1 00:00:00,160 --> 00:00:02,560 Speaker 1: Hello, Welcome back to another episode of the Mark mos Show, 2 00:00:02,600 --> 00:00:05,320 Speaker 1: where we talk about the decentralized revolution, talking about the 3 00:00:05,360 --> 00:00:07,600 Speaker 1: way the world's changing. Of course, we always look at 4 00:00:07,600 --> 00:00:10,440 Speaker 1: through the lens of politics, finance, and technology, so you 5 00:00:10,480 --> 00:00:13,640 Speaker 1: have better context to what is going on. And I 6 00:00:13,640 --> 00:00:16,320 Speaker 1: want to run through some of the latest breaking news 7 00:00:16,360 --> 00:00:19,320 Speaker 1: headlines of the week because it has not been a 8 00:00:19,400 --> 00:00:21,959 Speaker 1: dull week. It's been making much job pretty easy. There's 9 00:00:22,200 --> 00:00:25,200 Speaker 1: actually there's plenty to talk about. The problem is there's 10 00:00:25,280 --> 00:00:26,960 Speaker 1: too much to talk about. Trying to narrow it down 11 00:00:27,000 --> 00:00:28,960 Speaker 1: to what we're going to talk about, but man, there 12 00:00:29,040 --> 00:00:30,920 Speaker 1: is so much going on. Of course, we've been talking 13 00:00:30,920 --> 00:00:34,640 Speaker 1: about the financial system melting down, the FED raising rates, 14 00:00:34,640 --> 00:00:38,120 Speaker 1: they're draining liquid o the system until something breaks like 15 00:00:38,200 --> 00:00:40,720 Speaker 1: the banks. Of course, the Bank's broke. We talked about 16 00:00:40,760 --> 00:00:43,240 Speaker 1: that last week. If you've missed that, go check it 17 00:00:43,240 --> 00:00:45,240 Speaker 1: out on the podcast. Just search the Mark Moss Show 18 00:00:45,240 --> 00:00:50,000 Speaker 1: on the podcast. But there's another thing at play here. 19 00:00:50,400 --> 00:00:54,280 Speaker 1: There's like this dangerous undercurrent that's going on. So while 20 00:00:54,320 --> 00:00:57,160 Speaker 1: everybody's witnessing the FED and all eyes are on the 21 00:00:57,160 --> 00:00:59,120 Speaker 1: FED and the raising rates, and then we're witnessing the 22 00:00:59,120 --> 00:01:02,720 Speaker 1: banks going down and SVB had to get billed out. 23 00:01:02,840 --> 00:01:05,640 Speaker 1: And then you know, now the Treasury and the FEDS 24 00:01:05,640 --> 00:01:07,800 Speaker 1: that are going to backstop all the deposits now Jane 25 00:01:07,880 --> 00:01:09,600 Speaker 1: Yell and the Treasury said they're not going to. And 26 00:01:09,600 --> 00:01:14,000 Speaker 1: there's all this, right, all this distraction going on, There's 27 00:01:14,000 --> 00:01:17,880 Speaker 1: like something else going on down below the surface, something 28 00:01:17,920 --> 00:01:22,920 Speaker 1: that's deeper and darker and more scary. Now, this week 29 00:01:22,959 --> 00:01:27,200 Speaker 1: came out this report called the Economic Report of the President. 30 00:01:27,800 --> 00:01:30,400 Speaker 1: It was a long report. I wouldn't necessarily recommend that 31 00:01:30,400 --> 00:01:32,640 Speaker 1: you read it unless you want to and carry some 32 00:01:32,760 --> 00:01:38,279 Speaker 1: brain damage. It's about almost four hundred and fifty pages long, 33 00:01:38,760 --> 00:01:40,720 Speaker 1: four and frety pages for the Report of the President. 34 00:01:41,280 --> 00:01:44,840 Speaker 1: The Year in Review, the Years Ahead, confronting new global 35 00:01:44,920 --> 00:01:49,480 Speaker 1: challenges with strong international economic partnerships. Investing in young children's 36 00:01:49,520 --> 00:01:53,440 Speaker 1: care and education. You already know what's happening to the 37 00:01:53,520 --> 00:01:55,600 Speaker 1: kids education at school. You don't want to know about that. 38 00:01:55,920 --> 00:02:01,080 Speaker 1: Chapter five, Building stronger post secondary institutions, So apply challenges 39 00:02:01,160 --> 00:02:05,880 Speaker 1: in the US labor markets. Man, this is all just simple. 40 00:02:06,000 --> 00:02:07,840 Speaker 1: Just tell the government to stop get out of this 41 00:02:08,120 --> 00:02:13,200 Speaker 1: competition in the digital economy, new technologies and old economics. 42 00:02:13,760 --> 00:02:21,119 Speaker 1: Chapter eight Digital Assets, Relearning, economic principles, relearning economic principles. 43 00:02:21,400 --> 00:02:22,880 Speaker 1: I think they're the ones that should go back and 44 00:02:22,919 --> 00:02:27,600 Speaker 1: relearn economic principles. Chapter nine Opportunities for better managing weather 45 00:02:27,720 --> 00:02:33,000 Speaker 1: risk in changing climates. And then there's some appendages Report 46 00:02:33,040 --> 00:02:36,079 Speaker 1: to the President on activities of the Council of Economic Advisors, 47 00:02:36,440 --> 00:02:41,320 Speaker 1: Statistical tables relating to income, employment, production, and more So, 48 00:02:41,800 --> 00:02:44,880 Speaker 1: while all of this, I like to think of it 49 00:02:44,919 --> 00:02:48,520 Speaker 1: like a magician. Right, most of you probably know. I 50 00:02:48,560 --> 00:02:51,000 Speaker 1: hate to ruin it for you, but magic isn't real. 51 00:02:51,960 --> 00:02:54,520 Speaker 1: It's slide of hand. Hey look over there while they 52 00:02:54,560 --> 00:02:56,280 Speaker 1: do something over here, And that's sort of like what 53 00:02:56,400 --> 00:02:58,560 Speaker 1: seems to be happening where all of this stuff is 54 00:02:58,560 --> 00:03:00,959 Speaker 1: going on. And in the meantime, I'm they're like trying 55 00:03:01,000 --> 00:03:05,040 Speaker 1: to ram a bunch of stuff through. Now. In the 56 00:03:05,080 --> 00:03:09,840 Speaker 1: previous segment, I talked about two different open source protocols, 57 00:03:09,840 --> 00:03:12,560 Speaker 1: a monetary protocol and an information protocol. It's going to 58 00:03:12,720 --> 00:03:17,720 Speaker 1: change the world. Closed systems are going to continue to 59 00:03:17,760 --> 00:03:20,880 Speaker 1: get more closed, but open systems are going to continue 60 00:03:20,880 --> 00:03:22,400 Speaker 1: to compete for those and we're going to move more 61 00:03:22,400 --> 00:03:24,359 Speaker 1: to the open systems. If you miss that, go check 62 00:03:24,360 --> 00:03:26,399 Speaker 1: out on the podcast player. Just search Mark Moss show 63 00:03:26,440 --> 00:03:28,960 Speaker 1: you can catch that. But going back to what the 64 00:03:29,000 --> 00:03:32,360 Speaker 1: government's doing. Something I've been talking about for a while 65 00:03:32,760 --> 00:03:35,600 Speaker 1: is this Operation Choke point two point zero as we're 66 00:03:35,680 --> 00:03:39,160 Speaker 1: labeling it. There was a one point zero. Lots of 67 00:03:39,200 --> 00:03:41,320 Speaker 1: people in the government got in trouble under Obama, the 68 00:03:41,360 --> 00:03:44,720 Speaker 1: Obama administration, Lois Learner I believe ahead of the IRS 69 00:03:44,800 --> 00:03:47,040 Speaker 1: had to step down and all these things. But in 70 00:03:47,040 --> 00:03:49,920 Speaker 1: this economic report, well so now with this choke point 71 00:03:49,960 --> 00:03:52,520 Speaker 1: two point zero, and it looks like through the fog 72 00:03:52,560 --> 00:03:56,040 Speaker 1: of war, there's a lot of casualties. So we had 73 00:03:56,040 --> 00:03:59,480 Speaker 1: this banking collapse, and it was silver Gate Bank, then 74 00:03:59,480 --> 00:04:03,720 Speaker 1: it was Silicon Valley Bank, and then it was Signature Bank, 75 00:04:04,160 --> 00:04:08,720 Speaker 1: the three s's. The one thing that seems to tie 76 00:04:08,800 --> 00:04:11,800 Speaker 1: all three of those together is that they were all 77 00:04:12,000 --> 00:04:16,279 Speaker 1: very crypto friendly banks. Silver Gate was one of the 78 00:04:16,400 --> 00:04:20,680 Speaker 1: main crypto banks SVB, which of course Silicon Valley Bank, 79 00:04:20,720 --> 00:04:24,280 Speaker 1: a lot of Silicon Valley was in crypto projects. And 80 00:04:24,320 --> 00:04:28,400 Speaker 1: then Signature Bank, which was another very crypto friendly bank. 81 00:04:28,480 --> 00:04:31,720 Speaker 1: Now why did those three banks go down? And we've 82 00:04:31,760 --> 00:04:34,960 Speaker 1: talked about it extensively. You know, they got a bunch 83 00:04:34,960 --> 00:04:38,680 Speaker 1: of money deposits because the FED created so much money, 84 00:04:38,320 --> 00:04:41,520 Speaker 1: their deposits swelled up. They put them into US treasuries. 