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Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.

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Speaker 1: This is Bloomberg Law. I'm Madison Mills in for June

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Speaker 1: Grasso this week. So we were just talking about the

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Speaker 1: fallen leader of FTX, Sam Bankman Freed. I went from

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Speaker 1: having Sam Bankman Fried's name in my mouth a lot

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Speaker 1: when FTX first collapsed in our coverage not so much

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Speaker 1: the case anymore. That's partially because in early June, the

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Speaker 1: SEC filed a pair of lawsuits against those other crypto

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Speaker 1: trading platforms, among them Finance and Coinbase. The agency says

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Speaker 1: the glory days of crypto business practices are over and

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Speaker 1: that they're also not legal. So here it makes sense

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Speaker 1: of that for us is Hannah Miller, Bloomberg News crypto

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Speaker 1: reporter to discuss. Hannah, thanks so much for getting on

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Speaker 1: with us. Let's start broadly here with where the SEC

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Speaker 1: is at. Talk to me about their overall vibe and

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Speaker 1: feeling towards crypto right now.

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Speaker 2: So, for years and years, the crypto industry has just

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Speaker 2: been clamoring for what they call regulatory clarity. You know,

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Speaker 2: they've been asking for clear rules and guidelines to be

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Speaker 2: laid out, and they have their answer. Now, the SEC

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Speaker 2: is cracking down. These lawsuits show that they are coming

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Speaker 2: after crypto companies and that they consider many of the

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Speaker 2: tokens that are traded on these platforms to be unregistered securities.

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Speaker 1: And when you talk about that these crypto firms were

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Speaker 1: kind of itching to have this regulation, how important is

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Speaker 1: that in what the SEC's moves will look like moving forward?

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Speaker 1: Is that is that like a good enough excuse for

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Speaker 1: the practices of these crypto firms.

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Speaker 2: Yeah, so we've seen them argue, you know that they've

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Speaker 2: been working with regulators that there isn't a clear path

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Speaker 2: for them to register, you know, their tokens of securities.

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Speaker 2: You know that they just haven't been able to get

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Speaker 2: these answers. But now you know, they've gotten their answer

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Speaker 2: and it's not the one they've been craving. So they're

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Speaker 2: they're really, you know, at a loss here. There's a

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Speaker 2: lot of questions about whether crypto can actually survive in

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Speaker 2: the in the US, never minds thrive. So they're looking abroad.

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Speaker 2: You know, they're eyeing places like the UK, They're looking

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Speaker 2: at Asia. You know, they think that really their best

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Speaker 2: bet is to go overseas.

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Speaker 1: So is the sense among your sources that that's a

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Speaker 1: pretty likely outcome.

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Speaker 2: Yeah. I mean everyone's saying, you know, they're pushing us

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Speaker 2: away from the US. And you know the other thing too,

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Speaker 2: is that other countries take signals from the US in

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Speaker 2: terms of how they you know, form their regulations. So

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Speaker 2: the fact that you know the US is cracking down,

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Speaker 2: you know that that could dissuade regulators in other parts

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Speaker 2: of the world from you know, being more accepting of crypto.

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Speaker 2: So I think, here, what you know, when I'm talking

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Speaker 2: to two people, you know, there's obviously still hope that

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Speaker 2: you know, that these lawsuits will drag on for years

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Speaker 2: and that there could make be changes or you know,

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Speaker 2: more favorable treatment during that time. But you've seen companies

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Speaker 2: like Coinbase look abroad start expanding their operations there and

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Speaker 2: you know, building new hubs in different markets.

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Speaker 1: So let's talk about coinbase and finance. Starting with Coinbase,

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Speaker 1: which feels like the bigger deal of the two to me.

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Speaker 1: Talk me through the SEC's uh, you know, moves towards

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Speaker 1: Coinbase in particular.

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Speaker 2: Yeah, so Coinbase is publicly traded, this is a US

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Speaker 2: based company, and you know, they've argued the whole time

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Speaker 2: that they've been working with the SEC that they have

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Speaker 2: these close relationships with regulators. You know that there has

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Speaker 2: been some tension, but you know, ultimately they're trying to

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Speaker 2: you know, follow the best path they can. However, you

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Speaker 2: know this this lawsuit shows that the SEC does not

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Speaker 2: think that then they think that Coinbase could have done

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Speaker 2: more to you know, work with them, that they could

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Speaker 2: have stepped forward and you know, tried to find a

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Speaker 2: better path for for registering the tokens that they sell.

