The Wolf Of All Streets - Bitcoin ETF Numbers | Coinbase To Beat The SEC? | Crypto Town Hall

Episode Date: January 18, 2024

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Mario, you think they can hear us today? Are we talking amongst ourselves again? Let me see if it's glitching on my end. Can you hear me? I can hear you. Can the audience hear us? Guys, if you can hear us, thumbs up us. Don't thumb up us.

Thumbs up us. Just put it in the comments and they could hear us. It would help. For everyone listening, bottom right corner, that purple circle. Just let us know if you can hear us because it was glitching yesterday. Was it yesterday that I was calling you an asshole or was it the yeah it didn't the audio wasn't working it was yesterday wasn't it it was literally every day did you did you see the i know we're not going to kick off the space yet so just curious did you see the coin based um uh hearing did you listen to that? I listened to some of it.

And obviously, not being a lawyer, it's kind of a yawn fest. You start to fall asleep. But really great commentary from, I know, Eleanor Turrette had great commentary, met a lawman. I spoke to John Deaton right before the trial. David Silver was there. Literally all the lawyers showed up together to watch it was pretty awesome i want to um get your thoughts after speak i know you always like to go to the panel but maybe give us a in a couple of minutes when we kick off the show maybe give it another minute or two i want to get your thoughts after listening to them

because the people i spoke to just are they calling it a win for the sec but sorry a win for Coinbase. Really? No, Coinbase. I was going to say, wow. Yeah, yeah. I haven't heard that. Yeah, exactly.

The judge was really warmed up to it, which was surprising to me. And again, I don't want to dig into it yet. Let's give it a minute for everyone to join. But it was surprising to me considering that yesterday, or the day before, when we asked the panel, our lawyers on the panel, they all said that know i think one or two lawyers says like you know five percent chance for coinbase to win this and everyone had a similar similar expectation and that completely shifted i think that's still the case yeah yeah i think to some degree that's still the case but like there's varying levels of what i think a win would be defined as um you know outright victory they're putting it five ten percent because that means the judge literally says uh there's no case here it gets dismissed coinbase moves on with their

lives and the sec completely loses and i don't think anyone expected that necessarily to happen although when i talked to john deacon yesterday he said 40 chance he thought that would happen and that was before the trial wow so i would love to ask him what he thinks, what he thinks now after hearing it. I can say like, just like broad strokes, it was an exceptionally well-informed judge, of course, the same judge that did the Uniswap case and, and others. So very, Bitfinex maybe very well versed in the crypto space, had apparently 14 pages of prepared questions, very in depth, came right out of the gate, extremely complimentary of Coinbase. I think she called them the DeFi people and said that they were well prepared,

even more so than the SEC. Some quotes similar to that, that they had made the argument very clear. The judge was very, very critical of the SEC, asked a lot of pointed questions about how crypto could be viewed differently. She made, now, see, now I want to pull up all the quotes. I don't have it exactly, but there was an incredible. Don't go too deep. I want you to wait a bit more for more people to join. So before you just give it a bit more time.

Yeah, now I need to like dig in and find these quotes anyways i'm just gonna go to eleanor have you have you yeah hold on um tell me have you ever used just waiting for the panel just gonna give another minute for people to join and by the way for the audience please do let us know if you can hear us because i want to make sure the glitch is hasn't kicked in just let us know in the comments before we kick off the show because yesterday we did like five minutes of the show and then found out five, ten minutes in that 50% of the video. There were 3,400 people listening to a show

they couldn't hear, by the way. I don't know what you guys are doing out there. They were waiting to try to hear, I'm guessing. Tell me more about Scott Melker. Have you used Grok? Oh, God. Have you? Grok? Oh, God.

Have you? Are you on fun mode or real mode? Oh, it's different. Oh, yeah. There's one that's like fun mode is literally just like rattles off expletives about what a dumbass you are and the real mode is chat GPT. Okay. So

while it seems that Scott Melker is quite popular figure in the world of cryptocurrency and he's known as the wolf of all streets, who came up with that name? Me? Crazy. It's worth noting that he's not afraid to admit his own failures, which is quite commendable. And he's also been transparent about his plans to change his content schedule, which shows that he's adaptable. That's so lame. Well, I think we've got the panel here, man. Do you want to kick it off? Yeah.

Cool. I'm trying to find the quote because it's so good. But the judge basically said, you know, the Howey test in the 1930s was cool, but it's time to retire it for this. It was an unbelievable quote. And does anybody, come on, research group, hit me with the quote. I'm digging for it. time to retire it for this. It was an unbelievable quote. And does anybody, come on, research group, hit me with the quote. I'm digging for it. Now I can't find it. Maybe one of the guests even has it. But yeah, I mean, it was a pretty aggressive. Oh, here we go. We've had a good run. We've had 90 years where these securities laws have been

able to apply to these markets, but now we have something new. We've had a good run, is what they said about the Howey test. And clearly that it should not be applied necessarily to this. Listen, I can't, I'm not a lawyer. I don't know what's going to happen, but anything you would have wanted to hear, and there was no decision expected. So now it's going to be months as they ponder it. Anything you would have wanted to hear and there was no decision expected so now it's going to be months as they as they ponder it anything you would have wanted to hear as an advocate or supporter of this industry you heard out of the judge's mouth that that's my broad take of it so yeah yeah i've got can you can you dig into a bit further before we go to lawyers and other lawyers that will be joining us sam william ron everyone here on will probably give us a lot of insight into how he thinks it went for crypto. But I'll just kind of give you an overview on my end, going through Coinbase's arguments.

