"Mother of all scams" – Crypto gets attacked in the US Senate | The Daily Exchange

welcome dividend exchange we're talking about Roubini and having was wrong and I record my expert here the mat itself mr. bucket Poochyena we're gonna work out whether each coin of securities or not see you guys right after this alright guys welcome back now just fully introduce our beautiful guest today mr. Macha Poochyena he is a partner at the Piper Alderman legal group he heads up the blockchain group as well and he works with a lot of the leading Australian blockchain companies currently welcome Michael thanks having you on the show forever yeah sure we're gonna talk about all sorts of things but just it's good to be back it's good to be back welcome back market right now this is gonna bit of a sentiment we're looking at Bitcoin trading at six thousand two hundred and forty eight dollars a theory I'm down to 193 under $200 for some reason right now I'm seeing elos down rippled down full percent Bitcoin cash down theorem classic down like going down we just took a recent dip but bitcoins just holding defying gravity hello ever'one bitcoin holds an amazing let's talk about what's going on right now in the market but this weed one comodo is leading the pack right now our privacy Cohen seeing gains of 10% digit X futures as well or on the flip side down about 12% and downs another 69 in market cap Bitcoin trading up last week we talked about 400 bucks in 30 minutes down to six thousand three hundred twenty or six thousand two hundred and forty eight dollars right now still waiting for that etf decision still waiting thankfully markets on the way up to obviously trying to acquire right now that there was a Bitcoin puzzle everything with the Bitcoin puzzle Michael can we bring the Bitcoin puzzle up Joel so apparently there was two million bucks in this puzzle two million dollars it's been a few puzzles that have been around over the years there was that painting and this is the latest one look at this one so somewhere in there is two million dollars of Bitcoin I can see like a F and a 6 & a 4 a 310 and a Bitcoin symbol and a lot of little address look at all that detail down there so there's some sort of product key in there turrican jacket when people do this they're doing it for the like why wouldn't you do that why would you do that like I think it's a it's an excellent engagement for publicity around that and it's also just a cool cool problem so a lot of Bitcoin maximalist sin particular separate those who are just in there for the business for those who actually write into the cryptography and puzzle solver photography goes hand in hand with that so sure it's a excellent way of dominating the news which has some nice good news when you otherwise have dr. doom writing in we're gonna talk about dr. doom dr. dingdong doom we're calling him around here the Rubini man himself won't get too salacious we have my a my Tony here to back me up as well but the money apparently has gone out of the puzzle two million dollars has disappeared two million dollars a Bitcoin it came and went just like that bang right moving on like coin I'm done this like my Bitcoin for a little bit like coin had its birthday price rise and an exchange listing all in one last weekend and no cake no cake and Charlie the man himself obviously celebrating seven years but we've got an image here it's now available in Gemini it's kind of cool but Charlie sold these a soul is like land right at the top is pretty impressive and with the birthday Gemini exchange owned by the wicked lost twins received regulatory approval to whistle icon in the exchange with trading commencing this Tuesday permission was sought from the excited New York State Department of Financial Services as Jim and I continue their goal of running the exchange is built on standards of banking compliance of do you what do you think about the Gemini and how they're doing they're so illegal didn't they like legit well New York State has some pretty strict rules around crypto businesses and had early licensing so getting through New York gives something Gemini and the Winklevoss twins more credibility in terms of being out of work with regulators they've taken a bit of heat from their stable coin having some built in Killswitch tape of ladies into the contract so I think insofar as working with regulators to have a more compliant platform the winklevosses certainly leading the charge in New York State or a percent price went up slightly back down now like going to $52 now let's move on let's talk about Michael in the area we really want to dig into some couples in a couple of questions here just by way of background you currently had popper aldermen you got ten years of experiencing as a commercial litigator and a rich knowledge obviously of Bactria crypto currency as well as IT and technology is that how you got in how did you get into cryptocurrency well back in university days I was running web development and databasing during the first comm boom I think you might have had your hand in a few similar ventures way back then couple websites I was tinkering around with so my tech interests are spanned from there I was fortunate enough to exit that business early on and focus on law and then over my legal career I've had more and more tech clients come in and then with the rise of smart contracts in 2016 I've been very fortunate to be at a intersection where my IT background and passion for this technology and legal skills come together to be able to help some great blockchain projects so I'm all about what efficiencies blockchain can bring but of course ensuring things are going to work from a legal point of view okay now we want to talk about security tokens and I really want to get into this because it's a major trend right now obviously we were in this we're in this phase of utility tokens and I've been calling them the the Tulip of the cryptocurrency market and that's pretty harsh but you know there's been this massive bubble and I think it has sort of boomed and then we've got this rise or sentiment right now the security token where it represents actual assets or value tell us how would you describe a what is a security token I think that'd be the best example is to call it a tokenized security rather than a security token that that words been bandied a lot around from even you know consensus and blockchain week in New York earlier this year every project there was saying we're going to do a security token but a lot of projects that are talking if you dig into the detail and say but what is the security you're offering outside of those tokens which are asset-backed you don't necessarily get a clear answer so it seems to have replaced for some projects saying we're doing a utility token I've never liked the term utility token because I think there's a huge range of things that tokens can represent and trying to shoehorn them all into two categories is really quite difficult and then you end up with projects being put in these categories that just don't work together so at its most pure form I think a security token is a digital representation of an existing which was recognized as an existing financial product or security and you have to keep in mind that financial products and securities only exists because the Parliament has legislated them into existence so similar to the Dow's coming up saying we're going to make our own thing just like a company but call it a Dao downs don't exist at law because companies only exist because Parliament