WEBVTT - James Murphy: The Banks Collapse and Regulating Crypto 0:00:00.160 --> 0:00:02.560 Hello, Welcome back to another episode of the Mark mos Show, 0:00:02.600 --> 0:00:05.320 where we talk about the decentralized revolution, talking about the 0:00:05.360 --> 0:00:07.600 way the world's changing. Of course, we always look at 0:00:07.600 --> 0:00:10.440 through the lens of politics, finance, and technology, so you 0:00:10.480 --> 0:00:13.640 have better context to what is going on. And I 0:00:13.640 --> 0:00:16.320 want to run through some of the latest breaking news 0:00:16.360 --> 0:00:19.320 headlines of the week because it has not been a 0:00:19.400 --> 0:00:21.959 dull week. It's been making much job pretty easy. There's 0:00:22.200 --> 0:00:25.200 actually there's plenty to talk about. The problem is there's 0:00:25.280 --> 0:00:26.960 too much to talk about. Trying to narrow it down 0:00:27.000 --> 0:00:28.960 to what we're going to talk about, but man, there 0:00:29.040 --> 0:00:30.920 is so much going on. Of course, we've been talking 0:00:30.920 --> 0:00:34.640 about the financial system melting down, the FED raising rates, 0:00:34.640 --> 0:00:38.120 they're draining liquid o the system until something breaks like 0:00:38.200 --> 0:00:40.720 the banks. Of course, the Bank's broke. We talked about 0:00:40.760 --> 0:00:43.240 that last week. If you've missed that, go check it 0:00:43.240 --> 0:00:45.240 out on the podcast. Just search the Mark Moss Show 0:00:45.240 --> 0:00:50.000 on the podcast. But there's another thing at play here. 0:00:50.400 --> 0:00:54.280 There's like this dangerous undercurrent that's going on. So while 0:00:54.320 --> 0:00:57.160 everybody's witnessing the FED and all eyes are on the 0:00:57.160 --> 0:00:59.120 FED and the raising rates, and then we're witnessing the 0:00:59.120 --> 0:01:02.720 banks going down and SVB had to get billed out. 0:01:02.840 --> 0:01:05.640 And then you know, now the Treasury and the FEDS 0:01:05.640 --> 0:01:07.800 that are going to backstop all the deposits now Jane 0:01:07.880 --> 0:01:09.600 Yell and the Treasury said they're not going to. And 0:01:09.600 --> 0:01:14.000 there's all this, right, all this distraction going on, There's 0:01:14.000 --> 0:01:17.880 like something else going on down below the surface, something 0:01:17.920 --> 0:01:22.920 that's deeper and darker and more scary. Now, this week 0:01:22.959 --> 0:01:27.200 came out this report called the Economic Report of the President. 0:01:27.800 --> 0:01:30.400 It was a long report. I wouldn't necessarily recommend that 0:01:30.400 --> 0:01:32.640 you read it unless you want to and carry some 0:01:32.760 --> 0:01:38.279 brain damage. It's about almost four hundred and fifty pages long, 0:01:38.760 --> 0:01:40.720 four and frety pages for the Report of the President. 0:01:41.280 --> 0:01:44.840 The Year in Review, the Years Ahead, confronting new global 0:01:44.920 --> 0:01:49.480 challenges with strong international economic partnerships. Investing in young children's 0:01:49.520 --> 0:01:53.440 care and education. You already know what's happening to the 0:01:53.520 --> 0:01:55.600 kids education at school. You don't want to know about that. 0:01:55.920 --> 0:02:01.080 Chapter five, Building stronger post secondary institutions, So apply challenges 0:02:01.160 --> 0:02:05.880 in the US labor markets. Man, this is all just simple. 0:02:06.000 --> 0:02:07.840 Just tell the government to stop get out of this 0:02:08.120 --> 0:02:13.200 competition in the digital economy, new technologies and old economics. 0:02:13.760 --> 0:02:21.119 Chapter eight Digital Assets, Relearning, economic principles, relearning economic principles. 