Bitcoin Law Review – 1Broker, Winkelvii vs Charlie Shrem, EtherDelta SEC's Latest Statements

welcome back to the tone base YouTube channel and we are back with the Bitcoin law review this is one of my favorite shows and man so much has happened in the world of crypto that is related to regulation and law and to break it all down on for you today we do have three esteemed lawyers maybe a few more will join us let's do a little intro I probably picked up a bunch of new followers that haven't seen this show in months we have Bill David and Sasha Assad bill I just thought very brief intro and remind us what's up in your world lately hey Bill restless Restless Law Firm I'm an attorney here in San Diego I am leader Co lead counsel in several major crypto class actions and I also represent blockchain projects helping them comply with and avoid regulation the most exciting thing in my world though is I'm an entrepreneur in several other respects and one of my companies that I'm involved in just launched this water here called cent cent and it's got this little scented rig I'm chilling this on your show I can't help it it's got this little scented ring right here and when you take a sip you get the flavor of passion fruit or whatever it is it's pretty cool let me let you push a full screen bill do it again there you go you don't really it tricks your brain into thinking that you're ingesting something but that's like David everybody's laughing at me for Schilling at least it's not a blockchain project this time right you're now promoter no I know but I'm not selling stock in it baby no no no no this is totally fair because like I get you guys on this show literally it's not legal advice but it's legal suggestions to help people so please you are welcome to shell as it's not a scam or David will sue you speaking of David David what's up man okay David silver silver Miller I am just a little guy in a little space but I do sue everyone crypto related lately my big cases are going right now coin base crackin monkey capital Daniel Harrison for people who know Daniel Harrison he's showing up lately but it's been a good time we're actually litigating cases right now and now I'm not just stacking them up litigations going on so it's gonna be really interesting 2019 is we got a bunch of these cases actually set for trial so come listen you'll hear me say I'll sue anybody and everybody for the most amazing parties in the last two months I've started hearing from the early promoters and owners of companies who now want to sue their own partners so lately it's been what I'm willing to dabble and cross fighting you know I'll use one example you know people related to tether who got screwed in tether now wants to each other and when I pick a side and start stealing so we'll see how that goes that's amazing because that's how you find out what the hell is really happening under the hood of that project I started the call by saying Do You Know Who I am have you looked me up do you see what I say I'm like I believe tether is a fraud and out and out fraud he's like it's not it's legitimate I can prove it's legitimate but they stole all my money oh man all right and last but certainly not least we have the lovely Sasha with us again I'll show what's going on oh hi tone thanks for having me and all of us here and not much is nothing as exciting as the litigation going on with others but I do have a I got certified to teach bit blockchain law to other lawyers for nine and a half CLE credits in Tampa at block spaces so getting ready for that on November 17th and 18th it'll be an eight-hour course and then making that into a video series one hour at a time so that's been kind of exciting and then I was traveling last week at the Vegas crypto con with lynn albright and still working working towards either getting clemency or working on this 2255 motion and she asked if I could kind of mentioned the petition on on today's show and see if we can get any more signatures on there it's a partition if you go to free Ross org and we actually we got in touch with Michael Tsarevich and he took us to a Donald Trump jr. rally which was kind of the closest we've gotten to she needs Donald Trump to look at the situation you know give a part in so it was it was a step closer on that front so that was kind of exciting and then the week before that I went with Tatiana murrow's on the Contra cruise which was a lot of fun there too got to meet and I only Brockwell who have been a fan of her as her you know YouTube shows for quite a while so it was good last two weeks but I'm also glad to be home and get back to some more hard work ya know it sounds cool I'm actually in now your homies are home country of Australia at the moment and ya know very cool and speaking of Tampa and black space I will also be there teaching my workshop I think on December 15th so a few weeks after you alright let's jump right into it a good screen share and let me see which screen am i sharing here we go we're gonna do we're gonna start with a quick follow-up before we get to the breaking news of ether Delta and the quick follow-up that we have is on Raven coin so pop doctor or Jade oh man so mr. Pepe has a letter though their lawyer the lawyer for rayvin coin or an independent lawyer who likes radiant coin and holds radiant coin his letter apparently succeeded and Finance listed Raven coin they announced it on the 12th of October they announced that they will be listing it and here's what happened to Raven Queen so here is Raven coin on bit tracks where it was listed earlier and this is the day that it got listed on Finance so pretty much that day the price went up about 75% and about 70% and then over the course of two or three weeks the price went up three hundred and seventy percent so just general thoughts we did a huge deep dive into Raven coin with Bruce Fenton on the show Bruce was very open maybe a little too much so about how much Raven coin he has and all the work that he's done in order to promote Raven coin so the something like this you know justify the fact that Raven coin is this decentralized currency like Bitcoin and or does something like this make it look you know it is more ammunition for the regulator's to potentially say no you are clearly profiting general thoughts real quick and then we'll move on to the you know the breaking news of the day I know David Satcher you guys okay I'll jump in so basically my thoughts are simple one I agree that Pepe wrote the letter the you know he was acting as a lawyer basically for a centralized authority when he did that – I do not own Raven coin but I typically buy coins after I meet people and to them directly because I feel like if I like them I'll buy their coin so what you're telling me is I missed my opportunity to buy Raven coin after Bruce and was and Pepe called into the show because wasn't that before the big jump on buy head oh that was way mean I could have made a killing on this I mean my wife tells me I keep missing these opportunities so I'm a little disappointed in myself because I was joking around with Jason that day I thought Bruce beat Jason in the conversation that I was gonna buy some Raven coin and tuck it away just cuz Bruce look this is really easy the only this isn't a question of if it's a question of when and when I say now the question that if but the question of when the SEC has limited resources do I think they're gonna make Raven coin the example no I don't so I don't think Raven coin in of itself is any problems government regulators in the future being the target I think they'll get encapsulated and whatever happens in a year or two but I don't think the Raven coin itself is going to be the target all right sounds good I'll have a follow-up on that but let's get Sasha's thoughts and their bills yeah I kind of agree with with that that it seems like the SEC is going after more low-hanging fruit and Raven would probably fight back and then they'd have to you know litigate the matter rather than just giving them a fine and having someone say oh yeah we don't want any problem we'll pay the fine and let's move on so I think if they went after Raven it would it would lead to and I don't know that they could win that well we'll see it would be interesting but and I guess I need to disclose you know I've I've owned Raven since since last you know February or something so you know that might make me a little more bullish on it but I think where Raven was mined rather than sold through an ICO and this is where Jason and I disagree I think that when you mine alone it it takes it further away from the definition of an investment contract then if it's sold as an ICO so I think that's the big difference there but but this might like pretty pretty telling that you know getting on an exchange creates the expectation of profit ya know but we agreed on this show pretty much everyone was an agreement that Raven coin itself is not a security it's the promoters of Raven coin and the centralized entities there's clearly just two of them the two centralized entities that are basically in charge of everything to do with Raven coin other than the mining of the coin so that goes back to David before we get Bill's thoughts in that so I probably agree with you David that the sec technically has unlimited resources but limited you know limited time and effort to deal with it and Raven coin clearly has the money now the people behind Raven coin clearly have the money like the rippable people to defend themselves to the you know to the highest bidder or the best bidder for the highest money to clearly put up a fight against the SEC in this battle now that the price has pumped so much and but the other question is so I'm with you David that the SEC will probably not go after Raven coin but would you agree that if they wanted to they can easily go after basically the two people i in the white paper and the main entity in the back as well which is t 0 so I just wanna think one step back is Sascha kind of said she agree with me on something but she didn't actually agree with what I was saying because I poorly articulated it it's not that the SCC's the SC saucer was right when she said the SEC presently has only gone after the low-hanging fruit publicly I believe in 1920 19 20 20 I've been saying 20 20 lately they're gonna start going after the more confrontational crypto they whether it's going to be ripple whether it's gonna be the East cell you know they're gonna go after some of the big targets so my point was that I don't think Raven coin in its in and of itself will be a big enough target when they actually go after the actual so just clear up that little point I don't think this is an easy case it's a mixed case I do think it actually is a good test case if the SEC really wanted to go after them because of who their backers are and some of their backers or some of the bigger names in the space and how they handled this and the simple proof is in the pudding that saw a lawyer who is involved wrote the letter BAM they're on Finance and bam the price goes up I mean this is a picture-perfect candle of what happens when you get onto in exchange and don't get me started on Finance being a legit exchange because you could have traded this elsewhere but this is the perfect this would be not necessarily low-hanging fruit there be a confrontation based on the mining based on the sales after the mining based on the promotion so this isn't low-hanging fruit they could pick the fight with Raven coin I just don't think they will I don't think Raven coin is big enough of a target for them to go after when they actually start going after real targets and then so if they if they aren't a security tones question about whether the promoters could get in trouble I think they wouldn't have SEC jurisdiction if it's not a security so by promoting this it would be the same as like promoting a sneaker or something along those lines I'm a little bit on a couple of things here you know I first I want to say I really appreciate the I appreciate when when entrepreneurs can find perceived loopholes in the laws and ways around the law to do something in a way that is not violative of legal rules I think that if you know we discussed this ad nauseam but I think it's fairly clear that the way that Raven coin was launched it was not an investment contract there's certainly arguments for that and I know Jason would be here to advocate for it you know I remember talking with him a little offline about it and he said well you know all of the statements that were made everything that was done on the code all of the all of the repositories on github were all traced back to Medici and thing was Medici Ventures which is a subsidiary of t0 so really this is completely a creation of of t0 whether it's a security or not I'm pretty sure I feel pretty confident that it's not however we do know that Raven coin was built on the Bitcoin infrastructure right and so we also know that the that the CFTC has kamat has considered Bitcoin to be a commodity and so I think that it's fairly I think that it's fairly easy for us to conclude it for the CFTC to conclude that Raven coin is a commodity now normally the normally the the CFTC doesn't have jurisdiction over spot markets in commodities it's only futures market swaps things that deal with future delivery of a commodity but under section 9 of the Commodities Exchange Act the CFTC can bring an enforcement action for false statements and market manipulation so I think that while while this is not something that the that the SEC would be concerned with to the extent there are pump-and-dump or there are other spoofing techniques or market manipulation techniques or false information it's being put out into the marketplace by and I'm not saying that that bruce fenton is involved or has made any of these but to the extent him or others that are related to the project or not related to the project I think that they could be putting a target on their back for CST and see if to see enforcement Astrid and that's all I have it I'm gonna take a drink of this delicious water these guys I know we could talk we couldn't spend another five hours talking about Raven coin and Bruce meant them but we are gonna move on I mean I I took off screenshare let me jump right back on it and for our next EPIK what we are looking at is news just broke this wasn't on our original agenda but it has been added to the agenda because the FCC charged us eater Delta founder with operating an unregistered exchange oh and by the way we are gonna get back to finance a little bit later whether they are legit or as an alleged exchange to david silvers point hope you're still around for that one that's towards the end of the show or next week but back to ether Delta so there's a couple of things here right so I have two articles the one from CCN and the one from coin up from coin desk I just like the CCM page better it's nicer looking so here is that there is the interesting thing the US Securities and Exchange Commission has charged the founder of decentralized etherium exchange Dax III Delta with operating an unregistered exchange so and in the so that's the one thing so first of all the FCC clearly doesn't care that you claim to be decentralized and it's amazing how there is this concept of a decentralized exchange it doesn't exist if you are in charge you are in charge and the SEC basically said you are not decentralized and all of the fools that thought ether Delta was decentralized the SEC just proved that they aren't so that's number one there's almost no such thing as a decentralized exchange because someone is in charge of the code and that person could be held responsible the other part here is this one according to the SEC either of the platform illegally allowed users to trade tokens that the SEC considered to be securities under federal law now my biggest question after reading this entire article is what are those tokens which documents is the SEC clearly stated are securities and this seems like a big ambigú 'ti now the coin desk article did state right here almost all of the orders placed through either Delta platform were traded after the issued 2017 BAU report which concluded that certain digital assets such as the Dow token were securities and that platforms that offered trading of these digital asset securities should be subject to the SEC requirement then exchanged this register or operate a person