created them in into being a legal fiction and similarly securities and financial products sit around that space and when you come to things like the Howey test in America they use the investment contract as a sort of catch-all bucket for things that might not fall within the usual categories of securities and in Australia the managed investment scheme regime largely fulfils a similar function right so we've got the Howey test the management investment scheme in Australia and the have a test in America so I gotta ask so let's look at the top 20 coins we'll just bring them up ever so quietly do you have any views on any of these top 20 as to which ones you think might be securities I have to pull a no comment on specific no comment no comment on those codes are always welcome to come and get our considered legal opinion on it but I think that like what I can say is that and I want you to coin you know think about when it's you know it's trying to because there's a lot of a lot of a lot of jousting about this right this is a big concern correct and what what kind of things would you look for that would signify that something's a security token well I think that the biggest killer way that you've seen and certainly some projects that have been shut down the regulator's here is tokens which offer some kind of share in revenue or some kind of dividend return or the ability to vote and control what a business might be doing in the future the dividend in revenue sharing has shown up in projects over the last 18 months and a couple that have been shut down in the Australian space we're offering just that very thing so the hallmark of having an ownership in an underlying business where a return is being paid out is very close to a secure it is looking like a security or some kind of preference share equally saying that a token represents ownership in an underlying business or venture starts to look very much like a share so just because those who know me know I rag on tether fairly regularly otherwise you have things that look like derivatives and tokens which purport to represent an underlying thing of value like tethers saying they have one u.s. dollar deposited in their bank account for each tether on issue run the risk of being considered to be derivatives which are another form of financial products or you could use security as a shorthand to pick them all out mmm but I think that you don't see within the top 20 really nowadays a lot of tokens which are purporting to offer dividends or revenue payments and I think there's important distinction to make between say projects which might have a master note system running because my view is that if users are running a master node on a network and being rewarded for doing that much like miners on Bitcoin yes they're not earning a dividend or revenue share what they're truly doing is providing a service being the computing power and the processing that's being delivered so I think there's an important distinction there from tokens which might otherwise be considered securities so master node I guess yeah I guess that's different but what about you know in terms of something which is centralized or decentralized do you think that plays it howdy how does that play a factor in determining whether something so secure you know I don't think it's determinate by itself but I think it definitely plays a factor for example at least in Australia you know the comments to the Senate years ago about Bitcoin focused on the fact that things are fully decentralized and you're looking at peer-to-peer transfers and it's difficult to see that someone is engaging in for example a non-cash payment facility if transactions are happening peer-to-peer without any involvement of the party that originally issued the tokens that's certainly a feature a Bitcoin that has been identified before the Australian Parliament previously well its ownio it issues you get you if you hold me oh you get gas and gas can be bought and sold right so that's you know it's it's worth something that to me feels like a dividend to me correct in what you're describing it is still a cryptocurrency to some extent but that fear was very that sounds like a dividend would you say it certainly does sound like one but I think it ought we also have to look at what's the real purpose of the token and is this merely incidental or part of a bigger system so one of the challenges of any classification whether it's utility tokens versus other versus security tokens or financial products is everything is frustratingly a case-by-case analysis and you know exchanges which list tokens have to look at this problem to say if we have lots of customers in a country where there could be a problem of this token being traded and you'll see that Australian exchanges have tended to list lesser numbers of tokens overall then overseas exchanges like buy nets and I think it's because of that challenge of needing to look really closely at each token and see how it will be dealt with or might be dealt with because it's a gray area in a lot of ways we have our guidance documents from asset but you've also got as a commissioner being coming out to say we recognize they were tokens which will not be financial products mmm this is very blue feels a bit gray to me right now mr. patina question utility tokens right a lot of them have raised money there's a lot of promises that have gone in some of these white papers websites and all sorts of things do you think good chili tokens or securities I think that it's I think there are some other at risk of being they certainly are at risk but I think that you can see particularly in Australia with the Australian Competition and Consumer Commission delegating its powers for misleading and deceptive conduct for cryptocurrency tokens over to asag that NASA has been looking to use that as a easier tool to go after projects which it thinks have been engaging in conduct which is misleading and deceptive because even under securities laws there's a prohibition on misleading and deceptive conduct so when there's a white paper saying we're going to make these amazing things happen I mean a good example is Munchie given the decisions in America with the SEC moving quickly about promises for crazy returns and and how things are going to go it's that misleading and deceptive conduct which is really the mischief that I think the regulator's are trying to fix I don't think that from a policy perspective they want to get into is this project a good quality project but at the big picture utility tokens were all about capturing the value of a network as it grew larger in the hopes that the token might become more valuable if lots of people came on the network and I think we've seen a lot of projects realize that these kinds of networks involved marketplaces in bringing in the adoption of a whole lot of customers that's to really hard problems plus all the challenges of operating in a very gray space of crypto so it's unsurprising that you have a lot of these projects that just don't make it don't make it through or they make it through their builds that struggle with adoption I think they've just been really early so but with that there are there are a lot of coins you know in their presentations they said to that effect you know how you know this tokens going to go up in value because of the circulation and the network effect of the coin going around I you know you some of these projects would you might even soon admit that people were buying them with the intention that