0:02:21.400 --> 0:02:22.880 I think they're the ones that should go back and 0:02:22.919 --> 0:02:27.600 relearn economic principles. Chapter nine Opportunities for better managing weather 0:02:27.720 --> 0:02:33.000 risk in changing climates. And then there's some appendages Report 0:02:33.040 --> 0:02:36.079 to the President on activities of the Council of Economic Advisors, 0:02:36.440 --> 0:02:41.320 Statistical tables relating to income, employment, production, and more So, 0:02:41.800 --> 0:02:44.880 while all of this, I like to think of it 0:02:44.919 --> 0:02:48.520 like a magician. Right, most of you probably know. I 0:02:48.560 --> 0:02:51.000 hate to ruin it for you, but magic isn't real. 0:02:51.960 --> 0:02:54.520 It's slide of hand. Hey look over there while they 0:02:54.560 --> 0:02:56.280 do something over here, And that's sort of like what 0:02:56.400 --> 0:02:58.560 seems to be happening where all of this stuff is 0:02:58.560 --> 0:03:00.959 going on. And in the meantime, I'm they're like trying 0:03:01.000 --> 0:03:05.040 to ram a bunch of stuff through. Now. In the 0:03:05.080 --> 0:03:09.840 previous segment, I talked about two different open source protocols, 0:03:09.840 --> 0:03:12.560 a monetary protocol and an information protocol. It's going to 0:03:12.720 --> 0:03:17.720 change the world. Closed systems are going to continue to 0:03:17.760 --> 0:03:20.880 get more closed, but open systems are going to continue 0:03:20.880 --> 0:03:22.400 to compete for those and we're going to move more 0:03:22.400 --> 0:03:24.359 to the open systems. If you miss that, go check 0:03:24.360 --> 0:03:26.399 out on the podcast player. Just search Mark Moss show 0:03:26.440 --> 0:03:28.960 you can catch that. But going back to what the 0:03:29.000 --> 0:03:32.360 government's doing. Something I've been talking about for a while 0:03:32.760 --> 0:03:35.600 is this Operation Choke point two point zero as we're 0:03:35.680 --> 0:03:39.160 labeling it. There was a one point zero. Lots of 0:03:39.200 --> 0:03:41.320 people in the government got in trouble under Obama, the 0:03:41.360 --> 0:03:44.720 Obama administration, Lois Learner I believe ahead of the IRS 0:03:44.800 --> 0:03:47.040 had to step down and all these things. But in 0:03:47.040 --> 0:03:49.920 this economic report, well so now with this choke point 0:03:49.960 --> 0:03:52.520 two point zero, and it looks like through the fog 0:03:52.560 --> 0:03:56.040 of war, there's a lot of casualties. So we had 0:03:56.040 --> 0:03:59.480 this banking collapse, and it was silver Gate Bank, then 0:03:59.480 --> 0:04:03.720 it was Silicon Valley Bank, and then it was Signature Bank, 0:04:04.160 --> 0:04:08.720 the three s's. The one thing that seems to tie 0:04:08.800 --> 0:04:11.800 all three of those together is that they were all 0:04:12.000 --> 0:04:16.279 very crypto friendly banks. Silver Gate was one of the 0:04:16.400 --> 0:04:20.680 main crypto banks SVB, which of course Silicon Valley Bank, 0:04:20.720 --> 0:04:24.280 a lot of Silicon Valley was in crypto projects. And 0:04:24.320 --> 0:04:28.400 then Signature Bank, which was another very crypto friendly bank. 0:04:28.480 --> 0:04:31.720 Now why did those three banks go down? And we've 0:04:31.760 --> 0:04:34.960 talked about it extensively. You know, they got a bunch 0:04:34.960 --> 0:04:38.680 of money deposits because the FED created so much money, 0:04:38.320 --> 0:04:41.520 their deposits swelled up. They put them into US treasuries. 0:04:41.720 --> 0:04:44.559 The FED raised rates, the treasuries lost value. The banks 0:04:44.560 --> 0:04:50.120 didn't have money. Somehow a bank run got triggered where 0:04:50.120 --> 0:04:51.680 a lot of people wanted to go pull their money 0:04:51.720 --> 0:04:54.520 at the bank. The banks didn't have it, And that's 0:04:54.720 --> 0:04:57.159 the story that we're told, and that's actually what happened. 0:04:57.440 --> 0:05:00.000 But why did those things happen is the better question 0:05:00.080 --> 0:05:04.040 to ask. Why was there a bank run triggered on 0:05:04.200 --> 0:05:08.200 SVB putting out on all the other banks. Every bank 0:05:08.320 --> 0:05:10.760 is in the same situation. This is not just unique 0:05:10.760 --> 0:05:13.120 to those banks. They're all in the same situation. So 0:05:13.200 --> 0:05:16.320 why was there a bank run? Now, you know, I'm 0:05:16.360 --> 0:05:19.080 no stranger of dipping my toe in the conspiratorial waters, 0:05:19.120 --> 0:05:21.880 if you will, because I'm trying to make sense of 0:05:21.920 --> 0:05:25.280 all this and I just don't understand why those banks 0:05:26.200 --> 0:05:29.160 got attacked. And like I said, it just so happens 0:05:29.200 --> 0:05:34.320 that the three of them were very heavily into cryptocurrency companies. 