to an to an exemption so basically from what it sounds like to me the only actual security that the SEC has said this token of security is the down token which when they said that no longer even existed so to me this is very very frustrating because I want to know which tokens the SEC has said our securities that were traded on ether Delta and I haven't been able to find that part but what do you guys think of this in general and general thoughts let's start with bill I think this is incredibly obvious that this type of enforcement action is is coming we have been at least you know to anyone who's been listening to this podcast I think almost all of the attorneys here have been saying the SEC has their sights on unregistered exchanges there is a tremendous amount of regulation that that must be dealt with if you're going to be trading anything that constitutes a security now the I don't we can probably pull up the press release here from the SEC probably one of you two are doing it and they'll describe what tokens they were it does say ERC 20 tokens so basically to me that means that they were I see owed so you know we all know you know I think a shorthand way to cause something in security is that it was sold in an IC o—- in exchange for some sort of monetary consideration or Bitcoin or eath or something like that right so that's probably what they were trading and anybody trading those needs to be either an exchange which means they need to file rules and regulations and pile two manuals and get approved by the SEC or they need to be a broker-dealer registered with the SEC this has to comply with similar standards so what's what's interesting to me is why this this is not the first enforcement action I think bit funder was I think it was a couple of years ago maybe in February where that was the first exchange that was that was targeted by the SEC but why this one because there's some really interesting features about it we've got major exchanges in the US that are clearly selling trading securities I see oh tokens I won't name them because I don't want to get fingers pointed at me but they're they're big companies and and you know they trade billions of dollars worth of tokens every day why did the SEC go after a small I guess we could call it low-hanging fruit digital excuse me our digital decentralized exchange that's that whose participants aren't really based in the United States I don't know the answer to that maybe it's because it's easy maybe because they won't fight back I think that the I think that the wasn't this coupled by some sort of allegations of fraud I I don't I'm looking at the S I'm looking at the SEC website I'm looking at the press release it doesn't say which ERC 20 tokens other than the Dow which no longer exists at the time and saying look you had notice of this because ether Delta had noticed that this enforcement action was coming because in July 2017 the SEC issued the Dow report and in the Dow report has said that any any trading venue that was executing trades in these in something that could be considered as security had to register with the SEC what's interesting to me about it is that I think the the founder is in Malta and anyway they're all they're all overseas so no one's in the US and I think this is the SEC saying look if you're going to be if your custom are going to be us people which was part of this I think enforcement action then it really doesn't matter where you are they will shut down the exchange that they will hold you to account depending on whatever the prerogative is so maybe they can't actually reach Zach Coburn who is the this but they can they can seize assets they can shut down the exchange and I think this is the first of many anyone who runs a quote-unquote exchange you're not even allowed to use those words in the US if you're if you're trading securities anyone who is operating the exchange in the US should really be crapping their pants unless they've registered as a broker dealer and got approval with the SEC because this is the first of many second of many yeah and I do advise people to read the SE C's Dow report it was very interesting and uh I'll put the link I'll add the link to the video description in that I remember calling the Dow I gotta find those videos I remember cold and one of the dumbest projects that's gonna steal all of your money the moment I heard about it that was about three weeks before it imploded and I always called them a not only a security but a VC fund security and everyone said that it wasn't and the Dow report stated that it was so it was very interesting all right uh Sasha let's get you in on this your thoughts on the whole eath Delta the concept of being a decentralized exchange has never made sense to me and I'm still kind of upset that the SEC is going after these things like they're going after them rightfully so but they're not justifying it with which securities are being traded because they they're you know they're not telling us which ERC 20s and which i ce o–'s are securities i think they'd have told us that and you know in a number of different ways they they think everything that was sold through an IC o—- after the dow were noticed that they gave that the dow was a security they think every IC o—- since then has been a security that's my take on on their perspective and you know it was confused that line of messaging when Hinman came out and said aetherium wasn't a security but I think theory ins I co took place before the net down notice which was July 25th 2017 so I think every IC o—- after that is in their opinion of security so every RC 20 token on there that was being sold though IC owed post july 25th is probably what they're talking about and I think that guy I thought I read somewhere that the it I always was under the impression that that was a decentralized exchange you know in in so much that I didn't know there was someone behind it but I guess obviously someone wrote the code they weren't anonymous and I think that's one of the big problems with decentralized exchanges is how can you keep up an exchange or what incentive do you have like this guy didn't realize that he was taking I think a three cents or three percent there was some kind of you know Commission being being made by this Chicago based Zachery guy who's 31 years old and he if I'm remembering what I read properly he he was actually a licensed either SCC or CFTC broker or so he should have known the rules and knew that he was probably breaking them but this if he was taking a 3 3 cents or 3% off every trade he's what very won't well off now so $388,000 fine is just a small slap on the wrist to him and you know someone I think I saw in one chat to that is still open today like you can still go on and place trades on this thing so it's like a just you know pay to play and keep going if that's the case if the SEC like how can they actually shut it down if it's still going after after this happened today but I think it's a good message to put out there to all of the other people who think they have decentralized exchanges but there's like you know it's someone behind each of them running it or operating and maintaining the code if that's the case you know the you're you know not decentralized and then it's kind of a good want to say it's a good thing because you know I don't like overall don't like regulation but we it's created a really unfair playing field for people trying to create new projects in a space trying to do the Red Deer out and then there's these other projects that are out there just you know launching and going you know as if there's no regulation so now I think people are starting to really see okay we've got it if if this is the it levels the playing field so that people can't just think they can operate outside the rules yeah well David will get to unis I guess so Sasha yeah he might be well off but I'm sure you know how much guys that make this kind of money in crypto like to party so it's it's a big question mark haha whether she has the $100,000 the PDS easy I believe it you're gonna steal my line because you're there because this is an offshoot of the Lamborghini rule so the Lamborghini rule is if you do an IC o—- and you buy a Lamborghini the next day you commit an SEC violation this is an off shift if you're charging transaction fees you're not decentralized if you're putting in it to your bank account and you're gonna buy a Lamborghini so I'm with towing this guy probably boy Lamborghini because he thought he was decentralized and was making all that money my presumption is this was again in a so Sasha said before low-hanging fruit they negotiated this he's paying the four hundred thousand to make this go away or whatever it was three and change so this was low-hanging fruit they established some rules there's it needs to be a big distinction on this though this is discussing token sales so this isn't coinbase crack and Polonia acts gemini this is but there's something a little tidbit in here that's really interesting and the quote on this today was there was somewhere in the order but it's basically saying a system that meets the requirements for the exchange act must register as in exchange and that's what everyone in the crypto space should be terrified of because david silver just like so go back and say read my first publication on coin desk it's the exchange litigation that's coming and all these exchanges and coinbase did a fundraiser last week where they raised some extra money I think they're worth either nine billion dollars right now on paper they should go pay me my my hundred million dollars to go away but more importantly everyone that's running an exchange to go register is in exchange and that's who the sec is gonna be going after so the low-hanging fruit here was this guy was just selling ERC 20 tokens so i think that was really an easy way for them to go ahead and show that he was operating an unregistered exchange the coin base crack employee x gemini big truck sees of the world they're gonna claim they weren't selling tokens so that they're exempt from this but i think at the end of the day this is the beginning this is another low-hanging fruit for the sec that's claire martial law and what they're gonna declare the law is for 2020 and so let's think about really what is what this implies what does this mean what is it what is a crypt and i can't use the word exchange remember i can use a word exchange but it's it's a legal term of art that means that you're registered and you're approved hold on thought that all these use the word exchange no but all of these all these places use the word exchange you don't want to use it but all these places do know exactly they are you or they'll say something like to get around it like ex like bid treks or something like that not to point the finger at that but they have to be registered it creates all kinds of duties on these order execution venues right particularly for the protection of the investors not the investors the traders there has to be or that because remember all this happens in a in software order matching engines that that match buyers and sellers and it's as I've said a million times on the show it's a black box so what goes on in those order matching engines has to be disclosed to the sec so that investors can go look up these reports about how my exchange that I'm operating on how that exchange operates so that there's full disclosure of how my trades are going to be executed there's best execution obligations there's limits on the amount of Commission's that they can charge so there's often in in crypto exchanges a very big differentials between the bid and the ask oftentimes the exchange can step in on one side of the trade and take the spread and capture the opportunity of a trade there's a million different ways through BOTS or through being a market maker that that the exchanges can step in here and in what would you call it take the cream off the top of the of the traits and and all of that has to either be disclosed or mitigated against if it is actually something that's registered so what we have now is we have these exchanges that are basically using very simple order matching software that would never comply with SEC regulations and and I think what we're going to see is that the the order matching software for these exchanges is going to go to enterprise-grade the stuff that you can that that we're seeing with the the nicey and the nasdaq these types of software trading platforms are going to make their way into crypto because the SEC is not going to allow these black boxes to continue to operate this way it's just it's not it's not how markets are supposed to function in the 21st century I think we still use a Jesse Powell quote here crypto traders don't mind market manipulation they all mind it when they lose their money thank you really say that that is a direct quote and on a blog post by him after my lawsuit was filed he literally posts that it's in the bloomberg article they directly quote him on it when they did the tether fraud that is a direct quote man people CEOs in the space really should check with their lawyers before making any public statements or putting their fingers on a keyboard another white Jesse he doesn't like I'm trying to get Jesse to play in the poker game oh my god please he won't do it upon their come me out for Jesse I'm gonna get I'm gonna get really mad oh hell no no no no oh god no no you're in the game you you you you might come off the front page of my website I just wrote that just so I could get him in there but but you played Marco like Marco when Marco was still a coolie Marco when speak on stage with me because he was offended by the fact that I kept saying that Marco is gonna go to jail oh man yeah so but I if you are gonna play I don't know if you registered yet but I am gonna anyway I don't need to register well we'll talk about that later okay we're gonna move on I just have a one quick comment unless you guys want to say anything else I'm ether Delta I just want to say that if there is a sudden Lambo up for sale in Chicago that sale because you know what our money is going and why it's going up for sale I do have one comment just dead so someone actually just texted this to me but that you can actually download and run your own front end for ether Delta so the ruling is effectively worthless because anyone can set it up and trade any token regardless of it being listed or displayed on the front end well it's not it I don't think it's totally worthless because it shows that whoever wrote that code see this is the problem with the centralized stuff even something like a theory of them in order for unlike Satoshi and Bitcoin who was actually able to do it anonymously as the grassroots movement you can to get a project like this off the ground unless you personally promote it and if you promote it and there's and they know who wrote the code they can go after that person so sure right now people can use this thing and there's nothing in the SEC can do about it the next guy that tries to you know do something like this is gonna be a harsher penalty because of this precedent so they're they're setting it up going forward and I understand why they're doing it mm-hmm all right let's move on guys and this one is actually this is the one I really really really wanted to talk about and this is of course the one broker situation oh no sorry that's Eaton Delta again I where's my one broker stuff here we go yes so the SEC charges Bitcoin founded securities dealer and CEO now I found this particularly interesting I guess I maybe I maybe I shouldn't say too much I don't want to get a letter from the SEC but um so one broker has been around since 2012 I have never heard of a single a person complaining about one broker I never heard of a single person being scammed by one broker and one broker had a pretty neat thing one broker was allowing you there were oh they were bidding to Bitcoin only Bitcoin goes in a Bitcoin goes out but I they went a little bit beyond what something like bit max is doing where you place Total Return swaps are TRS bets on the future price of Bitcoin they also allowed to individual people to place Bitcoin I guess swaps on like Apple stock or Amazon stock or gold or oil or the sp500 so if I think the S&P 500 is gonna go up and you think the SMP 400 is gonna go down I would place one Bitcoin that it's gonna go up in a