they were going to go up in value and they were going to go and sell them you know I think that's the underlying intent right but legally does that give them any recourse to to do anything about this like what a lot of people have like you know they're holding bags of coins and never gonna list never going to be any you know they're worth either 90 95 percent of what they bought up do you think there's any recourse for them is there any path for them to to get their money back I think it's really hard because most of the time you're looking at people have probably put in not large sums so sitting in sort of class-action territory and I think you know there's a class-action also just dropped in the US against rippled not long ago so there's two against them at the moment but I think that we'll see class-action lawyers coming in against projects but you know lawyers also look at things that have to give client's advice around what's commercial and if there's a project which is dental it's money going on conferences around the world and marketing and whatnot and there's nothing to recover then there's a real question of well is there anything to go after because trying to prove that something failed because I was a high risk venture which for various reasons wasn't quite a fit it looks no different to any early-stage startup where people are investing in it versus something where it was a bit more on the scam side I think you've seen regulators particularly the SEC and also in Australia the focus being on the scams but you know there's been a large number of scams and I think dr. doone was raising that in in the Senate and we'll get to that we'll go to the doctor himself but but let's let's talk about suit suit suit some of these projects they're never it's never going to happen so you think potentially have that have those peoples who just lost their money well almost by definition if the project is never going to happen then yes because purchasers of tokens which are structured as a pre-sale it's like buying a voucher for a pizza for the pizza shop but it turns out that the pizza shop miscalculated how much it'll cost to build things or they've built in a bad area and they're never going to make the pizzas you're never going to get them so a lot of the tokens and the utility tokens were framed as pre-purchase of digital goods and well I think there is a space for that I mean baseball cards and collectibles have always been something where people purchase them stamp collectors they've never been viewed as securities but people have been able to buy them in the hopes that one day they might be worth more but they could also be traded around it's just that in the last couple of years the rise of these crypto tokens that could be traded at high volume and could raise money very very quickly have created this problem that never existed before so I think the laws trying to catch up there and there could be certainly a lot of risk over projects which have perhaps sold something that might not be designed to be a security but sold it in a way that it could be interpreted as a security much like say Munchie where a lot of the judgment focused on how it was being sold so I think that I I mean often say a token can really the easy way of thinking about is it might become a security for two ways one is how it is designed does it have a dividend does it have an asset sitting behind it what is the actual legal structure but – how is it presented or you know it's a timely point part of the year for it but selling you a pumpkin is not selling you a security but selling your pumpkin there might be on the 29th of October with a view of you reselling it to someone else could be so there's this gray area that that I'm not sure was going to get resolved in any hurry well I mean I think some of the internal workings of these tokens and how the money's been spent I think that's probably more where there's some interest wouldn't you say I think then rather than these judgment of whether it's utility because clearly they've bought Peter tokens or timezone tokens or whatever you meet you know time Pizza coupons that's probably the best way to put it all right let's let's talk about security tokens but right so I'm fascinated by this I'm interested in your view in you know let's imagine we get these new security tokens we establish a market for them to be traded and in general you know securities or stocks need to be traded within the rules of that country or that jurisdiction in which they operate whereas cryptocurrencies are global right how could happen me how can we take a candidate's how can we deal with this borderless new market look I think there's gonna be some inspiration taken from forex markets around how these will be dealt with because foreign exchange is liquid across borders as well so that's our best analogy and in law we often move as close as we can to the nearest analogy and build from that I think that you can still look at synthetic listings in Australia of American stocks and funds which hold US stocks to make it easy there's also platforms which permit you to trade on foreign exchanges so I think that it's the technological challenge that tokens enable this where shares in the native stage being just a piece of paper share certificate yes we're very hard to move cross-border I mean the last time we had pieces of paper that could move easily cross-border you know bearer bonds which are probably only really known to your viewers if they watch some amazing early eighties movies about terrorists and kidnappers became outlawed because they were so easy to move around internationally without a apparently Feeny's telling us that we do watch things about terrorists didn't come to him we come to him in a bit we'll come to this we come to this than the big guys we're getting there but I think the benefits of tokenized securities are so right over the existing securities administration and framework that they will just take over its me it may take five or ten years for them to communicate their way through because of the speed at which regulation moves but Nasdaq continues to look at how they might be able to put on a security token exchange the TSX is looking at it as well Malta Stock Exchange we've got multiple look the reality is you need the major Western jurisdictions to come on board because they have the big market so we've got these great island nations like Bermuda and Malta and others that are testing out perhaps frameworks but I think until those get adopted it's going to slow down the speed with which everything will move across but I can tell you there's a lot of interest from existing financial services businesses into the advantages that blockchain brings not necessarily tokenizing immediately but even looking at the benefits that can be gained by using blockchain for things like registry management and other things once once some you know I guess what are the challenges you see from a regulation perspective for say you know Australia and all the United States to actually get security tokens going good do you think if security even could launch today right now oh yes I think it could I think the challenge is this sort of you know at the risk of trading back when I said utility and security are bad do bad categories I look at this three category model of there's something which is completely a tokenized security and it's gonna have to be compliant with all the existing regulations around the issue of a security and then over here you've got something