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Speaker 2: But this lawsuit suit shows that they kind of have

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Speaker 2: put Coinbase in a similar category to Finance, which is

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Speaker 2: you know, does not have the best reputation in the US.

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Speaker 2: It's actually tussled with regulators around the world. You know,

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Speaker 2: there are these issues that Finance doesn't even have an

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Speaker 2: official headquarters. So to kind of lump these two together

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Speaker 2: is a big step back for Coinbase. Granted, the lawsuit

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Speaker 2: against Finance is way wider. There are more charges here,

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Speaker 2: you know, there are more issues here with Finance.

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Speaker 1: And when it comes to the crypto enthusiasts themselves, so

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Speaker 1: I know, you spend a lot of time talking with

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Speaker 1: how do they feel about this?

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Speaker 2: Yeah, so a lot of the crypto enthusiasts I talk to.

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Speaker 2: You know, they're saying, right now there's this transition from

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Speaker 2: money crypto to tech crypto that people are pulling back from,

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Speaker 2: you know, the financial implications of crypto trading things like that,

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Speaker 2: and they're looking at how blockchain technolo can actually benefit

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Speaker 2: society more broadly. So, you know, there's been a lot

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Speaker 2: of push towards using the term web three, which refers

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Speaker 2: to the centralized version of the Internet that can be

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Speaker 2: built on blockchain, and kind of turning away from you know,

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Speaker 2: these these ties to you know, financial scams, you know, bankruptcies, uh,

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Speaker 2: things like that, and and focusing more on how blockchain

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Speaker 2: can can benefit people.

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Speaker 1: And you mentioned in your story though that crypto enthusiasts, Uh,

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Speaker 1: we're looking at the SEC listing several of the digital coins,

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Speaker 1: even the ones that uh, you know, uh a person

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Speaker 1: who's not as familiar with crypto might know, like Solana. Uh.

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Speaker 1: How big of a concern is that for people who

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Speaker 1: hold those coins now?

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Speaker 2: Yeah, so that is a big concern because we've seen

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Speaker 2: you know, top tokens, tokens to people love named in

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Speaker 2: this SEC lawsuit. So you know, you mentioned Salana Kredano's

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Speaker 2: ATA token was another one named, and you know, these

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Speaker 2: are big names in the end of and people are concerned,

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Speaker 2: you know, like, Okay, well what are these tokens? I

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Speaker 2: do have our securities? What are the financial implications of that?

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Speaker 2: You know? Can I actually trade these? I also talk

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Speaker 2: to a lot to venture capitalists who invest in cryptostartups

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Speaker 2: through UH token purchases. So the fact that they're holding

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Speaker 2: onto these tokens right now, you know that that's given

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Speaker 2: them a lot of uncertainty. And you know, some of

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Speaker 2: these are registered investment advisors, so that gives them a

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Speaker 2: little a little more cushion with them. But this is

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Speaker 2: a this is a huge turning point for the industry

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Speaker 2: in looking at these tokens and seeing them as as securities.

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Speaker 1: Can they just register them as securities and then we

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Speaker 1: can treat it like you know, any old investment or

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Speaker 1: Is that not going to happen?

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Speaker 2: You know, that's a great question. I think there's just

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Speaker 2: still a lot of unknowns here, like what the actual

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Speaker 2: process is. You know a lot of these tokens also

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Speaker 2: are like monitored by the centralized foundations and things like that,

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Speaker 2: and it just it brings up a lot of questions here,

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Speaker 2: like how can we actually you know, work with the

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Speaker 2: SEC to get these these tokens registered if they are securities.

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Speaker 1: Well, and as you know, it's a very complicated topic.

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Speaker 1: Is there a sense from the sources that you speak

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Speaker 1: with that the SEC has the knowledge and understanding of

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Speaker 1: digital assets to even regulate them.

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Speaker 2: Yeah. So I think when you know, people were initially

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Speaker 2: first excited about Gary Gensler, they're like, oh my gosh,

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Speaker 2: he actually understands this technology. He's taught a course on

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Speaker 2: blockchain at MIT, like he gets it. But I think

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Speaker 2: now there there's some fear and concern that like, Okay,

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Speaker 2: maybe he doesn't actually, you know, see the potential in

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Speaker 2: this technology that he just wants to crack down. So

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Speaker 2: it's definitely shaken the industry for sure. I mean they've

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Speaker 2: been expecting this for a while, but to actually be

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Speaker 2: faced with the reality of these lawsuits, it's a huge deal.