certain leverage or actually I'm sorry they were taking the other side of that bat I'm sorry about that they weren't peer-to-peer one broker was taking the other side of the bed which is one of the things that the SEC didn't like is that one broker always the counterparty like a casino so you you think Apple stock is going to go up so you bought a Bitcoin on that with your leverage one broker takes the opposite side of that bet and if Apple stock goes up and you're right you get paid out Bitcoin if Apple stock goes down and you're wrong you lose Bitcoin you put up for that swap contract and the sec went after them and this is and shut them down now there's a couple of interesting things here so I don't and maybe I don't know I should probably asked you guys to look into it before we did this show in that once this thing shut down peoples could not get their Bitcoin out it happened suddenly but then like two weeks later they relaunched the website and were able to return all of the people their money like most exchanges in this case and David is very familiar with big Vern and crypt see when the government comes down you run away with the money now one broker didn't do that one broker Rita and I know this for a fact let's not talk about why I notice for a fact that you were able to log on to it anonymously with your email of course because there was all anonymous accounts and gets you a Bitcoin back was this something that the SEC allowed them to do or was this something that you know other employees were able to do just to be honest so that's my one question if you guys are aware of how that went down and the whole thing was the SEC didn't like the fact that they were basically doing swap contracts on registered securities and there's one more tweet here on this where well our our true Incas pointed several things out you can see from the SEC action it was all about the KYC part and the securities part but I was also very curious about this statement for everyone too lazy to read the SEC report this is in a nutshell why they got taken down flagrantly allowing the trading of securities and dividend payments with zero effort for kyc now this seems really strange that two dividends were paid out point 39 Bitcoin for a coca-cola dividend and point 19 Bitcoin for Western Union because this tweet for one bro from one broker seems recent but that's a lot of Bitcoin for just a dividend payment and so I guess they were holding the stocks so so I mean then he exchanged I mean the one broker they were probably most responsible the most honest among thieves well they didn't do anything right that's the thing like I think they were I mean sure they they were Bri this is the problem right okay unless you jump in here David well like this is like I understand that like oh man there's so many scammers here these guys were not scammers but they were clearly breaking like eight different SEC and CFTC regulations I mean I'm holding my head because we want to give them credit for not stealing money being a business yes I agree with you they apparently did not steal the money but think about this in the context of a drug company testing the drug you know you're saying if you can break all the laws when creating the drug as long as you have a product that works at the end that's all that matters no here they were not doing any kyc AML and the best reason I could say this way I always say especially with SCC's a lot of the companies today I say this about why I believe etherium vitalic is working with the government already is working with the US he's working with the Russian government Armstrong and coinbase and Gemini the wincle I they're already working with the government's Erik Voorhees is working with the government he what yeah he's definitely working with the governor and he he knew that he had to do the AML or kyc or reason go to jail and shape-shift didn't want to do it but he knew this was coming down the pipeline and he knew that if you don't do AML KYC you're a US citizen and you're not surrendering your passport and you're gonna stay in this country you have to do a Mel kyc on financial transactions that's to me the big picture here the fact that they were training the securities is just kind of icing on the cake they're they're trying to do something that's gonna be legal and permissible in 2025 I think everyone on this show and everyone in this space agrees then 2025 this is what we're moving towards but the one broker just didn't do it legally yet anybody else want to jump in well I think this is a good example I get so many clients always asking well what if we just you know form our business overseas and you know can we operate without worrying but the SEC and this shows clearly you know no they have long reach into what as long if you're selling anything to an American you know you're you're within the SCC's jurisdiction through the commerce clause so this gives a clear example of that being the case and but I think it'll you know how will they actually pull him into court here like it's nice that he complied with everything and shut shut everything down but if they want to actually lay charges will the Austrian government force him to come to America to stand trial or I wonder how that will play out cold extradition yes going on here you know as we saw there was a complaint by the SEC there was a complaint by the CFTC there were securities laws violations there were Commodities Exchange Act violations there was fencing regulations that were being violated so just a potpourri of various regulatory agencies whose jurisdiction was implicated by this and I think that despite being not a bad actor you know there's there's laws I mean we I'm gonna terney who frankly doesn't like a lot of laws I don't like a lot of regulation you know I tweeted just the other day I spend the afternoon at the DMV on Election Day and you know we don't we don't want the government to be in charge of everything but when you get into the context of investments menudo we don't want a complete free-for-all with with no regulation that's that's involved here so I think the reason why this was dealt with was because there were multiple jurisdictions that were involved I think I think this also shows something very interesting about the overlapping jurisdiction of the the CFTC and the in the SEC with respect to crypto assets so in this case they were dealing with swaps in a swap can be something that's under the CFTC jurisdiction and it's just a swap is also and in certain circumstances a security so you know when you're dealing with blockchain assets you can really intersect with both of these regulatory regimes and here's a couple examples where it might you know come into play so for example you might have an exchange that trades Bitcoin which we know is a commodity and it might trade ico tokens which we know are securities so there's various different permutations of how someone in this space a company operating in the space could deal with with both of these regulatory regimes at the same time but there's a lot going on here another one is and Sasha touched on this extraterritorial application of the US securities laws so it would involve it and the interesting thing is and this is a little bit different from what Sasha said it can involve you know US investors which would give the SEC jurisdiction but there was a Supreme Court case called the SEC versus Morrison I think it was in 2010 what this and what the what the Supreme Court said and what cases that have interpreted that have said is that to determine whether a transaction is within the SU seize jurisdiction depends on whether title transferred in the United States or not and so that has caused courts to look at all different types of scenarios one of them we dealt with in the tezo's case which I can't go into a ton of detail about but in that case there was something that was very obvious there was a the web the website that hosted the ICO contributions was based out of Arizona and you know that was a very easy hook for a court to say that this is a US based transferring nodes are located around the world and they're also located in the United States and it begs the question of if a if a blockchain transaction is consummated on a decentralized global network where does it take place does it take place everywhere or is it enough for the courts in the sec in the united states to attached jurisdiction in the United States and one of those factors at least in the tezo's case the court said the fact that there's nodes confirming the transactions in the United States supports the inference that this was a US based transaction so here you know I don't know enough about about how the SCC determined it had jurisdiction over people that were overseas but you know based on what Sasha said and some of the things I said is probably what influenced the SCC's analysis and I think this should be a good lesson to like a lot of people look at things like the EOS ICO where they said that they were blocking Americans but anyone with an American VPN was still able to participate and I don't have the link but I read something in this case that said even trying to block Americans basically it said you have to do more than you have to do more than just let them you know block them with the VPN and I guess that's where the KYC would come into play because if you're asking for the KYC information even if they have a VPN that says there is somewhere in Europe or you know anywhere in the world if you've KY seed them and they have a native address in America then you have the due diligence to follow the US laws in that case – all right baby want to jump back in here one last time I don't know this particular I don't know this one particularly well so I'm gonna rely on what they said because I don't think either of the people who are running this were US citizens right the people running this Russ not not that they pretended to be outside the u.s. they were absolutely yeah yeah yeah I mean in London or something like that but they weren't US citizens no because like I said I think that is distinctly different and people need to understand this when I meet someone and they tell me that they were living in Malta now they're going to Puerto Rico or they're going to Singapore to go to Thailand until you surrender your passport there are very different rules that apply so in this particular case because they were outside the US the extradition all that applies what people in the US need to understand is just because you put your business outside the US if you're still here and you're accepting those are very different things so my warning to the people watching just because you incorporate your company in Malta doesn't mean that you're safe and you can do anything you want and don't think US jurisdiction is going to apply give up your passports and I'll have more respect for you yeah I think it's like I just looked at this under Regulation S there's the foreign issuer and it's if more than 50% of your company's founders are they are from the US or living in the u.s. at the time then it doesn't matter where you're operating the business from you're under US regulation yeah so well besides that right like I would the way I phrase it as you're right David you're right so if you are if one of your sea level managers of your company whether it's centralized or decentralized is irrelevant is a US citizen that's going to be a lot easier for the SEC to deal with but they clearly don't care I mean if you break us regulations they don't care if every one of your members is not an American citizen now I think the only time it comes into play is when you are a citizen of and fully operating your project or your exchange in a country that the u.s. is not going to go into and the two examples I always give are Russia and China and then we can add Iran North Korea you know other countries right so if you are a Chinese citizen and you are gonna run an exchange financed you really want to do it out of China because then the US can't get you but when you run it out of Malta and will probably get to this later on now the SEC could I believe go after you if they wanted to because of your by Lance Tolkin but we'll get to that as well so um in this particular case so they were just I think that we're just breaking too many laws came I see is probably the biggest one but I think what what made it easy for the SEC is the fact that they were offering it's either TRS or CFD they're all they're very very similar financial instruments in that they're referring to a CFD which stands for credit for difference it's almost identical to a TRS Total Return swap they are very similar financial instruments does really matter how they named it pretty much and and they were doing it on and even says it like right here they were offering also not this one the other picture they were offering the CFDs on things that were actually securities and I think that played a huge role in it and this brings me to something like a bit max for example or there a bit to two exchanges I shouldn't call them exchanges as because I absorb the information from like Bill and that makes it interesting because we know that bitcoin is not a security but so offering a CFD on Bitcoin itself like bit max would not get them discs in this kind of trouble of offering a CFD and something that is not a security so the SEC can't get involved but they're also offering these CFDs who using Bitcoin on ripple and aetherium and other Kryptos so if one of those Kryptos if say ripple if say aetherium is deemed the security then something like I believe something like bid max needs to immediately delisted from trading or register with the SEC and kyc all of their traders because now they would be offering a CFD on top of a security that is deemed the security I just look at it 2-tone is if it is if it we can consider these things even if they're not a security if we can consider them a commodity right like like eath or a ripple token and there are and there are transactions being made on margin that would not clear within a certain time period then that would implicate the CFTC's jurisdiction for contracts for future delivery and I think I was reading in the context of something else just the other day that it's a 28 it might be a 28 day settlement period but you know I think we've been focusing a lot on the the SEC I don't know I'll be candid I'm not as familiar with CFTC regulations in the Commodity Exchange Act I'm really trying to get up to speed on this but you know as we can see from these enforcement actions the SEC may be saying well some of these things aren't securities but the CFTC is working in concert with them to to really cover their jurisdictional umbrella and bring everything with us one of the things that the government is not going to do is to say you got us guys these these tokens they fall within the trading of these tokens fall within a legal black hole and there's no laws that cover them guess you got us go have fun by your Lambos that's just not going to happen it's not great all right so I guess we can close out this topic oh yeah sorry so one last question so what do you think this means for bit max anyone can jump in here I think you have an affiliate code that I pimp out all the time I think they're probably an unregistered exchange in trouble eventually 8-ball I would say I don't even know if magic 8-balls say anymore it's been it's been a while but but exchanges you know anybody who's transferring exchanging these assets really needs to take a very hard look in the mirror or else they're gonna be on the end of an enforcement action or and you know this is something Sasha and I are dealing with is is these exchanges and I know David – I mean these exchanges are being sued repeatedly there's some ways that we can get around the the class action waivers and the arbitration clauses but for the most part they are there they're bleeping the bleep up royalty royally and people are losing a lot of money and there's a lot of arbitrations that are going on and they're behind closed doors David can probably say a lot more about that but you know that they're just it's a big problem for anyone that is transacting with US citizens is affecting transactions through software or through hardware that's located in the United States is settling transactions within the United States or is located you know about with a corporation or a