which isn't a security but are you till that Utility tokens are really defined by what they weren't maybe your loyalty points and and other things which have been tokenized which are plainly not a pizza voucher pre purchase of digital goods that is genuine and then in the middle you have this interesting space which is very active in America at the moment where you're seeing various things being offered up in compliance with the US framework which is largely around their what they call their Regulation D where investment contracts can be offered to accredited investors and that might be analogous to say using a managed investment scheme here offered to wholesale or sophisticated investors and that middle category is very interesting because there are product there are projects offering up tokens which ought not to be from the legal structure be considered to be financial products then sells ie they can be traded internationally with no restrictions whatsoever but also tokens which are being issued which should be the subject of whitelisting and things like that so polymath and harbor and other projects which are looking at keeping controlled whitelists to deal with the secondary trading problems so it's quite today you could issue your shares in a company using a digital token instead of the share certificate it's just a question of what rails will be build around that because you want to know as a company who are your shareholders at any given time because there need to have a vote you need to know excuse me who's voting for whichever resolution so it's a secondary problem I think around how do you track who holds the tokens and I'm all I'm a bit internally torn because there's some fantastic projects that are being structured such that the tokens aren't financial products including some asset backed tokens which are very exciting so we've been working on a model apply for Alderman as to how you may be able to push out asset-backed tokens where the tokens themselves won't be technically considered a financial product and that would enable trading on many exchanges immediately while the actual initial offer and the product is fully compliant and licensed so the entire licensing regime around financial products also poses a challenge because all the og crypto projects were not generally involving those who had licensing or access to licensing and then you've got the Winklevoss twins coming in and now level money couldn't have got you a license coverage last year but now there are holders of Australian Financial Services licenses getting involved in crypto saying we will put our license on the line for this project make sure compliance is there and I think the regulators are happier with that approach if I can make that assumption okay it suggested there but like so you have an asset a tokenized asset the initial offering would be to wholesale investors local retail investors with the appropriate registration of the offering right with the with the whore accredited investors in the United States and then it goes on to an exchange and it is traded with retail investors and it like does that pose any problems is that is that gonna work well that's the big question for these because that's the area where there's a lot of value and being have that secondary liquidity and that's why tokenized security token I securities or security tokens have a huge value edge over existing stocks because of the promise of potential secondary liquidities is really a huge driver as well as the administration savings of having a fully automated system that could be partially or fully decentralized so based on you know what we're looking at I think that framework is possible it still means that with interest or something or perhaps not but the the underlying point is still you'll need to be passing anti money laundering and know your customer chicks with the issuer as it were so if someone wants to come back and say alright I have a stable say with Gemini for example to come back in and get the u.s. dollars out if my tokens have gone to you you might then go back and say okay well you need to pass your check with Gemini to prove who you are before that we'll give you the cash so I think it's about regulators finding where they're comfortable where the anti money laundering and know your customer check is and for digital representations of shares it's going to be on whitelist for exchange of the shares because you need to know who's on that register but for things which represent ownership of an asset you might be in a position where you don't necessarily need to have that so tokenizing things like precious gems or precious metals may be able to be done in a way that because it's really trading it like a commodity this it should be subject to different rules that ought not to be as strict as well that's fascinating all right so let's say this exchange these markets right they're trading these stocks the exchanges commit to giving the KYC of the holder of the tokens to the project that's I heard you were talking about as an art as a concept now I think it'll be more the token holders so when someone comes in to buy the tokens they're obviously going to need to be passing a mln kyc yeah then there may be some secondary trading but if someone wants to come back and say alright this I bought 100 dollars worth of Gemini tokens I'd like $100 please then when they go to Gemini they're gonna need our ID themselves and pass whatever checks Gemini has the New York regulators are happy with III guess what I'm saying that so so so – so if you had this this this crypto I share and if there was some way say use say we traded it off exchange because you know we have some sort see deal and but in all of them say safe say you I give you the cash you give me the tokens and they're security tokens and they're there they're based on shares maybe there's some sort of unlock or KY caml that I must do in order to be able to you know register or use those shares to receive the value maybe there's absolutely I think that when you get to the point of any dividends or revenue sharing or money going out there's around tax withholding if it's moving internationally or the money laundering concern so I think it's the point at which you start to see those kind of payments happening that you need to ensure there's a whitelist in place so I think that any crypto graphic representation of shares is going to have at least for the time being have white lists baked in there's a lot of projects working on that because it's a sensible form of regulation which can be adopted without too much difficulty and obviously for in a Bitcoin maximalist they're not going to like that and the libertarian wing of the crypto community saying well we don't like that at all but for those who could take advantage of this to say well this is a faster way of running our registry and doing all of our voting we don't want to have to pay huge amounts of money to our to registry services and you've seen some existing share registry businesses investing into blockchain projects because I think they see the writing on the wall and say if they don't adopt this technology to home listed companies manage their registers someone else will because right now in Australia if you lose your holder identification number it's very easy for someone to get hold of all the information about the ship all the shares you aren't mmm they're all of course blocked out on on paper but for those who are only occasional share traders they need to keep that safe it's