According to the people that listened to the whole thing, I listened to bits and pieces, the judge kind of warmed up to Coinbase, kind of putting the SEC on the spot. He talked about whether there's an investment contract with the tokens, as there isn't. So with a share certificate, you've got the right to vote, you've got dividends, you've got liquidation rights, the right to sue, the rights for residual income, the rights of rescission, and then whether those apply to a token. And he asked the SEC by saying that the SEC,

so does it say, like he asked the SEC or the judge asked the SEC whether the tokens have a right of rescission, which obviously they don't. So it's kind of putting the SEC on the spot. And they've been really cordial. I think Coinbase messed up once or twice, and the judge didn't really put them on the spot. Yeah, and by the way, just really quick with that rescission thing.

Yeah. Sorry, you broke up. I didn't know if it was just for me, but I was going to say with that rescission thing. Yeah. Sorry, you broke up. I didn't know if it was just for me, but I was going to say with that rescission thing, I think the judge basically forced the SEC to basically make a comment that if the 13 coins that were named in that suit, because you guys remember, I mean, huge coins, Cardano, Matic, I think Sand was one of them. Some of the largest tokens, obviously, Solana. They all dumped massively when they were passively named in this lawsuit.

And each of the suits that the SEC sort of brought, Coinbase, Binance, they were just passively named 10, 15 tokens as securities without ever actually going to those projects and deeming them as such or pursuing action against them, right? So it was a sort of like passive-aggressive strategy. And so the judge asked somebody to the effect of, well, what would happen for people who bought these if they were deemed securities? And the SEC had to basically come out and say that they would have the right to a refund. That's that rescission.

Yeah. Pretty wild. I want to add one more. Probably Laird could explain it better to us, but she also, Louride, Coinbase did say one thing that kind of took it back. Not sure if you've really been following it, but just for the team, if you can get the judges that were there yesterday, I think Carlos and others that were there yesterday that was following it, it'd be good to get their thoughts on it too, if they can jump in a bit during the show. But Laurie, there's another thing that the SEC said,

sorry, that Coinbase said, but I think they messed up, is that Solana investors can sue Solana for fraud if Solana goes bankrupt. And they kind of took that back in a way. But that contradicts the whole right of rescission doesn't exist for tokens. Can you maybe give us a bit more insight on what that is, whether it applies to tokens and whether it's true?

Can you sue Solana or the foundation or who can you sue? If Solana goes bankrupt, do you have the right to sue them for fraud? So I have to be careful because I was in court yesterday for my own trial. And so I missed some of these details. But I think the point there was that if it was an investment contract and this is what it would look like, right. And they're trying to flush out what it is based on what it looks like. But to be honest,

I think one of the other guys are probably gonna be better to answer this one. Anyone else? I can give you sort of a, do you want me to give you metal lawmans? You know who we've had on a number of times? I can just read his literal tweet. It'll take two minutes, but it was his summary right when he walked out of court. And I think it'll give us a really good idea of the broad strokes.

Along the way, the hearing is over as expected. There was no ruling from the judge. There were no knockout blows delivered by either side and, frankly, not a lot of high points over the course of the five-hour hearing. The judge was the star of the show. She was exceptionally well prepared. She had drafted 14 pages of questions for the hearing. She understood the terminology and the technology. She's the kind of judge you want to handle a case of this magnitude. There was some interesting banter about the relative merits of Judge Rakoff's ruling in the Terraform Labs case and Judge Torres' decision in Ripple. Both judges worked in the same building with Judge Fila, but the judge gave away nothing away in terms of how she viewed the reasoning of

each of those cases. There was a general consensus that tokens are not in and of themselves securities, but the SEC argued nonetheless that transactions of tokens on secondary trading platforms like Coinbase can still constitute a sale of investment contracts. Now, to be clear, this is not from MetaLawMan, but that was somewhat settled in Ripple. People will say that it was not or that it was, but that's what the Ripple thing was very focused on. The SEC lawyers were better prepared than when they were caught flat-footed in July and were generally effective making their case. The lead lawyer for Coinbase, William Savitt of Wachtell Lipton, was methodical in his approach to answering the judge's questions. Each side was given a few minutes of summation time to say whatever they wanted at the end. And in that space, Savitt

definitely stepped up his game and finished with some very strong closing points. I watched the judge carefully. She's either genuinely undecided about how to rule or she's a great actor. The one message I took away was she is uncomfortable with the idea of dismissing the case on the basis of the major questions doctrine. My guess is just a guess that she's going to allow the case to go forward to discovery like the Ripple case. But I continue to believe, as noted in my pinned tweet, that Coinbase will ultimately win the case in the end. Congress, of course, could put a stop to the whole thing with adoption of comprehensive crypto legislation, but that won't happen this year. I expect the judge will issue her written

decision on the motion within the next three months. Not legal advice. You get what you pay for. That's sort of the top end summary, I think. But there were definitely some zingers. Lawyer, I see you laughing. Is that the you get what you paid for, aka free analysis? Well, more than that, I think you did a great job. And then you were like, yeah, this may not be legal advice. But that's what we do, right? I like to say that one of the more important things that I do is cover my ass. So if you hire me as a lawyer, like part of my job to protect you is to make sure that you don't get screwed so I don't, right?

