WEBVTT - Chief Justice Steps In & Crypto Letup 0:00:02.759 --> 0:00:07.000 This is Bloomberg Law with June Grossel from Bloomberg Radio. 0:00:09.000 --> 0:00:12.399 A Supreme Court fight over the president's power to remove 0:00:12.560 --> 0:00:17.000 independent agency members has been teed up. On Monday, in 0:00:17.040 --> 0:00:19.880 a seven to four decision, the US Court of Appeals 0:00:19.880 --> 0:00:24.160 for the DC's Circuit ruled that two independent agency members 0:00:24.400 --> 0:00:27.800 could return to their jobs while they continued to challenge 0:00:27.840 --> 0:00:31.000 President Trump's efforts to fire them. Well, it didn't take 0:00:31.080 --> 0:00:33.400 long for Trump to go to the Supreme Court with 0:00:33.600 --> 0:00:38.560 yet another emergency request today, asking the justices to allow 0:00:38.640 --> 0:00:42.760 him to immediately fire the two National Labor Relations Board 0:00:42.800 --> 0:00:46.239 member Gwyn Wilcox and Kathy Harris, a member of the 0:00:46.280 --> 0:00:50.520 Merit Systems Protection Board. And late this afternoon, Chief Justice 0:00:50.640 --> 0:00:54.040 John Roberts signed in order pausing that ruling by the 0:00:54.120 --> 0:00:57.600 DC's Circuit Court of Appeals and asking the two officials 0:00:57.680 --> 0:01:02.080 to respond to Trump's request by April fifteenth. My guest 0:01:02.160 --> 0:01:05.840 is an expert in this area of law, Professor Carry Coliniesi, 0:01:05.959 --> 0:01:10.280 who directs the University of Pennsylvania Law Schools Program on Regulation. 0:01:11.040 --> 0:01:13.720 Carry start by telling us about the history of this case, 0:01:14.080 --> 0:01:15.520 what's happened in the lower courts. 0:01:16.200 --> 0:01:20.280 Well, the lower court decided that the president does not 0:01:20.480 --> 0:01:24.400 have the power to fire the officers here at issue, 0:01:24.440 --> 0:01:27.920 And we're talking about the two agency heads, Gwen Wilcox 0:01:28.560 --> 0:01:32.760 from the National Labor Relations Board and Kathy Harris, a 0:01:32.800 --> 0:01:37.400 member of the Merit Systems Protection Board, And the underlying 0:01:37.680 --> 0:01:41.760 statutes setting up these agencies provide that the heads of 0:01:41.800 --> 0:01:48.000 these agencies can only be removed for cause malfeasans misconduct, 0:01:48.600 --> 0:01:52.760 something like that. Donald Trump comes along and says, sorry, 0:01:52.840 --> 0:01:58.640 I'm firing you for no reason, really not showing any cause. 0:01:58.800 --> 0:02:02.920 I just agree with maybe your approach to how you 0:02:02.960 --> 0:02:08.079 want to take these agencies. That's something then that they challenged. 0:02:08.280 --> 0:02:10.760 The lower court said the president doesn't have that power 0:02:11.240 --> 0:02:15.519 because they're protected from removal at will. They can only 0:02:15.560 --> 0:02:19.560 be removed by the president for good cause. And there 0:02:19.639 --> 0:02:22.680 was a Supreme Court decision going back to nineteen thirty 0:02:22.720 --> 0:02:27.880 five that says Congress can set up independent agencies and 0:02:28.639 --> 0:02:33.160 protect them from presidents removing the heads of these agencies 0:02:33.600 --> 0:02:37.720 at will for no reason whatsoever. So that lower court 0:02:37.800 --> 0:02:43.040 decided to though put a hold on its order commanding 0:02:43.080 --> 0:02:47.639 that the two dismissed officials be reinstated to their positions. 0:02:48.080 --> 0:02:51.320 The case went up to the Court of Appeals. The 0:02:51.360 --> 0:02:55.000 Panel of the Court of Appeals then was appealed further 0:02:55.120 --> 0:02:59.120 to the en banc sitting of the US Court of 0:02:59.160 --> 0:03:02.800 Appeals for the dist of Columbia Circuit. That's en bank 0:03:02.919 --> 0:03:07.840 means the full Court and the DC Circuit just issued 0:03:07.880 --> 0:03:14.640 a decision lifting the stay on the trial court's order 0:03:15.160 --> 0:03:19.720 to reinstate these officials to their position, and it did 0:03:19.760 --> 0:03:24.280 so on the similar grounds that the lower court held that. 0:03:24.680 --> 0:03:29.639 There's this nineteen thirty five decision called Humphrey's Executor that 0:03:29.800 --> 0:03:34.160 says Congress can create these good cause protections, and these 0:03:34.320 --> 0:03:39.480 officials are protected from removal with these good protection clauses. 