Speaker 1: the J six hearing, he's going to want to know
Speaker 1: what Pence was talking about. And if he hasn't said
Speaker 1: those openly and hasn't said anything about those particular conversations,
Speaker 1: then he hasn't weighed the privilege. The thing is that
Speaker 1: the privilege is just not applicable because he's not operating
Speaker 1: in a legislative capacity. And even if he were operating
Speaker 1: in an executive capacity and advising the president, he can't
Speaker 1: do that one. It's concerning a crime. When he'd filed
Speaker 1: the objection to the subpoena, he said that he would
Speaker 1: take this to the Supreme Court. Now he's saying they're
Speaker 1: sorting it out and reviewing whether or not they're going
Speaker 1: to appeal. Do you think an appeal to the Supreme
Speaker 1: Court would be advantageous to him? It would certainly delay things. Well,
Speaker 1: if delays in his interests, he can do it. I mean,
Speaker 1: it would be interesting to see what they would say
Speaker 1: about this. You know, if delays and his interest people
Speaker 1: do it, and he might help to get one or
Speaker 1: two justices. It's interesting. The court's a new ballgame right now.
Speaker 1: And you know, I'm out here talking to law professors
Speaker 1: about how new it is because I decided to read
Speaker 1: all three hundred of the opinions as they issued in
Speaker 1: twenty twenty and twenty twenty one. You did, Yeah, I
Speaker 1: have a new website for Georgetown. We're tracking all their decisions.
Speaker 1: And they've changed a lot, and they're in the process
Speaker 1: of changing more this term, so that increases uncertainty. And
Speaker 1: whenever there's uncertainty in the law, that's a full employment
Speaker 1: bill for lawyers, which is to say, oh, well, maybe
Speaker 1: they won't follow the Nixon case. They have departed occasionally
Speaker 1: for him, not always. You know, he might peel off
Speaker 1: a justice or two because I think it's pretty clear.
Speaker 1: I think the reason that the appellate Court is not
Speaker 1: wavering is because the Nixon case is pretty darn clear.
Speaker 1: There is one exception to all of this, and it
Speaker 1: is a crime to conspire to overthrow the electoral count.
Speaker 1: And there's really no two ways about that. And I
Speaker 1: think that they've been very inventive at legal arguments. I
Speaker 1: don't see the court wanting to take the case to
Speaker 1: tell you the truth, so they might just not take it.
Speaker 1: But you could get a dissent from say a Justice Thomas,
Speaker 1: who dissented in a couple of the Trump cases. It's
Speaker 1: just a delaying maneuver. I think. I don't think they'll
Speaker 1: want because they're going to do lots of big deals.
Speaker 1: You know, they're going to overturn affirmative action. They've got
Speaker 1: all these gun cases where there's a massive amount of
Speaker 1: uncertainty in the state. It's about who can own a
Speaker 1: gun and who can't own a gun, and that's real
Speaker 1: on the ground, right, So they've got things they have
Speaker 1: to decide this term. I don't think they'll want to
Speaker 1: decide it, and so then it's a waste of lawyer's money. Really,
Speaker 1: there's not much delay involved in denying a certain petition.
Speaker 1: The Special Counsel it seems to keep winning these cases,
Speaker 1: getting people to testify at the grand jury who don't
Speaker 1: want to. How big a victory is this particular subpoena
Speaker 1: for Mike Pence. Well, a victory for pens or a
Speaker 1: victory for them? Oh, well, tell me which side. I
Speaker 1: thought it was a victory for the Special Council. But
Speaker 1: you know who's a victory for this. It is a
Speaker 1: victory for the Special Council. And I think it shows
Speaker 1: that the rule of law, when the rule is clear applied,
Speaker 1: you know, I mean, this is the rule of lay
Speaker 1: is a treasured cultural commodity of the United States. If
Speaker 1: you go to other countries that are full of baksheishan,
Speaker 1: you know, kleptocracy, you realize that this is in our DNA,
Speaker 1: And I don't think any judge to tell you the truth,
Speaker 1: the Trump judge or not what you know on this
Speaker 1: kind of a thing to be on the wrong side
Speaker 1: of history, because this is about history and it's about
Speaker 1: the future governance of our country. Whether Trump is indicted
Speaker 1: or not, he can still run for presidents. Now. I
Speaker 1: think it was a labor leader who was sent to
Speaker 1: prison and he ran for president and got one hundreds
Speaker 1: of thousands of votes. And other members have gone to
Speaker 1: prison and run for the House. There's no prohibition on that.