So, yeah. One question I have for the panel, and feel free to jump in any time. But William, Ron, Dave, Sam or Matt or Mike, anyone could jump in on this one. Is can you explain for the audience why is this so important for crypto? And, you know, some people are saying it's even more important than the ETF decision that we had. If you could explain that for the audience, maybe give us your thoughts if you've been following the hearing yesterday. I mean, the answer is very quick it's it basically a loss by coinbase effectively ends access to everything not bitcoin and perhaps not ethereum in the united states which is half the world's investable assets so i mean every.S. crypto company that hasn't left will basically be forced to leave

if they lose the case because securities laws are completely unworkable for crypto. I mean, I could go on. I had a really long conversation with another fairly well-known securities and crypto lawyer about this. And effectively, the analogy I use, Mario, you'll like this, is trying to shoehorn crypto into securities laws is basically like having this superhighway and connecting to it with a dirt road with potholes. And trying to say, OK, you can only trade 930 to 4. You can only trade in dollars. You can't trade versus stables or Bitcoin. You can't have on-demand settlement. You have to settle T plus two and eventually T plus one. All the stuff that goes on.

It's just it will be catastrophic for all these tokens and they basically lose access to the US market. That's why it's such a big deal. And what does it mean for crypto? OK, I see all the hands up now. Perfect. But one more question for you, Dave, before going to Ron, William and Matt, is what would it mean for us if Coinbase wins the case? And what do you expect? I'm not sure if you heard the hearing yesterday, your SEC's time. I mean, look, at the end of the day, if Coinbase wins, which I suspect that they will, will have the ability to have an actual ecosystem in the United States. At the end of the day, it won't be settled until there's some legislation and or new rules crafted by whoever's running the SEC at the time that this all happens. I mean, I don't think

anybody believes that it will be this SEC, because whoever wins the next election, my guess is things will change. But that's a large part of it. At a bare minimum, it keeps crypto in the United States with a pulse. It's altcoinpalooza, Mario. And there should be some nuance here, because Dave is absolutely right. An outright loss by coinbase would be devastating an outright victory by coinbase would be altcoin palooza or whatever joke you want to make about it but there's a whole lot of uh middle ground there right it could be decided um that these are not securities but they could still go after coinbase pretty aggressively for staking as a service which kraken settled for so there's a lot of, there's not, this isn't very, it's not binary.

Just two things first. Pretty excited now because Zach, who's following it closely and Ran just joined as well. But one more question for you, Dave. Last question before we go to Ron and Matt and William is, can we call it a big win for Bitcoin if the SEC wins? Does that mean Bitcoin's ecosystem will just blow up because people will have more incentives to build on there? No, because effectively it would mean Bitcoin's use as a currency for trading all the other instruments would go kapooey. So that would be bad.

Also, the knock-on effect of the gateway to Bitcoin from all the exchanges, the exchanges would be crippled. It would – yeah, no, it would not be good. You know, people need to understand Bitcoin has, there's a lot of people who invest in Bitcoin for very purist reasons, myself among them, in terms of scound money, etc. But there are quite a few people who invest in Bitcoin back and forth with altcoins based on the idea of digitalization as a macro trend. And that being forced out of the U.S. market would not be good. Bitcoin dominance would go up, but, you know, sure.

But, you know, I don't think, but that's on a relative basis. Anyway, that's my opinion. Ron? Yeah, I mean, I think this is a huge, huge case. Just more in the D.C. front, more on the legislative side here. I saw the judge reference Senator Lummis' brief as well, and it seemed a lot more apathetic. The idea of these laws in the 1930s should probably be not applied to something like crypto 80-plus years later down the road um but you know i think one thing at least for me that was interesting was the call out from the sdc on coinbase's uh crypto ratings council uh that they had um and saying that the

coinbase basically just took the lead here of if yes he wasn't going to provide uh what security what's not they were going to get a lot of lawyers together and try to come up with at least a rating scale of where these things were going to be on the security commodity front. And take XRP, for example. They put that as a four, four being closer to the security, which would be a five. And the SEC objected that, hey, you know, this is something that Coinbase did on their own fruition. And we came up with different analysis than they did. And we shouldn't be using Coinbase's rating as a metric for what's secure, what's not.

But the truth is, like, they stepped up because the SEC wasn't stepping up and Congress wasn't stepping up. And, you know, now we know that four on that scale for XRP was deemed a commodity in the courts. So it seems that it was kind of odd that the SEC was really trying to bash the Coinbase attempt to at least just try that the SEC was really trying to bash the point

based attempt to at least just try to solve the problem or try to get the people in the room to answer this really tough question that we're spending millions of dollars legally on and millions of dollars in lobbying. And they got a little hit by the SEC, but the judge was able to push back a little bit. So for me, that really stuck out because I remember when that was going on, when I was both working in Congress, also working at Ripple as their lobbyist too, so afterwards. So that was the most interesting. But we'll see the effect in DC. The folks I'm talking to right now, there's a lot of things behind the scenes on the legislation for market structure that are in the works. So we could be seeing some potential movement

or news on that bill in, I'd say, like the next month or two and potentially vote in the House sometime in spring. So I stay tuned. While this court case plays out, we're going to have some congressional action potentially in the next 20 months. Just really quickly, Mario, I want to go over the rest of the panel. But one thing I missed when we were talking about it at the beginning that John Deaton made pretty clear to me yesterday when I spoke to him was that this could all actually be thrown out as well by the judge basically ruling that the SEC doesn't even have authority from Congress or doesn't have authority in general to regulate exchanges, period. So that's one of the big questions that they think that the judge, one of the reasons he thought that Coinbase could win outright. Before we go on to Matt, just a quick question. James, I see you in the audience.

If you have time to jump on for a bit, not now, like in a bit, we want to talk about the ETF. And I know the results came in. We were meant to talk about it yesterday. So if you can give us a bit of a recap, if you have time, James. And Lloyd, we'll bring you up on the panel shortly. I see you dropped out as well. And for the audience, I'd love to get your thoughts on the Coinbase versus the SEC and whether you think Coinbase could win this, even though the odds apparently are still against them, according to Scott and others, even though it's increasing and improving. Yeah, Matt, I'd love to get your thoughts and maybe also get some predictions on how likely do you think they're going to win. Just to be clear, a lot of people, they're not saying there's a 5% or 10% chance Coinbase will win.