person in the United States really is to take you know I don't know how their I don't know how they're sleeping at night their their legal team certainly aren't sleeping well at night I can tell you that are you talking about they're making millions they're billing hourly eighteen hours okay if it's just fine trust makes me my adversaries aren't losing sleep over this but I guess I mean Toya I'm not really sure I understand your question your question is should then Matt's be worried yes the answer is the world's gonna change when the SEC there's gonna be a day in 2020 and it's gonna be like we've seen the government do there's gonna be the SEC the CFTC the DOJ probably the FBI probably you know mi6 Interpol then MA you know every like they're gonna have a press conference in Washington DC and they're gonna descend upon the crypto world where all of today's heroes are tomorrow's villains and they're all gonna get they're gonna say so much so has been indicted we do a global raid x y&z are in jail here's what we're doing and which exchanges stand stay and maintain are gonna be the exchanges that were working with the regulators government's aren't going away before 2025 I'm sure everyone knows what it follows a show and it is going to be commenting they're gonna say I'm horrible things about me but I can promise you this we're gonna vote for a president in 2020 and 2024 I can tell you that for sure in the US and do you think they could just be gearing up to make an exchange that's safe enough in their opinion to host an ETF well again uh you know despite what CNBC calls me and they only call me a crypto critic I am NOT a crypto critic I do believe that in 5-10 years there will be an ETF and everything but no how can you have an ETF when the exchanges are an unregulated market right now they're not gonna allow you know pricing from a bunch of these exchanges that themselves tolerate spoofing whitewashing fraud so it's not today but I do believe that we're gonna get clarity I forgot who I was making fun of when they said we're gonna get clear English regulations sure we are so I think at the end of the day we'll just it's coming it's I mean come on we're like you're to a half of us right now think of what the internet was you were logging game through mosaic probably well saucer wasn't born yet rust is I'm guessing you're under 40 I moisturize I remember in 1995 logging into ESPN and there was one picture of yet on ESPN and it took about six minutes from that picture to learn that's where we are here wasn't the SPF picture for an hour exactly I mean it took it took like that picture took like thirty five minutes I mean I can name some names exactly I mean Netscape you know was the predominant browser mosaic I just think that it's coming it's just not coming as quickly as some of the Millennials would like and we got to be careful I mean I think you're right David we need to be careful that we don't take new new technologies and put them in an old box I think one of the things that's really unfortunate for me is you know and we all say this we don't want to stifle innovation this is an incredibly transformative technology and there's a lot of really amazing use cases for it but at the same time you know when you're dealing is that the problem with the problem with and I don't want to say crypto in general but everybody wants to who has a project they want to attach their own token to it and they want to you know they want to get in on the IC o—- you know this ICO craze that happened in 2016 and 2017 where a bunch of people made a shitload of money and and this model is really having a hard time dying and and these and the token ah mcc's of these things really it puts by including a token that everybody wants to put on an exchange as soon as they create their project it takes it from you know this concept that everybody used to talk about from the utility token or some kind of a product it makes it an investment and it makes it something that that is dealt with in the context of traditional capital markets and you know that it's just we can't escape that and so and unless we try to change token ah mix and stop trying to put you know a token on every new crypto project then we're going to be dealing with the CFTC we're gonna be dealing with the SEC and maybe maybe this base needs to take a really hard look at how they monetize their projects and it doesn't need to be with some other coupon token and I'm sorry to all the people that I represent or want me to represent them who have you know different ideas about this but you know let's move beyond let's move beyond the attach a token to my blockchain project model and just something that gets us you know in the real innovation and not financial markets yeah I I agree with that bill okay so I do want to move on I was gonna also talk about the global reach of the US government were briefly mentioned it I'll save that for the end if there's still time otherwise we'll definitely get to it next week because I want to talk about it in terms of Finance and maybe a little I mean I don't really want to talk about bit max I'm hoping that exchange sticks around as long as possible for selfish reasons but um but I just want to comment on David's point when he said is the are the regulator's gearing up for a Bitcoin ETF and they you know registered you know a compliant exchange and this is the chicken and egg problem I'm sure the regulator's would be okay with launching a Bitcoin ETF if they had a handle on the underlying you know regulation of bitcoins price discovery the problem is the most compliant exchanges like you know Gemini with Winkle I and maybe even coinbase and the upcoming bath exchange the problem is no one trades there because all price discovery happens in the uncompleted and that's their chicken and egg problem like they would need to make sure that 90% of bitcoins price discovery takes place I'm fully compliant and regulated exchanges before they can consider an ETF well you guys they also need to create demand right so just just listing you know so there's a buy side and there's a sell side when you're dealing with with secondary markets right so just just putting you know an order matching engine up on a regulated broker dealer it's not going to or an exchange that's regulated with the SCC is not going to suddenly cause trading to happen you need to create a incentive structures within that that's either gonna attract market makers which take the other side of the trade or you know have some sort of ability to create markets because they don't just happen spontaneously you need to sort of you need to prime the pump and you need to fill them with actors that will trade against each other and if you don't provide it liquidity then and I think that that's probably what's what's happening is there's no liquidity on these exchanges well I think they I think the regulator's and the larger US based exchanges they're working with the regulator's what they're doing is they're we as institutional money comes in there's going to be the need for regularly institutional money and the regulations are gonna come hand in hand and they'll fund it themselves once the there's clarity and the only way coinbase can have a valuation of eight or nine billion dollars is if institutional money is coming in to that and with institutional money comes government control so people can blame me I don't have institutional money so I'm not dictating what those rules are me but the institution's themselves are I mean it's ironic that we're all you know with everything that's happening here is all these anarchists and libertarians are inviting the banks back in to do everything again so badly right right and that's my point my point is like so many people are investing in backed and coinbase and all this stuff and they wouldn't be doing it unless they had a handle on eliminating the uncomplaining exchanges because what's the point of putting in hundreds of millions of dollars in the coinbase gemini and back if no one trades there so you have to force trading onto regulated exchanges by cracking down on the unregulated ones because otherwise everyone will still trade with you know Biffen acts and bitstamp or local bitcoins like christ exchanges I think your use of the word everybody is misleading because it's not that everybody is the people without money will be trading there the institutional money will be trading so it's like you know I'll use my pick in that case yeah I speak to a hundred people a week but most of those people lost between 100 and 500 dollars there are people who lost you know five you know five ten million dollars those people are gonna be trading on the regulated exchanges the people you see on Twitter who tell me I'm crazy and wanted say mean things to me on Twitter those are the people with a hundred five hundred dollars in you know I say well I got threatened and someone called me up and threatening me after the teasers lost you got filed you know it was a kid who put $1,000 into tasers that required swap going into his parents house and getting you know the police the FBI in Swat involved because they threatened me my family and by kill put said they were gonna do something to us so for that kids thousand dollar investment golly know what the government had to pay to go arrest this kid for that but that's I don't know so some kid drinking you you did an investigation to find out who it was no no I I called the FBI I mean like hold me up new like my where I lives have my personal information no I went straight to the government I like the government but yeah but I mean for this Cuba's $1,000 that shoes can be trading on the unregulated exchanges not the people who are doing the institutional money the institutional money is going to the legit places well that's what my point has been the institutional money is now going with legit places because to show money still doesn't give a about Bitcoin but I disagree with you if coinbase has a nine billion dollar an eight billion dollar valuation and there is an institutional money is starting to come in and those players and I agree with you Tony the space is going to consolidate with the real money coming in to regulated exchanges it's the only way you can work no I know I agree with you I think it's do we really do agree you and I now coinbase is grossly overvalued right as you probably know because you want to get paid dude I'm just saying if you're worth nine billion cut me a check but yes I mean the only way that coinbase isn't grossly overvalued is if there's institutional money and the tokenization and the token is Isis right but we haven't seen not yet like we haven't seen as all we've all we've seen is talk about institutional money trading we haven't actually seen it yet so maybe it's coming but I will wait till I see it but main street's the last people to here by the time we hear Goldman Sachs has already bought it up pay for it and change the law look for the law to change and then we'll know it's already happened yeah no I agree with you because I look it's all talking about how Goldman Sachs now owns Polonia right because of this like quasi chain so not true what about Bakht aren't they and what's there like a huge investment bank right the like the New York Stock Exchange or something all right so back is basically an initiative to create a Bitcoin trading operation by IC e & IC owns the New York Stock Exchange so basically so IC is the parent company and they they run the New York Stock Exchange and they are starting a backed initiative but back this again I haven't seen any difference between backed and coinbase like it's just another exchange like coinbase which is a quasi broker cause I exchange I haven't seen too many details people are hyping this thing up out of proportion I don't see a difference between fact and Gemini or coinbase or any other exchange trying to be fully compliant with the US government other that or the global government ionic Sun exchange regulation other than because it is being the run by the IC e they people think that it's gonna bring in more institutional traders but though those traders still need to come and my other question is like something like Gemini and coinbase have proven over the years to be very good at Bitcoin security I see is new so yeah it might be great that they have the you know the regulation part all set and they have experience in matching orders but you have to trust them to get Bitcoin security right because whatever the next headline when we see next year bath is hacked mm-hmm and what if everyone trust them to give the institutional money there because of the affiliation with ice everyone may be thin like all the people that aren't into crypto now or think that that's a way you know down the road that investment advisers can access the space and then if they get the security wrong I think the best bet is that someone like coinbase or gem and I you know get get more like if they are gonna have an ETF or something like that that it go with one of those two and I think they are trying to get these like better security I saw something that coinbase was getting storage or they were getting a bigger storage something going on with that right I mean like so we will see we will see how that goes because look everyone is so hyped about back let's say back launches on January 1st I mean I think it will take back several years before they are trusted as a Bitcoin storage mechanism like don't get hacked for two years so I don't see any institutional volume going in anytime soon the because of that model and this is another reason why I don't see the ETF coming anytime soon because after the SEC gets a handle on the owe on the underlying price discovery they then need to get a handle on Bitcoin security storage so I don't see the ETF coming anytime soon all right guys a lot of us there is any final follow-ups on math I do want to move on to the lawsuit between speaking of the wincle I twins and Gemini I want to move out that a lawsuit that they filed against Charlie Shrem and this is really really interesting so this article is in the video description and I need I'm not doing screen share let me do that real quick here we go for this next topic everybody it's been a pleasure I have to meet a client in a few minutes because I'm still on the west coast we're still doing business and everybody have a great night it's been a pleasure I'll talk to you soon thanks good you know just this would be my last one I have to go put my kids to bed because my wife decided I'm home and therefore she could leave so the fact they haven't interrupted yeah this is my last one it's gonna be my favorite one you know that's great and you know what will probably save the rest for next week I want to go to show again next week same time and we'll save the rest of the topics for for there because I don't think we have yeah I don't think the rest are as big a deal so well not that actually I don't think this is a big deal it's only a big deal because they're the names and that's what makes it a big deal it's because it's the winter white it wins it is Charlie Shrem otherwise this would be almost nothing so this is an old article from 2016 that kind of this explains like the whole story of Charlie but we're gonna jump oh wait so that's the wrong screenshare then sorry guys let me what I want to do now is share the actual court case so I'm just gonna yeah I know I'll share this not gonna go to my desktop so this is the actual court case it was unsealed this week and the wincle white cap Winklevoss capital fund versus Charlie Shrem and this gets a little bit interesting so they are suing him for 5,000 Bitcoin and that's because between September 2012 and February 2013 the wind Cove I sent him seven hundred and fifty thousand dollars to purchase Bitcoin on their behalf and they're specifically pointing to the first batch of that money being two hundred and fifty thousand dollars that they send to SRAM between September and October of 2012 and they're saying SRAM only accounted for one hundred and eighty nine thousand dollars worth of Bitcoin so 61 thousand dollars was the shortfall and if you estimate the price of Bitcoin at that time that comes out to about 5,000 Bitcoin during that time and and and what they're saying is he shorted them five dollars in Bitcoin and you know after doing a bunch of analysis and working with a blockchain analysis