Speaker 1: But I do think it's still affect how history treats
Speaker 1: what happened on January sixth. And they've seen enough in
Speaker 1: the DC third, they've seen enough of these defendants, and
Speaker 1: they're pretty much familiar with the kinds of defenses and
Speaker 1: they're not very good defenses. And I think they've seen
Speaker 1: enough not to be particularly sympathetic. Now, if you knew
Speaker 1: the law, you would expect that, you know, if you
Speaker 1: knew the Nixon case, there there's only one a case
Speaker 1: like you got to be a super expert to understand
Speaker 1: that you cannot the president cannot conspire to commit a crime.
Speaker 1: And if like Nixon, he aids, and it bets that
Speaker 1: that then his testimony is relevant. So I would have
Speaker 1: said that Jack Smith would win, and I think I
Speaker 1: did at some point. But I think people think that
Speaker 1: the laws up for grabs now because there's so much
Speaker 1: uncertainty in general, not just about not about this particular doctrine.
Speaker 1: The speech and debate clause also adds another wrinkle, because
Speaker 1: that's if you're an expert in that, you think, oh, well,
Speaker 1: maybe it could apply. There's all sorts of reasons why
Speaker 1: you think it might apply, but it's just the facts
Speaker 1: that show you it doesn't. Because he's in the basement
Speaker 1: and he's not performing as legislative duties, that could be
Speaker 1: that wrinkle. And it's just the court has been doing
Speaker 1: things in general that makes people nervous about the rule
Speaker 1: of law. So they wonder whether Trump judges are going
Speaker 1: to give him a break. They wonder whether, you know,
Speaker 1: the law has somehow changed, And so I think it's
Speaker 1: you know, these judges are really in an interesting place
Speaker 1: today because they are worried, and that general uncertainty is
Speaker 1: what it has prompted Pence to be able to make
Speaker 1: these kinds of claims. So it didn't surprise me that
Speaker 1: Jack Smith would win. He also knows more than we know,
Speaker 1: so he knows the phone calls, he knows what other
Speaker 1: people have testified to that we don't know, and some
Speaker 1: of it may be particularly damning. I doubt it's in
Speaker 1: a book that Pence wrote. I think if these conversations
Speaker 1: that he already knows one side of the conversation from
Speaker 1: somebody else, and that person called Pence, that's relevant and
Speaker 1: I think they wanted to try, you know, for probably
Speaker 1: know it was some political gesture to be somewhat solicitous
Speaker 1: of the president, But as a ruling from a judge
Speaker 1: on this particular case at this particular time, it doesn't
Speaker 1: surprise me. Well, we'll find out in the coming days
Speaker 1: whether Pence will decide to appeal this ruling. Thanks so
Speaker 1: much for your insights. That's Professor Victoria Norris of Georgetown
Speaker 1: Law School. The US has taken its most forceful move
Speaker 1: yet to crack down on crypto exchange Binance Holdings and
Speaker 1: its chief executive officer, Chang Pen Chao. The Commodities Futures
Speaker 1: Trading Commission alleged in federal court in Chicago that Binance
Speaker 1: and it's CEO routinely broke American derivatives rules as the
Speaker 1: firm grew to be the world's largest trading platform. Joining
Speaker 1: me a securities law expert, Anthony Sabino of Sabino and Sabino.
Speaker 1: He's also a professor of law at Saint John's University.