They're saying there was a 5% to 10% chance that the case will be completely thrown out before even going to trial. Yeah, sure. Absolutely. I agree with everything that people said. I like to sometimes zoom out and keep this meta because it's easy to get lost in the legal details. The reason security status matters is that decentralization is the beating heart of crypto. And if you force these blockchains to register as securities, to maintain those same disclosures, you need to centralize them in order to do it. So it's sort of antithetical to the existence of crypto. That's not the specifics that people are arguing from a legal perspective, but that's why this question really matters. We need a new regime for open source blockchains

to operate in, or we can't get the sort of wonderful efficiencies and new possibilities that they create. That's the meta reason this case matters. And it was a great day for Coinbase on day one. Yeah, I'm just going through the comments. That's the meta reason this case matters. And, you know, it was a great day for Coinbase on day one. Yeah, I'm just going through the comments. It seems we're all in a kind of an echo chamber-ish type environment.

A lot of people think that Coinbase is going to win this, an easy win for Coinbase. Your stance on this, Zach? Yeah, I'm happy to provide the contrarian take on this. I think crypto Twitter is sort of largely getting wrong what happened yesterday. It is, I think, true that Coinbase had a good day in court and that Judge Fela was really responsive to Coinbase's arguments and was more skeptical of the SEC's arguments. But I think what we're talking about here is actually pretty narrow. So right now, as sort of Scott had alluded to, this is a motion to dismiss. The question is, which of these claims can be dismissed just based on what is in the SEC's pleadings without having to get into any facts or go into discovery? I think the idea that the central claim here that the 11 to 15 tokens that are mentioned by the SEC, none of them are

investment contracts. I don't think there's basically any way that claim in particular is going to be dismissed without further discovery and without some fact finding, because it really is a specific question under the Howey test with each of these tokens. The thing that was really at the center of yesterday's argument that I think is really interesting for crypto and potentially bullish long term is the way that the Howey test applies to individual tokens. The SEC's view is that it's not really so much about a literal contract between the people who are creating the tokens and the people who are investing in them or even promises between the two like was talked in the Ripple case. But really just the specific question of if you're buying a token, why are you buying it? And if you're buying it because of number go up and your thesis for number go up depends on the efforts of the parties that

created that token, that's investment contract, that's a security no matter what. The SEC is, sorry, Coinbase is pushing for a more limited view where you actually need sort of promises and you need sort of almost like a legally enforceable contract that doesn't need to be a literal paper contract, it can be an implied contract, but some actual enforceable promise between the people who create the token and the people who are investing it in order to legally be an investment contract. And I don't expect that Coinbase is going to win this case overall. I think the burden to say that none of these tokens meet the definition of a security under the Howey test, it's just not realistic for Coinbase to win on that. But the real win for crypto here, I think, would be to get a ruling from Judge Vela,

especially if it's affirmed by the Second Circuit, which is the appellate court that sits over SDNY, that this more narrow sort of definition of a security that Coinbase is pushing for is the way that the Howey test applies to crypto. And if we get that, I think that could open the floodgates for lots more people to create tokens that they feel are legally compliant. Because as the previous speaker said, you can't really have the sort of decentralized benefits of crypto and comply with securities laws. That's just not a thing that's available right now. And so the most important thing from the industry, from a legal perspective is like, are there legal loopholes or are there ways that we can compliantly create tokens without giving the SEC jurisdiction?

And can you, Zach, just one more question. I'll go to Scott and Alex and William have their hands up. But how big of an impact do you think that will have on the industry? If we get a pretty clean ruling of here is a way to create tokens without creating security, I mean, that would be a huge boom, right? I do a lot of crypto venture law right now, people are creating foundations overseas, and doing all these complicated ways to keep tokens outside the United States, you know, it hurts investment, if we had a way to say, listen, here's a company you can create in the United States, you can raise money, and you can launch a liquid token that we're all comfortable is not a security

and doesn't need to have a year lockup and can trade openly on the blockchain that would be a huge game changer i think in the way that like venture capital could flow into crypto yeah metal lawman if you have time to jump on as well i'll see you in the audience we're just talking about what you were your discussion with scott and would love you to come up just request whenever you have time um but william and then alex go ahead guys yeah yeah so i've had a bit of experience in this because if you recall kick was the first one of the first big cases that the sec took on in 2018 when they sued kick for their 2017 ico which at the time was 100 million 100 million dollars and i was on the board of the kin foundation at the time. And that case ended in 2020.

It was resolved then. And that session yesterday with the Cone Base reminded me a lot of the last session between the SEC and Kik before the judge made his ruling at the time. Except that I saw more positive signals yesterday in favor of Coinbase. So I think to answer your question quickly, Mario, this is important because in theory, Coinbase is speaking on behalf of the future of the crypto exchanges in the US.

And the outcome could affect that future. At least that's the hope of the SEC. They want to shut down these exchanges. That's not going to happen, but that's their hope. Now, my view is that it's not going to be a black and white decision. I think the ruling will be more nuanced. And it could end up in a stalemate, throwing things back into the SEC's lap, saying that you need to have more clarifications.

And the reason why I said it's promising because the judge said that the SEC might be overstepping the boundaries of their jurisdiction. I think she said that more than once, if I'm not mistaken. And she gave the staking analogy to banking deposits. She asked the question, are banking deposits kind of like a staking? And she gave a lot of thumbs up to the DeFi report that was put in as an amicus brief. So I think, in my opinion, is that the ruling will come in the next 30 to 60 days based on previous... So you're talking about just for the ruling on whether the case will be dismissed, correct?