and you know people talk too much and shrimp posted some of his Bitcoin public keys on the internet and there was done an analysis and around that time period Charlie Shrem moved approximately five thousand dollars to his own public key and that allowed Winklevoss to say hey she actually did buy Bitcoin with our money during that time span but he sent it to himself instead and that I would have thought that the government had taken all of his Bitcoin when he went away in 2014 or 15 but he may still have it so there's lots of questions to be asked here my I guess let me get your general views on it I have like so many follow-up questions on this let's get your general views David you go first I love this lawsuit this is like you know the you know to early adopters going battling it out and shows everything that they say Bitcoin should have stopped and me blockchain should have stopped you have the exact problem from you know to early adopters this is great the only thing upsets me and I tweeted the wink alive when it's got unsealed I can't believe they didn't hire me to do this that they hired Nelson Mullen and paying them hourly I would have totally done this for shits and giggles I mean this is great and if I should sin giggles I was taking like five million you know of what they were what they're gonna get so this is what's incredibly interesting here is that despite what schrems gonna say the court must have agreed with the wincle by and allowed them under seal to lock up some of his assets now I do this a lot nowadays when my clients lose their crypto I go out to all the major exchanges in the u.s. I try and get accounts locked up and I haven't been quite successful at it because by the time I get court orders to do these things the bad guys move the money so it's pretty incredible the lawsuit what they're claiming but what is this it's basic fraud I mean there's nothing to it they're claiming shred you know use money to buy ship for himself and live a lifestyle but from that perspective this is just it's humorous but it's not a it's no different than any other business deal gone bad hey I got I got somebody follow us for you because I don't know how long I'm gonna have you and then we'll have Sasha follow up so wait a minute when you you just said something that's weird to me right you're saying that the court allowed some kind of you can't freeze Bitcoin what do you mean by that explain I so right now the US exchange is if you send them a restraining order they will actually freeze people's accounts fairly quickly nowadays within almost you know minutes to hours so someone who so let's I don't like you know let's assume that Shrem was holding and I haven't read the paperwork my understanding is it's in a paperwork somewhere which accounts of his they were able to lock up but let's just assume and this is an example I'm not saying this is true he held you know ten thousand Bitcoin at coinbase for some reason you if you get a court order a coin base will freeze his account this is what some of the people complain about centralized exchanges so if whenever exchange he got caught holding some of this crypto at those exchanges froze his accounts there and the wincle by were able to get the money out of those accounts for their benefit well um well that's the thing right like how do we know that Trump was holding that Bitcoin at an exchange so typically and I'll just use my example we just reshoot the darts at every exchange and hope to get lucky my questioners are are you assuming that that this happened or are there because I read I skimmed through the oil doctor the court report and I didn't see the part where that stated that SRAM is still like I don't even know if shrimp still has the five dollar was in Bitcoin as far as I know you spent skated when he got arrested via got a prejudgment attachment order and in the prejudgment attachment order they were able to go after assets if they knew where they were and he was holding I don't it wasn't near the five thousand may have only been five Bitcoin so I don't know what they actually attached on the order government took all of strands money he was broke because they I assumed that story Charlie if that's wrong but based on some of the projects that he was getting involved in it really seemed like he didn't exactly have 5000 Bitcoin in the bank no yeah but again this is the prejudgment attachment you have to be but there's a high threshold to get that normally just because I file a lawsuit I don't get to go freeze people's bank accounts so by the time I normally get a judgment the bad people have moved the money away the fact that the wincle I got the prejudgment order is pretty incredible but they found some things it wasn't nearly what they claim to be owed but what I read I was sorry the shrimp put 5,000 Bitcoin in some vanity address and posted about it in 2012 like on a Bitcoin forum so then they had a friend's accountant go through all of his history so maybe they didn't have they didn't have that kind of accounting service the government in at the time of first lawsuit but now they're able to look into blockchain transactions with more efficiency than they could a few years ago maybe that's what happened well but these are two different these are two different things that we're talking about your science is completely correct they now have the ability to basically unwind from the Genesis to wear any Bitcoin is gone but with we're discussing on the prejudgment attachment is then on the prejudgment attachment today shrim was holding some was holding assets in certain places the wincle by were able to attach to those assets where they were today those don't have to be the same two assets that you're attaching think of it this way if you steal mine if you steal my car and my car is worth ten dollars and you have ten dollars in the bank I can freeze the ten dollars in the bank if I get a pre judgment order even though those two things are different all right so I got oh man there's so many questions on this so so so here here's the thing right so oh man like I don't know let me go back to that table of how much money they sent and all of this like all this evidence is now public which is absolutely amazing so here is the list of the money that they sent them right so we're talking about the 2012 stuff so they're saying he shorted them on the first so I nice so you see these fifty thousand dollar transactions and this is the one that seems to be missing like this $50,000 one the DNA stuff and um so my first question is if Charlie Shrem shorted them 5,000 Bitcoin in 2012 why did they send him another 500 thousand dollars to buy them Bitcoin in 2013 please you know from a variety of reasons you're assuming they had this spreadsheet which showed them getting shorted the Bitcoin this was my guest created after the fact by Charlie Shrem according to this document but you know this was you know that this document was prepared contemporaneously with that yeah no III okay so that okay so oh basically so SRAM was actually but but that's the thing right like what's shrunk got a hold of that Bitcoin for them or was he actually sending it to them so I know this was 2012 and the winged kauai twins were probably very new to it so my best guess is like trem was gonna hold on to the Bitcoin for them but bid instance operation was that he was gonna send you that Bitcoin so this seems like this seems like kind of bad on our part of the winter white twins in that and look I've never met the winter white ones I've hung out with Charlie many times charlie don't get mad at me I still like you Charlie I hope you play in my poker tournament has already disgusted so we're I'm just queued really curious about the case and so like he should have been sending the Bitcoin to winkled why because bitinstant wasn't a Bitcoin storage facility it was a way for you to buy Bitcoin and they send it to you but I'm assuming that the Winker white winds were also investors along with Roger vo in bit instant and I guess they felt comfortable with Charlie being their Bitcoin storage and probably because of this incident the wink of white winds have come up with a very good Bitcoin storage solution so probably this doesn't happen to them so that's my first initial question well let's go back because this is I mean 2012 and I'm going back to and I got my first couple of Bitcoin that someone gave to me when prices were around this price I didn't know what I mean I to this day don't remember where the person sent those first bitcoins but there was some issue and then he moved them to Queen B's but you're looking at guys who saw the value and put in real money at the beginning you know they may've just been sitting there saying Charlie we trust you you're our boy you know I don't think that there was I mean they were building Gemini when this was going on right right no and I agree with that I mean like cuz I bought my first Bitcoin actually after this date so so they were definitely in before me I started on I bought my first ones a few months about two months later it was on the Cypress bubble so if only I got in six months earlier I would have been in right here at like $12 I must have been in like a little later in 13 I guess because mine were like two hundred dollars a pop yeah well so her mind it was the same thing was like April April yeah I didn't 2013 they were two hundred again anyway so my other now this is great I can't wait to get your thoughts on this at the very end I was almost like borderline laughing at this and it's great I mean you can try but good luck I'm trying to find it in the court document where they actually want if they can't get the five thousand Bitcoin they want the dollar amount of the highest price between the existence of Bitcoin and the payout so they're actually demanding and all of the fees all of their lawyer fees all of the filing fees they've probably been at this for about three years trying to get it so they're actually looking for ah man I I should have highlighted it somehow but okay so there's a difference between asking for something and getting something yeah so here's so here's here's what I would say to that so far what we've seen between the government and the private actions is you get the price that it is today not the price at the peak so the if let's just assume they weigh and maybe we get five thousand times whatever the price of Bitcoin is today and then they'd have to assume that Charlie could pay for it I can't imagine they have a contract that would allow for attorneys fees that they did this on a handshake but I could be wrong again I haven't actually someone sent this to me I actually haven't read most of it yet I've only skimmed through it but look I mean the whole point of this is shrimp I don't think there's one of us by the way Charlie that picture the tone put up over you that shows he's a good friend of you because you don't look like that anymore that's a good friend but the asking for my presumption is let's just assume the wincle by wing the wing go by wing the 5,000 Bitcoin plus pre and post judgment interest not the value at the peak they'll be getting five thousand times now what's Bitcoin trading out to that sixty five hundred I haven't checked the price people are in a chatter say it is dropping but I'm too busy so I have no idea so I'm busy people are likewise enthroned trading I'm like can't you be on video talking about law like this is it's raining so again yeah that's where they came up with a 33 million like someone said it was only 30 Millions that's why I thought that's what they asked for but that's why the case is worth 30 million bucks which is why they want to give me my 40% contingency fee and they hired a fancy firm to do an hourly I'll bet they're getting 100 grand a month for this case yeah it's a lot buddy but yeah so oh man I I read this whole thing last night and yeah so they want the highest price now now I thought that I mean like the way the mountain gods thing went down I mean David you you just said that it's the price today I thought it was the price at the time so pretty mal Cox cripsy was the same way cripsy was the price they closed and the litigation started mal Cox and this is their fighting this again because in theory there's more money in mount God's now that you pay the prices back then that's part of the problem on the distribution so I'll use cripsy for the instance when cripsy closed the price was like 500 a Bitcoin so that's what the valuation was on because lawsuits aren't about being an insurance policy for going up and down so during the litigation during cripsy the price went up to $20,000 people are like oh my god I want my $20,000 but if the price of going to zero you know you wouldn't have been like well now I'll take my $500 um the reasoning and the rationale between why you get you can get and this is the big fight look even in this lawsuit is Bitcoin property is it a commodity is it a security because if Bitcoin is a property you can just get back to 5,000 Bitcoin which they would happily take right now is the five thousand Bitcoin but here's the problem even if they've located it you know this better than anybody would even be located it in a wallet in Malta right now without the private key or yes my life else you know this very well with crit see I have eleven thousand Bitcoin everyone on the chat right now I will give you two thousand Bitcoin if you hack in my eleven thousand this is where actually thinks when I got our first fight I wanted someone to be named Bitcoin Jesus so I can get my eleven thousand Bitcoin back your argument would if that happens it goes to zero yeah you don't have you you are awarded a wallet with eleven in Bitcoin but you don't have the private key completely worthless my entire life would change if I got this access to those eleven thousand Bitcoin but that goes but that goes back to you you know what they're asking for reverse what they would win let's assume they win what they win is the five thousand Bitcoin and pre and post judgment interest at this point thirty million bucks all right so I got I got this on the fullscreen because I found the page wait why would they get interest if they're getting the Bitcoin back because they where people want like the higher value you're still entitled in the lawsuit on your damages to get pre and post judgment interest from when you didn't have it in your possession okay no no difference than regular litigation makes sense unlike a fine you know on on anything else but on Bitcoin it would seem funny to give them the interest over all that time they calculate it with just at the regular rate it's the courts that's the cast calculated the win Kauai like they're asking for the moon because look clearly they got the fraud and for sixty one thousand dollars but at the time that was five thousand Bitcoin but look what they're asking for I found the page or an award of compensate arre I can't pronounce that word I'm damages compensatory damage that Ori damages it's okay you could probably say it in Russian people want to hear you speak Russian today for some reason yeah apparently yeah in and around because this is also going to the audio podcast that's why I want to read it for an award on comp and conservatory I can't write that compensatory I'm pensa Tory thank you for an award of compensatory damages from defendant which is Charlie in an amount to be proven at trial open parenthesis calculated as the highest intermediate value of five thousand Bitcoin between the time of the wrongdoing and the time of trial or as otherwise calculated in accordance with the courts instructions issued in the US securities rejection so basically it's a trial if this goes to trial in three years and one Bitcoin is a hundred thousand dollars they want a hundred thousand times five thousand well so but now I'll now use I'll use I can only talk about the publicly filed cracking complaint at federal court but think about that case may 7th 2017 it's trading at ninety Ethan's up to twelve hundred bucks and Eve is now back to two hundred what are my clients entitled to when we go to trial now I'm gonna argue I'm with the wincle why I want twelve hundred to me that means that my mind that the eight million they lost that day which is what sixteen million in present value is worth a hundred and fifty million dollars I'm with the wincle I on this one but what number are they going to calculate the