85 00:04:41,720 --> 00:04:44,559 Speaker 1: The FED raised rates, the treasuries lost value. The banks 86 00:04:44,560 --> 00:04:50,120 Speaker 1: didn't have money. Somehow a bank run got triggered where 87 00:04:50,120 --> 00:04:51,680 Speaker 1: a lot of people wanted to go pull their money 88 00:04:51,720 --> 00:04:54,520 Speaker 1: at the bank. The banks didn't have it, And that's 89 00:04:54,720 --> 00:04:57,159 Speaker 1: the story that we're told, and that's actually what happened. 90 00:04:57,440 --> 00:05:00,000 Speaker 1: But why did those things happen is the better question 91 00:05:00,080 --> 00:05:04,040 Speaker 1: to ask. Why was there a bank run triggered on 92 00:05:04,200 --> 00:05:08,200 Speaker 1: SVB putting out on all the other banks. Every bank 93 00:05:08,320 --> 00:05:10,760 Speaker 1: is in the same situation. This is not just unique 94 00:05:10,760 --> 00:05:13,120 Speaker 1: to those banks. They're all in the same situation. So 95 00:05:13,200 --> 00:05:16,320 Speaker 1: why was there a bank run? Now, you know, I'm 96 00:05:16,360 --> 00:05:19,080 Speaker 1: no stranger of dipping my toe in the conspiratorial waters, 97 00:05:19,120 --> 00:05:21,880 Speaker 1: if you will, because I'm trying to make sense of 98 00:05:21,920 --> 00:05:25,280 Speaker 1: all this and I just don't understand why those banks 99 00:05:26,200 --> 00:05:29,160 Speaker 1: got attacked. And like I said, it just so happens 100 00:05:29,200 --> 00:05:34,320 Speaker 1: that the three of them were very heavily into cryptocurrency companies. 101 00:05:34,560 --> 00:05:37,800 Speaker 1: Now into that after the two thousand and eight banking collapse, 102 00:05:37,960 --> 00:05:39,480 Speaker 1: there was a whole bunch of new regulations that were 103 00:05:39,520 --> 00:05:42,360 Speaker 1: put in place. One of them was called the Dodds 104 00:05:42,440 --> 00:05:46,400 Speaker 1: Frank Act, and one of the original writers of that, 105 00:05:46,400 --> 00:05:52,400 Speaker 1: Bill Dodds, put put out an article saying that he 106 00:05:52,880 --> 00:05:56,719 Speaker 1: doesn't understand why and regulators at the FDIC didn't understand 107 00:05:56,800 --> 00:06:01,520 Speaker 1: why Signature Bank was taken over. It wasn't insolvent. There 108 00:06:01,600 --> 00:06:04,080 Speaker 1: was no reason why I should be taken over. So 109 00:06:04,839 --> 00:06:07,320 Speaker 1: why was it taken over? Why was it taken over? 110 00:06:07,360 --> 00:06:09,839 Speaker 1: The other two Signal two s banks, Well, and they're 111 00:06:09,880 --> 00:06:12,120 Speaker 1: all related to crypto. Now, if we go back and 112 00:06:12,160 --> 00:06:15,039 Speaker 1: read this economic report of the President, it starts to 113 00:06:15,080 --> 00:06:17,960 Speaker 1: give us a little bit of a better picture. Now, 114 00:06:18,480 --> 00:06:22,080 Speaker 1: they had a very scathing report, let's say, to talk 115 00:06:22,080 --> 00:06:25,400 Speaker 1: about cryptocurrencies as a matter of fact. And of course 116 00:06:25,400 --> 00:06:30,960 Speaker 1: it came during this growing industry concern that federal regulators 117 00:06:31,000 --> 00:06:35,080 Speaker 1: are looking to debank these crypto companies. So you know, 118 00:06:35,120 --> 00:06:38,280 Speaker 1: the narrative that they're trying to control is that these 119 00:06:38,279 --> 00:06:41,240 Speaker 1: banks went down because they were doing risky crypto assets. Well, 120 00:06:41,240 --> 00:06:43,200 Speaker 1: first of all, they didn't lose money on crypto. They 121 00:06:43,240 --> 00:06:45,599 Speaker 1: lost money because they put their money into the US treasuries. 122 00:06:46,279 --> 00:06:48,480 Speaker 1: But it looks like part of this chokepoint, you bueno, 123 00:06:48,520 --> 00:06:50,920 Speaker 1: where they're trying to take away the banks that these 124 00:06:50,960 --> 00:06:53,960 Speaker 1: company us. Now, the report that this came out said 125 00:06:54,000 --> 00:07:00,600 Speaker 1: that many cryptocurrencies do not have a fundamental value. Okay, 126 00:07:01,000 --> 00:07:03,440 Speaker 1: well I would agree. Now, of course, I'm very clear. 127 00:07:03,600 --> 00:07:06,520 Speaker 1: I like to say bitcoin not crypto. What do I 128 00:07:06,520 --> 00:07:08,919 Speaker 1: mean by that, Well, I'm not saying that bitcoin is 129 00:07:08,920 --> 00:07:11,600 Speaker 1: not a cryptocurrency. What I'm saying is when I'm talking 130 00:07:11,640 --> 00:07:14,160 Speaker 1: about bitcoin, I'm talking about bitcoin only, and when I 131 00:07:14,160 --> 00:07:16,880 Speaker 1: talk about crypto, I'm talking about crypto everything else other 132 00:07:16,920 --> 00:07:19,880 Speaker 1: than bitcoin. So we always want to make those two 133 00:07:19,920 --> 00:07:24,320 Speaker 1: things very clear. But what is a fundamental value? Typically 134 00:07:24,400 --> 00:07:27,480 Speaker 1: you might consider that be called like an intrinsic value, 135 00:07:27,480 --> 00:07:31,240 Speaker 1: which there's no such thing as intrinsic value. All value 136 00:07:31,280 --> 00:07:33,840 Speaker 1: is subjective. But they say that it's argued that crypto 137 00:07:33,880 --> 00:07:38,000 Speaker 1: assets may provide other benefits, such as improving payment systems, 138 00:07:38,040 --> 00:07:41,640 Speaker 1: increasing financial inclusion, and creating mechanisms for the distribution of 139 00:07:41,680 --> 00:07:45,920 Speaker 1: intellectual property and financial value that bypass intermediaries that extract 140 00:07:46,000 --> 00:07:49,040 Speaker 1: value from both the provider and the recipient. Looking under 141 00:07:49,080 --> 00:07:52,160 Speaker 1: the hood at these arguments, however, shows a more complicated picture. 142 00:07:52,440 --> 00:07:55,880 Speaker 1: So far, crypto acids have brought none of these benefits. 143 00:07:56,480 --> 00:07:59,480 Speaker 1: End quote. That's what the report said. I talk about 144 00:07:59,520 --> 00:08:00,840 Speaker 1: this all the time. We're gonna get this a little 145 00:08:00,840 --> 00:08:02,720 Speaker 1: bit later when I can talk about some other news headlines. 146 00:08:03,840 --> 00:08:08,440 Speaker 1: The number one threat to our democracy, the number one 147 00:08:08,520 --> 00:08:10,960 Speaker 1: threat that they talked about a Davos in Switzerland at 148 00:08:10,960 --> 00:08:15,960 Speaker 1: the World Coming Forum in February is supposedly is misinformation 149 00:08:16,000 --> 00:08:20,200 Speaker 1: and disinformation. But the but the irony is that all 150 00:08:20,200 --> 00:08:22,640 Speaker 1: the misinformation comes from the government. I don't want to 151 00:08:22,640 --> 00:08:24,520 Speaker 1: say all. A good majority of it comes from the 152 00:08:24,560 --> 00:08:26,640 Speaker 1: government itself. So how can they go and say this, 153 00:08:28,720 --> 00:08:32,600 Speaker 1: How can they go and say this? So bitcoin hasn't 154 00:08:32,600 --> 00:08:36,280 Speaker 1: done anything to increase financial inclusion. It certainly helped in Africa. 