Speaker 1: Hello, and welcome to another episode of The Mark Moss Show,
Speaker 1: where we talk about the decentralized revolution, of course, each
Speaker 1: and every week, looking at through the lens of politics, finance,
Speaker 1: and technology, which of course technology is bitcoin and the
Speaker 1: decentralized technology that's bringing. Now I am sitting down today
Speaker 1: with a special guest, James Murphy. You can find him
Speaker 1: on Twitter at meta law Man on Twitter and um
Speaker 1: he's a securities lawyer. Now, I don't have a lot
Speaker 1: of lawyers on and securities lawyers, but you know, I've
Speaker 1: been talking extensively about the FTX situation that's that's happened there.
Speaker 1: I put out a video on YouTube talking about how
Speaker 1: I think we might have seen the last crypto bull run,
Speaker 1: and I said, because I think securities are going to
Speaker 1: finally kind of make their way into the space, which
Speaker 1: will stop a lot of this venture capital money that's
Speaker 1: created these kind of pump and dump situations that are
Speaker 1: going there. And I thought, hey, let's just talk to
Speaker 1: an sec lawyer about that. So James, so welcome to
Speaker 1: the show. Hey, Mark, I love your show. Thank you
Speaker 1: so much for having me on. I'm looking forward to
Speaker 1: the conversation. Now, I know you just wrote an article
Speaker 1: for Coin Desk and you were talking about UM things
Speaker 1: that you think Andrew Sorkin should be asking. UM, SBF,
Speaker 1: Sam Bankman freed. So for the audience that's not caught up,
Speaker 1: how could you have missed it by now f t X,
Speaker 1: the second largest cryptocurrency exchange, blew up. Um. It looks
Speaker 1: like clear cut fraud to me. I know that the
Speaker 1: security laws are in a little bit of gray area,
Speaker 1: but fraud has always been fraud. That doesn't change that
Speaker 1: in my opinion. UM. And instead of Sam Bankman Freed
Speaker 1: defrauding and now even admitting too in messaging UH in
Speaker 1: the last week or two that he's done these things
Speaker 1: that I think are fraud, Um, he's still walking around
Speaker 1: as a freeman. And even worse than that, he's going
Speaker 1: to go speak at an event I think set up
Speaker 1: by New York Times. UM. Sharing the stage with are
Speaker 1: criminals like Janet Yelling, Secretary of the Treasury, UH, Ben Affleck,
Speaker 1: H Zuckerberg, UH, Larry Fink from Black Rock, etcetera. So, UM,
Speaker 1: he's going to be interviewed by H Andrew Sorkin probably
Speaker 1: going to be given up a bunch of softball lobs
Speaker 1: that he can just knock out of the park, or
Speaker 1: he can spread some misinformation on and uh, James, I
Speaker 1: know you had written this article said here's what he
Speaker 1: should be asking. So walk us through some of that.
Speaker 1: To start out with, Yeah, well, uh, great lead up.
Speaker 1: I am interested in the world of digital assets and
Speaker 1: have been paying a lot of attention to you know,
Speaker 1: what looks like a number of dominoes that have fallen
Speaker 1: and will follow fall yet and there will be, of course,
Speaker 1: this impact on the overall market. Uh, and we can
Speaker 1: talk about that at great length. It's not just prices
Speaker 1: and viability of companies. But you know, when you have
Speaker 1: a spectacular collapse, it creates tremendous latitude for policy makers
Speaker 1: and regulators to go after everybody else. And so I
Speaker 1: think I buy a significant part of your thesis about
Speaker 1: what is to come. But in any event, with respect
Speaker 1: to SBF, I am pretty uh plugged into the ft
Speaker 1: X bankruptcy and what's going on there. And um, you know,
Speaker 1: he has tweeted a little bit in ways that are nonsensical,
Speaker 1: and I thought, Wow, if he's really going to answer
Speaker 1: questions of a legitimate reporter, wouldn't it be nice if
Speaker 1: some real tough questions were asked, UH, and so I
Speaker 1: started tweeting them out. You know, I said, hey, look,
Speaker 1: I've been doing this for thirty years. I've questioned con
Speaker 1: men many times, dozens of times, and other kinds of fraudsters.
Speaker 1: Here's how I would go about it. And so I
Speaker 1: started putting out some of these questions on Twitter. And
Speaker 1: then all of a sudden last night, UH, an editor
Speaker 1: at coin Desk called me and said, we like what
Speaker 1: you're doing. Can you put this into a format that
Speaker 1: we can run it on on coin Desk? And I said, yeah,
Speaker 1: I would do that under one condition. And my condition
Speaker 1: is I want that out there in public before this
Speaker 1: interview of SPF happens. And so it's out there, people
Speaker 1: are talking about it. And so if I did want
Speaker 1: to make it harder for Andrew Ross Sorkin to throw softballs,
Speaker 1: there's now quite a little tiny army. You have a
Speaker 1: huge following. I've got a microscopic following because I just
Speaker 1: started Twitter or two months ago. But they're they're pretty
Speaker 1: worked up. They do not want softballs thrown because many
Speaker 1: of them have lost their life savings, and so questions
Speaker 1: like hey, Sam, you understand that the terms of service
Speaker 1: for your platform, f t X say very clearly the
Speaker 1: assets that customers deposit on f t X are the
Speaker 1: property of the customer and not the property of f
Speaker 1: t X. It's in black and white, a simple statement
Speaker 1: in their terms of service. You took that money that
Speaker 1: didn't belong to you and shifted it over to your
Speaker 1: hedge fund, Alameda, you understand, I'm sure that action is illegal, right,
Speaker 1: So you know this is why I am certain that
Speaker 1: any lawyer he has is has strongly advised him not
Speaker 1: to answer any of these questions. But I've seen this before,
Speaker 1: and you've seen it before. These con men who are
Speaker 1: really really smooth, slippery, whatever, believe that they and convince
Speaker 1: the whole audience about totally different narrative that is not
Speaker 1: rooted in the facts. And so that's I'm afraid he
Speaker 1: may try that. They want to win in the court
Speaker 1: of public opinion. Um, not in law, but in public opinion.
Speaker 1: So let's let's talk about some of this. So I
Speaker 1: know your securities, attorney, but to the point that you made,
Speaker 1: you've interviewed lots of people, con men and mobsters, et cetera.