Speaker 1: So Anthony, what is the CFTC charging Binance and it's
Speaker 1: CEO with well June. It's a pleasure to be on
Speaker 1: with you today. And I have to say my very
Speaker 1: first impression, and a very strong one, it is, is
Speaker 1: the massive allegations made here, the massive tome that has
Speaker 1: been filed by the CFTC. I mean that both quantitatively
Speaker 1: and qualitatively. First of all, this complaint filed by the
Speaker 1: Commodity's Futures Training Commission against Champenzau, Binance, etc. And also
Speaker 1: their compliance officer Samuel Limm, or more properly former compliance officer,
Speaker 1: is simply massive. It's seventy four pages. And that's significant
Speaker 1: because if you look at it when the SEC file
Speaker 1: it's civil complaint against FTX, that was only about twenty
Speaker 1: eight pages. The entire criminal complaint, and I mean the
Speaker 1: superseding indictments again, Samuel Benkman freed bowed by the Department
Speaker 1: of Justice here in New York US Attorney so the
Speaker 1: district that was less than a dozen pages. So the
Speaker 1: mere quantity pages tells you a lot. Secondly, in terms
Speaker 1: of quality, this again reflects a very in depth investigation
Speaker 1: here with the most serious of allegations. And what struck
Speaker 1: me is this the Commission knows specifically many times that
Speaker 1: there has been, as they caresorize it, a lack of cooperation,
Speaker 1: a lack of forwardness, of openness with Binance. But yet
Speaker 1: if you look towards the latter half of the complaint,
Speaker 1: there are very detailed allegations apparently based upon transactions with
Speaker 1: certain trading firms, and the trading companies are not named
Speaker 1: per se, but they called trading from ab etc. And
Speaker 1: one can only surmise. And again I admit this is
Speaker 1: a guest, but I would hope it educated guests. Is
Speaker 1: that that information was revealed to the CFTC by virtue
Speaker 1: of the Commission going after these trading partners account holders
Speaker 1: with Binance, who basically will probably front was a choice
Speaker 1: aid to cooperate fully with CFTC or be implicated yourselves.
Speaker 1: And I think it's fairly clear that they got a
Speaker 1: lot of information from outside sources, but in addition to that,
Speaker 1: they still a substantial amount of information that came from
Speaker 1: within Banance, although it was probably extracted with a great
Speaker 1: deal of difficulty. But essentially what the Commission is looking
Speaker 1: for here is at the very end okay, the werefol
Speaker 1: closers were called. The bottom yfe of the commission is this.
Speaker 1: They want to very much put Banans out of business
Speaker 1: within the United States, Okay. They want an injunction to
Speaker 1: shut them down for the US operation. They want to
Speaker 1: scorgement of all profits that finance is made, which allegedly
Speaker 1: open the many millions of dollars. They want a restitution
Speaker 1: for customers, and they basically want to make sure that
Speaker 1: Banan as presently constituted, cannot do business in the crypto
Speaker 1: space at all in the United States of America. So
Speaker 1: these are very severe allegations. And again, given the very
Speaker 1: international scope is painted so well by the sea of
Speaker 1: seeing the complaints, Banance might very well, okay, continue to
Speaker 1: do business in other parts of the world. But if
Speaker 1: this comes to its ultimate conclusion the way the CFTC
Speaker 1: wants it, all right, they will be absolutely forbidden from
Speaker 1: doing business or let me rephrase, legally doing business within
Speaker 1: the United States of America and with the importantly American customers.
Speaker 1: So let me understand something. Is Bonance allowed to trade
Speaker 1: in the United States now or with US customers? Isn't
Speaker 1: that forbidden? That's correct, okay, and that's the crux of
Speaker 1: the complaints. Nance is unregistered with the Commodities Troops Trading Commission. Okay,
Speaker 1: they have not filed and not maybe appropriate regulatory filings registration.
Speaker 1: They have not complied with American law, with federal law
Speaker 1: that regulates commodities and encrypto he views the commodity here.