0:03:39.920 --> 0:03:44.560 So the President in firing them acted. Therefore, we're going 0:03:44.640 --> 0:03:48.520 to really force those officials back into office. They can 0:03:48.560 --> 0:03:51.320 go back and take over their positions. 0:03:51.920 --> 0:03:56.000 The majority said that the Supreme Court has repeatedly told 0:03:56.080 --> 0:03:59.720 lower courts to follow precedents unless and until the Supreme 0:03:59.760 --> 0:04:04.000 Court changes it, referring to Humphrey's Executor. There but the 0:04:04.080 --> 0:04:07.840 dissent said, in doing so, the majority threatens to send 0:04:07.840 --> 0:04:11.040 this court headlong into a clash with the executive. 0:04:11.760 --> 0:04:16.159 Well, yeah, there's two issues really at stake here. One 0:04:16.320 --> 0:04:19.480 is the question that we'd say is on the merits 0:04:19.720 --> 0:04:24.000 whether what the president did was legal and whether Congress 0:04:24.040 --> 0:04:28.039 had the constitutional power to make it illegal for a 0:04:28.040 --> 0:04:31.440 president to remove certain officials that will So that's the 0:04:31.560 --> 0:04:35.039 question on the merits, and the District of Columbia Circuit 0:04:35.080 --> 0:04:38.200 Court here said, listen, you know, this is like really 0:04:38.240 --> 0:04:42.320 a no brainer from the standpoint of this Humphreys Executor 0:04:42.560 --> 0:04:45.479 decision still good law. It hasn't been overturned by the 0:04:45.480 --> 0:04:48.960 Supreme Court. We have to follow it. That's one issue. 0:04:48.960 --> 0:04:52.240 But the second issue is, then, Okay, once you say 0:04:52.360 --> 0:04:59.960 that the president impermissibly and illegally removed these two officials, 0:05:00.240 --> 0:05:02.560 what do you do about it as a court? And 0:05:03.240 --> 0:05:07.560 the dissent by Judge Row said, you know, there's never 0:05:07.640 --> 0:05:12.240 really been a remedy where a court has ordered officials 0:05:12.279 --> 0:05:16.520 to be reinstated in the way that the DC Circuit 0:05:16.600 --> 0:05:19.960 now has said the District Court could do. The Humphreys 0:05:20.040 --> 0:05:24.640 Executor case from nineteen thirty five, for example, rose in 0:05:24.720 --> 0:05:29.560 a dispute over acclaim for back wages. You know, the 0:05:30.200 --> 0:05:33.919 court there said, okay, you know that was illegal to 0:05:34.040 --> 0:05:37.480 remove what was then a member of the Federal Trade Commission. 0:05:38.040 --> 0:05:42.839 Improperly for no reason, and the members actually a state 0:05:42.960 --> 0:05:46.359 was entitled to back wages. This is totally different. Judge 0:05:46.400 --> 0:05:48.960 Row says, it's totally different. You know, here we have 0:05:49.400 --> 0:05:54.880 now a court ordering that officials who have been purportedly 0:05:54.920 --> 0:05:58.760 fired by the president maybe illegally under current law. But 0:05:58.880 --> 0:06:03.240 while this litigation pending, shouldn't we just as she says, 0:06:03.440 --> 0:06:07.760 you know, keep things on hold and not force the 0:06:07.920 --> 0:06:12.880 issue of reinstating these two officials and get this up 0:06:12.920 --> 0:06:16.360 to the Supreme Court and let them decide. And if 0:06:16.400 --> 0:06:20.040 at that point in time, the Supreme Court decides that 0:06:20.080 --> 0:06:24.520 the president acted illegally, and the Supreme Court can decide 0:06:24.560 --> 0:06:27.760 whether it's an appropriate remedy to force these folks back 0:06:27.960 --> 0:06:32.040 into their positions. But right now it is certainly setting 0:06:32.160 --> 0:06:36.920 up a real confrontation between an order from a lower 0:06:36.920 --> 0:06:40.480 court judge and a president's order to fire these folks, 0:06:40.720 --> 0:06:45.719 which one prevails. I think it's very clear and quite 0:06:45.720 --> 0:06:48.120 certain that the Supreme Court is going to step into 0:06:48.160 --> 0:06:52.240 this matter, and we will see what they do, probably 0:06:52.240 --> 0:06:56.160 on the remedies front, pretty soon. And then the question is, 0:06:56.360 --> 0:06:58.719 you know how long they'll take to decide the merits. 