analogous to a private key there's usually a bit of postcode authentication as well but the reality is with Australia being so centralized around Sydney or Melbourne for a lot of ownership of assets that's not that many postcodes to guess to get in if you could get someone's well you know chyann what um what are the trends users are seeing right now in the market Michael what's excites you I think there's a flight to quality and I think part of this move towards tokenized securities or security tokens is about representing projects which say there will be value which is being unlocked here in an underlying business or asset which is on offer whereas previously was just a value in a platform maybe or the Kickstarter kind of idea of you're getting the tokens cheap but the thing you'll be able to redeem your token for in the future will be valuable I think that a lot of the larger funds which maybe previously were looking around or willing to purchase tokens in the hopes that they'd be worth more in the future are now very much looking at equity in the underlying business hmm and that I think a lot of people working in crypto looked at early to say oh yes it's an awesome way where people were were raising money through a presale but the reality was it would be in keeping the underlying business if there was value being generated and now what do you think I'm gonna see in 2019 what sort of your forecast look I think over 2019 we're going to see you know a regulation continuing to creep forward I think those island nations will press ahead with their pilots if you will of RIT of regulation which if they work successfully and we don't see a lot of scams in them you might see some Western countries larger Western countries saying that works let's look at it or see how it can interface with our existing rules so I think that they'll continue to be a flight of projects to some of those nations and will just depend I think of them if the US can find a satisfactory framework that they're going to be comfortable with and not have too much of a pushback from Congress around the recent hearings and and how their regulation will work I think you're just going to see higher quality I mean you just saw cent Regis in Aspen do a in effect a tokenized real estate investment trust and I think they raised it was at 18 million u.s. through that process which was just a pure token issue tying into shares and was very popular so they got a lot of press from it that certainly helped their project so I think we're going to see more of that mm-hmm so you're gonna see a lot more traditional if you will fund raising accepting that it's an offer of perhaps of security and doing in a compliant way may not squeeze out the pre-sale tokens or tokens which have an obvious function like you know really good Australian one coming up although disclosure we advise liven is a reward point token and functions properly like a reward point within their system so there's always going to be room for tokens which aren't securities but I think you'll really need to have a whole range of different categories to capture them properly like reward tokens like presale tokens medium tokens any favorite coins even your favorite coins look I've been an aetherium fanboy since the early days so Wow did you write a good roller coaster there Wow but I really you know it's not contracts aware I caught the bug initially so I think that when chains a really interesting one that I like mm-hmm with that whole move towards cross building in cross chain and driving what you can do with other smart contracts and I think there's an upcoming stable coins we're working with the party on a gold-backed stable coin which is very exciting because having these stable coins permeate and be used in smart contracts is really what we need you saw a lot of the projects last year suddenly starting to look at all we need jewel tokens and of course one of them would be a stable coin because they realize if they don't have that stable pricing then it's so hard to get the adoption through right awesome in when the clock strikes 12:00 or New Year's Eve this year 2018 mr. Pacino what will be the price of Bitcoin I I think it'll be above ten thousand Australian that's my tenth a lot financial advice zealand where do financial it's really fine chill advice on the show all right live it up let's talk about doctor do mr. Roubini himself i'm gonna really dig into this guy's i'm gonna unpack this the big story over the over the weekend the US Senate Committee on Banking Housing and Urban Affairs conducted a hearing entitled exploring the cryptocurrency and blockchain ecosystem it's interesting this idea of hearing and testimony so strong lots of lots of professionals came in mister dr. Rubini himself Doctor Doom aka the doom stir doom deadly doom doom doctor the man himself he is apparently an esteemed professor of economics and it is because he has one claim to fame er he he predicted everything was gonna fail the Scot was gonna fall in the 2008 financial crisis and so para people listened to him now which is kind of a thing now he has in five minutes in his testimony let's just this is British down he has made comparisons between cryptocurrency and the following North Korea The Flintstones threw shade at Vitaly had a little metallic pewter and founder of aetherium label blockchain as a glorified database and called cryptocurrency the mother of all scams fine words assessed in fighting words as so strong oh sorry he also made mention of criminals and terrorists as well forgot about that part my apologies this isn't five minutes how do you think you know just just starting we're gonna roll a first video I don't Joel if you want to spin this up and then I'm interested in your view on this Joe spin his first video of this chat he's got Roubini he's just throwing shade let's let's hear it development is centralized as a technological elite is police prosecutor and judge they arbitrarily change the code and 40 points into new ones when things go wrong and while it is massively concentrating crypto land the Gini coefficient of inequality for Bitcoin is worse than North Korea it's quite an achievement so ruby knees made some pretty good points right he's thought about centralization in mining and exchanges being massive issues and I don't think you know everyone considers see some of that but he's got some serious inconsistency in his knowledge and out resident Andrew Monroe the blockchain man the crypto expert himself has written an incredible criticism and like really cut this all in too many different pieces Joel if you want to post the link so everyone can look at this and I just want to quote a few things and there are a lot of a poorly thought-out thoughts I guess within this but just to start my what do you think about this in terms of Roubini coming in the doom stir throwing shade on everything how do you think that's affected the cryptocurrency space look I think it's perversely I think it's been good for the cryptocurrency space the issue is that um dr. Rubini I mean he does have a few a few degrees as well for his qualifications you know he's an esteemed academic but the arguments he's read a few degrees actually I've got one I've got a PhD in hard knocks let's get you before the Senate but fundamentally I think you know crypto has always had a bit of infighting right there's been sure a bit of tribalism you know people people I'm throwing shade on various projects but I think that one thing that dr. emini has has helped with and perhaps is