Speaker 1: So their transaction, if any United States with American based
Speaker 1: customers are absolutely illegal. But the crux of the complaint
Speaker 1: here from is well, you aren't registered, they're not authored
Speaker 1: through business in the US, but you've done it anyway,
Speaker 1: which is why we now want to take steps to
Speaker 1: utterly bar you from the United States. You've been doing
Speaker 1: business here you're not supposed to. So a let's get
Speaker 1: you out of the United States. Let's exclude you, okay,
Speaker 1: let's exalt you forever from our shores. But also to
Speaker 1: make sure you get out and stay out, we want
Speaker 1: massive financial penalties. So in essence by property from these
Speaker 1: violations of doing business in American when you're not registered, license,
Speaker 1: et cetera. We want to get all that money back
Speaker 1: and essens to make sure that crime does not pay
Speaker 1: in this participal expence. So binance, is it finance or binance?
Speaker 1: I always say finance, But okay, I think it's finance.
Speaker 1: I think it's fine. I have to you know, I
Speaker 1: thought I knew, and they were talking about it and
Speaker 1: I've forgotten. Okay, So anyway, finance finance. That's the way
Speaker 1: Finance said. Okay, So Finance said, We've made significant investments
Speaker 1: over the past two years to ensure we do not
Speaker 1: have US users active on our platform. But the CFTC
Speaker 1: said that Finance's own documents for the month of August
Speaker 1: twenty twenty showed the platform earn sixty three million fees
Speaker 1: from derivatives transactions, and then about sixteen percent of its
Speaker 1: accounts were identified as being held by US customers. Also,
Speaker 1: the complaint quoted text messages from the CEO, So it
Speaker 1: seems like the CFTC has evidence. Yes, And again one
Speaker 1: has to wonder where that Evans has come from. One
Speaker 1: for the moment, I would assume that the FFTC is
Speaker 1: active within the law, so I'm not going to question
Speaker 1: the resting of these allegations. And again let me praise
Speaker 1: it this way, these allegations, and we have to remember
Speaker 1: their allegations. It doesn't become fact or truth unless proven
Speaker 1: in the court of law, if indeed that they e
Speaker 1: becomes Nevertheless, just as allegations, these are the damning set
Speaker 1: of accusations share because what they're saying is we have
Speaker 1: this literal amount of evence And again this is why
Speaker 1: the mass of this complaint, Okay, the ship both of
Speaker 1: it at seventy four pages is amazing because again they
Speaker 1: quote text messages, emails, all these other chat wounds stuff
Speaker 1: directly coming from this to zang okay sometimes referred to
Speaker 1: with CZ the CEO and also the former CHIE compliance officer,
Speaker 1: mister Samuel Lynn, where basically they think that they are
Speaker 1: doing this Nance States with the most customers. Now, you
Speaker 1: mentioned and well said that the nance's position has been well,
Speaker 1: you know, we've instituted compliance programs, et cetera. However, the
Speaker 1: CFTC has fairly stridently said, okay, you've told us your compliant.
Speaker 1: But the truth of the matter is what you say
Speaker 1: and what the reality is are It's completely different. Okay,
Speaker 1: you claim to have compliance programs in but you don't.
Speaker 1: And furthermore, even though okay, your claims were following the law,
Speaker 1: you still have never registered with US, so you're still
Speaker 1: not authorized under the Commodity Exchange Act the CPA. And
Speaker 1: the bottom line is so without that registration and so forth,
Speaker 1: without filing accurate reports your truth. Also what I found,
Speaker 1: and I have to use the word stunning here. I
Speaker 1: don't need to be melodramatic, but I was stunned by
Speaker 1: this is the allegations and again their allocations. They're not
Speaker 1: the truth yet, but it's alleged that, among other things,
Speaker 1: financed deliberately and willfully okay, and especially with Missus Dao
Speaker 1: as the CEO, and the company self deliberately and willfully
Speaker 1: sought to disguise American customers US based customers so they
Speaker 1: would not appear to be from the US. They apparently
Speaker 1: had a category of what they called the v I
Speaker 1: P customers, whatever that means, but it also means that
Speaker 1: they essentially engaged in to be frank a subterfuge to
Speaker 1: shall we stay in or otherwise hints to US based entities. Look, okay,
Speaker 1: we can't do business with you as US based entity,
Speaker 1: but you should essentially disguise your identity. And now they
Speaker 1: get into all the lingual of VPN's virtual protocol network
Speaker 1: wherever it is, okay, but that the virtual address, but
Speaker 1: basically hiding their identities. And also something that again if true,
Speaker 1: is quite dam in itself, is the allegation where the
Speaker 1: HTC says that again you mentioned the sixteen percent, that's
Speaker 1: very significant because when you're talking sixteen percent of billions
Speaker 1: of dollars in trades, that's a lot of money. That
Speaker 1: is significant business. And it's been allege that on their
Speaker 1: various financial disclosures for lack of the better term, pie charts,
Speaker 1: et cetera, as we find again literally pie charts and
Speaker 1: grifts in the complaint that US based business US based customers.