0:06:58.960 --> 0:07:02.120 The Solicitor jen said, it intends to ask the Supreme 0:07:02.200 --> 0:07:07.159 Court to overturn Humphrey's Executor, and that's a decision that 0:07:07.279 --> 0:07:11.880 conservatives have been dying to get overturned for years. Do 0:07:11.920 --> 0:07:13.720 you think it's on the chopping block. 0:07:14.080 --> 0:07:17.440 Yeah, I think it is certainly going to be, you know, 0:07:17.600 --> 0:07:23.520 an all probability modified, if not overturned entirely. The Supreme 0:07:23.600 --> 0:07:28.000 Court has really for the last fifteen years been cabining 0:07:28.240 --> 0:07:32.440 the scope of Humphrey's Executor through a number of decisions. 0:07:33.160 --> 0:07:38.040 In one case saying that you couldn't have a double 0:07:38.120 --> 0:07:43.120 layer of officials who have this good cause protection. That 0:07:43.240 --> 0:07:46.160 was a decision in twenty ten, and then in twenty 0:07:46.280 --> 0:07:48.920 twenty one, the Court said, well, you can't have a 0:07:49.120 --> 0:07:54.440 single headed agency with a good cause protection. Fine, Phil 0:07:54.640 --> 0:07:58.680 for these commissions or these boards that have multi members, 0:07:59.000 --> 0:08:02.880 Humphrey's Executor still stands for those, but not for agencies 0:08:02.920 --> 0:08:07.960 headed with just one person. The question is, though, if 0:08:08.520 --> 0:08:15.840 Humphrey's Executor does go, what happens to a the Federal Reserve, 0:08:16.520 --> 0:08:22.160 which I don't know. The Supreme Court and quite frankly, 0:08:22.400 --> 0:08:27.600 this administration right now is saying that monetary policy still 0:08:27.680 --> 0:08:31.680 can be kept independent We'll see how long the administration 0:08:31.800 --> 0:08:34.040 takes that position, But I think the Supreme Court is 0:08:34.080 --> 0:08:37.600 going to be certainly cognizant of what it could do 0:08:38.160 --> 0:08:44.080 to the economy if the Federal Reserve Board loses its independence, 0:08:44.280 --> 0:08:48.680 and the second issue as well, if Humphrey's executor goes, 0:08:48.920 --> 0:08:53.760 what will happen to the protections for the civil service 0:08:54.000 --> 0:08:58.559 and its independence. Maybe there's some ways that the Court could, 0:08:58.960 --> 0:09:03.160 in overturning Humphrey's executor create a carve out for the 0:09:03.160 --> 0:09:07.880 Federal Reserve Probably easier to see how it could still 0:09:08.200 --> 0:09:13.960 keep the civil service protections intact. But we're just, you know, 0:09:14.080 --> 0:09:20.480 really getting close to restructuring some fundamental aspects of US 0:09:20.600 --> 0:09:25.480 government that we've had in place for nearly, you know, 0:09:25.600 --> 0:09:26.600 ninety years now. 0:09:27.640 --> 0:09:30.360 I mean, what does it say that the Appeals Court 0:09:30.559 --> 0:09:36.800 voted seven to four the seven Democratic appointees blocking the 0:09:36.840 --> 0:09:41.840 firing and the four Republican appointees including three Trump appointees, 0:09:42.320 --> 0:09:43.920 giving a go ahead to the firing. 0:09:44.840 --> 0:09:51.400 Listen, there's no question that these structural questions of administrative 0:09:51.440 --> 0:09:56.800 governance have taken on a high level of ideological salience, 0:09:57.400 --> 0:10:01.839 and it's certainly reflective in the judiciary as it is 0:10:01.960 --> 0:10:06.160 in the polity at large. So you know, we definitely 0:10:06.240 --> 0:10:09.880 have a good number of folks who have on the 0:10:09.960 --> 0:10:14.840 political right been trumpeting the unitary executive theory now for 0:10:15.040 --> 0:10:18.520 several decades, and this is sort of the logical extension 0:10:18.679 --> 0:10:22.240 and maybe even some might say the last vestiges of 0:10:22.320 --> 0:10:27.000 a holdout on the unitary executive theory. And you know, 0:10:27.040 --> 0:10:30.560 I think it has some real consequences, and I think 0:10:30.600 --> 0:10:34.400 this is what those who are concerned with how far 0:10:34.480 --> 0:10:39.720 the Court might go if it does modify or ultimately 0:10:39.800 --> 0:10:42.640 overturn humph result together. I mean, as