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Speaker 2: And you know, the qu industries just continuing to reel

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Speaker 2: from scandal after scandal.

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Speaker 1: Well, that was going to be my next question for you,

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Speaker 1: because I've been saying that, you know, the FTX news

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Speaker 1: feels old to me at this point, but obviously that

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Speaker 1: kind of kicked all of this off. To what extent.

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Speaker 1: Is the downfall of FTX sort of the spark that

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Speaker 1: lit this regulatory flame.

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Speaker 2: Yeah, I mean it was I think a huge catalyst

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Speaker 2: for this. I mean especially because Sam bankf and Fried

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Speaker 2: was just so beloved in Washington, DC that he was

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Speaker 2: working closely with you know, politicians with regulators, and he

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Speaker 2: was he was well known to them and kind of

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Speaker 2: seen as you know, a better alternative to to you know,

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Speaker 2: cz and Binance. So the fact that you know, his

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Speaker 2: his exchange just collapse and set off this you know,

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Speaker 2: tidal wave of issues for the industry. I mean that

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Speaker 2: they're still dealing with them.

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Speaker 1: And Hannah, in our final kind of forty five seconds

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Speaker 1: with you, you mentioned the investors and and folks in

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Speaker 1: this industry are looking globally for their next steps. Is

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Speaker 1: there any chance of that option getting dwindled as well

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Speaker 1: by the same regulatory issues.

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Speaker 2: Yeah. I mean we've already seen you know, regulators take pause.

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Speaker 2: I mean like in Dubai for example, you know they've

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Speaker 2: kind of if the uas very much presents it itself

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Speaker 2: as you know, a crypto friendly environment, but you even

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Speaker 2: see you know, Dubai's top regulator crackdown on a new

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Speaker 2: crypto exchange called open x and already having issues there.

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Speaker 2: So it's it remains to be seen, you know, what

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Speaker 2: will happen in various in various markets. But I think

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Speaker 2: any crypto company should be on their toes, whether they're

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Speaker 2: operating in the US or outside of it.

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Speaker 1: All right, Hannah, well, thank you so much for joining us.

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Speaker 1: That was Hannah Miller, Bloomberg News crypto reporter, breaking down

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Speaker 1: all the complexities that continue to exist within this space. Again,

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Speaker 1: Hannah Miller with Bloomberg News. I'm Madison Mills in for

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Speaker 1: June Grasso. Coming up next that PGA Live merger will

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Speaker 1: bring you the latest. This is Bloomberg. This is Bloomberg

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Speaker 1: Law with June Grasso from Bloomberg Radio. This is Bloomberg Law.

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Speaker 1: I'm Madison Mills in for June Grasso this week. So

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Speaker 1: that PGA Live Golf Tour. It's loaded with questions and

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Speaker 1: the latest is how the century centuries old PGA Tour,

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Speaker 1: which is technically a nonprofit, will run once funded by

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Speaker 1: one of the world's biggest sovereign wealth funds. PGA Tour

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Speaker 1: says it plans to keep its nonprofit status, but how

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Speaker 1: are regulators going to feel about that. Joining us to

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Speaker 1: discuss is Bloomberg Intelligence senior litigation analyst Jennifer ree Jen

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Speaker 1: great to speak with you as always. Can they keep

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Speaker 1: their nonprofit status here?

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Speaker 3: You know, it's a really good question, and I'm not

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Speaker 3: so sure that they can. And I also don't really

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Speaker 3: think for profit or nonprofit will make a difference in

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Speaker 3: terms of the anti trust review of this. I mean,

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Speaker 3: I think right now their biggest obstacle. I mean, we've

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Speaker 3: seen all sorts of issues and senators coming out and

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Speaker 3: worry about national security, but I think right now their

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Speaker 3: biggest obstacle will be anti trust in the DOJ, and

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Speaker 3: that review won't really matter. It won't really matter whether

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Speaker 3: it's for profit or not for profit.

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Speaker 1: Okay, So that's interesting. So that's not really something that

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Speaker 1: we need to be looking at in our coverage necessarily.

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Speaker 3: Well, I think for tax purposes, I think it does

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Speaker 3: make a difference. I'm not a tax expert, so I

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Speaker 3: can't really speak to what I mean. I think there's

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Speaker 3: so many implications to this across many different areas of

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Speaker 3: the law, and because we don't know the details, they don't.