Speaker 1: It's allows they deliberately obfuscated that by changing instead of
Speaker 1: US or USA put it under UNK and I don't
Speaker 1: mean United Kingdom UNK as an unknown. So there are
Speaker 1: again numerous allegations of all these artifices, all these devices
Speaker 1: where Banan knew they were dealing with parties in the
Speaker 1: United States, knew they weren't supposed to be transacted business
Speaker 1: for them, and they did it anyway. And then even
Speaker 1: as a subset but still damming allegations, they talk about
Speaker 1: the extension of margin trading leverage okay, which apparently BANCE
Speaker 1: encouraged amongst all customers, but also particularly with US based customers.
Speaker 1: And again that's something that's also extremely regulated. You and I,
Speaker 1: and you're sophisticated audience knows that if you're buying stocks
Speaker 1: on margin, okay, that's highly regulated by the SAC. The
Speaker 1: same essential principle applies to buy commodities, including crypto and
Speaker 1: addrivatives of crypto on the commodities exchanges. And since they
Speaker 1: did not comply at all with the rules regarding reporting leverage, etcetera, etcetera, Okay,
Speaker 1: that's a serious allegation. And once again it just gets worse.
Speaker 1: It goes from the fine pain as the fire. There's
Speaker 1: the allegations, not dissimilar to what we saw against FPX,
Speaker 1: that there were violation lack of compliance with the anti
Speaker 1: money laundry laws that AMLS has been known that basically
Speaker 1: are in place to make sure that terrorist organizations, criminal
Speaker 1: organizations are not transacting business are otherwise on the securities
Speaker 1: in commodities markets, things that have to be tracked to
Speaker 1: deter criminal or terroristic behavior. And again Banance is way
Speaker 1: out of compliance with that because they simply don't have
Speaker 1: any methodology in place. Now. Banance certainly says the opposite.
Speaker 1: I believe one of their other high ranking executives is
Speaker 1: quoted in the complaint of saying, only yet, but we've
Speaker 1: been working on this for years and we've done thustin
Speaker 1: soone they can progress, and we're going to continue to
Speaker 1: do so. But in essence, the retort from the commission
Speaker 1: it is, that's what you said, but that's not what
Speaker 1: you're doing. So you're out of compliance and you're not
Speaker 1: even trying. You say you've got something, but your controls
Speaker 1: are inconsequential, ineffective, and we said we don't biased if
Speaker 1: you know what, we gave you a chance. You haven't
Speaker 1: fixed it, all right, So if you can't fix it,
Speaker 1: you're out. Okay, we want to borrow you from the
Speaker 1: US forever. And once again, I think one of the
Speaker 1: most troublesome things you're hearing is the fact that these
Speaker 1: folks have allegedly been doing business in the US when
Speaker 1: they're not supposed to when they're unregistered, where they don't
Speaker 1: full reports, where they don't fall in the rules. But
Speaker 1: yet they've done it anyway, so they're already not supposed
Speaker 1: to be here. So in terms of like excluding them,
Speaker 1: it literally is the Commission, by virtue of injunctions, decrees,
Speaker 1: monetary penalties, they're speaking to expel the nance, if you will,
Speaker 1: from the US markets forever and ever. Do you see
Speaker 1: this the lawsuit being an attempt by the CFTC to
Speaker 1: assert its authority over the crypto trading world while it's
Speaker 1: in something of a petition with the Securities and Exchange
Speaker 1: Commission over crypto Unequivocally, yes, I'm not faulding the CFTC
Speaker 1: for following their statutory duty to police the commodities market,
Speaker 1: but there is definitely an element of competition with the SEC,
Speaker 1: if you will. In fact, at one point to complaint
Speaker 1: there's sub mention of icos Ico's initial corn offers. Now
Speaker 1: in more recent years, especially as Gary Densler has moved
Speaker 1: from CFTC chairman to SEC chairman, he said, Okay, icos
Speaker 1: are security, so therefore the SEC is going to regulate that.