interest on on the highest price ever or will they take a daily average over the span of its whatever the word is okay whatever the cash awareness whatever this cash value of the award is the the monkey capital case we did it also it was cash value plus pre and post judgment interest the CFTC or the yes I began who did the New York case that recently they did the same thing it was on present value okay but I think we're headed you're gonna get the argument is that you get present value because you want your five thousand Bitcoin back and they're gonna give you the present value so you can go by five thousand Bitcoin because they're seeing it the course are almost seeing it as property and you should be it's like your car you are allowed to get your this they have to give you enough money to buy your car back so they'll give him enough money the thirty million to buy the Bitcoin back hey I really don't think I really don't think shrimp has the money for five thousand Bitcoin right now I personally don't so they're also asking like like we said for other stuff are punitive damages they're asking for interest on all that Bitcoin over the five year span attorney fees prejudgment post-judgment that's the interest and and other stuffs that they think that we were told don't grow scroll down a second show me who signed this you're gonna google them yeah I go for it so um okay so if I was charlie and correct me if I'm wrong here if this was me if I was in Charlie's shoes I would try to offer counteroffer $61,000 plasti oh I want to say Plus attorney fees but three years of attorney fees from the wincle why that could be like three million dollars uh-huh so because it's gonna be hard to prove that Charlie still has the five thousand Bitcoin and even if they could prove that Charlie has that because I have no idea I really need to talk to I mean I would kind of wish Jason was here because Jason might know because he was involved in the trend on shavers case and I know the trend in shavers case to the person you called me you're the first you're right am i bad my bad there I forgot to like I forgot who actually put a trend on her whites and now you're working on putting it another trend on away from the big connect case so I guess it's like turret red trend ons for you so look in the in the trend on shavers case or every single penny of his Bitcoin was confiscated by the government sure well but most of it was missing at that point but yes right but whatever he had left was confiscated by the government I believe so but yeah that's a Jason question no no Jason's already answered that question and the answer is yes I just don't remember so I'm with you I remember I remember very well it was on another interview like what Jason and shavers they specifically stated that every single satoshi of trend on shavers has been accounted for and handed over to the US government but um and so in Charlie's case I wonder how much of Charlie's Bitcoin was taken by the US government and if Charlie still has had any Bitcoin when he was getting out of prison now if Charlie made a deal with the government to hand over you know like his Bitcoin but didn't this is a big problem for him now I have no idea like I've no idea how that case when time just like guessing here but if Charlie does have still has if they can trace the public keys and they can say we are 99.9% sure these are Charlie's Schramm's public keys and he has still has access to the Turner's Bitcoin you can't actually prove that Charlie still has dug up the private key if that Bitcoin has not moved in a long time so I think it's gonna be very difficult to prove for them that Charlie can actually pay them back and if I was Charlie I would claim as such though then you're almost like losing that Bitcoin you won't be able to touch it for 50 years till people start you know dying of old age and forget about this apparently tone so I claim that you no longer have access to those public keys someone just said they lifted the freeze on on Charlie's assets like a few minutes ago coined as published it but I remember seeing Airbnb ads for like quite a nice mansion in sarasota that he had just purchased and I think he has some nice cars as well so maybe he sold as Bitcoin and thought real property when you're talking about two different things here let's clear this up first you're talking about collectability versus liability liability and collectability of nothing to do with each other just the fact is discussion I spend my entire life on cases that viability is a slam-dunk collectability is a question so what you're arguing is that the collectability on shrim is possibly not there just like big bird isn't China with the private keys and saying maybe one day I'll move the money we'll see what happens yes that's it that's exactly it like I think by the Winklevoss from Raleigh is going to be very very difficult but if you know Charlie did buy a mansion and a bunch of cars that could be the confiscate ability part because those are not exactly private key assets that are you know sitting somewhere they can attach a lien on a platform yet here's the answer by the way they got a court order to freeze assets and Zappo coinbase Polonia acts and bit racks up to five thousand bitcoins not that there was that now that there is that much there according to circle purple oni axe there was less than half of Bitcoin right yeah but what's he got on a treasure we'll never know like every forensic accounting can figure that out to actually like according to circle there was only 40 cents there actually because I saw this 40 well says 41 in big it says dollar sign 41 cents in Bitcoin so is that 41 sensor 0.4 good coin nor less point that's 41 cents I think that's a typo I mean I think it's point for one Bitcoin no no it says you don't know look at my screen David um look it says zero zero zero zero six oh you're looking at the garnished statement yes okay this one I'm looking at the coin desk article okay bitter expelled roughly four dollars and 40 so this is why they lifted to stay because there was like five dot because there's four dollars and forty-one cents at uh big at bid trap so this is probably why they looked at this day there was less than like ten twenty bucks that they had thousands of dollars of lawyer hours and the judge right so how much of so there's no money in there or there's the forty one cents again well some say if the forty one cents the four dollars and forty four cents oh they got Judge Rakoff yeah hahaha it's a very important first step towards vindication that all of the money is missing I love Brian Klein oh he hired Brian Klein this is offense attorney yeah hey Brian Klein's so let me tell you know Brian Klein is a good defense attorney there's a charlie good job beef right goodness of his own heart Brian if you're listening to this I'm not saying you're a bad lawyer I'm just saying you're an expensive lawyer yeah no no I'm uh no Brian Klein is on my short list of lawyers that if I get in trouble no no no you don't want to be associated with someone he's got too much fame at this point so you get tied to his other rulings for you know the Brightman's for Schramm you want your own lawyer who can say I don't agree with what happened in the past a clients innocent and Klein was not a lawyer for the case in California ah the local Bitcoin dealer and she she went away for like a year and a half or something as was representing he's representing Kathleen and Arthur come in here whoa wait Kathleen and Arthur who what is that case again the bright men's four tasers all the brightness potatoes a try oh my bad yeah see I don't know like the pesos are so like I'm so not coming Charlotte okay I have to go put solder at the bed your kids are adorable yeah they're super cute okay guys have a good night let's you guys next week yes thank you my god all right close this out yes so this I gotta read this article okay it's crazy how news is breaking as we're doing the show until I read and prep for this I had to send that course I'm doing in a week I had to send the slides to a graphic designer and all the laws have changed in the past week not all of them but like it's you know I don't have anything about these I would like actually talked about centralized versus decentralized exchanges and that's you know we've got to change and anyway yeah yeah so um this is gonna be a really really interesting but but again the only thing that makes this case interesting is the names it's the five minutes went and Charlie like in reality this stuff happened all the time back in 2012 back in 2013 there is like hundreds of these cases and the only reason why this is news is because of the names well I wonder if it's gonna everyone on bitinstant should go do a forensic accounting and see you know if he was skimming off that he probably skimmed off everyone on there I can't yeah I shouldn't make any accusation that was wrong to say but no no no no but I did hear like like even like from what stories from people that were doing it well like that sure Charlie didn't have like the best accounting practices and people I hate Charlie where's my Bitcoin send it over and then he would send it over but I thought those were the stories that I heard but uh yeah so this is interesting so I think um collectability is gonna be very tricky very very tricky and this is gonna be you know one public trial one public case in a world of crypto because of the names and it's all because of the names mm-hmm all right I think we're good we're coming up in two hours and we did have other things to talk about we were gonna talk about the the Senate hearings and everything that has come out of coin Center from Peter Van Valkenburg testimony to coin Center trying to I get a bill through Congress we're also gonna talk about I can't believe I'm showing an article from eat news which is ridiculous but they did quote our true Henkes extensively about it being bad on you know naming what a blockchain is and case law we're gonna briefly mention about the Chinese and Hong Kong regulations and we're gonna talk about the global reach of the US security laws and what and and this tweet right here from Larry Cermak I'm not sure if he's a lawyer I'm assuming yeah yeah looks like it can be in high school but I'm assuming he's a lawyer but I'm talking about how this the implications of these again comments by him men that maybe etherium is not a security but I star P and B and B are and if a TV I'm watching today it certainly would be a security so these are all going to be the topics for our next week's show along with you know Politico which implies that a lot of the promoters of these icos could be in serious trouble so this is our agenda this is going to be our agenda for next week but I'm assuming we're gonna scrap all of that because so much more news is going to come out between now and next week this has to be a weekly show once again there's just too much stuff going on in the law and yeah thank you so much Sasha any final thoughts yeah I think nothing too major but it's a I think we're seeing like when I was going through the SEC enforcement actions just to get ready for that course and it seems like almost every week a new one is coming out so it really looks like they were ramping up here and you know they gave their first notice you know well over a year ago now and actually that law master guy Larry I think it's Cermak that you just had his Twitter account up earlier he a few weeks ago put out a post showing how much the government was spending in enforcement in every area it was really interesting I'll try and find it and send it to you but it shows just you know they're really directing a lot of assets towards enforcement here so it's kind of I don't know it's an uneasy feeling you know Big Brother's always watching us yeah please send that over to me because next week we're definitely going to talk about the global reach of the US security laws because I'm so tired of all of these people telling me that by Nantz is untouchable and that's just ridiculous yeah just the same way that ether Delta got Ernest word that a one broker you know in Austria it's the exact same scenario they can get jurisdiction as soon as they say one of the tokens on Finance is a security which I think you know it's funny I it's not it in that that's not even my problem it's not that the finance is trading security tokens that's a problem my bigger problem is that by now it's my token finance token is itself in violation of security laws so it's so they're actually breaking I don't know if finance ky C's or not I'm not sure I'm assuming they don't because of how many people trade they're like like I can tell whether you're whether you are crypto company KY C's because when you don't you have like ten acts the volume of those that do so like no one Chili's I'm polluting the X anymore because they came I see so a finance doesn't care I see that's a violation be finance trades securities that's a violation and see which is my biggest problem with by names because a lot of people do one and two finance is the only one that is independent that by themselves is a violation of security law with the BnB token that they're using inside by Nance so which is why I think vine ants is the biggest risk out of all of the exchanges and if you have your crypt so um bye Nance you you are you it's a giant risk because they were breaking the maximum number of US security laws in my opinion in my opinion I think I think I would agree with you and they have the largest volume so they have the most money to fight against the SEC so that's what the SEC is like a big bully going after these people that aren't fighting back and then executing all these people saying not fighting and then the president is getting set so then by the time they come to finance they might have ten other exchanges that they've deemed our securities or in other you know multiple and plenty of violations and then they can go after them with that right that is true by printing your own money and becoming popular violence has a lot of money to fight the AC but also because violence has so much volume and because violence is so popular it also puts a lot of eyes from the SEC on Finance so it's not always a good thing to be like usually you want to be at the top of the list if you're going to be on the list you really want to be somewhere in the middle of that list you don't want to be a low-hanging fruit and you also don't want to be at the top of the list breaking so men in violation of so many different aspects and this is what two Dow one broker they were just in violation of too many aspects it was the KYC problem this tfd problem that the fact that they were doing CFDs on registered securities those were three major issues and they were outside of the US there people were not American and they still got taken down and I think that by Nance is also in violation of three things but again that's we're gonna save it for next week I don't want to do a deeper dive into to buy Nance the way we did a deep dive into Raven coin a few weeks ago and hopefully you know if icz who wants to pull a bruce fenton and come on the lawyers show so you guys can perhaps explain to him the way it was explained to bruce fenton as to where the might be that would be great maybe I will reach out but I normally don't like don't like it when people come on aI don't want them to incriminate themselves and B this is not exactly a debate show this is more of experts explaining so but we will see what's going on there all right on this note any other final thoughts awesome sign the free Ross petition all right thank you very much guys and thank you for watching once again this has been other episode of the Bitcoin lore review in this episode we discussed while finance and launching random coin and just follow-up from the show before we discussed the eat Delta I guess crackdown by the SEC the final the final ruling and settlement on that we talked about the one broker I shut down and we'll talk about the wincle live versus Charlie Shrem lawsuit will be go up or stop next episode please check out tone vase calm if you liked this show and you want to support the show please check out the affiliates page and I will see you all on another podcast and probably gonna talk about the price of Bitcoin once again and in near future thank you so much for watching and I will see you all on the next one