155 00:08:36,360 --> 00:08:38,720 Speaker 1: Over eighty percent of all bitcoin transactions under a thousand 156 00:08:38,760 --> 00:08:40,800 Speaker 1: dollars are being done in Africa where they don't have 157 00:08:40,960 --> 00:08:44,480 Speaker 1: access to banking. It says that they said it could 158 00:08:44,520 --> 00:08:50,040 Speaker 1: bypass interminiaries that extract value. Well, that's being done. It's 159 00:08:50,480 --> 00:08:53,760 Speaker 1: it's doing payment remittances all over the world right now 160 00:08:53,920 --> 00:08:58,480 Speaker 1: and bypassing the extraction of these intimitaries. So it's doing that. 161 00:08:58,960 --> 00:09:01,800 Speaker 1: So looking under the hood, it shows that it's exactly done. 162 00:09:01,840 --> 00:09:04,559 Speaker 1: Just that they've nailed it exactly except for of course, 163 00:09:04,920 --> 00:09:07,080 Speaker 1: the Office of the President is lying to you. If 164 00:09:07,080 --> 00:09:08,840 Speaker 1: you're just tuning in to listen to the Mark Moss Show, 165 00:09:09,040 --> 00:09:11,880 Speaker 1: talking about, of course, the decentralized revolution, running through some 166 00:09:11,920 --> 00:09:14,800 Speaker 1: of the latest breaking news headlines of the week, and 167 00:09:14,920 --> 00:09:17,840 Speaker 1: looking at the attack on the banking sector and the 168 00:09:17,840 --> 00:09:20,200 Speaker 1: crypto sector. I got a very special guest coming up 169 00:09:20,480 --> 00:09:23,040 Speaker 1: when we come back, an SEC attorney. We're gonna talk 170 00:09:23,080 --> 00:09:25,520 Speaker 1: more about this attack. You don't want to miss this. 171 00:09:25,720 --> 00:09:28,079 Speaker 1: I'll be right back in a second. Don't go away, 172 00:09:29,000 --> 00:09:30,640 Speaker 1: all right, Welcome back. If you just tune in, you're 173 00:09:30,640 --> 00:09:32,839 Speaker 1: listening to the Mark Moss Show. Of course we're talking 174 00:09:32,840 --> 00:09:35,400 Speaker 1: about some of the latest breaking news headlines of the weeks, 175 00:09:35,440 --> 00:09:37,240 Speaker 1: you can understand what's going on. And before the break, 176 00:09:37,280 --> 00:09:41,400 Speaker 1: I was talking about how this banking crisis is all 177 00:09:41,440 --> 00:09:43,560 Speaker 1: the rage. Everyone's focused on that, but then there's like 178 00:09:43,559 --> 00:09:46,440 Speaker 1: these dangerous undercurrents at the same time. Some of it's 179 00:09:46,840 --> 00:09:49,720 Speaker 1: sparked by this economic report of the President that came 180 00:09:49,720 --> 00:09:52,760 Speaker 1: out and this kind of choke point two point zero 181 00:09:52,800 --> 00:09:54,960 Speaker 1: that I've been talking about. I have a very special 182 00:09:55,000 --> 00:09:57,439 Speaker 1: guest with me right now. I got James Murphy. You 183 00:09:57,480 --> 00:10:00,600 Speaker 1: can find them online at Meta law Man he has 184 00:10:00,640 --> 00:10:03,920 Speaker 1: a securities attorney, and we're going to talk about what 185 00:10:04,120 --> 00:10:07,200 Speaker 1: potentially is going on here now, James, I had you 186 00:10:07,240 --> 00:10:10,080 Speaker 1: on before, and you know, I was kind of talking 187 00:10:10,080 --> 00:10:12,040 Speaker 1: about how I thought we were going to continue to 188 00:10:12,040 --> 00:10:17,199 Speaker 1: see a massive push into more regulations on these crypto assets. 189 00:10:18,640 --> 00:10:20,840 Speaker 1: They would be labeled securities, and you know, I was 190 00:10:20,840 --> 00:10:23,440 Speaker 1: even going as far as saying as a category, we 191 00:10:23,559 --> 00:10:27,040 Speaker 1: might not see another bull run in cryptocurrencies again, not bitcoin, 192 00:10:27,600 --> 00:10:31,319 Speaker 1: and so far that seems to be what's happening. And 193 00:10:31,440 --> 00:10:34,000 Speaker 1: there's a lot of things happening really quickly. We're really 194 00:10:34,000 --> 00:10:37,360 Speaker 1: seeing the SEC step up enforcement. A lot of data 195 00:10:37,400 --> 00:10:40,280 Speaker 1: points that dig into. Let's start with one that that 196 00:10:40,320 --> 00:10:42,360 Speaker 1: broke this week that seemed to be really big and 197 00:10:42,400 --> 00:10:45,680 Speaker 1: it was coin base being hit with this wells notice. 198 00:10:46,840 --> 00:10:49,360 Speaker 1: Break that down for me a little bit. Yeah, sure, 199 00:10:49,800 --> 00:10:52,760 Speaker 1: So a wells notice is a standard part of the 200 00:10:52,800 --> 00:10:56,560 Speaker 1: process when you are under investigation by the SEC. It 201 00:10:56,679 --> 00:11:00,440 Speaker 1: typically comes near the end of the process US where 202 00:11:00,480 --> 00:11:04,160 Speaker 1: the staff within the Division of Enforcement, which is a 203 00:11:04,320 --> 00:11:09,520 Speaker 1: part of the SEC, says to the target of the investigation, 204 00:11:09,800 --> 00:11:14,480 Speaker 1: we the staff of Enforcement, intend to recommend to the 205 00:11:14,480 --> 00:11:19,760 Speaker 1: Commissioners that they approve a lawsuit against you. The purpose 206 00:11:19,800 --> 00:11:24,120 Speaker 1: of the wells notice that communication is to give the 207 00:11:24,160 --> 00:11:31,200 Speaker 1: target an opportunity to rebut the allegations of wrongdoing and 208 00:11:31,320 --> 00:11:36,600 Speaker 1: to convince the Commissioners not to follow the recommendation of 209 00:11:36,640 --> 00:11:43,360 Speaker 1: the Enforcement Division and instead decline to approve the lawsuit. 210 00:11:43,520 --> 00:11:48,320 Speaker 1: So that's where it is in the process. That's generally 211 00:11:48,360 --> 00:11:52,559 Speaker 1: near the end. There's been a couple weird things about 212 00:11:53,200 --> 00:11:59,960 Speaker 1: how this has happened. One, in the communication, the sec 213 00:12:00,720 --> 00:12:07,479 Speaker 1: declined to inform coin Base which tokens they believe our securities, 214 00:12:07,520 --> 00:12:12,840 Speaker 1: which tokens they're going to assert our securities in a 215 00:12:13,120 --> 00:12:16,600 Speaker 1: potential lawsuit. So that makes it a little difficult on 216 00:12:16,720 --> 00:12:20,680 Speaker 1: coin Base to rebut the contention if they're not told 217 00:12:21,240 --> 00:12:25,520 Speaker 1: which of the tokens are allegedly violative. Yeah, of course. 218 00:12:25,679 --> 00:12:28,240 Speaker 1: And the second weird thing about it is they only 219 00:12:28,280 --> 00:12:36,480 Speaker 1: took two depositions of uh, you know, executives at coin Base. 220 00:12:37,200 --> 00:12:41,120 Speaker 1: That's weird. I've handled many of these and you could 221 00:12:41,160 --> 00:12:44,960 Speaker 1: see dozens, particularly on a big case. You know, this 222 00:12:45,040 --> 00:12:47,719 Speaker 1: is to the advantage of the Division of Enforcement to 223 00:12:47,760 --> 00:12:51,400 Speaker 1: get people on the record under oath as much as possible. 