Speaker 1: But once again, okay, the CFTC also would like to say, well, WAYMNT,
Speaker 1: what is you selling in the Ico. You're selling or
Speaker 1: you maybe selling the commodity that's our territory or turf.
Speaker 1: So definitely there is an element here of CFTC stame Look,
Speaker 1: crypto and crypto derivatives and so on and so forth.
Speaker 1: They are commodities. They're essentially of the same nature as
Speaker 1: you know pork bellies and gray and wheat and gold
Speaker 1: and silver which have always historically been regulated by the
Speaker 1: CFTC for its predecessors, and therefore it's our our sovereign
Speaker 1: duty to regulate that. And again I also know that
Speaker 1: our funds interest me that this case is filed in
Speaker 1: the Northern District, Illinois, in other words, Chicago, and that
Speaker 1: makes a lot of sense historically because the complaint specifically
Speaker 1: mentions the CBOE Chicago Board of Options and the CME
Speaker 1: Chicago Mercantile Exchange, because basically for all of American history,
Speaker 1: Chicago has been the heart of the commodities market in America. Again,
Speaker 1: that's not the Nine Mexican with the former Nine Mexican
Speaker 1: in New York. But the bottom line is, when there
Speaker 1: is wrongdoing in the stock market, the government goes to
Speaker 1: where the stock market is found Wall Street. So that's
Speaker 1: why those actions for example FTX and S and SBS
Speaker 1: Damon Backman freed, those will venue in the southern New York.
Speaker 1: But when you talk about commodities, the heart range of
Speaker 1: commodities is literally the American heart random that West Chicago.
Speaker 1: So that's why the CFTC filed there. Have no doubt
Speaker 1: not to mention the fact that the judges both at
Speaker 1: the District court level Northern District in Chicago and the
Speaker 1: Seventh Circuit Court of Appeals which sits in Chicago, they
Speaker 1: have enormous six piece with respect to the Commodities Exchange
Speaker 1: Act and enforcing those laws, in interdicating those cases and
Speaker 1: so forth. So essentially, not only is sticking out its
Speaker 1: own territory, making sure is being assertive with respect to
Speaker 1: commodities regulation, of which they say Crypto is a part of,
Speaker 1: They're also going to what in many ways is their
Speaker 1: home court. They're speaking home court advantage by going to
Speaker 1: the court that they are regularly in front of, that
Speaker 1: they know the judges, so on and so forth. But again,
Speaker 1: what you're indicating there, and I quite agree, is the
Speaker 1: fact that this is not the end of it, I
Speaker 1: would not be the least bit surprised to see the
Speaker 1: SEC also step in. And again one hopes that these
Speaker 1: two agencies work collaboratively and not competitively, all right, to
Speaker 1: stored out this mess and basically protect the integrity of
Speaker 1: the commodities market. So how does any agency regulate finance
Speaker 1: when the CEO ZAO has even avoided designating a corporate
Speaker 1: headquarters and said wherever he is, that's where the corporate
Speaker 1: headquarters is. So if it's crypto and they're not even
Speaker 1: located in a place, how do you control them? Exactly? Okay,
Speaker 1: And again you highlighted one of the more startling areas
Speaker 1: of the complaints, and I found this absolutely astounding. This
Speaker 1: zoo for example, Okay, his present location is not exactly specified.