18 thoughts on “Bitcoin Law Review – 1Broker, Winkelvii vs Charlie Shrem, EtherDelta SEC's Latest Statements”

  1. Today, they often experience a lack of accurate or up-to-date information about the development of cryptocurrency regulations. Thank you, the information is very helpful.

  2. I would love to hear a legit legal opinion about dragonchain’s token strategy. They have a patent pending to make their tokens “micro licenses” essentially for use. They have an fbi white collar crime consultant on staff, and have been working closely w SEC, following all guidance via direct consultation. Seems like a novel, and effective approach….?

  3. Why are you even talking about Binance? According to you, everything traded on Binance is a scam so why acknowledge the business?
    45:40 – If you are selling to an American you are within SEC jurisdiction??? That is a cross border threat if you ask me. The numbers that are showing resilience toward the American infrastructure is telling me that their scare tactics are fading. The SEC do not have the right to walk over the world pointing their finger and accusing of nonsense. despite what they actually do… This is all just smoke and mirrors.

  4. David Silver is a moron who loves centralization along with Tone the Soup Nazi !!! Don't kid yourself with a stable coin backed by the "US"dollar. Buy-bye $100,000 dollar BTC without a total collapse of the dollar. So once again fraud assholes like Clif, Bixy and jsnip actually bailed a long time ago when Jonny sold at top, then told you all to keep buying. Now Joe is moving on to more BS treasure hunting with a witch, and 2 or 6 other strangers he met on the net? WOW, sounds like a safe person. Good luck little girls your Dad brings phone chat strangers he met on the web into your living space.