Doctor Doom Monica's really good in that regard is he's kind of created I think the Fantastic Four Oh dr. Doom's counterpoints I think he's created their fantastic four million the people who've come together to say you know what we might have some differences over where the Bitcoin cash is garbage compared to Bitcoin but this guy's just saying stuff that we don't agree with so having a common point of a common enemy a common enemy he'll that's like you know this is not financial advice no but a common point to here and go after and D'Andra but and debunk I think is quite useful I think a common enemy is an incredible thing right we've all coming together around this now I just wanna quote something he comes some spots ready let's let's roll with this job you want to bring up this comment from rubidium so this is the new refuge of the crypto scoundrels is blockchain the technology underlying crypto that is now alleged to be the cure of all global problems including poverty famines and even diseases that as discussed in detail pallone blockchain is the most overhyped and least useful technology in human history in practice it is nothing better than the glorified spreadsheet or database Wow spicy words so what were the crypto scoundrels using before blockchain I thought they needed blockchain – that's interesting isn't yeah I don't know what we were using what were we using before we scaled realized things that's very strong but mr. Monroe ow our crypto journalist he had fired up he notes that banks themselves including institutes like World Trade Organisation and the IMF disagree with this mr. Chris sorry Christine Lagarde the director of the IMF has identified distributed ledger technology and digital identity as the as being the two biggest and most beneficial things to come in a cryptocurrency furthermore she's pragmatic about the use and she quotes Joel feel to bring this up by working together and leveraging technology for the public good we can harness the potential of crypto assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability and the World Trade Center quote as well also said these technologies have the potential to reduce trade cost further and transform international trade profoundly in the years to come that is from the World Trade Organization that's pretty pretty strong how do the kind of comments you'd expect to hear from Rubini right called the most overhyped and least useful technology in human history human history that's impressive that's that's better than fidget spinners you know beanie babies you know yeah garbage garbage kids I like garbage pal I think I click toys that was fun anyway and then you know his opening statement compare this real and ongoing FinTech revolution right this is important AI Big Data IOT that has nothing to do with blockchain of cryptocurrencies and the record of blockchain which has existed for almost a decade and still has only one failing and imploding application cryptocurrencies that's incredible incredible this is so spicy right whereas this is not true right in Australia the big four banks Commonwealth Bank has used blockchain for some time another the big for Westpac have been testing blockchain this year with promising results saying that it complements AI Big Data a article II in Westpac's general manager of corporate institutional banking did here then not so the learning about blockchain was like being a caveman and coming out into the light that's that's that that must be um human history being being written but apparently outside of the back film such as IBM IBM has a huge blockchain situation going on absolute and they tie into Walmart's recent announcement there without salads and lettuces leafy greens leading to the box showing get him into this you get the diverters chain Alibaba Amazon Walmart using blockchain technology Forbes even put together a list of 50 of the large public companies using blockchain with a max conserve enum MX was at the bottom of that this I would I would bet good money the blockchain might just be the next Vint a revolution now another issue issue were being too was with ICS right and none of us here disagree right there's been some nefarious activity treacherous things have gone on right which is which is fine although he has gone a little off the mark right and I quote Rubini quotes there are hundreds of stories of greedy crypto criminals raising billions of dollars with scammy white papers that are nothing but vaporware and then literally stealing these billions now we've done that research here at find up and I can we can reveal Andrew these research you know from used up Bitcoin calm and obviously all the total cryptocurrency scams have been out there it sort of rounds out about a half a billion dollars yeah that's a lot of money but it's far away from this billions and billions of dollars which which mr. Roubini is you know referring to was just stolen on a regular basis apparently as well it's regularly stolen regularly on a regular IC o—- stealing basis what's regular well you said like everyday few times a week I guess I don't know it's hard to tell with with his comments in his rambling paper that supports his testimony it's hard to say I mean I think there's there's no question that there has been scams you know there was that fantastic one with Ryan Gosling is one of the team and and a bunch of exit scams but there's always scams so we've also we've also had a look at this and 9i Geryon prince scam an email has raised nine point three billion in 2008 alone 2018 2018 sorry my polishing nine point three billion in Nigerian email scams so everything's got lots of scams but the thing is you know there are obviously a lot of other really good projects out there as well let's bring out this scam graph if we can we've got this is some research we've done mr. Madoff the Ponzi man himself has done well in Ron's done exceptionally well their Nigerian prince scam and then we've got crypto they're right next to it is the romance scam that's pretty impressive coin check scam the Bangladesh Bank highest bit connect and bit Grail I don't know if it's you know it's it's interesting isn't it he just puts it in perspective but the Nigerian prince scam is pretty impressive the people that still works that's quite amazing steel rabbit from the Hat right right those emails and make the phone calls and take photos and yeah it's have Skype phones and let's like follow up it sound like a Sales Leader gonna make it they're gonna sales for supplies them software I apologize sales suppose I didn't intend to say that no it's too far so the Senate committee asked her of balanced discussion so invited Peter van Falkenburg a lawyer and director of research at coin Center Quinn said a base in Washington DC described as house leading nonprofit research and advocacy center what do you think mister mr. Van Valkenburg what do you think about him I think he's like the Human Torch of the Fantastic Four in this dr. doom scenario if I can push the tomahawks he's there he's got the fire in him and he pushed back on I think a lot of really useful uses for cryptocurrency and made the case I think fairly compellingly to the Senate for the same kind of light touch approach that's needed on crypto and blockchain that was useful the rise of the Internet okay so so then Valkenburg aka the Human Torch aka the shining light aka cryptocurrency angel is apparently backed by galaxy digital andreessen horowitz to name a few circle block stack blockchain capital etc etc etc pretty names right obviously