224 00:12:51,960 --> 00:12:55,880 Speaker 1: So it feels, you know, I'm not representing anybody, and 225 00:12:56,000 --> 00:12:59,920 Speaker 1: it feels like it's a little bit rushed, even though 226 00:13:00,280 --> 00:13:03,160 Speaker 1: they've been threatening. Gary Gensler has been threatening to do 227 00:13:03,240 --> 00:13:07,679 Speaker 1: this for ever since he took office a couple of 228 00:13:07,720 --> 00:13:12,679 Speaker 1: years ago. So those are those are two unusual points 229 00:13:12,679 --> 00:13:15,319 Speaker 1: in and it's possible that the one or more of 230 00:13:15,360 --> 00:13:20,760 Speaker 1: the commissioners will be uncomfortable if the if the Division 231 00:13:20,840 --> 00:13:25,959 Speaker 1: Enforcement continues to refuse to say which tokens that are 232 00:13:25,960 --> 00:13:31,120 Speaker 1: listening on coin Base are securities? Yeah, do we know 233 00:13:31,200 --> 00:13:34,040 Speaker 1: that it's specifically about tokens that are listed that could 234 00:13:34,040 --> 00:13:36,560 Speaker 1: be securities? Or could it be because of like yield 235 00:13:36,600 --> 00:13:38,640 Speaker 1: products that they have some of that we've already seen 236 00:13:38,679 --> 00:13:41,600 Speaker 1: happen with Jim and I. Yeah, great question. I'll tell 237 00:13:41,640 --> 00:13:45,920 Speaker 1: you what. The disclosure by coin Base was the most 238 00:13:46,200 --> 00:13:50,760 Speaker 1: thorough disclosure I think I've ever seen of a Wells notice. 239 00:13:50,840 --> 00:13:55,960 Speaker 1: You know, actually, Mark, there's some disagreement at the securities 240 00:13:56,000 --> 00:14:00,240 Speaker 1: bar as to whether a public company is required to 241 00:14:00,440 --> 00:14:03,680 Speaker 1: disclose the fact that they have received a Wells notice. 242 00:14:03,880 --> 00:14:08,520 Speaker 1: It is the safer course of action to disclose by 243 00:14:08,520 --> 00:14:10,839 Speaker 1: a public company. But in any event, they went in 244 00:14:10,920 --> 00:14:14,840 Speaker 1: a great detail about the whole process leading up to 245 00:14:16,040 --> 00:14:18,520 Speaker 1: this wells notice and all of you know, there are 246 00:14:18,520 --> 00:14:22,080 Speaker 1: many interactions with the SEC trying to head this off, 247 00:14:22,400 --> 00:14:27,680 Speaker 1: trying to establish, you know, a regulatory framework that they 248 00:14:27,680 --> 00:14:30,720 Speaker 1: both could agree on. But in any event, they said it. 249 00:14:31,000 --> 00:14:35,000 Speaker 1: They said it's about some of the assets they have listed, 250 00:14:35,120 --> 00:14:39,400 Speaker 1: and it's about a yield product as well. And so 251 00:14:39,440 --> 00:14:41,720 Speaker 1: we've seen that kind of case before. So we kind 252 00:14:41,720 --> 00:14:43,680 Speaker 1: of know that we've seen what happened with Gemini. They 253 00:14:43,680 --> 00:14:47,440 Speaker 1: paid a fine, they listed it, they were kind of okay. 254 00:14:47,600 --> 00:14:50,680 Speaker 1: But now you're saying coinbase is saying it's actually because 255 00:14:50,680 --> 00:14:53,880 Speaker 1: of some assets. Would that be strange that gem and 256 00:14:53,960 --> 00:14:57,360 Speaker 1: I didn't get hit with assets that it has, it 257 00:14:57,480 --> 00:14:59,800 Speaker 1: only got the yield product. Would it be weird that 258 00:15:00,400 --> 00:15:02,400 Speaker 1: they already went after an exchange and only went after 259 00:15:02,480 --> 00:15:04,600 Speaker 1: yield and now they're going after an exchange for both 260 00:15:04,640 --> 00:15:06,200 Speaker 1: And would they then go back to Jim and I 261 00:15:06,280 --> 00:15:09,840 Speaker 1: or how does that work? Well, you know this fits 262 00:15:09,880 --> 00:15:16,200 Speaker 1: in the under the rubric of prosecutorial discretion. Now they're 263 00:15:16,240 --> 00:15:22,120 Speaker 1: not prosecuting crimes. The SEC prosecute civil claims against people, 264 00:15:22,200 --> 00:15:26,440 Speaker 1: not criminal, but they get to pick. Why did they 265 00:15:26,440 --> 00:15:28,760 Speaker 1: pick coin Base? I don't know, but you're one hundred 266 00:15:28,760 --> 00:15:33,760 Speaker 1: percent right. They could bring the identical case against Gemini 267 00:15:34,520 --> 00:15:37,440 Speaker 1: on listed assets if they want to take the position 268 00:15:37,520 --> 00:15:42,520 Speaker 1: that some of the tokens qualify as securities and therefore 269 00:15:42,520 --> 00:15:45,680 Speaker 1: they're running an unregistered securities It doesn't some of this 270 00:15:45,800 --> 00:15:48,920 Speaker 1: set precedent though, So like, for example, if they go 271 00:15:49,000 --> 00:15:52,680 Speaker 1: after coin Base for listing these tokens, but then Jim 272 00:15:52,680 --> 00:15:54,920 Speaker 1: and I has the exact same tokens listed. I mean, 273 00:15:54,960 --> 00:15:57,000 Speaker 1: wouldn't coin Base go Wait a minute, how come you 274 00:15:57,000 --> 00:15:59,160 Speaker 1: didn't go after them or vice versa, Like, I mean, 275 00:15:59,280 --> 00:16:02,840 Speaker 1: isn't there press there. Yeah, they don't have to go 276 00:16:02,920 --> 00:16:06,560 Speaker 1: after everybody at the same time for the same claim. 277 00:16:06,680 --> 00:16:10,040 Speaker 1: Your use of the word precedent is exactly right. I mean, 278 00:16:10,160 --> 00:16:14,280 Speaker 1: you would expect that if they win against coin Base, 279 00:16:14,320 --> 00:16:16,160 Speaker 1: and let's just make up a number. Let's say they're 280 00:16:16,240 --> 00:16:22,840 Speaker 1: ten tokens that a federal judge declares are securities that 281 00:16:22,920 --> 00:16:27,200 Speaker 1: have not been registered, then you would expect I don't 282 00:16:27,200 --> 00:16:30,120 Speaker 1: want to go too far, but you would expect that 283 00:16:30,280 --> 00:16:35,080 Speaker 1: other exchanges operating the United States might delist the very 284 00:16:35,080 --> 00:16:39,680 Speaker 1: same tokens very quickly. Yeah, they go, shoot, they may 285 00:16:39,800 --> 00:16:42,240 Speaker 1: they may be coming back to us. Yeah, I saw 286 00:16:42,280 --> 00:16:45,840 Speaker 1: that it was a coin Bas's statements that were prepared. 287 00:16:46,240 --> 00:16:49,480 Speaker 1: We prepared for this disappointing development, and they talked about 288 00:16:49,480 --> 00:16:51,920 Speaker 1: how they've tried over and over and over to kind 289 00:16:51,920 --> 00:16:54,280 Speaker 1: of get to get kind of approval and they just 290 00:16:54,320 --> 00:16:57,560 Speaker 1: got silence back. I'm curious. I know, we're seeing lots 291 00:16:57,560 --> 00:17:01,360 Speaker 1: of things. We saw then Just and Son was sued. 292 00:17:01,400 --> 00:17:06,679 Speaker 1: Tron was also sued for securities and mark of manipulation. Um, 293 00:17:06,720 --> 00:17:09,640 Speaker 1: so I guess they're saying the TRX and BTT are 294 00:17:09,720 --> 00:17:13,600 Speaker 1: under unregistered securities. So then I guess those tokens, if 295 00:17:13,600 --> 00:17:18,159 Speaker 1: they're listening on either of those exchanges within be a problem, right, Yeah, 296 00:17:18,200 --> 00:17:21,000 Speaker 1: it's it's got to be, uh, something that they would 297 00:17:21,000 --> 00:17:24,160 Speaker 1: be discussing in the in the compliance legal and compliance 298 00:17:24,160 --> 00:17:28,960 Speaker 1: function within every exchange. These developments they're they're they're following closely. 