0:05:34.560 --> 0:05:37.800 Now into that after the two thousand and eight banking collapse, 0:05:37.960 --> 0:05:39.480 there was a whole bunch of new regulations that were 0:05:39.520 --> 0:05:42.360 put in place. One of them was called the Dodds 0:05:42.440 --> 0:05:46.400 Frank Act, and one of the original writers of that, 0:05:46.400 --> 0:05:52.400 Bill Dodds, put put out an article saying that he 0:05:52.880 --> 0:05:56.719 doesn't understand why and regulators at the FDIC didn't understand 0:05:56.800 --> 0:06:01.520 why Signature Bank was taken over. It wasn't insolvent. There 0:06:01.600 --> 0:06:04.080 was no reason why I should be taken over. So 0:06:04.839 --> 0:06:07.320 why was it taken over? Why was it taken over? 0:06:07.360 --> 0:06:09.839 The other two Signal two s banks, Well, and they're 0:06:09.880 --> 0:06:12.120 all related to crypto. Now, if we go back and 0:06:12.160 --> 0:06:15.039 read this economic report of the President, it starts to 0:06:15.080 --> 0:06:17.960 give us a little bit of a better picture. Now, 0:06:18.480 --> 0:06:22.080 they had a very scathing report, let's say, to talk 0:06:22.080 --> 0:06:25.400 about cryptocurrencies as a matter of fact. And of course 0:06:25.400 --> 0:06:30.960 it came during this growing industry concern that federal regulators 0:06:31.000 --> 0:06:35.080 are looking to debank these crypto companies. So you know, 0:06:35.120 --> 0:06:38.280 the narrative that they're trying to control is that these 0:06:38.279 --> 0:06:41.240 banks went down because they were doing risky crypto assets. Well, 0:06:41.240 --> 0:06:43.200 first of all, they didn't lose money on crypto. They 0:06:43.240 --> 0:06:45.599 lost money because they put their money into the US treasuries. 0:06:46.279 --> 0:06:48.480 But it looks like part of this chokepoint, you bueno, 0:06:48.520 --> 0:06:50.920 where they're trying to take away the banks that these 0:06:50.960 --> 0:06:53.960 company us. Now, the report that this came out said 0:06:54.000 --> 0:07:00.600 that many cryptocurrencies do not have a fundamental value. Okay, 0:07:01.000 --> 0:07:03.440 well I would agree. Now, of course, I'm very clear. 0:07:03.600 --> 0:07:06.520 I like to say bitcoin not crypto. What do I 0:07:06.520 --> 0:07:08.919 mean by that, Well, I'm not saying that bitcoin is 0:07:08.920 --> 0:07:11.600 not a cryptocurrency. What I'm saying is when I'm talking 0:07:11.640 --> 0:07:14.160 about bitcoin, I'm talking about bitcoin only, and when I 0:07:14.160 --> 0:07:16.880 talk about crypto, I'm talking about crypto everything else other 0:07:16.920 --> 0:07:19.880 than bitcoin. So we always want to make those two 0:07:19.920 --> 0:07:24.320 things very clear. But what is a fundamental value? Typically 0:07:24.400 --> 0:07:27.480 you might consider that be called like an intrinsic value, 0:07:27.480 --> 0:07:31.240 which there's no such thing as intrinsic value. All value 0:07:31.280 --> 0:07:33.840 is subjective. But they say that it's argued that crypto 0:07:33.880 --> 0:07:38.000 assets may provide other benefits, such as improving payment systems, 0:07:38.040 --> 0:07:41.640 increasing financial inclusion, and creating mechanisms for the distribution of 0:07:41.680 --> 0:07:45.920 intellectual property and financial value that bypass intermediaries that extract 0:07:46.000 --> 0:07:49.040 value from both the provider and the recipient. Looking under 0:07:49.080 --> 0:07:52.160 the hood at these arguments, however, shows a more complicated picture. 0:07:52.440 --> 0:07:55.880 So far, crypto acids have brought none of these benefits. 0:07:56.480 --> 0:07:59.480 End quote. That's what the report said. I talk about 0:07:59.520 --> 0:08:00.840 this all the time. We're gonna get this a little 0:08:00.840 --> 0:08:02.720 bit later when I can talk about some other news headlines. 