it's a bit of a lobby group we get it and they're gonna fight but let's yeah let's ever hear what mr. Valkenburg had to say to combat mr. Roubini do you want to spin the spin the real first Joel spin it DJ that's good we got a song coming up as well why should we want the pioneers of this technology here in the United States and not fleeing overseas a simple reason because the corporate intermediaries providing today's critical but privately owned infrastructure are becoming fewer larger and more powerful and their failures are in critics increase so so it's interesting you know he went on to take a few swipes at Equifax and the breach is there right so a lot of centralization with these corporate entities making honey pots and things like that particularly around ID and Social Security numbers they need to need took a swipe at the Swift Network which has been targeted obviously bye-bye ripple and things like that and you talked about the the biggest bank heist over Swift 1.8 billion dollars was stolen by corrupt employees and there were other issues where where where certain devices have been hacked pacemakers communication devices vehicles even which you know cryptographically they're not as secure as the blockchain and things like that right and and I think you know cryptocurrency and block training its essence it's in its early infancy days you know it's like it's it's like a child learning to walk and I think we're you know it's fair to say mr. Roubini has come out and go on oh jeez this kid can't even walk and you know he's kind of pretty harsh and criticized all the problems giving us good constructive feedback and we're very grateful actually that he would couldn't make such a good contribution right take the time to write all this stuff and think about it and you throw out all these things that we need to deal with which i think is awesome right I actually think it's great we've got awesome fuel and fought on now to win you know inspire us to go and improve this economy so this industry as well but really you know was so early you know he talked about also mr. Val mr. Van Valkenburg talked about email and how long that took but start of the 70s and then you know what was it like the 90s late 90s really or early two-thousands even it's now now email is I suppose emails pretty prevalent right now but it took ages for that to get cranking right absolutely and and and and and what blockchain and crypto and bitcoins 9 9 years old and and calling it the whole thing the worst technology in human history I think is a little bit of an exaggeration and I am one to exaggerate just a little I'm tired of time now we'll also look at you know I think what's really important here you know there are there are calls here in terms of the services of some of the bad actors within economic systems as well you know and obviously trying to bring that through and treating of the balance that blockchain and cryptocurrencies can provide with some of these economic systems and other these these devices and how it's so early on you know we've got another video here you want to roll this Joel as well there's some important arguments obviously for both sides and we just want to bring this is how blockchains can similarly disintermediate critical payments and IOT infrastructure the technology is not yet ready to answer all of those questions today but it is our best hope and as with the Internet in the 1990s we need a light touch pro innovation policy to ensure that these innovations flourish in America for the benefit and security of all America that's pretty cool right so what do you think about mr. Ruby's arguments do you agree with him look I think he raises the technical challenges that blockchain tech has and so you know tricky thing there's a fair credit on 1-view blockchain is a glorified database it just depends how glorious you think it is and being able to have this trusted shared ledger is supremely powerful and we've never had had that before so I think he misses the point on a whole lot of so bringing out the scaling arguments and transaction limits of whatnot there's a lot of people far smarter than you are working on these problems to get lightning and other solutions in there to bring it up so I think that you know hopefully we can look back on him in ten years time and say maybe it was a that you know you raise issues that were definite problems but their problems are being worked on it's not as if nothing is happening in in blockchain to fix these problems there's always that balance between centralization and decentralization and speed and other important things so I think that he's mistaken and the way to show that he's mistaken is to show the results and the deployments not necessarily just to throw shade back at him on Twitter what do you think about how the Senate will respond to this like do you deal with much government like that how do you look at I think it's um American politics are pretty hard to guess at the best of times and with the current occupant of the White House it's even even hard I guess I think their governments have been pretty fair in how they've responded to testimonies on blockchain and cryptocurrency I I would hope that they will be listening to the full range of testimony that's been given and not just focusing in on these bad noon news items it always frustrates me when there's the I mean I vilas clickbait really because if he went up there and said oh look it's a promising technology but there are these serious hurdles that have to be overcome before it can be useful yeah we wouldn't even be talking about it you're not have even made the news but it's because he's gone up there with you know the um you know trumpian kind of comments if this is the worst thing ever yeah you know terrible that suddenly it's not it's on the radar so I hopefully they'll look through the hyperbole and hear the others who've given the testimony and also do their own research because you you just have that technological gap with Parliament and to an extent the judiciary who are hearing cases around crypto that don't have enough time to really get stuck in and understand it so they have to rely on experts who are coming up I think he just needs to be shown to not be an expert in the space you know I used the Walmart example when a company that has better logistics than the US Army and the US Post Office it says hey we can make our logistics better with a blockchain it's kind of game over on supply chain and blockchain right there you don't even need to listen to someone like dr. doom just say the market isn't speaking for itself and will continue to speak for itself so dr. doom has been throwing some seriously ruts and insults on Twitter right now right he is he is cooking up like true that like Twitter troll like like world war like World War Twitter troll 7 like nobody OVF you know Royal Rumble they all get together so cheers Wilders that that that MMA fight the other day right but you know it looks relatively non impartial to some extent now how do you think this affects the credibility of cryptocurrency ah look I what do we we've got a question coming in Chris I think it I think that it doesn't affect it for those who are already inside the industry if you will or I think those who are just watching it on television and or those who are uninformed can easily pick up on that much like when you know the Law Society wrote an article earlier this year the dark side of crypto there was some Australian journalist who put that piece saying X percent of