299 00:17:28,960 --> 00:17:33,800 Speaker 1: And I guess the biggest, most obvious example is XRP, 300 00:17:34,280 --> 00:17:38,000 Speaker 1: you know, and and when the sec went out after 301 00:17:38,640 --> 00:17:43,040 Speaker 1: ripple and uh the XRP token it did get delisted, 302 00:17:43,119 --> 00:17:46,840 Speaker 1: so um, yeah, they're paying attention. Yeah, if you just 303 00:17:46,840 --> 00:17:49,160 Speaker 1: tune in, you're listening to the Mark Moss Show, I'm 304 00:17:49,160 --> 00:17:51,800 Speaker 1: talking with James Murphy. You can find a mind online 305 00:17:51,840 --> 00:17:55,359 Speaker 1: at Meta law Man. He is a securities attorney, and 306 00:17:55,359 --> 00:17:58,240 Speaker 1: we're talking about some of the potential of what we're 307 00:17:58,280 --> 00:18:00,280 Speaker 1: going on Choke point two point zero, how the government 308 00:18:00,320 --> 00:18:03,480 Speaker 1: seems to be going after crypto banks and cryptocurrencies and 309 00:18:03,520 --> 00:18:06,320 Speaker 1: the sec is bringing enforcement action. We're gonna cover a 310 00:18:06,320 --> 00:18:07,639 Speaker 1: lot more when we come back. We're gonna take it 311 00:18:07,680 --> 00:18:10,200 Speaker 1: just a quick break, don't go away, We'll be right back. 312 00:18:12,640 --> 00:18:14,240 Speaker 1: All right, Welcome back. If you're just tune in, you're 313 00:18:14,240 --> 00:18:16,280 Speaker 1: listening to the Mark Moss Show. We're talking about, of 314 00:18:16,280 --> 00:18:19,160 Speaker 1: course each and every week, the decentralized revolution running through 315 00:18:19,200 --> 00:18:22,320 Speaker 1: some news and I'm joined by James Murphy. He's online 316 00:18:22,359 --> 00:18:25,200 Speaker 1: at Meta law Man, is a securities attorney, and we're 317 00:18:25,200 --> 00:18:28,479 Speaker 1: talking about some of these security issues and where that 318 00:18:28,520 --> 00:18:31,880 Speaker 1: puts the state of cryptocurrency. We talked about coin Base, 319 00:18:32,280 --> 00:18:34,640 Speaker 1: we talked about Tron. Another thing I want to ask 320 00:18:34,640 --> 00:18:38,320 Speaker 1: you about is the New York Attorney General. So we 321 00:18:38,359 --> 00:18:40,679 Speaker 1: know in the crypto space, New York is like the 322 00:18:40,800 --> 00:18:45,639 Speaker 1: most aggressive government state against cryptocurrency. They have kind of 323 00:18:45,680 --> 00:18:47,399 Speaker 1: had their own New York bit license that they've had 324 00:18:47,400 --> 00:18:50,280 Speaker 1: for a long time, so we know they're very restrictive. 325 00:18:51,480 --> 00:18:55,159 Speaker 1: But the New York Attorney General father the lawsuit against coucoin, 326 00:18:55,280 --> 00:18:59,760 Speaker 1: so another exchange, but also said that ethereum is a security. 327 00:19:01,160 --> 00:19:08,919 Speaker 1: What's going on with that's a that's a really really 328 00:19:08,960 --> 00:19:15,919 Speaker 1: good question. So that a little background. As you undoubtedly know, 329 00:19:16,960 --> 00:19:20,240 Speaker 1: Bill Henman, the head of corporate finance at the SEC, 330 00:19:20,520 --> 00:19:25,080 Speaker 1: years ago, said bitcoin is not a security, and athereum, 331 00:19:25,400 --> 00:19:27,440 Speaker 1: if it ever was, the security is no longer a 332 00:19:27,520 --> 00:19:30,720 Speaker 1: security because it had arrived at a sufficient level of 333 00:19:30,760 --> 00:19:34,320 Speaker 1: decentralization where it would make sense to apply the security's 334 00:19:34,359 --> 00:19:37,280 Speaker 1: laws anymore to ethereum. And that's kind of what everybody 335 00:19:37,320 --> 00:19:42,000 Speaker 1: thought was, you know, the SEC's position. But then when 336 00:19:42,080 --> 00:19:45,199 Speaker 1: Gary Gensler came in, you started hearing more of like, 337 00:19:45,560 --> 00:19:49,720 Speaker 1: is it is ethereum really in the clear here? So 338 00:19:49,760 --> 00:19:54,000 Speaker 1: what happened was a lawyer in San Diego sued the 339 00:19:54,200 --> 00:19:58,880 Speaker 1: SEC last November, asking a federal judge you'd simply declare 340 00:19:59,000 --> 00:20:04,320 Speaker 1: ethereum is not a security. The SEC countered and said 341 00:20:04,359 --> 00:20:07,440 Speaker 1: this case should be dismissed. There is no case or 342 00:20:07,480 --> 00:20:12,840 Speaker 1: controversy here. It's not right for any adjudication because get this, 343 00:20:13,480 --> 00:20:17,560 Speaker 1: we have not decided yet whether we think Ethereum is 344 00:20:17,600 --> 00:20:22,200 Speaker 1: a security is literally in a brief they file. Now, 345 00:20:22,520 --> 00:20:27,840 Speaker 1: in my opinion, that's embarrassing because Ethereum, you know, its 346 00:20:27,920 --> 00:20:34,040 Speaker 1: started eight years earlier, twenty fifteen, eight years, Yeah, that's right, um, 347 00:20:34,760 --> 00:20:37,240 Speaker 1: and they still hadn't made up their mind. That collides 348 00:20:37,960 --> 00:20:43,560 Speaker 1: with Gary Gensler's standard position that it is clear as 349 00:20:43,600 --> 00:20:48,119 Speaker 1: a bell under Howie, that these are all securities. You know, 350 00:20:48,160 --> 00:20:51,280 Speaker 1: what's a security, what's not is clear. And so for 351 00:20:51,320 --> 00:20:55,919 Speaker 1: the sec to say, we just haven't decided yet, and 352 00:20:55,960 --> 00:20:59,200 Speaker 1: they want to backpedal away from the Henman thing. So 353 00:20:59,760 --> 00:21:03,960 Speaker 1: that was embarrassing. That happened, you know, a few months ago. 354 00:21:04,680 --> 00:21:09,160 Speaker 1: And then suddenly the New York Attorney General instigates an 355 00:21:09,240 --> 00:21:16,040 Speaker 1: investigation of coucoin. They use an investigator in their office. 356 00:21:16,480 --> 00:21:18,719 Speaker 1: So there's an investigator signed to the New York Attorney 357 00:21:18,800 --> 00:21:22,399 Speaker 1: General's office and he was told go open an account 358 00:21:22,480 --> 00:21:25,480 Speaker 1: at coucoin, which doesn't have a bit license. It's an 359 00:21:25,520 --> 00:21:30,200 Speaker 1: offshore exchange from the Seychelles Islands. And he managed, as 360 00:21:30,200 --> 00:21:32,800 Speaker 1: a New York resident to get an account there, which 361 00:21:32,840 --> 00:21:36,879 Speaker 1: is a no no. And so they told him apparently 362 00:21:36,960 --> 00:21:43,320 Speaker 1: coucoin lists seven hundred tokens mark they told him go 363 00:21:43,440 --> 00:21:49,600 Speaker 1: buy atherium, so he bought ethereum, sold ethereum, therefore traded 364 00:21:49,640 --> 00:21:55,760 Speaker 1: ethereum as a New York resident. And that is now 365 00:21:55,800 --> 00:22:00,520 Speaker 1: the basis a basis for the lawsuit that a theory 366 00:22:01,200 --> 00:22:06,560 Speaker 1: is an unregistered security and coucoin was not properly licensed 367 00:22:06,760 --> 00:22:10,480 Speaker 1: in any event to deal with New York residents. But 368 00:22:10,560 --> 00:22:14,000 Speaker 1: the underpinning of the case is Ethereum is a security. 369 00:22:14,359 --> 00:22:18,919 Speaker 1: So one wonders if there was any communication between the 370 00:22:19,119 --> 00:22:23,640 Speaker 1: SEC and the New York Attorney General to instigate an 371 00:22:23,680 --> 00:22:29,640 Speaker 1: interesting timing in terms of let's go after ethereum specifically, 372 00:22:30,720 --> 00:22:36,280 Speaker 1: and by the way, coucoin. They served a subpoena on Coucoin. 