I said, there's 0:10:42.679 --> 0:10:46.040 real concerns about what it would do to the central 0:10:46.040 --> 0:10:50.280 bank's independence. And there's an awful lot of really extensive 0:10:50.960 --> 0:10:55.160 economic research that shows that countries that have central bank 0:10:55.200 --> 0:10:59.960 independence do better economically, that that's an important thing to protect, 0:11:00.080 --> 0:11:04.280 to preserve and not have monetary policy interest rates being 0:11:04.320 --> 0:11:07.520 dictated by what might be in the short term political 0:11:07.559 --> 0:11:10.840 interests of somebody in the White House of either party. 0:11:11.040 --> 0:11:16.479 And there's also concern about you know, political control, presidents 0:11:16.520 --> 0:11:21.520 having too much control over agencies like the Federal Communications Commission, 0:11:21.640 --> 0:11:26.680 and you know, having power to make decisions that might 0:11:26.840 --> 0:11:32.400 be reflective of their own political interests. There's the Federal 0:11:32.440 --> 0:11:37.280 Elections Commission. Some of these agencies are ones that really 0:11:37.360 --> 0:11:41.920 wield a considerable amount of power, and power that can 0:11:41.960 --> 0:11:47.120 be directly relevant to somebody who's a politician and wants 0:11:47.160 --> 0:11:51.200 to stay in office and use these powers not for 0:11:51.280 --> 0:11:53.880 the good of the country, but for the good of 0:11:54.000 --> 0:11:57.480 staying in office. And that's what's I think at stake 0:11:57.800 --> 0:12:02.080 with this litigation here, and quite for there's other lawsuits 0:12:02.440 --> 0:12:07.199 also pending with other officials of independent agencies who President 0:12:07.280 --> 0:12:10.000 Trump has fired at will. So this is going to 0:12:10.040 --> 0:12:14.240 the Supreme Court. It will be a blockbuster decision when 0:12:14.240 --> 0:12:17.600 it comes out, and we'll have to see what kind 0:12:17.640 --> 0:12:21.200 of waves it makes for the country and the future 0:12:21.240 --> 0:12:23.440 of its governance. You know, is it going to be 0:12:23.760 --> 0:12:26.960 just some heavy waves that we can navigate, or are 0:12:27.040 --> 0:12:31.360 we unleashing a tsunami for the country where a president 0:12:31.440 --> 0:12:36.880 can now wield control over some really important government agencies. 0:12:37.600 --> 0:12:43.160 The president acting is if Humphrey's executor has already been overturned, 0:12:43.200 --> 0:12:46.839 I mean, they've taken the position that, as you indicated, 0:12:46.920 --> 0:12:51.080 they're going to argue in court, a Humphrey's executor should 0:12:51.120 --> 0:12:54.920 be overturned. But in the meantime, the President has also 0:12:55.120 --> 0:12:59.000 issued in executive order that says, listen, I'm going to 0:12:59.120 --> 0:13:03.960 subject all all you independent agencies to white House review 0:13:04.000 --> 0:13:08.160 of your regulations, white House review of your budgets, Department 0:13:08.200 --> 0:13:12.720 of Justice review of your legal opinions and positions. We 0:13:12.760 --> 0:13:15.960 want to have a say over your strategic planning. This 0:13:16.000 --> 0:13:20.920 is all now happening, and it's unprecedented. Really, you know, 0:13:21.280 --> 0:13:25.160 there's never been an administration that has acted as if 0:13:25.240 --> 0:13:30.920 these independent agencies are no longer independent. And it's in progress. 0:13:31.120 --> 0:13:35.679 These agencies are submitting their work for review by the 0:13:35.679 --> 0:13:39.760 White House, and we're already in a world in which 0:13:40.040 --> 0:13:44.680 there's an incredible degree of White House involvement to a 0:13:44.760 --> 0:13:49.160 level we've never seen before. The only question is just 0:13:49.280 --> 0:13:52.760 whether at the end of the day President's going to 0:13:52.800 --> 0:13:56.000 be right that if there is some conflict ever between 0:13:56.240 --> 0:13:58.200 the view of somebody at the head of one of 0:13:58.200 --> 0:14:01.840 these agencies in the White House, the White House can 0:14:01.920 --> 0:14:05.800 legally fire him. Right now, that's unclear, But like I said, 0:14:05.840 --> 0:14:08.840 the administration's taking that position, and in this case and 0:14:08.960 --> 0:14:11.680 others gone ahead and made those firings. 