Speaker 1: So um, let's talk about some of these things. Because
Speaker 1: some people I can't believe it. People that known people
Speaker 1: in the space are saying, well, you know this happened
Speaker 1: in in this gray area, that these aren't really security
Speaker 1: so maybe it wasn't really illegal. But to your point,
Speaker 1: I believe fraud is always fraud. And so if you
Speaker 1: said in the terms that these are your deposits, but
Speaker 1: then I take those and use them for my own use,
Speaker 1: misappropriating them to the words you used, regardless of what
Speaker 1: type of asset that is, isn't that still considered fraud,
Speaker 1: which is still considered illegal. Yes, okay, and you don't
Speaker 1: and you rarely get unequivocal answers from any lawyer, But
Speaker 1: the answer your question is yes. If you are a
Speaker 1: valet at a fancy restaurant and somebody hands you the
Speaker 1: keys to your to their car, it doesn't become the
Speaker 1: valet's car to do whatever they want with it. But
Speaker 1: if the valet takes that car, it goes and crashes it,
Speaker 1: he doesn't hand the keys back and say, hey, you know, sorry,
Speaker 1: stuff happens. No, that's a crime. What what what just
Speaker 1: happened there? That's a criminal offense. When you when you
Speaker 1: when you give your money to the bank, though that
Speaker 1: money is not yours anymore. They owe you that money,
Speaker 1: and there's a legal difference. And I thought that it
Speaker 1: might be the same with these crypto exchanges, where once
Speaker 1: you give it to them, they owe it to you
Speaker 1: and it's not actually your property anymore. But you're saying
Speaker 1: that's not the case in f t X. Now you're
Speaker 1: getting somewhere, Mark, What you just described is the situation
Speaker 1: at Celsius, and in terms of service are very very
Speaker 1: clear that it is like the bank paradigm. You give
Speaker 1: us the money, then we you know, you are our
Speaker 1: credit or we owe you that money, but we take
Speaker 1: dominion over that money and lend it out to other people,
Speaker 1: just like a fractional reserve model of a bank. F
Speaker 1: t X was different. Coin base is different. Uh in
Speaker 1: saying no, that's not our money, that's your money, and
Speaker 1: you are the one who has complete control and all
Speaker 1: ownership rights over that money when you deposit it here.
Speaker 1: We cannot borrow it from you and lend it or
Speaker 1: spend it, you know, in some other way. That's a
Speaker 1: that's a point and distinction. That's a big point. I'm
Speaker 1: gonna cut you off right there, James. You're listening to
Speaker 1: the Mark mos Show. UM in the studio with James Murphy.
Speaker 1: He is an attorney and we're talking about the f
Speaker 1: t X situation, the blow up, the biggest blow up
Speaker 1: in the cryptocurrency space right now, the second largest cryptocurrency exchange,
Speaker 1: and we're talking about some of the legality of what's
Speaker 1: going on with this. Uh, if you've got money in
Speaker 1: the crypto space, you want to hear what we are
Speaker 1: going to talk about next. So don't go away. Um again,
Speaker 1: just listening to the Mark mo Show talking about the
Speaker 1: decentralized revolution and the f t X blow up. We're
Speaker 1: back with more in a minute. Don't go away, We
Speaker 1: right back. All right, welcome back. If you're just tuning in,
Speaker 1: you're listening to the Mark Moss Show. I'm sitting down
Speaker 1: with attorney James Murphy talking about f t X, the
Speaker 1: second largest cryptocurrency exchange that blew up and disappeared with
Speaker 1: people's money and a lot of people say there's maybe
Speaker 1: some gray air there, and I'm talking to an attorney
Speaker 1: about that. So, James, before the break, you were saying
Speaker 1: how um Celsius and some of these other exchanges are
Speaker 1: are like a bank model where the money that's there is,
Speaker 1: actually there's and they owe it to But with f
Speaker 1: t X, UM they said that it was actually customer funds,
Speaker 1: and that changes things on what they're able to do.
Speaker 1: I'm guessing yeah very much so, yeah, very much so. Um,
Speaker 1: they cannot use the money to invest in something else.
Speaker 1: They cannot use your asset assets and UH lend them
Speaker 1: to UH traders who want to short assets. They explicitly
Speaker 1: cannot do that. And they of course can't just take
Speaker 1: the assets and give it to a different company to
Speaker 1: see if they can invest it profitably and put and
Speaker 1: then put it back later. Um. You know, that's how
Speaker 1: many Ponzi schemes evolve. Very often, a Ponzi scheme does
Speaker 1: not begin as a Ponzi scheme. The person who is
Speaker 1: at the heart of it believes they can earn a
Speaker 1: return on the money that they are receiving from investors,
Speaker 1: and when that proves them not be the case or
Speaker 1: not be reliably be the case, that's when they start,
Speaker 1: you know, taking new money to pay off old investors
Speaker 1: and they find themselves in an impossible spot of a
Speaker 1: of a Hanzi scheme. So the rules were really clear.
Speaker 1: F t X made the rules there Uh, there, there's
Speaker 1: no way to get around it. It is a very
Speaker 1: solid case of male fraud and wire fraud under US statutes. Yeah,
Speaker 1: now what about um, I'm guessing this is pretty big encompassing.
Speaker 1: But um, if we found out that there was customers
Speaker 1: had about one point four billion dollars worth of bitcoin
Speaker 1: that they had bought and that we're on the exchange,
Speaker 1: but then f t X actually had no bitcoin at all,
Speaker 1: So they sold one point four billion dollars worth a
Speaker 1: bitcoin to customers but actually didn't have it on their behalf.
Speaker 1: I mean, that's another big piece of fraud. I would imagine, yes,
Speaker 1: that that is fraud. So whether this is a flower
Speaker 1: like a tulip, or it's a share of stock like apple,
Speaker 1: or it's a cryptocurrency, it doesn't really matter what it is,
Speaker 1: it's still fraud and that's still illegal, right, That's right.
Speaker 1: People do really fixate on does this, you know, fill
Speaker 1: in the blink the f t T token qualify as
Speaker 1: a security. It's interesting, you know, if the answers yes,
Speaker 1: that means that the SEC could get involved to the
Speaker 1: extent that there are US citizens who are victims of
Speaker 1: of the you know, f t T fraud. Um, but
Speaker 1: they don't have to be that, the US prosecutors. It
Speaker 1: doesn't have to be a security. It's money, it's mail fraud,
Speaker 1: wire fraud, all day long. Yeah. Now, several of the
Speaker 1: questions that you had, UM that you that you hoped
Speaker 1: he just thought maybe they should ask him these questions.
Speaker 1: But some of these would be UM, missing money, so
Speaker 1: fifteen million that was suspiciously, suspiciously transferred from wallets, um,
Speaker 1: these loans that were issued to himself and other people,
Speaker 1: things like that, and so several of these questions basically
Speaker 1: hone in on that, like where is the money? Obviously
Speaker 1: we know lots of money is missing. Is there any
Speaker 1: reason why you would ask him specifically like hey, this
Speaker 1: money it was misappropriated? Like where is it? Yes, there
Speaker 1: there is, Mark, And this is part of my training, Uh,
Speaker 1: trying cases for for thirty years on cross examination, quite
Speaker 1: often you really don't care what the answer is. The
Speaker 1: entire point is the question itself. So that's why I
Speaker 1: was tweeting out these questions so people would be aware.