Not the... She will give an opinion. It may not be... There will be an opinion. It may not be, there'll be a commentary. She has to say why it's dismissed because she might go back and give some assignments to maybe both parties. And again, I think it's not going to be a black and white decision necessarily. It could, it could. But she seemed to be quite nuanced.

She asked the right questions and she was curious enough to want to dive deep into it. And the last thing I will say is that I don't think the House will front-run this. I mean, that's the whole... I don't think they can do it so quickly. That's

my opinion, though. That's all I have to say. Alex? Yeah, though. That's all I have to say. Alex, and then we'll go to Michael. Yeah, lots of great comments, I think, from the panel. So just a few that I didn't hear mentioned that I'll add. One, the SEC is suing Kraken in San Francisco in California federal court. So for almost exactly the same stuff, not the staking thing, because they already settled with Kraken over that but the a list of tokens that are securities that in the SEC's view and thus the exchange is a unregistered securities exchange so there's jurisdiction shopping here by the SEC right depending on the SDNY outcome

almost certainly either like longer term almost certainly either party Coinbase or the SEC will appeal that to the second circuit similarly there'll be a case in the federal court in San Francisco that has very similar facts. And almost certainly either of those victors or losers will appeal there to that. What is that the Ninth Circuit? I think I'm not a lawyer. Maybe Zach knows. So however, this happens, if there are contradictory rulings then, and then contradictory appeals court rulings, and now we're looking pretty far into the future, it's very hard to see how this doesn't eventually end up in the Supreme Court, I would say. And, you know, a victory in SDNY only applies to the jurisdiction that SDNY covers,

like literally, right? And a victory in the second, for either party in the Second Circuit only applies in the appellate jurisdiction there, right? So this does not solve the question for the entire United States for a while, theoretically. Just a high level point I would make is that like- But sorry, just on that point, does that not create, is precedent in one state precedent only in that state

or is that precedent across- that precedent so these are all federal courts so so all of the precedent is nationwide but the federal courts are broken up into at the trial level into various districts if the districts are overseen by circuits and so like new york sdny is overseen by the second circuit like alex said in california it's the ninth circuit and when it is very likely that the like in SDNY, we already have split rulings on the securities law issue, like between the Ripple decision and the Terraform Labs decision, that that's just definitely going to go to the Second Circuit. If the Second Circuit disagrees with the Ninth Circuit, right, based on an appeal out of

California, you have what's called a circuit split. And then those don't need to be resolved, you're always allowed to appeal from the trial district court to the circuit court. In order to appeal something from the circuit court, you have to go to the US Supreme Court, which gets to decide whether or not they want to hear cases. So we may or may not get like a Supreme Court to break the tie. Or you might just have different federal law in different regions of the country, which would be interesting. Hey, quick, quickly, Mario, since I had to read James, MetaLawMan James, I had to literally read your tweets to sound smart at the beginning to give a summary. So now that you're here and you were actually in trial, I can shut up

and you can help us out here. Yeah, happy to do that. Just got on, so I don't know exactly what was said before. i basically read your summary tweets uh number five i think it was number five and we've been talking about the broad strokes of what happens here and sort of our takes and what the implications could be but like i kind of want to go circle back because you were actually there i can probably give a sort of a firsthand account of what the sentiment was versus expectation. Yeah, I thought it was important to be there in the court and watch the judge.

I know thousands of people listened in. I think that was great. But big picture, I think people should understand that motions to dismiss are typically denied. And so the odds of a motion to dismiss, and I argued many of them in that court building over the last couple of decades, the odds are around 10% or lower, single digits. However, given what happened at the first hearing in this case back in July,

I honestly walked into court thinking there was a 60% chance that this case would be dismissed early. Wow. And coming out of the five-hour hearing, I'm definitely below 50% in confidence level that it's going to be dismissed at this point. And people should also understand that this was tried in ripple and was unsuccessful. The motion to dismiss by Garlinghouse and Larson was unsuccessful. It was really well done by great lawyers and was denied. And then they didn't get the hearing. No, right.

They didn't even get the time with the judge, correct? Like this was different this time, or am I wrong? Well, some judges have oral argument on motion, some don't. But you really make your case in your papers. But in any event, you know, they essentially won two years later. Now, one thing you really need to understand is this is a very, very big case for this particular judge and her reputation. What is the egg on the face scenario for this judge? She's embarrassed is if she denies grants the motion to dismiss and dismisses the case and then gets reversed on appeal at the Second Circuit. Then she looks bad.

If she denies the motion to dismiss, nobody can appeal. It just continues then into discovery on a normal track to summary judgment. I still believe Coinbase will win this case eventually. And I hope I'm wrong and that she does dismiss this case early because I don't believe trading on a platform, blind bid-ask trades, where you're not investing in the underlying project, you're not sending money to the underlying project, cannot be an investment contract. You're not entering into any kind of contract when you trade on Coinbase and tokens, in my opinion. Not legal advice, certainly not financial advice.

But in any event, bottom line, great judge, very well prepared, great questions. I know some people have said she was really tough on the SEC and easier on Coinbase, I would say maybe a little bit, but it was really nothing like that first hearing where she was just throwing bombs and saying, hey, SEC, explain to me how anybody could figure out in advance how any of these tokens would or would not qualify as investment contracts, because I sure as hell don't understand that now. I mean, sorry, go ahead. Yeah, I'm done. She was throwing bombs back then. This one was very, very wild. Yeah, I mean, I think there was a consensus that the SEC was wildly underprepared for her in July and were much better prepared this time. And I think you're hinting at that, certainly.