0:08:03.840 --> 0:08:08.440 The number one threat to our democracy, the number one 0:08:08.520 --> 0:08:10.960 threat that they talked about a Davos in Switzerland at 0:08:10.960 --> 0:08:15.960 the World Coming Forum in February is supposedly is misinformation 0:08:16.000 --> 0:08:20.200 and disinformation. But the but the irony is that all 0:08:20.200 --> 0:08:22.640 the misinformation comes from the government. I don't want to 0:08:22.640 --> 0:08:24.520 say all. A good majority of it comes from the 0:08:24.560 --> 0:08:26.640 government itself. So how can they go and say this, 0:08:28.720 --> 0:08:32.600 How can they go and say this? So bitcoin hasn't 0:08:32.600 --> 0:08:36.280 done anything to increase financial inclusion. It certainly helped in Africa. 0:08:36.360 --> 0:08:38.720 Over eighty percent of all bitcoin transactions under a thousand 0:08:38.760 --> 0:08:40.800 dollars are being done in Africa where they don't have 0:08:40.960 --> 0:08:44.480 access to banking. It says that they said it could 0:08:44.520 --> 0:08:50.040 bypass interminiaries that extract value. Well, that's being done. It's 0:08:50.480 --> 0:08:53.760 it's doing payment remittances all over the world right now 0:08:53.920 --> 0:08:58.480 and bypassing the extraction of these intimitaries. So it's doing that. 0:08:58.960 --> 0:09:01.800 So looking under the hood, it shows that it's exactly done. 0:09:01.840 --> 0:09:04.559 Just that they've nailed it exactly except for of course, 0:09:04.920 --> 0:09:07.080 the Office of the President is lying to you. If 0:09:07.080 --> 0:09:08.840 you're just tuning in to listen to the Mark Moss Show, 0:09:09.040 --> 0:09:11.880 talking about, of course, the decentralized revolution, running through some 0:09:11.920 --> 0:09:14.800 of the latest breaking news headlines of the week, and 0:09:14.920 --> 0:09:17.840 looking at the attack on the banking sector and the 0:09:17.840 --> 0:09:20.200 crypto sector. I got a very special guest coming up 0:09:20.480 --> 0:09:23.040 when we come back, an SEC attorney. We're gonna talk 0:09:23.080 --> 0:09:25.520 more about this attack. You don't want to miss this. 0:09:25.720 --> 0:09:28.079 I'll be right back in a second. Don't go away, 0:09:29.000 --> 0:09:30.640 all right, Welcome back. If you just tune in, you're 0:09:30.640 --> 0:09:32.839 listening to the Mark Moss Show. Of course we're talking 0:09:32.840 --> 0:09:35.400 about some of the latest breaking news headlines of the weeks, 0:09:35.440 --> 0:09:37.240 you can understand what's going on. And before the break, 0:09:37.280 --> 0:09:41.400 I was talking about how this banking crisis is all 0:09:41.440 --> 0:09:43.560 the rage. Everyone's focused on that, but then there's like 0:09:43.559 --> 0:09:46.440 these dangerous undercurrents at the same time. Some of it's 0:09:46.840 --> 0:09:49.720 sparked by this economic report of the President that came 0:09:49.720 --> 0:09:52.760 out and this kind of choke point two point zero 0:09:52.800 --> 0:09:54.960 that I've been talking about. I have a very special 0:09:55.000 --> 0:09:57.439 guest with me right now. I got James Murphy. You 0:09:57.480 --> 0:10:00.600 can find them online at Meta law Man he has 0:10:00.640 --> 0:10:03.920 a securities attorney, and we're going to talk about what 0:10:04.120 --> 0:10:07.200 potentially is going on here now, James, I had you 0:10:07.240 --> 0:10:10.080 on before, and you know, I was kind of talking 0:10:10.080 --> 0:10:12.040 about how I thought we were going to continue to 0:10:12.040 --> 0:10:17.199 see a massive push into more regulations on these crypto assets. 0:10:18.640 --> 0:10:20.840 They would be labeled securities, and you know, I was 0:10:20.840 --> 0:10:23.440 even going as far as saying as a category, we 0:10:23.559 --> 0:10:27.040 might not see another bull run in cryptocurrencies again, not bitcoin, 0:10:27.600 --> 0:10:31.319 and so far that seems to be what's happening. And 0:10:31.440 --> 0:10:34.000 there's a lot of things happening really quickly. We're really 0:10:34.000 --> 0:10:37.360 seeing the SEC step up enforcement. A lot of data 0:10:37.400 --> 0:10:40.280 points that dig into. Let's start with one that that 0:10:40.320 --> 0:10:42.360 broke this week that seemed to be really big and 0:10:42.400 --> 0:10:45.680 it was coin base being hit with this wells notice. 