Speaker 1: Sam Bankman Freed personally borrowed one billion dollars from Alma Alameda,
Speaker 1: which is now bankrupt. Sam therefore owes Alameda a billion
Speaker 1: dollars which could pay off a lot of creditors. Sam's company,
Speaker 1: paper Bird, borrowed two point three billion dollars from Alameda,
Speaker 1: So we've got a total of three point three billion
Speaker 1: dollars that this guy borrowed. He needs to put it back.
Speaker 1: You know, we need to know where that is, because
Speaker 1: if you think about, uh, the entire context of the
Speaker 1: scope of the problem, three point three billion dollars would
Speaker 1: solve a significant chunk the entire problem. But who knows,
Speaker 1: you or you and I have no idea if he's
Speaker 1: lost the money gambling, or or it's it's on some
Speaker 1: ledger or treasure wallet hidden underground in a bunk or somewhere.
Speaker 1: You know, we don't know. The point of the questions
Speaker 1: was simply to communicate to the world these issues and
Speaker 1: what his answers are. You know, unless he surprises us
Speaker 1: and says, hey, James, thanks for asking, I can have
Speaker 1: that three point three billion back over to John Jay Ray,
Speaker 1: the new CEO, you know, in forty eight hours. I
Speaker 1: will say that the point is the questions themselves. So
Speaker 1: then the next question, which would be asking about which
Speaker 1: news organizations has he given money to? UM probably the
Speaker 1: answer again isn't isn't important as the question which you're
Speaker 1: just showing to the people, like, look, he bought off
Speaker 1: a lot of these people, would that be a fair
Speaker 1: assumption on that question as well? Yeah, well it's documented,
Speaker 1: you know, I've seen documentation. I'm not going to name
Speaker 1: him because I'm not sure of like three or four,
Speaker 1: but it's just the tip of the iceberg. So he
Speaker 1: can't say none. But he probably has done it so
Speaker 1: many times he doesn't even remember how many news outlets
Speaker 1: that are supposed to be objectively reporting on f t
Speaker 1: X and the boy wonder Sam may have been somewhat compromised.
Speaker 1: M hmm, yeah, definitely. And then of course all the
Speaker 1: ties with the political situation that we have, you know, uh,
Speaker 1: millions of dollars of their I know kind of had
Speaker 1: maybe some questions about that. He came out now and
Speaker 1: said that he actually gave money to Republicans as well,
Speaker 1: but he didn't want to say that because it would
Speaker 1: be looked at very bad. He only wanted to claim
Speaker 1: that he gave money to Democrats. However, lots of people
Speaker 1: have done diligence through open finance, and seeing that there
Speaker 1: has there was no money claimed. Is that an even
Speaker 1: bigger can of warms? Now to go open up? This
Speaker 1: is a can of warms. I get a lot of
Speaker 1: questions from people about this. It makes customers who may
Speaker 1: be out all of their money or a substantial portion
Speaker 1: of it makes them pretty mad that where did this
Speaker 1: money come from? Are those my assets? Um? And the
Speaker 1: thing about Democrat versus Republican, just to get some clarity
Speaker 1: on that, he gave two Democrats with a couple of exceptions.
Speaker 1: And those exceptions were Republicans who were willing to co
Speaker 1: sponsor his bill in Congress, and one of them was
Speaker 1: the Senator from Arkansas. Um, but it was, you know whatever, Democrats.
Speaker 1: His partner, however, UM, now I'm forgetting his name. It's
Speaker 1: something like salom A, who was the quote unquote president
Speaker 1: of f t X, was a Republican. He gave less,
Speaker 1: substantially less than than Sam, but he did give principally
Speaker 1: to Republicans. And so if you look at the overall
Speaker 1: organization there there it's you know, some bipartisan giving there.
Speaker 1: But to me, the most brilliant move he made was
Speaker 1: when he gave an interview and said, you know what
Speaker 1: I'm really thinking, I just might spend one billion dollars
Speaker 1: to get the Democratic candidate elected in think about that.
Speaker 1: They got to cut you off right there. You're listening
Speaker 1: to the Mark Moa Show. I'm talking with James Murphy,
Speaker 1: attorney about the ft X fiasco. I'll be back with
Speaker 1: more in a minute. Don't go away, we'll go back.
Speaker 1: All right. Welcome back. If you're just tuning in, you're
Speaker 1: listening to the Mark Moss Show. I'm sitting down with
Speaker 1: attorney James Murphy, securities attorney. We're talking about the ft
Speaker 1: X fiasco. And if you're just tuning in, we've been
Speaker 1: talking about a lot now. Right before the break, James,
Speaker 1: I had to cut you off. You were saying that
Speaker 1: one of the most brilliant things that he had done
Speaker 1: was saying that he was projecting he would give a
Speaker 1: billion dollars to two Democrats in the future. Um and
Speaker 1: why is that even the more an interesting piece? Well, um,
Speaker 1: so they certainly were grateful, you know, to receive five
Speaker 1: thousand dollars, twenty thousand dollars whatever individual congress people or
Speaker 1: their packs, whatever, um. But to say I will spend
Speaker 1: a billion this is unheard of. Basically, what he is saying,
Speaker 1: is I single handedly can push a candidate over the
Speaker 1: finish line? That is what a billion dollars could do.