  5. Paper etf will BE final Regulator, i guess and best Business too. Possession of real btc will BE illegal and confiscated for US people, as government i would do so. Only regulated digital etf is legal to own in bank Account Like paper gold.

  6. Tone Please help! QuadrigaCX – Canadian crypto exchange has frozen any fiat withdrawals. They claim to have litigation with CIBC which blocked their bank account with some USD 29mln + in it. I can't get any meaningful response from them on what is really going on and when the issue will be resolved. Fortunately it is possible to withdraw crypto but the fiat withdrawal requests got stuck in "no one knows place" May be some of the lawyers from your show will be interested to investigate… I'm not alone who can't get fiat $$ from the QuadrigaCX. Or at least you can recommend Canadian law firm which can help.

  7. Stephanie Avakian Co-Director of the SEC's Enforcement Division, Stephanie is Armenian, that's awesome. Armenia small nation but many smart people.

  8. I think Binance requires KYC if you want to withdraw more than 2BTC, plus BNB is basically a coupon. It's weird how Tone promotes BitMex but calls Binance shady. BitMex mos def enriches themselves with funds from "System overloads". #FreeRoss

  9. BitMex is the bucket shop of all bucket shops, Arthur "Bitcoiners are children so I treat them like Children" Hayes should be sweating 45 ACP cal bullets.

  10. If crypto is regulated to the teeth, by government forcing control on certain exchanges, and just assumes jurisdiction for all others despite actual location, then doesn't that mean crypto loses all of its purpose and value to its nation's individuals? I mean, who cares about crypto anymore, if all it serves is to accomplish more financial slavery by centralized overlords in banks and government? And also price can be manipulated by large institutions behind the curtain, since they control fiat money creation, effectively making price discover centrally controlled also. That makes the investment potential also stunted.

    I know I won't have any interest in crypto anymore if that becomes the case. The whole point of "censorship resistance" or "unconfiscatable" value becomes a joke at that point, if it's nothing more than digits nobody can use anywhere freely. If it's fully and centrally controlled by government, that makes it a tool for slavery, not freedom. And it makes the technology rather pointless in the end, since it won't be any different than what we have now, except by being worse. All crypto would become in that case, is a way to pay more to government coffers as they see fit, using lawmaking to enslave us even more than we already are. Technical decentralization will mean nothing in that context, except when you're leaving the country for good.

    On the opposite end of the spectrum, this may actually give advantage to any superpower nation, that wishes to allow freedom of its citizens instead of this type of draconian oversight via excessive regulation. I say this because money will naturally flow there instead, where it can't be confiscated from a foreign government trying to collect it. And so that nation will almost serve like it's "taxing" the rest of the world as capital flows to it naturally as a "safe haven". Therefore it could become financially prosperous at the expense of all the more socialist nations that had attempted to control crypto on its citizens by excessive lawmaking and restrictions via government control. For example, what if the USA enforced all Americans to use blockchain for work income, business accounts, and spending currency in all trade… and all with automatic taxation on all of the above (they take whatever they want, since it's fully centralized by regulation). But people in Russia could use it freely without taxation. Russians would then benefit at all productivity in America, without even having to lift a finger. As Americans are forced to use blockchain to store their work value (income), while Russians can spend it for actual goods (ex. to buy and hold gold). This effectively makes the slave nation (America's middle class) work for the master nation (all of Russia), as their work efforts are converted to Russian gold.

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