0:14:11.720 --> 0:14:13.000 Anyway, it seems. 0:14:12.679 --> 0:14:16.320 Like another big case at the Supreme Court. Thanks so much, Carrie. 0:14:16.480 --> 0:14:19.840 That's Professor Carrey colinies He of the University of Pennsylvania 0:14:19.960 --> 0:14:24.160 Law School. Coming up next, the Justice Department shuts down 0:14:24.280 --> 0:14:31.560 its cryptocurrency fraud unit. This is Bloomberg. The Justice Department 0:14:31.680 --> 0:14:36.840 is scaling back its cryptocurrency crime investigations to focus on 0:14:36.960 --> 0:14:42.440 cases related to terrorism, drug cartels, victimizing investors in other 0:14:42.520 --> 0:14:48.560 specific categories. The Department will no longer target virtual currency exchanges, 0:14:48.840 --> 0:14:54.400 mixing and tumbling services, and offline wallets for unintentional violations 0:14:54.400 --> 0:14:59.240 of regulations, and will also close existing investigations that don't 0:14:59.280 --> 0:15:02.800 align with the new priorities. Joining me is an expert 0:15:02.880 --> 0:15:06.600 in securities law, John George Arris of Aarris Law. So 0:15:06.680 --> 0:15:11.200 tell us about this memo from Deputy Attorney General Todd 0:15:11.240 --> 0:15:15.200 Blanche about scaling back cryptocurrency enforcement. 0:15:15.840 --> 0:15:19.120 Torod Blanche and the Department of Justice have taken a 0:15:19.160 --> 0:15:24.560 step away now from focusing on crypto enforcement, which was 0:15:25.480 --> 0:15:31.480 a primary target of the Biden administration, and they've essentially said, listen, 0:15:31.520 --> 0:15:33.600 the Department of Justice, we're not going to have this 0:15:33.760 --> 0:15:37.640 crypto task force anymore. We're not looking at crypto is 0:15:37.640 --> 0:15:43.760 a key area we're refocusing to issues like immigration issues 0:15:43.800 --> 0:15:48.200 dealing with that and all human trafficking and that for now, 0:15:48.480 --> 0:15:52.160 our priority is not looking at crypto that's created or 0:15:52.600 --> 0:15:56.960 how its end users may take the product and then 0:15:57.120 --> 0:16:00.520 use it for something illegal. They're still looking at fraud 0:16:00.600 --> 0:16:04.240 obviously on a more broad level, or if any of 0:16:04.480 --> 0:16:07.520 crypto ends up being used for something that fell into 0:16:07.520 --> 0:16:10.960 those categories, let's say, you know, illegal human trafficking or 0:16:11.000 --> 0:16:13.800 something like that. But it's really been a big step 0:16:13.960 --> 0:16:18.240 by the government across the board, SEC included and the 0:16:18.240 --> 0:16:21.280 Department of Justice to now take a step back and 0:16:21.640 --> 0:16:25.800 say crypto is not something that we really even have 0:16:25.880 --> 0:16:29.240 a regulatory framework for at this time, so it feels 0:16:29.240 --> 0:16:30.240 like a hands off approach. 0:16:30.760 --> 0:16:33.280 How could this affect, you know, the average consumer. 0:16:33.760 --> 0:16:37.200 I think it's a buyer beware market now for crypto. 0:16:37.280 --> 0:16:40.720 I think it's safe to assume that any company that's 0:16:40.840 --> 0:16:44.000 based in crypto, or any individuals that are trying to 0:16:44.040 --> 0:16:47.080 start a new crypto based business or launch a coin, 0:16:47.720 --> 0:16:51.200 whatever it may be, fraud is still fraud, right lying 0:16:51.240 --> 0:16:54.520 about something to induce some investment and taking that money 0:16:54.560 --> 0:16:57.480 and misappropriating it or using it for themselves. I think 0:16:57.480 --> 0:17:01.000 that's still on the table and something that could potentially 0:17:01.040 --> 0:17:04.160 be looked at. It'll be consumer driven, right, people complaining, 0:17:04.560 --> 0:17:09.000 people filing their own lawsuits through their attorneys going after it. 0:17:09.000 --> 0:17:12.280 It does feel, however, though, that they're not going to 0:17:13.200 --> 0:17:15.800 approach this in a way anymore where they're saying, hey, 0:17:15.840 --> 0:17:19.000 this is security's fraud. Crypto is a security. We know 0:17:19.080 --> 0:17:23.080 