Speaker 1: So think about it. This gives him a two year runway,
Speaker 1: how do you think Democrats will treat any human being
Speaker 1: who says, you know what, I may just give you
Speaker 1: all a billion dollars to spend as you see fit
Speaker 1: to elect your nominee. You know, he had meetings at
Speaker 1: the White House, he was calm, He was meeting privately
Speaker 1: with Converse people, meeting privately with Gary Gensler. He did well,
Speaker 1: He got a good return on investment of his money
Speaker 1: in the twenty two cycle. But to say you'll spend
Speaker 1: a billion was really a stroke of genius because nobody
Speaker 1: would say anything against him, nobody on the Democratic side
Speaker 1: for at least two years. Uh, if he was still
Speaker 1: able and not now kind of run out and the
Speaker 1: money now, I don't know if I don't know how
Speaker 1: much favors he's going to get anymore. Now, um let's
Speaker 1: jump to another another piece. So I put out a
Speaker 1: video on YouTube and then put out a with a
Speaker 1: thread on it, and basically I was making the case
Speaker 1: that uh, there would not be another crypto bull run
Speaker 1: and what I was talking about was if you look
Speaker 1: at and then you look at basically the entire cryptocurrency
Speaker 1: market cap went up. You could, you know, basically close
Speaker 1: your eyes and throw a dart um and and everything
Speaker 1: just went up at this crazy amount. And I was
Speaker 1: saying that most that you have to understand how the
Speaker 1: cryptocurrency market worked in order to understand why it may
Speaker 1: not happen again. And so a lot of people just
Speaker 1: looked at the headline. They didn't like that. But the
Speaker 1: part that I was talking about, James, was that most
Speaker 1: people don't know, but most of the cryptocurrency market was
Speaker 1: driven by venture capital money because they could get these
Speaker 1: tokens at extreme discounts and then instantly have liquidity and
Speaker 1: flipped them on the market onto retail at five, ten x,
Speaker 1: twenty x or whatever. They loved it, and then they
Speaker 1: spent all this money to then drive hype, including uh
Speaker 1: hundreds of millions of dollars in advertising on Google and
Speaker 1: mainstream media, et cetera. Obviously Super Bowl whatnot, and so
Speaker 1: they loved it. All the hype was built. People thought
Speaker 1: everyone was getting rich, but really it was just vcs
Speaker 1: driving this. Now, my assumption was that based off of this,
Speaker 1: and you kind of started talking about this in the beginning. Um,
Speaker 1: these big events that cause a lot of harm then
Speaker 1: allow governments to kind of run and maybe push policy.
Speaker 1: And if they push securities regulations on these tokens, then
Speaker 1: vcs can't keep doing what they've been doing, which would
Speaker 1: then drive up a lot of that capital. I'm not
Speaker 1: saying the technology goes away or that progress happens, but
Speaker 1: we maybe don't see these big bumps. So let's break
Speaker 1: that down little by little. So, UM, let's start with
Speaker 1: why these maybe securities? And there's four pieces of this.
Speaker 1: How we test? I mean, should we start there and
Speaker 1: kind of look at that. Are these token securities? Will
Speaker 1: the sec maybe cracked down on them as securities? Well,
Speaker 1: I can tell you they've hired so taking taking a
Speaker 1: step back. At my at my firm where I worked
Speaker 1: until eleven months ago, we had sixteen of our partners
Speaker 1: had worked at the SEC. We were constantly engaged to
Speaker 1: help people assess their risk that what they were doing
Speaker 1: was issuance of an unregistered security um and many of them,
Speaker 1: once they got our advice, many of them moved off
Speaker 1: shore to places like Estonia and the Isle of Man.
Speaker 1: Places I have not yet visited to do their their
Speaker 1: token offering, and then then they had to avoid issuance
Speaker 1: to um uh to US residents. UM. So the Howie
Speaker 1: test uh to me is a is an artifact. And
Speaker 1: I disagree with Gary Gensler when he goes on every
Speaker 1: show and says, I don't know why people are clamoring
Speaker 1: for new rules or clarity of rules. Nothing could be
Speaker 1: more clear. There's a case at the Supreme Court in
Speaker 1: nineteen forty six that deals with Orange Groves in Florida
Speaker 1: that clearly explains what a native token on a decentralized platform,
Speaker 1: whether that's a security to me, it's a non sequit,
Speaker 1: or it's ridiculous. It is square peg and round hole.
Speaker 1: And so now we have briefs. I filed these briefs
Speaker 1: where you try to apply the Orange Grove test to
Speaker 1: something that was not unheard of certainly in nineteen six,
Speaker 1: and I think that UM clearly the last two chairman
Speaker 1: of the SEC has said basically, everything they've seen is
Speaker 1: a security. Accept bitcoin and maybe accept ethereum. And so
Speaker 1: whatever the law is, that's a pretty interesting data point
Speaker 1: if you are in the business of minting tokens that
Speaker 1: the SEC has said those are securities. So one thing
Speaker 1: people miss they see these SEC enforcement cases against UM
Speaker 1: issuers of these tokens. What they miss is it is
Speaker 1: a crime in all fifty states to sell an unregistered security,
Speaker 1: which is what the SEC is saying. These things are
Speaker 1: people have gone to jail for selling unregistered securities. So
Speaker 1: the risk is quite significant, and so you have many
Speaker 1: many projects. It's it's astounding. Really, if you go on
Speaker 1: coin market cap mark you know this. There's was about
Speaker 1: to say twenty one, there's UH twenty two thousand tokens
Speaker 1: and the vast majority of them have the the inditia
Speaker 1: of securities UM. But you know what, in fairness, I
Speaker 1: what I would say is the how he tests is
Speaker 1: not a good test for what that these are securities.
Speaker 1: And the reason is that you do not gain an
Speaker 1: equity interest in the underlying UH operation. You don't have
Speaker 1: a right to any of the profits generated by If
Speaker 1: you GO Labs does a project that has a token
Speaker 1: associated with it, you don't own a fraction of UGA
Speaker 1: Labs and the vcs. To your point, the vcs have
Speaker 1: on occasion bought these tokens with the thought that you know,
Speaker 1: they'll rapidly appreciate due to some factor, either the success
Speaker 1: the underlying operation or you know, the rising tide of
Speaker 1: the alleged four year cycle. But really, the vcs are
Speaker 1: buying actual equity of the underlying companies, not just tokens
Speaker 1: where they have stock in these private companies. And when
Speaker 1: people talk about this or that is a unicorn worth
Speaker 1: a billion dollars, well, andreas in Horowitz was probably an
Speaker 1: early seed investor in the stock of that company. And therefore,
Speaker 1: should it get bought or go public on a stock exchange,
Speaker 1: and treason Horowitz will reap. You know what vcs look for,
Speaker 1: a hundred x return, a thousand x return, uh, something
Speaker 1: like that. So, um, this is a big topic. There
Speaker 1: are many conferences that deal only with this topic. A
Speaker 1: lot of token buyers think they're actually buying some interest
Speaker 1: in the underlying business operation, and they're they're certainly not
Speaker 1: doing that. Well. I would certainly agree that a hundred
Speaker 1: year old law about orange groves can't possibly work for
Speaker 1: something in the digital age. And so uh and and
Speaker 1: let me just set the record straight. I talked about
Speaker 1: my video and on my Twitter thread. Um, I am
Speaker 1: not for regulations. I think we should be free to
Speaker 1: do what we want with our money. And I don't
Speaker 1: need the government to protect myself. I actually be able
Speaker 1: to protect myself. So I just do want to say
Speaker 1: that as well. However, the law is what the law is,
Speaker 1: and so I want to dig into a couple of
Speaker 1: points on this how he tests and ask you about him.