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Speaker 3: They haven't hammered out the details yet, so we don't

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Speaker 3: even know what kind of an alliance this is, whether

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Speaker 3: it's a merger, whether it's a joint venture, whether it's

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Speaker 3: something else. They haven't even hammered that out yet, and

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Speaker 3: so we don't know either, and the legal implications won't

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Speaker 3: really fully be able to be fleshed out or known

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Speaker 3: until those sorts of details are completed.

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Speaker 1: Well, that's the thing that's interesting to me and hard

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Speaker 1: about talking about this is I feel like I need

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Speaker 1: to know the number to understand it. How do you

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Speaker 1: think about it without knowing the number? Here?

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Speaker 3: So, just from an antitrust perspective, the way I think

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Speaker 3: about it is that it almost doesn't really matter what

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Speaker 3: it ends up being. It is two competitors in a

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Speaker 3: very concentrated market coming together to become one, and that

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Speaker 3: is sort of presumptively anti competitive. I mean, we saw

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Speaker 3: the benefits of Live as a new entrant because a

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Speaker 3: lot of golfers got paid a lot of money to

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Speaker 3: come over to Live, and then the PGA also had

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Speaker 3: to start pushing up their prize money in order to

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Speaker 3: keep the golfers within the PGA tour. That's the essence

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Speaker 3: of competition. A new competitor comes on board, and people

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Speaker 3: are paid more I mean, or you know, prices go

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Speaker 3: down for consumers. But this is a different issue. This

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Speaker 3: is about labor and the payments made to labor, and

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Speaker 3: that will change if they come back together, because once

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Speaker 3: again one entity will be able to determine how much

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Speaker 3: these golfers are paid. And so you know, no matter

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Speaker 3: what kind of what kind of a transaction it is,

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Speaker 3: I think that it's sort of superficially just clearly has

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Speaker 3: an anti trust issues.

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Speaker 1: And given that it's coming from Saudi Arabia's public investment

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Speaker 1: fund the money part. Could this be similar ish to

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Speaker 1: what we were talking about with the Microsoft Activision deal,

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Speaker 1: where we see different results in different parts of the world,

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Speaker 1: or is it really going to be decided in the States.

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Speaker 3: Well, I think that's possible because part of this alliance

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Speaker 3: that they're putting together, whatever it is, is including the

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Speaker 3: European Tour, the DP World Tour I think it's called,

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Speaker 3: and so European regulators may want to look at it

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Speaker 3: as well. It's kind of rare for the big global

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Speaker 3: antitrust agencies across the world to actually come out differently

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Speaker 3: on a deal. What happened with Microsoft Activision was kind

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Speaker 3: of a rarity, and I don't you know, I don't

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Speaker 3: think that they would here because it's also not in

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Speaker 3: my mind, it's not quite as complicated as the Microsoft

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Speaker 3: activision deal is in terms of looking at how it

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Speaker 3: could harm a market. I mean, it seems to be clearer.

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Speaker 2: This is a This is basically a.

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Speaker 3: Combination of horizontal competitors, and I just think it's more

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Speaker 3: likely that the agencies would be more aligned on that,

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Speaker 3: and so the European regulators may want to look at

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Speaker 3: this too.

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Speaker 1: In our final thirty seconds, what do you think is

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Speaker 1: going to be the next big reveal that we get

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Speaker 1: about this? I guess I'm going to call it a murder,

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Speaker 1: even though that may not even be the right rule work.

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Speaker 2: We don't know.

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Speaker 3: Yeah, well, I think we're going to have to. Senators

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Speaker 3: are really popping up now talking about concerns about national

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Speaker 3: security or the tax issue that the nonprofit and for

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Speaker 3: profit tax issue you raised. The DJ started an investigation,

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Speaker 3: so I think, you know, it could be along any

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Speaker 3: of those lines that we could hear about the next event.

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Speaker 1: All right, well, I am certain I'm going to be

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Speaker 1: asking you a lot of questions along the way. Jennifer

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Speaker 1: Ree Bloomberg Intelligence senior litigation analysts. Thanks so much for

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Speaker 1: joining us. This is Bloomberg Law. I'm Madison Mills in

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Speaker 1: for June this week. Stick with us for more throughout

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Speaker 1: the week on Bloomberg Law. This is Bloomberg