there was that huge case with Coinbase where the SEC 0:17:23.760 --> 0:17:27.480 dropped its enforcement action against them on the basis that 0:17:27.640 --> 0:17:30.879 Coinbase had challenged what they were engaged in was not 0:17:31.040 --> 0:17:34.399 securities that crypto aren't. In fact, that the definition of 0:17:34.400 --> 0:17:38.000 a security. So without a regulatory framework of where to 0:17:38.040 --> 0:17:42.880 box this into what this digital asset actually is, fraud 0:17:43.200 --> 0:17:47.800 is fraud. Wire fraud is fraud, Mail fraud is fraud. However, 0:17:48.119 --> 0:17:51.520 that applies to everything right across the board, every single industry, 0:17:51.880 --> 0:17:56.119 and crypto is no longer getting that special treatment or 0:17:56.160 --> 0:18:01.360 that more intense look just because it's crypto. So it's 0:18:01.359 --> 0:18:04.160 a more broad approach. You know, crypto by itself doesn't 0:18:04.240 --> 0:18:07.119 raise a red flag anymore, which I think has really 0:18:07.760 --> 0:18:10.639 freed up this industry. Not that long ago, you know, 0:18:10.720 --> 0:18:14.560 under the Biden administration, crypto was under a heavy, heavy 0:18:14.600 --> 0:18:18.040 attack across the board, whether it was the SEC or 0:18:18.080 --> 0:18:21.840 the Department of Justice, that has all really been unwound. 0:18:22.160 --> 0:18:25.240 And it's at the best of Donald Trump, who is 0:18:25.280 --> 0:18:28.920 approaching his administration from a very very friendly crypto point 0:18:28.920 --> 0:18:29.240 of view. 0:18:29.880 --> 0:18:34.200 He's also issued his own crypto token just before taking office. 0:18:34.920 --> 0:18:37.400 I think that was a big indicator of what regularly 0:18:38.040 --> 0:18:40.159 was going to head and that quite a ton of 0:18:40.160 --> 0:18:44.160 people by surprise, you know, myself included, but just following 0:18:44.240 --> 0:18:47.040 across the industry that it was sort of the silent 0:18:47.119 --> 0:18:50.120 launch of this I guess what's dubbed as a technically 0:18:50.119 --> 0:18:53.879 a mean coin or just this token, that it was 0:18:53.920 --> 0:18:56.680 just a Donald Trump token, as simple as that, and 0:18:56.720 --> 0:18:58.879 he launched it. So I think that was an early 0:18:58.920 --> 0:19:04.000 indicator for Austin, for the public at large that crypto 0:19:04.480 --> 0:19:08.840 industry was going to be given much broader latitude than 0:19:08.880 --> 0:19:12.160 it had been because things were getting really narrow and 0:19:12.240 --> 0:19:16.080 if it was determined that the crypto industry was subject 0:19:16.240 --> 0:19:20.040 to the regulatory framework of the securities in exchange industry, 0:19:20.560 --> 0:19:24.000 that changes everything, right, that changes the barriers to entry, 0:19:24.359 --> 0:19:27.480 that changes every aspect of that business, and how they 0:19:27.520 --> 0:19:31.640 would deal with launching a coin. What exceptions they would 0:19:31.680 --> 0:19:33.960 have to fit into, whether they would need to be 0:19:34.080 --> 0:19:37.520 registered with the Securities and Exchange Commission is very complex. 0:19:38.080 --> 0:19:40.760 So now I know people saw this term around a lot, 0:19:41.200 --> 0:19:43.560 but you know, are we in the wild West of 0:19:44.000 --> 0:19:46.960 crypto when it comes to regulation. I'd say yes. 0:19:47.840 --> 0:19:51.080 And the person who's chosen to lead the SEC has 0:19:51.720 --> 0:19:55.080 substantial investments in crypto. 0:19:55.760 --> 0:20:00.000 Yes, this is an administration now that's saying crypto is 0:20:00.119 --> 0:20:04.439 its own asset class. The SEC has put together a 0:20:04.480 --> 0:20:10.240 team that's looking at a proposed framework for what would 0:20:10.280 --> 0:20:13.359 go around this. Right What rules and regulations would they 0:20:13.359 --> 0:20:16.240 have to have in place? Right now? We have anti 0:20:16.280 --> 0:20:20.760 money laundering rules, we have fin send, we have very 0:20:20.800 --> 0:20:25.520 basic money service businesses that you can be registered with 0:20:25.640 --> 0:20:29.040 spin SEN and be regulated by the government. But we 0:20:29.160 --> 0:20:33.520 don't have anything that's directly on points saying Okay, you're 0:20:33.680 --> 0:20:36.639 selling a crypto, you're issuing a new crypto to the public, 0:20:37.040 --> 0:20:39.479 you have to abide by these set of rules. So 0:20:39.520 --> 0:20:41.520 I think the way that they're going to approach it 0:20:41.560 --> 0:20:44.840 is I would say security is light. At some point. 