Speaker 1: If you're just tuning in, you're listening to the Mark
Speaker 1: Moss Show. I'm sitting down with special guest James Murphy.
Speaker 1: He's at a securities in exchange SEC lawyer, and we're
Speaker 1: talking about kind of the ft X fiasco and what's
Speaker 1: happening in the aftermath of that. I want to ask
Speaker 1: him more about a couple of pieces of this, uh
Speaker 1: and then ask him for his crystal ball what's gonna
Speaker 1: happen next? You don't want to miss it, don't go away?
Speaker 1: Well right back, all right, welcome back. If you're just
Speaker 1: tuning in, you're listening to the Mark Moss Show, I'm
Speaker 1: sitting down with special guest James Murphy. He's the founder,
Speaker 1: was the founder and chairman of law for Murphy and
Speaker 1: McGonagall um, and he's the securities and exchange SEC attorney. Now, um, James,
Speaker 1: you had said, you know, this hundred year old law
Speaker 1: about such as orange Groves doesn't fit for digital assets.
Speaker 1: And but the one key piece I want to hit
Speaker 1: on is you said that UM, that's typically meant for
Speaker 1: um people who think they're buying an equity or some
Speaker 1: part of a share interest in a business. But when
Speaker 1: I read the four points, and I know these four
Speaker 1: points are broken down by another ninety eight points or
Speaker 1: something like that, But when I read just the four points,
Speaker 1: it says an investment of money, so I'm giving someone money,
Speaker 1: uh to in a common enterprise, so somebody, some sort
Speaker 1: of people are running this kind of a thing. But
Speaker 1: three an expectation of profit. So it doesn't say anything
Speaker 1: in there, and that I should have ownership. That's not
Speaker 1: listed in this at all. But it's did people buy
Speaker 1: it thinking they would get a profit? And UM, I
Speaker 1: guess you know. Now that's subjective. You have to go
Speaker 1: back and ask every single person in the world, why
Speaker 1: did you buy this? UM? But I think if you
Speaker 1: just google and I did this, if you just google,
Speaker 1: like uh, you know crypto or all coin, like, it's
Speaker 1: all is about investment. Like that's the number one keyword
Speaker 1: that matches up with that, and so they all bought it.
Speaker 1: I mean, whether you know people bought f t T
Speaker 1: token because they can get a discount of trading fees
Speaker 1: on f t T. That's not why they bought the token.
Speaker 1: They thought that token up in value, right, Like I
Speaker 1: get a discount at the grocery store when I type
Speaker 1: in my phone number. But I didn't buy anything to
Speaker 1: get that, because I don't think it's kind of go
Speaker 1: op in value. It's give me a discount. So anyway,
Speaker 1: I think that's what that expectation of profit. And so
Speaker 1: I guess the question is did people give up money
Speaker 1: and were they hoping into to a group of people,
Speaker 1: and we're they're hoping for it to go up in
Speaker 1: in profit, And I would guess the answer would be yes. Well,
Speaker 1: mark your take. I don't know if you you have
Speaker 1: you sound a little bit like a lawyer, but your
Speaker 1: take has prevailed almost everywhere, you know, so you're on
Speaker 1: the winning side of this argument. And Gary Gensler's argument
Speaker 1: that this is this old um test is the one
Speaker 1: we're going to use, and under that test, all of
Speaker 1: these tokens fail. So if if if, if hypothetically so
Speaker 1: I'm hey, you know, all these people that got Ato
Speaker 1: mad at me, they say, oh, Mark, you don't understand,
Speaker 1: like no one, they can't stop the progress. So yeah,
Speaker 1: So if I started a project and I created token,
Speaker 1: I didn't raise any money or I had had I
Speaker 1: had some early you know, friends and family rounds or
Speaker 1: some VC rounds, right, and we created the software, and
Speaker 1: then I decided to launch this token UM that was
Speaker 1: available UM and then maybe on a third party market,
Speaker 1: those tokens became valuable and there was some resell going on,
Speaker 1: But I wasn't actually selling those two people, and that
Speaker 1: would be totally different. I think it seems it's the
Speaker 1: very act of me trying to raise money for my
Speaker 1: common enterprise selling something. Is what kind of makes it
Speaker 1: that security? It's a it's ah yes, that's a telltale
Speaker 1: sign of a security. Uh. And it's in you know,
Speaker 1: the list of factors that have dribbled out from the
Speaker 1: SEC over the last uh you know, ten to twelve years.
Speaker 1: The way I look at it is everybody tries to
Speaker 1: apply the Howie facts and test to their circumstances of
Speaker 1: a token issue, and I would argue what we ought
Speaker 1: to is the reverse. Let's look at the situation of
Speaker 1: this token and see what it would mean to the
Speaker 1: orange grows. Here's what I mean by that. What if
Speaker 1: the investors in those orange groves did not acquire any
Speaker 1: acreage of the orange groves, just as token buyers acquired
Speaker 1: no property other than this ephemeral token. It doesn't represent stock,
Speaker 1: it doesn't represent a claim on profits. Let's say we
Speaker 1: took the facts of a token and put it into
Speaker 1: that case. All right, So the investors in that case
Speaker 1: now have no property. They own no orange grows. Secondly,
Speaker 1: let's take the of tokens where there is no income stream.
Speaker 1: There are a few out there that operate a little
Speaker 1: bit like a bond, but let's forget those and look
Speaker 1: at the Those also have no claim on the profits
Speaker 1: of the underlying business. So there is a business that
Speaker 1: runs this program called the Graph and there are graph tokens,
Speaker 1: And when you buy those Graph tokens, you don't own
Speaker 1: any of the underlying business and you have no right
Speaker 1: to their profits. So let's apply that to the orange grows. Now,
Speaker 1: not only do the investors have no property in Florida,
Speaker 1: they also have no right to split up the interests
Speaker 1: of the harvest each year. They don't get their percentage
Speaker 1: of the orange harvest. If that was the case, mark
Speaker 1: in of that situation with the orange groves, with those
Speaker 1: two factors, it's not that the government would lose that case.
Speaker 1: The government would never bring that case. That never he
Speaker 1: would have been brought. If the investors own nothing and
Speaker 1: have no rights to any harvest, there is no case.
Speaker 1: And so I'm arguing in the wind a little bit
Speaker 1: on on this score. And I will probably submit amikas
Speaker 1: briefs when the time comes, perhaps even in the ripple case.
Speaker 1: But I believe people are looking at it wrong and
Speaker 1: that you should take the facts from the token world
Speaker 1: and apply them back to that case, and and the
Speaker 1: and the result is that case would never have been
Speaker 1: brought because it would have no possibility of prevailing in court.