373 00:22:36,520 --> 00:22:41,760 Speaker 1: Coucoin did not respond. The Attorney General believes and I believe, 374 00:22:42,040 --> 00:22:45,159 Speaker 1: that there's a good likelihood coucoin will not defend the case, 375 00:22:45,480 --> 00:22:48,399 Speaker 1: in which case the New York ag may find that 376 00:22:48,480 --> 00:22:51,600 Speaker 1: it's you know, it's got a clear fairway to get 377 00:22:51,920 --> 00:22:55,160 Speaker 1: you know, what they want. And that is a declaration 378 00:22:55,280 --> 00:22:58,520 Speaker 1: from a judge, a New York State judge that ethereum 379 00:22:58,600 --> 00:23:02,919 Speaker 1: is a security and boy mark that would be a 380 00:23:03,040 --> 00:23:07,080 Speaker 1: really really big deal when you consider, you know that 381 00:23:07,119 --> 00:23:09,680 Speaker 1: it's the second largest market cap and all of these 382 00:23:09,720 --> 00:23:14,359 Speaker 1: thousands of projects built on the Ethereum network. So a 383 00:23:14,400 --> 00:23:16,240 Speaker 1: couple questions I have with that. So one, you're saying 384 00:23:16,240 --> 00:23:19,240 Speaker 1: that if coucoin doesn't doesn't defend that, then nobody's left 385 00:23:19,240 --> 00:23:23,960 Speaker 1: to defend Ethereum except for the Ethereum Foundation. Okay, So 386 00:23:24,000 --> 00:23:25,760 Speaker 1: I mean so so people, I mean so somebody could 387 00:23:25,800 --> 00:23:29,440 Speaker 1: step up to defend ethereum. Potentially, absolutely could. And this 388 00:23:29,560 --> 00:23:33,760 Speaker 1: is for lawyers like me. This is fascinating because you 389 00:23:33,800 --> 00:23:38,359 Speaker 1: would think the talk and the Foundation would be all 390 00:23:38,400 --> 00:23:42,800 Speaker 1: over this because the stakes are enormous. Even though the 391 00:23:42,880 --> 00:23:46,000 Speaker 1: United States is just one country, it's a pretty important 392 00:23:46,080 --> 00:23:49,359 Speaker 1: country when it comes to you know, the digital asset 393 00:23:49,440 --> 00:23:52,920 Speaker 1: ecosystem and Ethereum in particular, and all of these thousands 394 00:23:52,960 --> 00:23:56,560 Speaker 1: of projects. So far, we haven't heard anything from them, 395 00:23:56,880 --> 00:24:01,120 Speaker 1: and they have a conundrum. Mark for the way is fascinating. 396 00:24:01,119 --> 00:24:03,879 Speaker 1: I don't know if it's fascinating to your audience, but 397 00:24:04,040 --> 00:24:08,879 Speaker 1: this is fascinating. If the tallic and the foundations step 398 00:24:08,960 --> 00:24:12,800 Speaker 1: in and defend the case, it helps the New York 399 00:24:12,840 --> 00:24:16,119 Speaker 1: Attorney in general to say, well, see see what I 400 00:24:16,160 --> 00:24:20,080 Speaker 1: mean is it is? Yes, it is centralized, There is 401 00:24:20,119 --> 00:24:24,399 Speaker 1: control here, you know exactly, and so they've got a 402 00:24:24,400 --> 00:24:26,560 Speaker 1: little bit of a conundrum here and have to make 403 00:24:26,600 --> 00:24:31,399 Speaker 1: a really important decision. Back to that Henman thing, is 404 00:24:31,440 --> 00:24:34,040 Speaker 1: it possible? It seems like it would be possible that, 405 00:24:34,800 --> 00:24:39,560 Speaker 1: to his point, potentially could have become decentralized enough, but 406 00:24:39,920 --> 00:24:43,080 Speaker 1: the merge seems to push it way back to being 407 00:24:43,080 --> 00:24:45,600 Speaker 1: centralized again. So it's is it possible that it did 408 00:24:46,320 --> 00:24:49,600 Speaker 1: go from centralized to decentralized but then also then went 409 00:24:49,680 --> 00:24:52,320 Speaker 1: back to being centralized because of the merge, a common 410 00:24:52,440 --> 00:24:57,080 Speaker 1: enterprise driving the results of you know, their labor and 411 00:24:57,440 --> 00:25:00,680 Speaker 1: because of the staking that they're doing. Okay, so I'm 412 00:25:00,720 --> 00:25:03,719 Speaker 1: not going to offer an opinion on that. What you 413 00:25:03,720 --> 00:25:06,960 Speaker 1: have just said is something that is a theory that 414 00:25:07,119 --> 00:25:12,960 Speaker 1: is definitely out there and being discussed. Now, I'm oh yeah, 415 00:25:13,000 --> 00:25:16,400 Speaker 1: oh yeah, yeah yeah. Well, I mean you've seen staking, 416 00:25:16,440 --> 00:25:19,240 Speaker 1: We've seen staking cases. That's why that's why krack And 417 00:25:19,440 --> 00:25:24,000 Speaker 1: took off. You know, their staking product was declared you know, 418 00:25:24,080 --> 00:25:27,560 Speaker 1: the contended by the SEC and that it was an 419 00:25:27,800 --> 00:25:33,200 Speaker 1: investment contract. And and so krak And said, uh, okay, 420 00:25:33,200 --> 00:25:35,240 Speaker 1: we're not going to defend it. Here's thirty million dollars 421 00:25:35,280 --> 00:25:39,199 Speaker 1: and we'll we'll stop doing this for US customers. I 422 00:25:39,200 --> 00:25:42,800 Speaker 1: tweeted that out that settlement and said Krackin agreed to 423 00:25:42,840 --> 00:25:48,000 Speaker 1: stop the staking staking program, and the CEO tweeted back 424 00:25:48,000 --> 00:25:50,560 Speaker 1: to me and said, well, to be clear, it's only 425 00:25:50,600 --> 00:25:53,200 Speaker 1: in the United States. The rest of the world will 426 00:25:53,240 --> 00:25:58,159 Speaker 1: continue as before, you know, with this staking program. And 427 00:25:58,200 --> 00:26:00,560 Speaker 1: so I think we're seeing a lot of that happening 428 00:26:01,040 --> 00:26:05,200 Speaker 1: where businesses are making a judgment that it's no longer 429 00:26:05,320 --> 00:26:09,080 Speaker 1: safe to engage in certain kinds of uh, you know, 430 00:26:09,119 --> 00:26:13,440 Speaker 1: cryptoactivities here in the United States with US citizens. If 431 00:26:14,359 --> 00:26:17,880 Speaker 1: if the state of New York were to win that lawsuit, 432 00:26:17,920 --> 00:26:20,000 Speaker 1: and if here and would be deemed a security by 433 00:26:20,040 --> 00:26:23,160 Speaker 1: in New York, what does that mean nationally federally? I mean, 434 00:26:25,480 --> 00:26:31,560 Speaker 1: oh boy, that you know, that's a that's a great question. Uh. 435 00:26:32,800 --> 00:26:37,360 Speaker 1: There is a premise in the US Constitution that other 436 00:26:37,359 --> 00:26:42,879 Speaker 1: states are supposed to respect the judgments of one state. 437 00:26:43,280 --> 00:26:45,080 Speaker 1: I don't know if you remember this, but a few 438 00:26:45,160 --> 00:26:50,919 Speaker 1: years ago there was you know, states began to change 439 00:26:50,920 --> 00:26:55,960 Speaker 1: their laws to accept and endure same sex marriage. And 440 00:26:56,040 --> 00:26:59,440 Speaker 1: so this is the same issue. Is if it's okay 441 00:26:59,480 --> 00:27:03,879 Speaker 1: in New y work, does Mississippi have to recognize, you know, 442 00:27:03,920 --> 00:27:07,000 Speaker 1: the same sex marriage. These are very two, two very 443 00:27:07,040 --> 00:27:11,719 Speaker 1: different things, but the legal concept is the same. So 444 00:27:12,119 --> 00:27:16,399 Speaker 1: I'm not going to say how that would definitely work out, 445 00:27:16,960 --> 00:27:20,280 Speaker 1: because of course, of course it hasn't. It hasn't spread 446 00:27:20,320 --> 00:27:23,240 Speaker 1: with like the marijuana laws for example, right, so it 447 00:27:23,640 --> 00:27:25,840 Speaker 1: doesn't always work out that way. But I'm curious if 448 00:27:25,840 --> 00:27:28,639 Speaker 1: that sets precedents for the SEC. But before you answer that, 449 00:27:29,480 --> 00:27:31,399 Speaker 1: I gotta we're gonna take a quick break. If you're 450 00:27:31,440 --> 00:27:33,320 Speaker 1: just tune in, you're listening to the Mark Moss Show. 451 00:27:33,720 --> 00:27:37,679 Speaker 1: We're talking about the cryptocurrency space, that the crackdown, the 452 00:27:37,760 --> 00:27:40,720 Speaker 1: choke point two point zero and what could happen with Ethereum, 453 00:27:40,880 --> 00:27:42,920 Speaker 1: we're gonna come back speculate with that a little bit more. 454 00:27:42,960 --> 00:27:44,840 Speaker 1: I'm gonna be right back with more talking about the 455 00:27:44,920 --> 00:27:47,880 Speaker 1: SEC enforcements on crypto. Don't go away, I'll be right back, 456 00:27:49,440 --> 00:27:51,000 Speaker 1: all right, Welcome back. If you just tune in, you're 457 00:27:51,000 --> 00:27:53,840 Speaker 1: listening to the Mark