0:20:45.040 --> 0:20:50.840 If they do issue their regulations or proposed regulations around this, 0:20:51.480 --> 0:20:54.560 they're really in my opinion going to take a less 0:20:54.600 --> 0:20:59.000 stringent approach, which I don't know, may or may not 0:20:59.080 --> 0:21:02.480 be good for consumers and may fall into the hands 0:21:02.520 --> 0:21:06.600 of plaintiffs attorneys if there is fraud, to go after 0:21:06.640 --> 0:21:08.280 it through the courts on their own. And I think 0:21:08.320 --> 0:21:10.800 that was kind of a message from the SEC and 0:21:10.880 --> 0:21:13.560 the Department of Justice. They're not going to put a 0:21:13.600 --> 0:21:15.880 big enforcement focus on this anymore. 0:21:16.600 --> 0:21:19.560 Do you think that the states will step in? Some 0:21:19.680 --> 0:21:22.120 states have said that they are going to step in. 0:21:22.640 --> 0:21:23.400 I think it's tough. 0:21:23.680 --> 0:21:26.680 They could be preempted by federal walls, but obviously there's 0:21:26.680 --> 0:21:29.200 no law on the books right now. If the state 0:21:29.560 --> 0:21:34.480 is against not against crypto, but is skeptical of it, 0:21:34.560 --> 0:21:36.600 or wants to put some rules around that, they could 0:21:37.160 --> 0:21:40.120 It's quite complex and there's arguments against it too. I mean, 0:21:40.600 --> 0:21:44.280 it's the free run of capital. It's allowing people to invest, 0:21:44.640 --> 0:21:48.040 will put their money into a new asset class that 0:21:48.440 --> 0:21:51.760 we've seen can generate extraordinary wealth. People could lose all 0:21:51.800 --> 0:21:55.280 their money. Some states, I think, will be even more 0:21:55.320 --> 0:21:57.960 crypto friendly and try to attract that business to them. 0:21:58.359 --> 0:22:02.760 The ones that regular against it may be missing out 0:22:02.960 --> 0:22:06.840 on those opportunities. Although I can see in some instances 0:22:06.920 --> 0:22:11.000 then stepping in, but broadly right across the United States, 0:22:11.480 --> 0:22:16.119 we've seen things that were once highly regulated and illegal 0:22:16.480 --> 0:22:20.320 are now following free. For example, the cannabis industry right 0:22:20.400 --> 0:22:24.200 we have a lot of legalizations and also with sports betting, 0:22:24.600 --> 0:22:26.760 there's been widespread legalization of it. 0:22:26.920 --> 0:22:28.440 So states view this. 0:22:28.400 --> 0:22:31.600 As a potential to generate new tax revenue to support 0:22:31.640 --> 0:22:35.240 other projects. Without federal regulations. On top of this, states 0:22:35.240 --> 0:22:39.120 could create an attractive environment for crypto businesses to set 0:22:39.160 --> 0:22:41.359 up there, as opposed to limiting that. 0:22:42.000 --> 0:22:45.040 I mean, do you think that cases like that against 0:22:45.119 --> 0:22:49.320 Sam Bekman freed would still be discovered and go forward 0:22:49.440 --> 0:22:50.600 or they might be missed. 0:22:51.080 --> 0:22:53.000 I think they'll likely be missed. I could say that, 0:22:53.280 --> 0:22:58.280 you know, personally, I work as a defense attorney in 0:22:58.320 --> 0:23:04.080 the white collar civil slash criminal space with a specific 0:23:04.160 --> 0:23:09.400 focus on securities, and I've had investigations where I've represented 0:23:09.800 --> 0:23:13.359 individuals related to crypto right in one way or another. 