Bitcoin have been used in illegal transactions but of course later in the paper pointed out that that percentage was skewed because of the use on the Silk Road and if you look at it nowadays it's vastly less newsworthy percentage so and my comment to that was if you know if you think cryptocurrencies are used for crime and money laundering just wait till you hear about this thing called cash cash is an extremely effective device when it comes to illegal activities anyway it outweighs the amount of cryptocurrency being allegedly used in money laundering by you know an order of magnitude it's huge the amount of cash used for money laundering and crime is just Kryptos are dropping the bucket by comparison so it's it's um as you say weights it's a an industry just learning to crawl and it's really important that these things are done right because if it does ramp up massively then that's the risk but I think that there's so much to be done on the cash side for money laundering and and protection against terrorism financing that that really needs government's attention let's roll this question Joel we got a question my corner so from Aaron does Michael have any opinion on the digits gold token I think that's really really really this is from Aaron thank you so much Aaron for your question and I think the digits token is the one that is backed by gold in Singapore out of Singapore so look I only understand their project you know I only speak to at a very high level but my understanding is they're you know they're one step down the line as it were so there are the holding the holding the gold or holding a financial product representing gold I think that those kinds of projects are really good and stepping forward I think there'll be some regulatory hurdles that still need to be met I think it needs a careful analysis you know it hasn't been listed on any Australian based exchanges as yet as I mentioned earlier in the broadcast we're working with a party on a gold back token which we think will be able to be listed in Australia and might be an arrival to DTX I can't throw Shane on any project or favorite I think it's really interesting is probably the as for as far as I can go without digging into a lot of details but I think that the rise of these stable coins and asset-backed tokens that can be used is fascinating because one it's kind of like a return to the gold standard of money that existed before Bretton Woods which is part of the libertarian philosophy of blockchain and Bitcoin from the early days but also it enables the use of smart contracts in projects that previously didn't really have any real stable coin to use within those my contracts other than turning to some kind of collateralized product like a dye or something else so I think from that perspective it's fascinating because if you can whatever the the gold back to token is start to use gold within smart contract transactions automatically it starts to unlock that efficiency that we've been hearing about for two years but hasn't really come out in many projects and fascinating price movements in dgx when you watch it as well and and and I think there might be correct me if I'm others enough financial advice a difference in the price of dgx and the actual gold price and maybe there is some sort of algebra 2 or 3 percent premium on the gold back token versus gold itself mmm so there's definitely at least last I checked so I think there's definitely a little bit of a value given to something that's more easily moved around than going and getting physical bullion but you know it's it again it's in a foreign country you really want to have these kinds of things local because if you want to be able to buy a token which say you can go to a location and get the physical gold that's that's your ultimate aim of some kind of asset back token that it can be to redeem for the value or if it's gonna be backed by dollars that you can go somewhere and actually get those dollars out then you're enabling the movement from a value in and out of what might be a smart contract environment really easily and getting of those on ramps that just don't exist Inc in a lot of current projects and they need them so I think this is a really important step I agree and also do the faster you can talk about tomorrow stable coins as well we've got on-ramp coming on to having a chat with us but I think sample coins and what is the reserve currency underlying it I think this gold situation could potentially be one of those contributing factors just gonna lighten the mood a bit Google has had a lot of harder jab at cryptocurrency and will spin this video for you juxtaposing it with Nigerian prince phone scammers apparently so you weren't roll this video Joel first let's have a look he wants to make me super rich taking this call hi this is Teddy who is it it's the electric company they said your bill is super high right well cryptocurrency mining takes a lot energy somebody's not real yeah well I Got News for You money isn't real you'll live that way you gonna live that laughs I love that you know that is ultimately the comeback right everyone says our cryptocurrencies not real and then people say you know money's not real you know and this is very fascinating whole situation I do have a forecast coming up I should I'm sure put on another show of what I think well what will skyrocket cryptocurrency again I've got some I've been doing some thoughts over the weekend I've been really in my in my crypto keep thinking about cryptocurrency and where we're going and I've got some very very very interesting thoughts I don't know maybe I'm not maybe I'm crazy but I've got I think I've got an idea of what's gonna send us up to the next literally the moon if that makes sense provide that next application and use case the next app yeah I think your financial advice this is not financial advice this is just really my opinion sin no financial advice I obviously Google co-founder Sergey Britain has been mining a theorem with his ten-year-old son and it also follows the fake news sorry some news a few weeks ago that Google had reverse its ban on cryptocurrency and is now allowing verified companies in the US and Japan to advertise on Google all right guys let's have a final check of prices Bitcoin trading it's two six thousand two hundred eighty eight dollars it's just chilling out a theorem that 195 still down slightly and Twitter over the last 24 hours heels down at five dollars twenty one ripple at 40 cents us pickling cash at $440 like I'm fifty two dollars theorem classic at nine dollars 36 that's an interesting price it's one of the ones that always confuses me trying at two cent two point three cents Kodama has had some interesting controversy over the weekend with its foundation still holding it six sense sorry sixth point nine cents almost seven cents finance coin at nine dollars sixty alright guys we want to wrap up here you want to thank Michael for joining us from Piper aldermen leading the blockchain group it's been an absolute pleasure with pleasure man talking about the intricacies and specific ideas around security tokens I've actually enjoyed that do follow him Mike Bettina there on Twitter and Michael is I would love for you to come back on and have a chat with us further as more of this market progresses guys do subscribe press the little bell join us again follow us on Twitter because we are broadcasting live all the time from the daily exchange yeah see you guys tomorrow

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