Speaker 1: The complaint indicates, okay, a belief that he's currently in
Speaker 1: Dubai in the United Arab emirths. So he's beyond the
Speaker 1: reach of US law enforcements. Okay, As you noted, and
Speaker 1: this is one of the keys to the complaint here
Speaker 1: is that this entity right basically claims to be international
Speaker 1: and it refuses to give an address, and of course
Speaker 1: that is fatal to any attempt to be properly regulated
Speaker 1: and registered in the US as a commodit trading platform, okay,
Speaker 1: as a swap exchange, so on and so forth, because
Speaker 1: you have to provide the most pedestriate information. In other words,
Speaker 1: state this is where we are. Okay, hello, CFTC, this
Speaker 1: is where you can find us. Then you're mail to us.
Speaker 1: If you need to subpoena our records, if you need
Speaker 1: to crash our party and these our records, this is
Speaker 1: where you're going to find us. We need a physical location.
Speaker 1: So the fact that Banan refuses and apparently works very hard,
Speaker 1: it is very assiduous at working at making sure you
Speaker 1: can't find them. I think that speaks very much the
Speaker 1: fact that they're trying to evade the long arm of
Speaker 1: the law. Okay, and certainly with respect to mister Zao,
Speaker 1: I who have no expectation that this gentleman will ever
Speaker 1: ever spend five minutes in front of a US judge
Speaker 1: of before, because he's simply beyond our reach. That leads
Speaker 1: to very practical problem okay, of then how do you
Speaker 1: regulate these guys? I think the purpose of this complaint,
Speaker 1: among other things, is not just to enforce the law.
Speaker 1: Okay again, astudents allegations have proven true against mister Lynn
Speaker 1: Performance CEO, CCO compliance officer, against mister zao Is CEO,
Speaker 1: and against the entity itself. It's not just to basically
Speaker 1: exclude them exile them from the US. I think it
Speaker 1: also sent a powerful message to anyone who has done
Speaker 1: business with them as an accounts basically based because what
Speaker 1: says to meet you is gif you se say, look, okay,
Speaker 1: we're after Banans. If you've come business with them, you
Speaker 1: are next. If you are have an account with them,
Speaker 1: we can find you because you are US based, and
Speaker 1: we can shut you down. We know who you are,
Speaker 1: we know where you live, okay, and we can shut down.
Speaker 1: And again, even in a global economy that we have today,
Speaker 1: is we all well known We see this every day
Speaker 1: is the fact that money moves globally, but one of
Speaker 1: the places, one of the stops that makes constantly is
Speaker 1: within the US, especially in New York through the money
Speaker 1: main money center banks. So if you go to basically
Speaker 1: shut down Banance in the US, that means they can't
Speaker 1: access cash in the US or any of the kind
Speaker 1: of assets. They can't transact any business here, and certainly
Speaker 1: right now. If I was at any any bank, be
Speaker 1: it Major Mind or anywhere on the spectrum between, the
Speaker 1: bottom line would be, hey, okay, make sure we have
Speaker 1: nothing to do with Banance. And if we have a
Speaker 1: customer who's banking with us and they're doing business with Banans,
Speaker 1: we don't want to have these people's customers anymore. We
Speaker 1: don't want to be entangled with this mess, all right.
Speaker 1: So I think it's more a matter of again a
Speaker 1: powerful message to commodity treators put go creators, okay, legitimate
Speaker 1: and also maybe you let's call them some up borderline people,
Speaker 1: people in the gray area, basically saying, look, okay, even
Speaker 1: if mister Zoo is in a foreign nation, we can
Speaker 1: get him. We certainly know where you are and we
Speaker 1: can certainly get you. So okay, back off, get away
Speaker 1: from Banan, okay, because that's how we're going to shut
Speaker 1: them down by basically excluding their customer base. Okay, who
Speaker 1: in them off? If you will, fencing them off from
Speaker 1: yours customers, Thanks so much for lending us your expertise. Anthony,
Speaker 1: that's Anthony Sabino of Sabino and Sabino. And that's it
Speaker 1: for this edition of the Bloomberg Law Show. Remember you
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Speaker 1: week night at ten pm Wall Street Time. I'm June
Speaker 1: Grosso and you're listening to Bloomberg