0:10:46.840 --> 0:10:49.360 Break that down for me a little bit. Yeah, sure, 0:10:49.800 --> 0:10:52.760 So a wells notice is a standard part of the 0:10:52.800 --> 0:10:56.560 process when you are under investigation by the SEC. It 0:10:56.679 --> 0:11:00.440 typically comes near the end of the process US where 0:11:00.480 --> 0:11:04.160 the staff within the Division of Enforcement, which is a 0:11:04.320 --> 0:11:09.520 part of the SEC, says to the target of the investigation, 0:11:09.800 --> 0:11:14.480 we the staff of Enforcement, intend to recommend to the 0:11:14.480 --> 0:11:19.760 Commissioners that they approve a lawsuit against you. The purpose 0:11:19.800 --> 0:11:24.120 of the wells notice that communication is to give the 0:11:24.160 --> 0:11:31.200 target an opportunity to rebut the allegations of wrongdoing and 0:11:31.320 --> 0:11:36.600 to convince the Commissioners not to follow the recommendation of 0:11:36.640 --> 0:11:43.360 the Enforcement Division and instead decline to approve the lawsuit. 0:11:43.520 --> 0:11:48.320 So that's where it is in the process. That's generally 0:11:48.360 --> 0:11:52.559 near the end. There's been a couple weird things about 0:11:53.200 --> 0:11:59.960 how this has happened. One, in the communication, the sec 0:12:00.720 --> 0:12:07.479 declined to inform coin Base which tokens they believe our securities, 0:12:07.520 --> 0:12:12.840 which tokens they're going to assert our securities in a 0:12:13.120 --> 0:12:16.600 potential lawsuit. So that makes it a little difficult on 0:12:16.720 --> 0:12:20.680 coin Base to rebut the contention if they're not told 0:12:21.240 --> 0:12:25.520 which of the tokens are allegedly violative. Yeah, of course. 0:12:25.679 --> 0:12:28.240 And the second weird thing about it is they only 0:12:28.280 --> 0:12:36.480 took two depositions of uh, you know, executives at coin Base. 0:12:37.200 --> 0:12:41.120 That's weird. I've handled many of these and you could 0:12:41.160 --> 0:12:44.960 see dozens, particularly on a big case. You know, this 0:12:45.040 --> 0:12:47.719 is to the advantage of the Division of Enforcement to 0:12:47.760 --> 0:12:51.400 get people on the record under oath as much as possible. 0:12:51.960 --> 0:12:55.880 So it feels, you know, I'm not representing anybody, and 0:12:56.000 --> 0:12:59.920 it feels like it's a little bit rushed, even though 0:13:00.280 --> 0:13:03.160 they've been threatening. Gary Gensler has been threatening to do 0:13:03.240 --> 0:13:07.679 this for ever since he took office a couple of 0:13:07.720 --> 0:13:12.679 years ago. So those are those are two unusual points 0:13:12.679 --> 0:13:15.319 in and it's possible that the one or more of 0:13:15.360 --> 0:13:20.760 the commissioners will be uncomfortable if the if the Division 0:13:20.840 --> 0:13:25.959 Enforcement continues to refuse to say which tokens that are 0:13:25.960 --> 0:13:31.120 listening on coin Base are securities? Yeah, do we know 0:13:31.200 --> 0:13:34.040 that it's specifically about tokens that are listed that could 0:13:34.040 --> 0:13:36.560 be securities? Or could it be because of like yield 0:13:36.600 --> 0:13:38.640 products that they have some of that we've already seen 0:13:38.679 --> 0:13:41.600 happen with Jim and I. Yeah, great question. I'll tell 0:13:41.640 --> 0:13:45.920 you what. The disclosure by coin Base was the most 0:13:46.200 --> 0:13:50.760 thorough disclosure I think I've ever seen of a Wells notice. 0:13:50.840 --> 0:13:55.960 You know, actually, Mark, there's some disagreement at the securities 0:13:56.000 --> 0:14:00.240 bar as to whether a public company is required to 0:14:00.440 --> 0:14:03.680 disclose the fact that they have received a Wells notice. 0:14:03.880 --> 0:14:08.520 It is the safer course of action to disclose by 0:14:08.520 --> 0:14:10.839 a public company. But in any event, they went in 0:14:10.920 --> 0:14:14.840 a great detail about the whole process leading up to 0:14:16.040 --> 0:14:18.520 this wells notice and all of you know, there are 0:14:18.520 --> 0:14:22.080 many interactions with the SEC trying to head this off, 0:14:22.400 --> 0:14:27.680 trying to establish, you know, a regulatory framework that they 0:14:27.680 --> 0:14:30.720 both could agree on. But in any event, they said it. 0:14:31.000 --> 0:14:35.000 They said it's about some of the assets they have listed, 0:14:35.120 --> 0:14:39.400 and it's about