Moss Show, and I am joined 458 00:27:54,200 --> 00:27:57,800 Speaker 1: by with James Murphy. He's an securities attorney. You can 459 00:27:57,800 --> 00:28:01,160 Speaker 1: find him online on Twitter at Meta law Man. Now 460 00:28:01,240 --> 00:28:04,239 Speaker 1: we're talking about before the break, about if if the 461 00:28:04,280 --> 00:28:07,800 Speaker 1: state of New York deemed ethereum of security. What does 462 00:28:07,800 --> 00:28:10,040 Speaker 1: that do for other states? And you're saying sometimes states 463 00:28:10,119 --> 00:28:12,119 Speaker 1: kind of respect that, but maybe not always like we 464 00:28:12,119 --> 00:28:15,680 Speaker 1: saw with marijuana. But I'm curious what that means then 465 00:28:15,760 --> 00:28:18,679 Speaker 1: for the SEC. You know, going back to like precedents 466 00:28:18,680 --> 00:28:21,360 Speaker 1: and that sort of a thing. Does that we've seen 467 00:28:21,400 --> 00:28:23,000 Speaker 1: in the past, Like obviously, as I already kind of 468 00:28:23,040 --> 00:28:25,160 Speaker 1: opened up with, like New York has been very restrictive 469 00:28:25,200 --> 00:28:26,480 Speaker 1: and so a lot of things you can't do in 470 00:28:26,520 --> 00:28:27,920 Speaker 1: New York that you can do across the rest of 471 00:28:27,920 --> 00:28:30,560 Speaker 1: the country. So if they did that, would it be 472 00:28:30,600 --> 00:28:32,720 Speaker 1: sort of like always is well, new York's restrictive, you 473 00:28:32,720 --> 00:28:34,159 Speaker 1: can't do a theem in New York, which you can 474 00:28:34,160 --> 00:28:35,399 Speaker 1: do it to to the rest of the country. Or do 475 00:28:35,400 --> 00:28:38,880 Speaker 1: you think the SEC then probably picks that up? And 476 00:28:38,920 --> 00:28:42,320 Speaker 1: I know this is all speculative, Yeah, it is. So 477 00:28:42,640 --> 00:28:45,800 Speaker 1: the SEC, the New York AG is suing under a 478 00:28:45,880 --> 00:28:49,840 Speaker 1: New York statue you'd called the Martin Act, and its 479 00:28:50,480 --> 00:28:57,200 Speaker 1: requirements in order to prevail are are pretty easy to establish. 480 00:28:58,200 --> 00:29:02,320 Speaker 1: And so no other state has the Martin Act, So 481 00:29:02,400 --> 00:29:04,560 Speaker 1: that might be a little bit of a barrier for 482 00:29:04,840 --> 00:29:11,440 Speaker 1: recognition of an outcome where ethereum is declared a security, perhaps, 483 00:29:11,600 --> 00:29:17,480 Speaker 1: but the top appellate court in New York has said 484 00:29:17,520 --> 00:29:20,920 Speaker 1: that in New York state courts, we will look to 485 00:29:21,440 --> 00:29:26,320 Speaker 1: the federal law to determine whether there's a security here, 486 00:29:26,680 --> 00:29:29,480 Speaker 1: and so you will see in New York state cases 487 00:29:29,560 --> 00:29:33,320 Speaker 1: they're talking about the federal case, the Supreme Court case 488 00:29:33,360 --> 00:29:40,320 Speaker 1: of Howee. So you know it will be influential perhaps 489 00:29:41,080 --> 00:29:45,360 Speaker 1: and will certainly be cited by the sec in every 490 00:29:45,440 --> 00:29:48,400 Speaker 1: case if if they were to prevail. Now, one thing 491 00:29:48,440 --> 00:29:53,840 Speaker 1: I would say that makes this even more unusual is 492 00:29:54,240 --> 00:29:59,200 Speaker 1: there is a agency in New York that is responsible 493 00:30:00,160 --> 00:30:05,760 Speaker 1: or determining whether digital assets are securities and whether they 494 00:30:05,760 --> 00:30:08,680 Speaker 1: could be sold to New York residents. And that's not 495 00:30:08,720 --> 00:30:11,000 Speaker 1: the New York Attorney General. It's the New York Department 496 00:30:11,040 --> 00:30:14,600 Speaker 1: of Financial Services. The New York Department of Financial Services 497 00:30:14,720 --> 00:30:22,280 Speaker 1: granted bit licenses to Gemini, coin Base, PayPal, Fidelity and 498 00:30:22,480 --> 00:30:26,480 Speaker 1: others to permit them to trade a number of tokens 499 00:30:26,560 --> 00:30:30,200 Speaker 1: in fidelities cases just too bitcoin and ethereum, but all 500 00:30:30,240 --> 00:30:35,520 Speaker 1: of them we're specifically permitted by the regulator who's responsible 501 00:30:35,560 --> 00:30:39,440 Speaker 1: for making this decision. They were permitted to allow New 502 00:30:39,520 --> 00:30:43,280 Speaker 1: York residents to trade ethereum on their platform. So the 503 00:30:43,280 --> 00:30:49,040 Speaker 1: New York Attorney General's argument collides with this agency that's 504 00:30:49,080 --> 00:30:54,080 Speaker 1: supposed to be the expert on this question. So that's 505 00:30:54,120 --> 00:30:58,000 Speaker 1: a little weird and will be interesting to see if 506 00:30:58,000 --> 00:31:01,640 Speaker 1: the New York Department of Financial Services enters the fray 507 00:31:01,680 --> 00:31:03,880 Speaker 1: and says, hey, wait a minute, we looked at this 508 00:31:04,160 --> 00:31:10,440 Speaker 1: really hard. We have the most stringent requirements for permitting 509 00:31:11,080 --> 00:31:14,280 Speaker 1: trading of digital assets of any state in the United States, 510 00:31:14,400 --> 00:31:19,240 Speaker 1: for sure, and we permitted US trading of ethereum. We disagree. 511 00:31:19,680 --> 00:31:22,480 Speaker 1: It'll be interesting. It'll be political because it's New York, 512 00:31:23,040 --> 00:31:25,960 Speaker 1: but that's going to be interesting. Wow, that is interesting. 513 00:31:26,000 --> 00:31:27,560 Speaker 1: And then it looks like, I mean, I saw you 514 00:31:27,600 --> 00:31:30,080 Speaker 1: tweeted out earlier again check them out online apt meta 515 00:31:30,120 --> 00:31:32,040 Speaker 1: law man you tweeted out earlier back to this kind 516 00:31:32,040 --> 00:31:36,240 Speaker 1: of President's economic report, that there might be something in 517 00:31:36,320 --> 00:31:40,320 Speaker 1: there that might also help out some of these crypto 518 00:31:40,360 --> 00:31:43,400 Speaker 1: security things, regardless of the label used. A crypto asset, 519 00:31:43,440 --> 00:31:46,160 Speaker 1: maybe among other things, a security commodity derivative or another 520 00:31:46,160 --> 00:31:49,800 Speaker 1: type of financial product. Depend on the facts and circumstances. 521 00:31:51,160 --> 00:31:54,160 Speaker 1: So is that something else where now? Maybe potentially the 522 00:31:54,160 --> 00:32:00,480 Speaker 1: executive branch might also disagree with that. Well, I know, well, 523 00:32:00,520 --> 00:32:04,240 Speaker 1: I don't know. I presume that Gary Gensler is unhappy 524 00:32:04,760 --> 00:32:08,120 Speaker 1: with that language, and I'm a little surprised that it 525 00:32:08,200 --> 00:32:15,200 Speaker 1: was allowed in there because it significantly undercuts his position, 526 00:32:15,600 --> 00:32:19,360 Speaker 1: which is, all of these tokens, you know what, however 527 00:32:19,440 --> 00:32:23,080 Speaker 1: many there are now on coin marketcap, I have no 528 00:32:23,120 --> 00:32:28,440 Speaker 1: idea twenty three thousand or whatever. They're all securities under 529 00:32:28,600 --> 00:32:34,480 Speaker 1: my jurisdiction here at the sec except for bitcoin. And 530 00:32:34,800 --> 00:32:40,960 Speaker 1: so clearly that statement it collides with that point of 531 00:32:41,040 --> 00:32:44,920 Speaker 1: view and says, these digital assets, these crypto assets, could 532 00:32:44,960 --> 00:32:50,400 Speaker 1: be commodities, could be securities, could be other financial instruments, 533 00:32:50,840 --> 00:32:53,640 Speaker 1: or could be something else. Entirely, it was a it 