What about her comments? Because we see the hot takes and the highlights and the quotes, but we don't really know the context. But it seems like a pretty compelling... I read the quote earlier that she was saying about how we somewhat had its time and this is something completely new uh doesn't that that seemed pretty compelling well uh look she gave things to both sides and uh was was really holding her cards close to the vest and said it from the very beginning hey hey, heads up, I haven't made up my mind. Now, whether that's true or not, I don't know.

But she, to my observation, did not give a tell, like in poker, of which way she was leaning. And I was reading her to law clerks or sitting in the jury box, you know, scrupulously taking notes. It sounded like there is no opinion written and ready to go here, that they are sincerely trying to figure this out. I think she was impacted by Senator Lummis' amicus brief. And the sad part of that is it would have been so much more powerful if it was 10 or 15 or 30 senators who had put in that brief instead of one. And the SEC, I think, had their worst moment when they, all right, I'm paraphrasing this not well, who gives a shit what one senator has to say about anything? You know, this is out, the securities laws are our baby. They assigned this responsibility to us back in 1934. So it would have been nice if there

had been a lot more of that. But the judge was certainly impacted. And she read the really critical amicus brief from the six securities scholars who explained how these tokens cannot be investment contracts because they do not carry with them the rights to equity or income or profits or assets of the underlying project. And that, to me, is the key issue in the case. And I'm afraid she's just not going to tackle it until they get to summary judgment like

in Ripple. One thing I've noticed, Scott, and I was going through the comments, how the sentiment is shifting. I just like how we've got two people that have been following the case, two lawyers with experience following the case closely, one who was there in person, and how different that their take is from the crypto echo chambers. Like every person in crypto is talking about how this is a massive win for Coinbase and it was unexpected.

They came in expecting Coinbase to lose and not have a chance of dismissing the case. And then they came out of it thinking the opposite. And then you've got Zach and Meta Lohmann saying the complete opposite. So I just really appreciate how we always get out of that crypto echo chamber when we host these spaces. And I also want to point out one thing before going to Mikkel and getting his thoughts on this is that there's more points I want to discuss today. I mean, they'reickle and getting his thoughts on this is that there's there's more points i want to discuss today i mean they're important first about um jamie diamond's comment at wef which we tried to to discuss yesterday when there was a glitch um and the the trump saying that he'll never allow cbdc's and kind of echoing the vex stance

on this i mean pretty important maybe you want to comment on tron uh tusd depegging as well but mickle do you agree with zach and metal lawmann on their stance when it comes to yesterday's hearing? Yeah, well, I think they did a great job. And I just wanted to quickly comment on two observations that I had. I thought one thing that was very unique and a hard point for the SEC was them coming out and directly saying that the tokens themselves aren't securities because it's just code. If people listen to the entire Ripple SEC case, this is something they did not do at all. They were very reluctant to say that XRP itself was not a security. So you can see very quickly how that case impacted them in this upcoming case. And if you listen to what the judge said in response to that, she was thoroughly confused. She even said that I guess Coinbase is

probably confused why they're even here, because essentially, here's the SEC trying to explain to her that the tokens aren't securities, but Coinbase is listing securities. And regardless of whether there's a fundamental reason that argument does make sense on the back end, you could see very clearly the judge was having a hard time comprehending how that made any sense. The other thing that I think the SEC really struggled on was when Bitcoin was brought up and the SEC stated that Bitcoin's not a security because there's no ecosystem around it. Well, I would argue that Bitcoin probably has one of the biggest ecosystems around it. So I think right there, the SEC kind of proved to the judge, hey, we might not really know what we're talking about and how we're differentiating one token

from another. There was certainly nothing in Howie that could have been pointed to or was pointed to in how Bitcoin was different than the other tokens. So I thought that was a massive struggle for the SEC. And I think just zooming out, it showed a massive plot hole or hole in their case and how they're differentiating between what tokens are securities and which ones weren't. I think they were confusing the judge and I don't think that's going to bode well for them in this case. Yeah, I think the... I'm trying to find it here. Yeah, so the SEC admitted BTC is not a security.

So Coinbase, I think Coinbase's lawyers used this argument against them. They said that the tokens in questions, the question are not too different from BTC. I think they used Cardano as an example. And they said that Cardano has a support group just like Bitcoin has a support group. Did I get that right, Michael? Yeah, essentially. And the funny part about the entire thing was just, it never really came back to Howie, right? There's nothing about a support group in Howie. So you

could tell that the SEC kind of put themselves against a wall when they came out and said that they don't see Bitcoin and Ethereum as securities. Because now you can come back to that decision and point out to the SEC, hey, how do you think these two tokens are different than anything else? And in all reality, they're really not different from anything else when it comes down to securities law. So the SEC was having a very hard time explaining that to the judge. And whether they have more logic or not, they certainly didn't put it on display in that case. And they did an awful job of putting it on display in the Ripple case as well. The SEC absolutely botched their attempt to try to differentiate between XRP and Ethereum. And this seems to be an ongoing issue for the SEC.