a yield product as well. And so 0:14:39.440 --> 0:14:41.720 we've seen that kind of case before. So we kind 0:14:41.720 --> 0:14:43.680 of know that we've seen what happened with Gemini. They 0:14:43.680 --> 0:14:47.440 paid a fine, they listed it, they were kind of okay. 0:14:47.600 --> 0:14:50.680 But now you're saying coinbase is saying it's actually because 0:14:50.680 --> 0:14:53.880 of some assets. Would that be strange that gem and 0:14:53.960 --> 0:14:57.360 I didn't get hit with assets that it has, it 0:14:57.480 --> 0:14:59.800 only got the yield product. Would it be weird that 0:15:00.400 --> 0:15:02.400 they already went after an exchange and only went after 0:15:02.480 --> 0:15:04.600 yield and now they're going after an exchange for both 0:15:04.640 --> 0:15:06.200 And would they then go back to Jim and I 0:15:06.280 --> 0:15:09.840 or how does that work? Well, you know this fits 0:15:09.880 --> 0:15:16.200 in the under the rubric of prosecutorial discretion. Now they're 0:15:16.240 --> 0:15:22.120 not prosecuting crimes. The SEC prosecute civil claims against people, 0:15:22.200 --> 0:15:26.440 not criminal, but they get to pick. Why did they 0:15:26.440 --> 0:15:28.760 pick coin Base? I don't know, but you're one hundred 0:15:28.760 --> 0:15:33.760 percent right. They could bring the identical case against Gemini 0:15:34.520 --> 0:15:37.440 on listed assets if they want to take the position 0:15:37.520 --> 0:15:42.520 that some of the tokens qualify as securities and therefore 0:15:42.520 --> 0:15:45.680 they're running an unregistered securities It doesn't some of this 0:15:45.800 --> 0:15:48.920 set precedent though, So like, for example, if they go 0:15:49.000 --> 0:15:52.680 after coin Base for listing these tokens, but then Jim 0:15:52.680 --> 0:15:54.920 and I has the exact same tokens listed. I mean, 0:15:54.960 --> 0:15:57.000 wouldn't coin Base go Wait a minute, how come you 0:15:57.000 --> 0:15:59.160 didn't go after them or vice versa, Like, I mean, 0:15:59.280 --> 0:16:02.840 isn't there press there. Yeah, they don't have to go 0:16:02.920 --> 0:16:06.560 after everybody at the same time for the same claim. 0:16:06.680 --> 0:16:10.040 Your use of the word precedent is exactly right. I mean, 0:16:10.160 --> 0:16:14.280 you would expect that if they win against coin Base, 0:16:14.320 --> 0:16:16.160 and let's just make up a number. Let's say they're 0:16:16.240 --> 0:16:22.840 ten tokens that a federal judge declares are securities that 0:16:22.920 --> 0:16:27.200 have not been registered, then you would expect I don't 0:16:27.200 --> 0:16:30.120 want to go too far, but you would expect that 0:16:30.280 --> 0:16:35.080 other exchanges operating the United States might delist the very 0:16:35.080 --> 0:16:39.680 same tokens very quickly. Yeah, they go, shoot, they may 0:16:39.800 --> 0:16:42.240 they may be coming back to us. Yeah, I saw 0:16:42.280 --> 0:16:45.840 that it was a coin Bas's statements that were prepared. 0:16:46.240 --> 0:16:49.480 We prepared for this disappointing development, and they talked about 0:16:49.480 --> 0:16:51.920 how they've tried over and over and over to kind 0:16:51.920 --> 0:16:54.280 of get to get kind of approval and they just 0:16:54.320 --> 0:16:57.560 got silence back. I'm curious. I know, we're seeing lots 0:16:57.560 --> 0:17:01.360 of things. We saw then Just and Son was sued. 0:17:01.400 --> 0:17:06.679 Tron was also sued for securities and mark of manipulation. Um, 0:17:06.720 --> 0:17:09.640 so I guess they're saying the TRX and BTT are 0:17:09.720 --> 0:17:13.600 under unregistered securities. So then I guess those tokens, if 0:17:13.600 --> 0:17:18.159 they're listening on either of those exchanges within be a problem, right, Yeah, 0:17:18.200 --> 0:17:21.000 it's it's got to be, uh, something that they would 0:17:21.000 --> 0:17:24.160 be discussing in the in the compliance legal and compliance 0:17:24.160 --> 0:17:28.960 function within every exchange. These developments they're they're they're following closely. 