534 00:32:53,760 --> 00:32:57,760 Speaker 1: was a non exclusive list of the options that these 535 00:32:57,840 --> 00:33:01,720 Speaker 1: things could be sorted into. And so that feeds into 536 00:33:01,920 --> 00:33:07,960 Speaker 1: an argument that most of these entities that have either 537 00:33:08,040 --> 00:33:11,480 Speaker 1: issued a token or trade tokens on a platform have said, 538 00:33:11,560 --> 00:33:14,400 Speaker 1: and that is, there's no clarity as to which of 539 00:33:14,480 --> 00:33:20,800 Speaker 1: these our securities. And that's required under our constitutional concept 540 00:33:20,840 --> 00:33:24,280 Speaker 1: of due process. You're supposed to know ahead of time 541 00:33:24,680 --> 00:33:30,840 Speaker 1: what is prohibited so that you can steer around stuff 542 00:33:30,880 --> 00:33:34,760 Speaker 1: that's forbidden, and I mean you can't go back and 543 00:33:34,840 --> 00:33:37,360 Speaker 1: like retroactively do things like that. Well, I mean you 544 00:33:37,440 --> 00:33:41,800 Speaker 1: think about that. Well's notice you know, they said, please, 545 00:33:42,160 --> 00:33:47,400 Speaker 1: you've completed here investigation, tell us which tokens are securities? 546 00:33:47,520 --> 00:33:51,160 Speaker 1: And their answers no, we're not. You know, you'll see 547 00:33:51,200 --> 00:33:54,080 Speaker 1: it in the complaint, I guess. And then in that 548 00:33:54,240 --> 00:33:58,400 Speaker 1: case in San Diego, I mentioned, hey, judge, the sec 549 00:33:58,600 --> 00:34:02,120 Speaker 1: will not tell me is ethereum of security? Please, I 550 00:34:03,040 --> 00:34:06,280 Speaker 1: you know, engage with the Ethereum network. I'm now speaking 551 00:34:06,400 --> 00:34:09,480 Speaker 1: as the plane. If there somebody's got to tell me 552 00:34:09,600 --> 00:34:12,200 Speaker 1: if this is illegal, if this is an unregistered security, 553 00:34:12,239 --> 00:34:14,440 Speaker 1: I need a declaration. And the response was, you know what, 554 00:34:14,560 --> 00:34:17,480 Speaker 1: we haven't made up our mind yet after eight years 555 00:34:17,680 --> 00:34:22,960 Speaker 1: of looking at it. So that's that is definitely inconsistent 556 00:34:23,440 --> 00:34:26,400 Speaker 1: with due process in this country. The problem that I 557 00:34:26,480 --> 00:34:28,960 Speaker 1: have with that is, I mean problem with the whole 558 00:34:29,000 --> 00:34:32,160 Speaker 1: legal system is to your to your point, m the 559 00:34:32,440 --> 00:34:35,720 Speaker 1: laws are supposed to be laws, not rules, but laws, 560 00:34:35,840 --> 00:34:37,920 Speaker 1: and we're all supposed to know what those laws are 561 00:34:37,960 --> 00:34:39,880 Speaker 1: in advance, so I can plan my life and you 562 00:34:39,920 --> 00:34:41,440 Speaker 1: can plan your life, and we can plan our lives. 563 00:34:41,480 --> 00:34:44,520 Speaker 1: Off those laws. Now I've taken the stands. I had 564 00:34:44,560 --> 00:34:46,840 Speaker 1: to kind of put mister wonderful Kevin o'leriy in his 565 00:34:46,880 --> 00:34:48,920 Speaker 1: place on the bitcoin desk last year at the conference 566 00:34:49,120 --> 00:34:51,200 Speaker 1: because he was like begging for these regulations. I said, 567 00:34:51,239 --> 00:34:53,000 Speaker 1: hang on, hang on, hang on. Like you're Canadian, I 568 00:34:53,080 --> 00:34:57,640 Speaker 1: get that. I'm American. In America, we're free. So that 569 00:34:57,800 --> 00:34:59,919 Speaker 1: means that we're free to do anything that we want 570 00:35:00,040 --> 00:35:02,960 Speaker 1: unless there's a law that prohibits us from doing that. 571 00:35:03,440 --> 00:35:06,040 Speaker 1: So we don't ask for laws to give us permission. 572 00:35:06,920 --> 00:35:08,960 Speaker 1: Everything is we're permitted to do everything unless there's a 573 00:35:09,000 --> 00:35:12,000 Speaker 1: law prohibiting us. And so back kind of to the 574 00:35:12,040 --> 00:35:16,279 Speaker 1: point that you're making, if there's no law specifically prohibiting them, 575 00:35:16,880 --> 00:35:20,560 Speaker 1: then then we should be free to do it. Now, 576 00:35:20,840 --> 00:35:23,560 Speaker 1: I guess it gets it. You know, there's the ignorance 577 00:35:23,560 --> 00:35:25,279 Speaker 1: of the laws, no excuse kind of a thing, right, 578 00:35:25,400 --> 00:35:28,759 Speaker 1: So there is that. Um, I guess the problem is 579 00:35:28,840 --> 00:35:31,920 Speaker 1: the gray area that's here. But yeah, it seems like 580 00:35:32,120 --> 00:35:34,320 Speaker 1: when these companies like coin base are saying, look, we 581 00:35:34,480 --> 00:35:38,200 Speaker 1: we've specifically asked them, they haven't. You know, they've let 582 00:35:38,280 --> 00:35:40,800 Speaker 1: us proceed with this. I mean, they got a public 583 00:35:40,920 --> 00:35:45,439 Speaker 1: listing like it should have been caught at some point. 584 00:35:45,520 --> 00:35:48,359 Speaker 1: And so you know, I think, like to your point, 585 00:35:48,360 --> 00:35:50,640 Speaker 1: you can't really go back and retroactically change those laws. 586 00:35:50,640 --> 00:35:53,640 Speaker 1: And so that's going to be a problem. It's gonna 587 00:35:53,680 --> 00:35:59,720 Speaker 1: be yeah, absolutely, And look it's not hidden, it's not tricky. 588 00:36:00,040 --> 00:36:04,800 Speaker 1: What needs to happen. Look at Europe, of all places. 589 00:36:05,239 --> 00:36:08,240 Speaker 1: I rarely use that phrase, look at europe An example 590 00:36:08,280 --> 00:36:12,520 Speaker 1: of anything, but twenty seven countries within the European Union 591 00:36:12,640 --> 00:36:16,600 Speaker 1: got together and said, all right, we need comprehensive laws 592 00:36:17,160 --> 00:36:22,040 Speaker 1: about what is going to be permissible in the issuance, 593 00:36:22,160 --> 00:36:26,520 Speaker 1: distribution of trading of digital assets, stable coins, etc. How 594 00:36:26,560 --> 00:36:29,520 Speaker 1: the custody is going to work. You know, how people 595 00:36:29,640 --> 00:36:32,560 Speaker 1: need to prove their reserves, how clients assets need to 596 00:36:32,600 --> 00:36:36,520 Speaker 1: be custodied and segregated. All of this isn't shrined in law, 597 00:36:36,880 --> 00:36:39,480 Speaker 1: and they're rolling it out next month with like a 598 00:36:40,160 --> 00:36:43,920 Speaker 1: year and a half of you lead time for companies 599 00:36:43,960 --> 00:36:48,800 Speaker 1: to adjust their operations, stop doing things that are violative 600 00:36:48,880 --> 00:36:52,120 Speaker 1: of these new laws. That's how you do, or you don't, 601 00:36:52,400 --> 00:36:54,520 Speaker 1: or you don't and you just let them let them go, right, 602 00:36:54,680 --> 00:36:56,839 Speaker 1: or you don't. If you're just tune in, you're listening 603 00:36:56,920 --> 00:36:59,360 Speaker 1: to the Markmas Show. I'm talking with James Murphy. You 604 00:36:59,360 --> 00:37:02,160 Speaker 1: can find them on line at Meta law Man. If 605 00:37:02,160 --> 00:37:03,440 Speaker 1: you want to stay up the date with what's going 606 00:37:03,480 --> 00:37:05,920 Speaker 1: on in the legal space, because it is changing fast 607 00:37:06,040 --> 00:37:09,120 Speaker 1: and you should be up to date on that. We 608 00:37:09,239 --> 00:37:12,960 Speaker 1: covered a lot something to watch. Check him out at 609 00:37:13,040 --> 00:37:15,640 Speaker 1: Meta law Man. He's a security's attorney. I should be 610 00:37:15,760 --> 00:37:18,200 Speaker 1: clear about that and be safe out there. That's what 611 00:37:18,239 --> 00:37:19,440 Speaker 1: we've got. Thanks so much for listening.