Hinman came out and gave clarity on two tokens without any sound logic on how they're going to differentiate those two tokens from the rest of the market. That question, just a question, Does the SEC have good lawyers? Like I'm asking a really serious question. And the reason why I say that is because like in some countries, state run bodies usually get inferior lawyers because it's just the way that it works. Like you almost know that private lawyers are always going to be, you know, stronger than, than, than the than than the the state uh regulator like how good

are the secs lawyers in in big marquee cases like this they have they have pretty good lawyers i think part of the issue here like they should have chosen a different word than ecosystem because it's confusing what they're trying to get at is like the particular's prong of Howie. Is there some particular person or group of people that you're reliant on to make number go up, to make your expectation of profits play out? And when you look at the difference between Bitcoin and Cardano, the question is, if Charles Hodgkinson stepped down tomorrow and said, I hate Cardano, would that impact the price of ADA? And I think most people would say, the answer is yes. And if you're investing in Cardano, you kind of are investing in the Cardano team, and you know, you somewhat believe

in the Cardano founder. If you ask the same question about Bitcoin, you get a pretty different result, right? The founder is gone. We don't even know who the founder is. You know, contrary to what Jamie Dimon says, even if Satoshi came back, I don't know how much people would actually care about that. And so I think Satoshi could have done a better job exactly he works at finance so i think there is in fact like a important legal question of where does something go from being like a startup which most crypto tokens start at right like it's they're released by a company that company has to do work in order to make the token valuable in the first place. And like that really does legally look like a security. Where does it go from that to something more like Bitcoin or Ethereum, where you're not really reliant on the issuer team to make the investment work out,

there's enough of like a, I would say the more of a natural ecosystem you have around the token, the less like a security it looks. And the SEC using that ecosystem terminology to refer to the issuer and the VCs, like that was just a, that was their own goal. Before you jump in, Mikkel and Alex, Zach, one other quick question for you. If the case is dismissed, is that comparable to the industry to the ETF launch in terms of positive impact? Well, it would depend on the reasoning for the dismissal. If the case, first of all, I think it's incredibly unlikely the case gets outright dismissed. But if we say the case gets totally dismissed because as a matter of law, these types of tokens, which by the way, there are industry leaders across crypto. You've got

Axie Infinity, you've got Solana, you've got DEX tokens. If all of those tokens are as a matter of law, not a security, and that's why the states get dismissed, I would think that's much like an order of magnitude more bullish for crypto than the ETF. I just don't think it's going to happen. What odds would I have to give you for the case being dismissed that you would take 1 to 10, 1 to 20? Oh, I would gladly take 1 to 10. I think it is significantly below a 10% chance. Significantly below a 10%. That's what I wanted to 10. I think it is significantly below a 10% chance. Significantly below a 10%. That's what I wanted to hear. But Rand, even

just, you might have missed some of it earlier, even MetaLawMan said in this situation, regardless even of the facts, it would be sub 1 to 10, you know, it would be a sub 10% chance that a case would be completely thrown out and not sent to discovery anyway. So that you

have to consider the facts. I have been here just i don't know why but i keep getting disconnected and then kicked off and then i have to have to jump on you i'm always listening but it just takes me time to get up and off the stage yeah yeah i mean i i think that uh very few are expecting that outcome but zach i agree many magn. I mean, because then it's like the SEC is completely neutered, right? I mean, there's just nothing left for them to come after these companies, and they still have the suits against Kraken and Binance, and those would effectively be limp noodles at that point, too, right? Yeah, I mean, there would be like actual, you know, I mean, like the case would definitely be appealed if that happens, but it would look

like regulatory clarity, it would look like crypto can come back to the United States. All the stuff that the SEC was saying doesn't matter because the courts have overruled them. Again, I think this is a little bit about how many angels can dance on the head of a pin because I think it's so unlikely. But if that were to happen, it would be massive, massive, massive. Scott, do you mind if we go to the ETF numbers since we have James here? Get Ranj and others to comment on those. And Matt. Yeah, how about it?

James, we were meant to discuss this yesterday, and obviously the spaces were crashing. We'd love to get your thoughts on whether you'd consider the ETFs a success or failure after yesterday's numbers. Yeah, I mean, I guess this depends what your point of view is, right? If your view was you think that billions are going to flow in in day one and day two and pump the price into a new all-time high, then yeah, I guess this was a failure. But from my perspective, looking at things from a traditional finance perspective, from an ETF perspective, these are some of the most successful launches we've ever seen. I mean, iBit just crossed a billion dollars in four days from iShares. That is the third fastest ETF to a billion dollars in the history excluded. There's three ETFs that also did it, but they were not organic demand.

They were money from institutions for ESG ETFs. But so the only ones that did it faster in my mind via organic demand are BIDO, which is the Bitcoin Futures ETF, and GOLD, GLD, the gold ETF. Other than that, iBIT did it, and it did it while competing with 10 other products here. Obviously, some of that is a little bit buoyed. I'm sure some of that money that went into I bit came from grayscale because grayscale seen 1.6 come out in the first four days. But yeah, we're looking at 1.2 billion that has gone in on a net basis. And you're almost near three. You're at 2.9 on the newborn nine that are excluding Grayscale. So, I mean, by any metric in the ETF world, in the traditional finance world, this was a smashing success.

I mean, the volume numbers alone are through the roof. Anyone launching a product like this, even the ones that are arguably not as successful as some of the ones at the top are still smashing success etf launches um so as a group and for the most part i consider this to be a very big success but i understand why some in the crypto community and bitcoin community at large are upset that it's not pumping the price but just give it give it time things will settle out there's going to be washing out of money coming out of gpc coming into these other etfs over over a long time um and we'll we'll keep watching we're going to keep watching this over the next uh few months but it looks like i just find it so stupid when people judge whether something is a success or failure by the price uh or by the market's response especially considering the markets are generally forward-looking.

But Matt, we've got Matt from Bitwise here as well. I would love to get your thoughts on this. And Ran jumped off, Ran ran away because I think Ran might disagree with you guys. Matt? Matt, you're muted. Martin, you just went a bit robotic. That's your problem. You have to live with that. I'm joking. I'll fix it. You a bit robotic. That's your problem.