0:17:28.960 --> 0:17:33.800 And I guess the biggest, most obvious example is XRP, 0:17:34.280 --> 0:17:38.000 you know, and and when the sec went out after 0:17:38.640 --> 0:17:43.040 ripple and uh the XRP token it did get delisted, 0:17:43.119 --> 0:17:46.840 so um, yeah, they're paying attention. Yeah, if you just 0:17:46.840 --> 0:17:49.160 tune in, you're listening to the Mark Moss Show, I'm 0:17:49.160 --> 0:17:51.800 talking with James Murphy. You can find a mind online 0:17:51.840 --> 0:17:55.359 at Meta law Man. He is a securities attorney, and 0:17:55.359 --> 0:17:58.240 we're talking about some of the potential of what we're 0:17:58.280 --> 0:18:00.280 going on Choke point two point zero, how the government 0:18:00.320 --> 0:18:03.480 seems to be going after crypto banks and cryptocurrencies and 0:18:03.520 --> 0:18:06.320 the sec is bringing enforcement action. We're gonna cover a 0:18:06.320 --> 0:18:07.639 lot more when we come back. We're gonna take it 0:18:07.680 --> 0:18:10.200 just a quick break, don't go away, We'll be right back. 0:18:12.640 --> 0:18:14.240 All right, Welcome back. If you're just tune in, you're 0:18:14.240 --> 0:18:16.280 listening to the Mark Moss Show. We're talking about, of 0:18:16.280 --> 0:18:19.160 course each and every week, the decentralized revolution running through 0:18:19.200 --> 0:18:22.320 some news and I'm joined by James Murphy. He's online 0:18:22.359 --> 0:18:25.200 at Meta law Man, is a securities attorney, and we're 0:18:25.200 --> 0:18:28.479 talking about some of these security issues and where that 0:18:28.520 --> 0:18:31.880 puts the state of cryptocurrency. We talked about coin Base, 0:18:32.280 --> 0:18:34.640 we talked about Tron. Another thing I want to ask 0:18:34.640 --> 0:18:38.320 you about is the New York Attorney General. So we 0:18:38.359 --> 0:18:40.679 know in the crypto space, New York is like the 0:18:40.800 --> 0:18:45.639 most aggressive government state against cryptocurrency. They have kind of 0:18:45.680 --> 0:18:47.399 had their own New York bit license that they've had 0:18:47.400 --> 0:18:50.280 for a long time, so we know they're very restrictive. 0:18:51.480 --> 0:18:55.159 But the New York Attorney General father the lawsuit against coucoin, 0:18:55.280 --> 0:18:59.760 so another exchange, but also said that ethereum is a security. 0:19:01.160 --> 0:19:08.919 What's going on with that's a that's a really really 0:19:08.960 --> 0:19:15.919 good question. So that a little background. As you undoubtedly know, 0:19:16.960 --> 0:19:20.240 Bill Henman, the head of corporate finance at the SEC, 0:19:20.520 --> 0:19:25.080 years ago, said bitcoin is not a security, and athereum, 0:19:25.400 --> 0:19:27.440 if it ever was, the security is no longer a 0:19:27.520 --> 0:19:30.720 security because it had arrived at a sufficient level of 0:19:30.760 --> 0:19:34.320 decentralization where it would make sense to apply the security's 0:19:34.359 --> 0:19:37.280 laws anymore to ethereum. And that's kind of what everybody 0:19:37.320 --> 0:19:42.000 thought was, you know, the SEC's position. But then when 0:19:42.080 --> 0:19:45.199 Gary Gensler came in, you started hearing more of like, 0:19:45.560 --> 0:19:49.720 is it is ethereum really in the clear here? So 0:19:49.760 --> 0:19:54.000 what happened was a lawyer in San Diego sued the 0:19:54.200 --> 0:19:58.880 SEC last November, asking a federal judge you'd simply declare 0:19:59.000 --> 0:20:04.320 ethereum is not a security. The SEC countered and said 0:20:04.359 --> 0:20:07.440 this case should be dismissed. There is no case or 0:20:07.480 --> 0:20:12.840 controversy here. It's not right for any adjudication because get this, 0:20:13.480 --> 0:20:17.560 we have not decided yet whether we think Ethereum is 0:20:17.600 --> 0:20:22.200 a security is literally in a brief they file. Now, 0:20:22.520 --> 0:20:27.840 in my opinion, that's embarrassing because Ethereum, you know, its 0:20:27.920 --> 0:20:34.040 started eight years earlier, twenty fifteen, eight years, Yeah, that's right, um, 0:20:34.760 --> 0:20:37.240 and they still hadn't made up their mind. That collides 0:20:37.960 --> 0:20:43.560 with Gary Gensler's standard position that it is clear as 0:20:43.600 --> 0:20:48.119 a bell under Howie, that these are all securities. You know, 0:20:48.160 --> 0:20:51.280 what's a security, what's not is clear. And so for 0:20:51.320 --> 0:20:55.919 the sec to say, we just haven't decided yet, and 0:20:55.960 --> 0:20:59.200 they want to backpedal away from the Henman thing. So 0:20:59.760 --> 0:21:03.960 that was embarrassing. That happened, you know, a few months ago. 0:21:04.680 --> 0:21:09.160 And then suddenly the New York Attorney General instigates an 0:21:09.240 --> 0:21:16.040 investigation of coucoin. They use an investigator in their office. 