0:23:13.960 --> 0:23:17.480 And during the Biden administration there were a lot of inquiries, 0:23:17.520 --> 0:23:20.040 there were a lot of subpoenas, there was a lot 0:23:20.080 --> 0:23:22.560 of trying to figure out what was really going on 0:23:22.640 --> 0:23:25.320 in this industry. I can tell you that at the 0:23:25.400 --> 0:23:29.680 tail end of that administration and into President's Trump administration, 0:23:30.119 --> 0:23:34.800 it has been completely silent on ongoing investigations. So from 0:23:34.800 --> 0:23:39.480 my perspective, I don't think it will be looked into. 0:23:40.200 --> 0:23:42.120 I don't think they're going to issue subpoenas. I don't 0:23:42.119 --> 0:23:43.840 think that they're going to be investigating it in the 0:23:43.880 --> 0:23:46.560 same way. And you bring up something interesting with Sam 0:23:46.560 --> 0:23:50.840 Bangmin free, who knows maybe his sentence maybe commuted, you know, 0:23:51.240 --> 0:23:53.240 he maybe put in a position where he gets out 0:23:53.240 --> 0:23:57.240 of jail much sooner in light of these very recent changes. 0:23:57.240 --> 0:24:01.640 And we have a precedent for this was Ross Oldbrick, 0:24:01.720 --> 0:24:06.280 who was the founder of Silk Road, which was sort 0:24:06.320 --> 0:24:09.000 of the first I guess exchange for lack of a 0:24:09.040 --> 0:24:12.320 better word, where you could utilize crypto to buy anything 0:24:12.520 --> 0:24:14.760 you know on the Internet or on the dark web. 0:24:14.800 --> 0:24:17.919 And he was sentenced to I think two lifetimes in prison, 0:24:18.040 --> 0:24:21.879 like two hundred years, and when Trump got into office, 0:24:22.400 --> 0:24:25.359 he pardoned him right away. He has been in jail 0:24:25.400 --> 0:24:28.720 for ten years and now Ross Olbrick is free. So 0:24:28.920 --> 0:24:31.360 I think in regards to your question, it may even 0:24:31.400 --> 0:24:32.520 go one step further. 0:24:33.160 --> 0:24:35.240 Not only will these not. 0:24:35.160 --> 0:24:39.600 Be investigated, these type of crypto based frauds. We may 0:24:39.640 --> 0:24:42.800 see people that have been prosecuted for them, like SBF, 0:24:43.840 --> 0:24:46.879 get a reduced sentence and be set free. 0:24:47.160 --> 0:24:49.119 Before I let you go, do you think any of 0:24:49.119 --> 0:24:51.879 the cases you were handling that seemed to have stopped 0:24:52.600 --> 0:24:53.960 could be started up again. 0:24:54.880 --> 0:24:58.800 In my work, I've had really tense investigations with the 0:24:58.880 --> 0:25:03.120 Department of Justice dealing with hundreds of millions of dollars 0:25:03.200 --> 0:25:08.000 related to various crypto frauds that were out there that 0:25:09.160 --> 0:25:12.960 completely stopped. I never got another follow up call again. 0:25:13.359 --> 0:25:17.440 The investigations are, from what I understand, done. They don't 0:25:17.480 --> 0:25:21.360 send the closing letter, but they're done, so I think 0:25:21.600 --> 0:25:23.600 it really has changed. I was just speaking to a 0:25:23.600 --> 0:25:26.040 friend of mine who's in the crypto industry, and it's 0:25:26.080 --> 0:25:29.080 like a green light for any project they want to run. 0:25:29.160 --> 0:25:30.800 The only thing you have to watch out for is, 0:25:31.160 --> 0:25:33.800 you know, anti money laundering. Really just making sure that 0:25:33.840 --> 0:25:36.520 the money that you're getting is from real people and not, 0:25:36.800 --> 0:25:38.879 you know, from some illicit scam. 0:25:39.440 --> 0:25:42.919 It all seems to be evolving very quickly. Thanks so 0:25:43.000 --> 0:25:45.919 much for joining me on the show. That's John. George 0:25:46.000 --> 0:25:49.240 Arris of Aris Law coming up next on the Bloomberg 0:25:49.320 --> 0:25:54.080 law show the Justice Department suspended two lawyers involved in 0:25:54.119 --> 0:25:57.800 the high profile case of a man deported to an 0:25:57.840 --> 0:26:02.639 El Salvador prison because of an administrative error, a case 0:26:02.680 --> 0:26:06.959 that illustrates the position government attorneys can now find themselves 0:26:06.960 --> 0:26:10.679 in while facing the dual demands of loyalty to the 0:26:10.680 --> 0:26:17.720 Trump administration and candor to the courts. The Trump administration 0:26:17.880 --> 0:26:23.200 is facing a barrage of lawsuits challenging President Trump's executive orders, 0:26:23.600 --> 0:26:27.159 some of which have already led to judges grilling Justice 0:26:27.160 --> 0:26:32.040 Department lawyers who are defending their legal basis. The suspension 0:26:32.080 --> 0:26:36.280 of two Justice Department lawyers in a high profile deportation 0:26:36.520 --> 0:26:41.000