Speaker 1: So there is an argument on the other side. Your
Speaker 1: side has been winning and winning quite consistently. I don't
Speaker 1: want to say my side, because, like I said, I
Speaker 1: don't think we should even have I think we should
Speaker 1: just disband the SEC That would be my that would
Speaker 1: be my guess. They're supposed to protect consumers, but look
Speaker 1: how good of a job they're doing. Um. What I
Speaker 1: would say, though, is uh. And again I would ask, um,
Speaker 1: I believe that you have like court law, our precedents
Speaker 1: like this, how he is right, But the more times
Speaker 1: it's used than the stronger it gets. And it also
Speaker 1: starts to morphin evolve over time how it's being applied
Speaker 1: to other things. So I'm obviously not an attorney, don't
Speaker 1: listen to what I'm saying, and I'm just reading something
Speaker 1: off of investopedia here. But it doesn't say anything about
Speaker 1: applying it to an orange grove. I know it started
Speaker 1: from that case. Doesn't say anything about they owned it
Speaker 1: or whatever. It just says an investment of money with
Speaker 1: an expectation of profit and a common enterprise. So I
Speaker 1: would just go back to say, well, uh am I
Speaker 1: giving it? Why did these people give up money? They
Speaker 1: thought they were getting something back in return. But um,
Speaker 1: let let's get how about this? How about this mark?
Speaker 1: What if you go to a casino in Las Vegas
Speaker 1: and buy tokens and you're hoping that you can gamble
Speaker 1: those tokens and make more tokens and then go back
Speaker 1: and cash it in for money. Those aren't securities because
Speaker 1: you don't own part of the casino. You don't have
Speaker 1: an interest in whether that enterprise is successful. A better
Speaker 1: example would be like Chuck E Cheese. Right, so I
Speaker 1: go to Chuck E Cheese, I buy tokens and I
Speaker 1: don't have any control or interest in Chuck E Cheese.
Speaker 1: So maybe that's a good example. That isn't That's that's
Speaker 1: an example. Yeah, but depending there's utility tokens, utilitial tokens.
Speaker 1: You've heard of those. I think of UM airline mileage points.
Speaker 1: You know that you receive these, but you don't own
Speaker 1: any part of the airline, and you can use them
Speaker 1: for stuff. To me. To me, the difference would be
Speaker 1: and again I'm no attorney and I don't really want
Speaker 1: to be taking the SEC side of this, but for
Speaker 1: playing Devil's advocate, UM, the way that I would look
Speaker 1: at it is is if I'm going to Chuck E
Speaker 1: Cheese and I'm buying tokens to play video games, I'm buying,
Speaker 1: I'm buying the tokens, I'm playing the video games, and
Speaker 1: then I'm done. But Chuck E Cheese didn't do a
Speaker 1: I p O selling tokens to raise money to go
Speaker 1: build all the Chuck E Cheeses that you hope one
Speaker 1: day if they do a good job, they'll build the
Speaker 1: Chucky Jesus and at some point I could then go
Speaker 1: use them. So does it happen to do with like
Speaker 1: the proceed of funds kind of thing like, where like
Speaker 1: it's a it's a factor that the SEC definitely uses.
Speaker 1: And I would simply endorse what you said at the beginning.
Speaker 1: There's really nothing unusual about an old precedent kind of
Speaker 1: growing over time to accommodate new things. When you say that,
Speaker 1: you are, of course describing the United States Constitution. So
Speaker 1: there's no air travel at seven, you know, it's seventeen
Speaker 1: eighties and all these things. It had to adapt to
Speaker 1: new technology. But yes, I'm a little bit of a
Speaker 1: voice out in the wilderness here saying let's let's let's
Speaker 1: reconsider um whether it's really a good match for the
Speaker 1: Howie Howie tests. So now let's see how good your
Speaker 1: crystal ball is, and let's see, like where do you
Speaker 1: think this goes? So you you had made the case
Speaker 1: that you think that you know, now it's one I
Speaker 1: had at another video where like maybe this was a
Speaker 1: little bit intentional where he was taking all this money,
Speaker 1: he was then working with regulators to impose all these
Speaker 1: new regulations trying to almost kind of corner the market.
Speaker 1: Um now even with them being bust, it brings even
Speaker 1: more maybe potential firepower or attention that they could bring
Speaker 1: and try to push through all these regulations. So I
Speaker 1: guess the question I would ask is like, where does
Speaker 1: this go? Do you think that to the point you
Speaker 1: said that maybe this gives them some public attention they
Speaker 1: can now push through a lot of regulations. Do you
Speaker 1: think they'll start cracking down or do you think no,
Speaker 1: they probably are not cracking down because they know they
Speaker 1: don't have a good case and maybe nothing really will
Speaker 1: actually come of this. Well, I think a lot is
Speaker 1: going to come of it. And I put out a
Speaker 1: list of top ten winners and top ten losers as
Speaker 1: a consequence of the f t X implosion, and the
Speaker 1: number one winner was Gary Gensler. So Gary Ginstler has
Speaker 1: been getting some bad publicity because of this ripple k
Speaker 1: which he inherited from his predecessor. Jay Clayton is the
Speaker 1: one who authorized that lawsuit very shortly before he left office,
Speaker 1: so he knew he was gonna have nothing to do
Speaker 1: with it. The problem with that case is the public perception.
Speaker 1: The problem is there are a class of x RP
Speaker 1: holders who have intervened in the case. These are the
Speaker 1: ones who are supposedly injured, the ones that the SEC
Speaker 1: is supposed to be protecting. They've entered the case together
Speaker 1: in a class action to ask the SEC to stop
Speaker 1: what they're doing and stop destroying Ripple because they believe
Speaker 1: in it. They owned the token, they knew what they
Speaker 1: were doing when they got the token, and this is
Speaker 1: a big waste of time. We are not victims here,
Speaker 1: were good. We want you out of here. That is
Speaker 1: an uncomfortable spot SEC in our investment. We're hoping to
Speaker 1: get some money back out. Don't crush it to zero.
Speaker 1: Pre that that is precisely at mark. As you think
Speaker 1: about I know you're an investor, as you think about risk,
Speaker 1: um you know, categories of risk uh and counting them out.
Speaker 1: The biggest risk associated with Ripple is the government itself.
Speaker 1: It's not fraud or misconduct or the market uh, you know,
Speaker 1: reception to XRP or anything. It's the government is the
Speaker 1: risk factor. That's not how it's supposed to be. And
Speaker 1: what's weird And this sort of gets to your question,
Speaker 1: what's weird is everybody in crypto you know this I
Speaker 1: know this, everybody knows it. Of the twenty two thousand tokens,
Speaker 1: some of them are out and out frauds that where
Speaker 1: the people just issued a token, took the money and
Speaker 1: split at the top of that though, I would put
Speaker 1: XRP up there, e O s maybe the biggest four
Speaker 1: billion dollars they took and disappeared. But x r P,
Speaker 1: I mean they created a hundred percent of the tokens
Speaker 1: in a pre mine, and they just enriched themselves, and
Speaker 1: they spend it all in public policy and and uh
Speaker 1: most a lot of what I would consider fraud in
Speaker 1: a sense of promising things, promoting things that just aren't true.