0:21:16.480 --> 0:21:18.719 So there's an investigator signed to the New York Attorney 0:21:18.800 --> 0:21:22.399 General's office and he was told go open an account 0:21:22.480 --> 0:21:25.480 at coucoin, which doesn't have a bit license. It's an 0:21:25.520 --> 0:21:30.200 offshore exchange from the Seychelles Islands. And he managed, as 0:21:30.200 --> 0:21:32.800 a New York resident to get an account there, which 0:21:32.840 --> 0:21:36.879 is a no no. And so they told him apparently 0:21:36.960 --> 0:21:43.320 coucoin lists seven hundred tokens mark they told him go 0:21:43.440 --> 0:21:49.600 buy atherium, so he bought ethereum, sold ethereum, therefore traded 0:21:49.640 --> 0:21:55.760 ethereum as a New York resident. And that is now 0:21:55.800 --> 0:22:00.520 the basis a basis for the lawsuit that a theory 0:22:01.200 --> 0:22:06.560 is an unregistered security and coucoin was not properly licensed 0:22:06.760 --> 0:22:10.480 in any event to deal with New York residents. But 0:22:10.560 --> 0:22:14.000 the underpinning of the case is Ethereum is a security. 0:22:14.359 --> 0:22:18.919 So one wonders if there was any communication between the 0:22:19.119 --> 0:22:23.640 SEC and the New York Attorney General to instigate an 0:22:23.680 --> 0:22:29.640 interesting timing in terms of let's go after ethereum specifically, 0:22:30.720 --> 0:22:36.280 and by the way, coucoin. They served a subpoena on Coucoin. 0:22:36.520 --> 0:22:41.760 Coucoin did not respond. The Attorney General believes and I believe, 0:22:42.040 --> 0:22:45.159 that there's a good likelihood coucoin will not defend the case, 0:22:45.480 --> 0:22:48.399 in which case the New York ag may find that 0:22:48.480 --> 0:22:51.600 it's you know, it's got a clear fairway to get 0:22:51.920 --> 0:22:55.160 you know, what they want. And that is a declaration 0:22:55.280 --> 0:22:58.520 from a judge, a New York State judge that ethereum 0:22:58.600 --> 0:23:02.919 is a security and boy mark that would be a 0:23:03.040 --> 0:23:07.080 really really big deal when you consider, you know that 0:23:07.119 --> 0:23:09.680 it's the second largest market cap and all of these 0:23:09.720 --> 0:23:14.359 thousands of projects built on the Ethereum network. So a 0:23:14.400 --> 0:23:16.240 couple questions I have with that. So one, you're saying 0:23:16.240 --> 0:23:19.240 that if coucoin doesn't doesn't defend that, then nobody's left 0:23:19.240 --> 0:23:23.960 to defend Ethereum except for the Ethereum Foundation. Okay, So 0:23:24.000 --> 0:23:25.760 I mean so so people, I mean so somebody could 0:23:25.800 --> 0:23:29.440 step up to defend ethereum. Potentially, absolutely could. And this 0:23:29.560 --> 0:23:33.760 is for lawyers like me. This is fascinating because you 0:23:33.800 --> 0:23:38.359 would think the talk and the Foundation would be all 0:23:38.400 --> 0:23:42.800 over this because the stakes are enormous. Even though the 0:23:42.880 --> 0:23:46.000 United States is just one country, it's a pretty important 0:23:46.080 --> 0:23:49.359 country when it comes to you know, the digital asset 0:23:49.440 --> 0:23:52.920 ecosystem and Ethereum in particular, and all of these thousands 0:23:52.960 --> 0:23:56.560 of projects. So far, we haven't heard anything from them, 0:23:56.880 --> 0:24:01.120 and they have a conundrum. Mark for the way is fascinating. 0:24:01.119 --> 0:24:03.879 I don't know if it's fascinating to your audience, but 0:24:04.040 --> 0:24:08.879 this is fascinating. If the tallic and the foundations step 0:24:08.960 --> 0:24:12.800 in and defend the case, it helps the New York 0:24:12.840 --> 0:24:16.119 Attorney in general to say, well, see see what I 0:24:16.160 --> 0:24:20.080 mean is it is? Yes, it is centralized, There is 0:24:20.119 --> 0:24:24.399