Speaker 1: But they have created utility uh situations, banks have settled
Speaker 1: uh international remittances using ripple UM. So there's something there.
Speaker 1: I'm just saying, why don't you get the actual fraud
Speaker 1: people who had no intention of building something gross ones? Yeah,
Speaker 1: what about this case when the library? Um where that?
Speaker 1: I mean that obviously the ripple is sometime next year
Speaker 1: we'll find out. But library just got settled. Library created utility.
Speaker 1: They actually have a working product that actually people use
Speaker 1: my videos go on library or on Odyssey. Now, UM,
Speaker 1: I don't know if anybody used x RP, but they
Speaker 1: used library um, and they claim that they have utility.
Speaker 1: And the judge said, there's no tribal defense for that,
Speaker 1: being a uh, that's what that's the words that wording
Speaker 1: that he used, Um, no tribal defense for that, Like
Speaker 1: it's a security black and white. What does that have
Speaker 1: an effect on potentially with ripple and other things. Well,
Speaker 1: that had a ripple effect. Um. So yeah, all the
Speaker 1: lawyers in the business were passing around that decision when
Speaker 1: it came out, and you know what you'll hear people say, Look,
Speaker 1: it's one judges decision. What matters, what constitutes a precedent
Speaker 1: is a decision of an appellate court. And so we
Speaker 1: have all all these courts of appeal throughout the United States,
Speaker 1: and then the Supreme Court sits on top of that,
Speaker 1: and there are you know a lot of judges who
Speaker 1: get things wrong, mostly get things right, and so people
Speaker 1: will disregard a single judges opinion and what matters are um,
Speaker 1: what appellate courts say. And so I got this question
Speaker 1: on Twitter yesterday about what do you think is gonna
Speaker 1: happen on Ripple? And I said, what I think is
Speaker 1: gonna happen. Is everybody's gonna overreact whether it's a win
Speaker 1: or a loss, because what this judge has to say
Speaker 1: about it is really not going to be that important.
Speaker 1: There are two more layers of appeals. What an appellate
Speaker 1: court says about this and eventually the Supreme Court, that's
Speaker 1: what will matter. But people will overreact. And what is
Speaker 1: that overreaction gonna look like? You could see a lot
Speaker 1: of other tokens get delisted in a hurry. Then the
Speaker 1: liquidity fall fall out of bed and therefore, if you
Speaker 1: can't sell a token easily, the value is gonna plummet um,
Speaker 1: So there would be I would expect significant market fall
Speaker 1: out if it's a you know, full on win in
Speaker 1: for the SEC at the trial level. When you said
Speaker 1: it was a win for Gary Gensler, Uh, you thought
Speaker 1: he would be the biggest winner from this, you said, um,
Speaker 1: And it is he the biggest winner because he got
Speaker 1: it inherited this horrible case. But now it gives him
Speaker 1: some leverage on that. Is that why you were saying
Speaker 1: he might be the biggest winner. No, I was saying
Speaker 1: it because there were people pushing back, you know, politically
Speaker 1: on regulation of the space and pushing back on his
Speaker 1: enforcement efforts because he picked one with with a bunch
Speaker 1: of people who do not view themselves as victims. But
Speaker 1: I'm getting, you know, direct messages from people who are
Speaker 1: extremely distraught that they then wiped out as a consequence
Speaker 1: of the f t X complosion. So having a million,
Speaker 1: you know, victims and a lot of bad stories clears
Speaker 1: away a lot of opposition in Congress and in the
Speaker 1: media of who's the good guy who's the bad guy? Here?
Speaker 1: There's a lot of Hey, I told you so, I
Speaker 1: told you if they didn't come in and register with
Speaker 1: the SEC, this sort of thing could happen. And now
Speaker 1: it's happened. And now we need two things. We need
Speaker 1: draconian legislation to regulate the heck out of this thing.
Speaker 1: And I'm going to use my you know, much much
Speaker 1: larger enforcement staff to bring a bunch more cases. And
Speaker 1: my fear is that they're gonna decide to go after
Speaker 1: domestic exchanges on the ground crypto exchanges on the grounds
Speaker 1: that they are trading unregistered securities. It is just as
Speaker 1: illegal to facilitate a trade of an unregistered security as
Speaker 1: it is for you or me to sell an unregistered security.
Speaker 1: That we own and sell it to somebody else. That's illegal.
Speaker 1: Arranging for that to happen is also illegal, and so
Speaker 1: I will not be shocked. And Geinstler was gonna set
Speaker 1: we'll be able to say. Look at a hundred quotes
Speaker 1: in the New York Times over the last two years
Speaker 1: in the Wall Street Journal where I have said, hey, exchanges,
Speaker 1: you're trading unregistered securities. You need to come in and
Speaker 1: register with the SEC, and they have not done that.
Speaker 1: And so one could wake up one day and there
Speaker 1: be at a court order that fill in the blank
Speaker 1: exchange must cease and desist trading in one or many
Speaker 1: tokens that the SEC is very confident they would win
Speaker 1: uh in in establishing that it's a security under the
Speaker 1: Howie test. So he doesn't need to go file lawsuits
Speaker 1: against twenty thousand cryptocurrencies. He could just go after the
Speaker 1: three or four biggest exchanges in the US and he
Speaker 1: could just kind of take it right there, right, And
Speaker 1: I think you're aren't you one of the self custody keeps,
Speaker 1: you know, no keys, No, I am, yeah, yeah, Well
Speaker 1: you've had a big I told you so over the
Speaker 1: last few days. So um to kind of again try
Speaker 1: to clear up your crystal ball a little bit, like,
Speaker 1: how do how do you think this plays out? Do
Speaker 1: you think that, um, you know, maybe we kind of
Speaker 1: wait and see he builds up some strength and then
Speaker 1: we'll see what happens with Ripple. I think what Q
Speaker 1: two of next year? Or do you think maybe the
Speaker 1: more likely chances that he might just go after a
Speaker 1: couple of exchanges and kind of do something there, or
Speaker 1: do you think just government bureaucracy gets in the way
Speaker 1: and we go another couple of years and nothing really happens.
Speaker 1: I think he would really really like to have a
Speaker 1: positive ruling in Ripple that he could use all around
Speaker 1: the country. I do know they have many many cases
Speaker 1: in the hopper that they have investigated that are pretty
Speaker 1: close to ready to go, ready to file in court. Um,
Speaker 1: I don't know, don't have a crystal ball about whether
Speaker 1: he's gonna wait. I doubt that he's gonna wait. You know,
Speaker 1: the iron is kind of hot now. People are angry.
Speaker 1: He's got Elizabeth Warren and in this congressman, I don't
Speaker 1: know if you know him, Brad Sherman's from California. Yeah,
Speaker 1: So they're just, you know, absolutely thrilled by this f
Speaker 1: t X collapse in our demanding action immediately. Um. And
Speaker 1: so whether that can meander through Congress or not yet
Speaker 1: to be determined. But I think you are going to
Speaker 1: see significant enforcement actions in and I hate to say
Speaker 1: it really but because it's will be really bad to
Speaker 1: the whole ecosystem, but I could see a case against
Speaker 1: and it's change coming in now. Um. Yeah, just to
Speaker 1: clarify something you said, so Sherman and Elizabeth Warrent trying
Speaker 1: to push new laws or new regulations through Congress because
Speaker 1: laws have to be set through Congress. The SEC just
Speaker 1: would enforce laws, right, So they're an enforcement agencies. They
Speaker 1: would enforce laws already there, so they don't need to
Speaker 1: go pass new laws to just go enforce what they
Speaker 1: think they already have. Those are two different things, Okay,
Speaker 1: it correct? So yeah, I mean you could see laws
Speaker 1: that say all digital assets or securities. You know, then
Speaker 1: we don't have to bother with the Howie test and
Speaker 1: everybody's dead, you know, all all everything's dead. Um, and
Speaker 1: just for the just for the crypto bros. They're like, no, no,
Speaker 1: they can't stop. This is progress. Well, it doesn't mean
Speaker 1: that these companies can't exist. It just means they have
Speaker 1: to just file the securities, which people do every single day. Right. Um, No,
Speaker 1: not that easy. It's not It's not easy at all.
Speaker 1: I mean it's expensive and as I made the case
Speaker 1: in my video, it's expensive and there's lots of discol
Speaker 1: closures and there's all types of things that you have
Speaker 1: to do. Um, it's not that easy. It's PI. Yes, yeah,
Speaker 1: it's complicated. So it is expensive for sure. But once
Speaker 1: you are a registered UM issue of securities like a
Speaker 1: any stock any company trading on the NASDAC or New
Speaker 1: York Stock Exchange or whatever, it's a whole new ball
Speaker 1: game in terms of how you run that company. You
Speaker 1: become subject to controls requirements in Sarbanes Oxley that mean
Speaker 1: you're going to have to double your head count immediately
Speaker 1: in order to generate the UM data and test the
Speaker 1: data rigorously in order for it to percolate up to
Speaker 1: accounting so that people can sign off on quarterly financials
Speaker 1: that must be reported to the SEC into the public
Speaker 1: every quarter in ten queues. It's it's uh. And then
Speaker 1: you know, the compensation of the top five executives in
Speaker 1: the organization needs to be approved every year by the
Speaker 1: by the shareholders. It's it's a radically different looking proposition
Speaker 1: once you are a public entity and your securities are
Speaker 1: listed with the with the SEC, the registered with the SEC.
Speaker 1: So it definitely slows things down, to say the least. Yeah, well,
Speaker 1: you know, on the bright side, I guess you know,
Speaker 1: instead of twenty two thousand projects there, you know, there
Speaker 1: might be fifty or something that are really you know,
Speaker 1: valuable and and and good projects or maybe less, I
Speaker 1: don't know where it is a you know, an income
Speaker 1: and perhaps profit generating enterprise. Then they could do it,
Speaker 1: and you know, the rest would simply fall apart. But
Speaker 1: if they have useful technology or intellectual property, it would
Speaker 1: be acquired by the survivors. And that's why I look
Speaker 1: at this is a little bit of a deja vous
Speaker 1: potential to the nineteen nineties when they're all these young
Speaker 1: kids who quit there what they were doing at Harvard
Speaker 1: and m I T And Stanford and all congregated in
Speaker 1: one spot called Silicon Valley to build businesses on an
Speaker 1: emerging technology called the Internet. And so now we have
Speaker 1: the same thing. We have an emerging technology called blockchain technology,
Speaker 1: and people like Vitalic and all the rest of them
Speaker 1: are dropping out of school or dropping whatever else they
Speaker 1: were doing to work on projects. Well in the nine nineties,
Speaker 1: most of them failed, but some of them succeeded spectacularly.
Speaker 1: And if I were to have a crystal ball, that's
Speaker 1: my guests as to what this crystal ball would tell
Speaker 1: me that we're going to find some really innovative, durable
Speaker 1: survivor from uh this shakeout that is caused both by
Speaker 1: market conditions, the crypto winner vcs pulling out and the
Speaker 1: government cracking down. That's quite a trifectorate. So you should
Speaker 1: see a lot of projects go away and the strong
Speaker 1: survive hopefully if we're still in a capitalistic system. I
Speaker 1: agree with that you can't stop progress. I'm super bullish
Speaker 1: on humanity and entrepreneurs um. The one thing I would
Speaker 1: just say, and it's a good parallel that you drop,
Speaker 1: is all those people went to Silicon Valley and they
Speaker 1: started all these companies, and they raised money through friends
Speaker 1: and family and and through early VC rounds. And there's
Speaker 1: nothing stopping from people building on blockchain technology and raising
Speaker 1: money through friends and family and VC rounds. It's the
Speaker 1: selling of the token that seems to be the sticking point.
Speaker 1: So no reason why you can't still go build on
Speaker 1: the technology, and no reason why you can't still raise
Speaker 1: money from your friends and family and from from venture
Speaker 1: capitalist et cetera. Um, that's how it's done the Internet days. Um,
Speaker 1: all these That's how Uber got started, it's how Instagram
Speaker 1: got started, and so you can certainly do that. Of course,
Speaker 1: me being in the bitcoin camp is I don't believe
Speaker 1: everything needs a token. So that's that's that's that's a
Speaker 1: whole different conversation. UM, I think we went we went
Speaker 1: pretty long here, James, a lot of really good information.
Speaker 1: I appreciate you taking the time and give me your
Speaker 1: professional and expert opinion on this stuff. UM. I know
Speaker 1: you're on Twitter, just kind of getting started. You said,
Speaker 1: you just kind of created your account, so everyone go
Speaker 1: give him a follow at Meta law Man m E.
Speaker 1: T A Metal law Man. You're listening to the Mark
Speaker 1: Mo Show. Thanks for tuning in. That's what I got