You have to live with that. I'm joking. I'll fix it. You're better now. Alex might not be an issuer, but he's part of it. I was going to go to Alex as well. Yeah, I was going to go to Alex as well. Matt, you got a request again. Alex. Yeah, hey, thanks, guys, and James. I mean, I agree with James'

sentiment overall. I think this has been a pretty big success for the complex, I think, to James's point, right? I mean, like GLD launched by itself, right? Biddo was a solo launch, right? So like this, the whole complex is sort of what I'm looking at to judge the success. And I think given that, you know, there was no broad retail investable way to get gold prior to GLD. But there has been plenty of ways for many types of retail to buy and sell and hold Bitcoin, right? So the market for these, I think, is primarily a different set of advisors that don't really have access to spot Bitcoin for

their end clients. And they are not here. Like that's none of the platforms have added these yet. Right. So the real test, I think, for, you know, bigger success of these vehicles is going to come in, you know, three, six, nine months as some of those wealth management platforms add these vehicles to their menu and allow their financial advisors to put end clients into them. So knowing that they're not really here yet, and that's really who these are geared towards, I think that further amplifies the idea that this has been quite positive. I think the big question now for spot price is,

you know, which way Western man, right? I mean, you have still significant outflows from Grayscale, like just today saw, you know, over 400 million cent to settle yesterday's redemptions from grayscale to coinbase prime so they're still releasing so you have a big supply event right with the grayscale effectively a great scale unlock and then you have the demand side that these are geared toward not yet really here then and now they've launched so the sort of narrative that drove prices so strongly from you know august through through a week and a half ago is has played out um the havings not for three full months and and of course historically the having itself hasn't necessarily been the bullish event but you know cycle positive bull runs have occurred after the halving. So I think it's in my view, I would say I'm basically neutral to slightly bearish on BTC

USD at the moment. It's hard for me to understand exactly what the near term positive catalyst is. I think one of the invalidations of that would be significant and powerful new issue or marketing campaigns, right? If we see incredible... I mean, you already see grayscale advertising in every airport. I don't know if people have seen that. It's just all over the place. But if we see Super Bowl ads and they really turn on the marketing spigot, I think that could help drive near-term demand. Again, obviously very bullish on Bitcoin long-term. And on these products, I just think that that could help drive near term demand. Again, obviously very bullish on Bitcoin long term. And on these products, I just think that months like three to 12 are a lot more important

than months one to three for these products. Since, you know, we can all buy Bitcoin right on Swan, on River, on Coinbase, on Cash App. Like there's not really, they're not really for us. I mean, of course, there's, you know, retail retirement and accounts that you may not have been able to unlock. But financial advisors are the primary market here, and they're not really turned on yet in a significant way. I also think like, and James, I would love your take on this. And I love how you guys consistently say, you know, ex-GBTC. In a world where we didn't have a Bitcoin spot ETF launch, but GBTC actually became redeemable

for some other reason or was unlocked, we would have just seen the selling pressure without the buying pressure. I almost view GBTC's involvement here as like a separate event from the Bitcoin spot ETF launches. And when you take it out of the picture, there's just been people that have been trying to redeem or exit GBTC for ages. And even if it's just to get into spot or to another ETF product, we don't know. But I mean, the discount was gone and their money was locked. So it just seems like a completely separate event to me, James. Yeah. I mean, I would say that's the way we're kind of looking at it. Obviously, some of some of this money that's coming to these other ETFs is specifically because GBTC got unlocked. But I've been I said on these spaces for the last few months, like the I would be, I honestly am a little more impressed. I thought it'd be closer to neutral. I mean,

maybe over the first couple weeks, it will be more neutral rather than inflows net inflows. But I, I'm, like I said, I've been expecting billions to flow out of GBTC. And if that was an event that happened before these ETFs were made available, I don't know how much worse it would have been. I assume most of the money would have found a way into another product. Some people might stay until ETFs became available. We don't have to figure that out. But a lot of this money is recycling back into the Bitcoin ecosystem. Some of it has taken off for profits. We have FTX and other people liquidating. But it's yeah, I'm we're looking at it both including GBC and excluding for both people who want to look at it both ways. But we're trying to look at it both ways.

Yeah. And Alex, I tend to agree with your assessment of the market, right? I think that the Bitcoin spot ETF narrative at least was front ran to some degree. That narrative is over. It's selling pressure now. I just would not be surprised if now it goes into the normal narrative of the four-year halving cycle and we have a very boring spring and summer of sideways chop with some highs and lows and then we look back in october november when things start ramping up and going parabolic into 2025 and say oh this is all just the four-year cycle right yeah i don't i agree i don't i and i've sort of been saying there was some selva news but that typically means like that the event has occurred and now we take take it off keep in mind bitcoin ran over 49k on the day these

launched i actually think of this more as a sell the structure kind of uh activity right it's not i don't see a lot of people that are like oh we were only in it for the narrative and now we're dumping purely on the narrative i just see a huge supply unlock happening and flooding the market with new supply and then the market actually doing quite a good job absorbing it, frankly. I mean, we're talking, you know, people are concerned about like, you know, whether it's Mt. Gox or like the U.S. government's seized coins. Like we've seen basically among the largest selling in the history of Bitcoin. Ever.

Literally ever. We've never seen this much supply coming from somewhere directly to an exchange that we literally know is being sold. Right. Ever. Literally ever. We've never seen this much supply coming from somewhere directly to an exchange that we literally know is being sold. Right. Right. We know it's being sold. And we also have, we're basically, Bitcoin is where it opened the year, right? I mean, it hasn't, I wouldn't say it's fair to, I don't think it's fair to say Bitcoin has dumped, frankly. Like we pumped right on the day and then we're sort of back. Oh, we chopped. We chopped. Exactly. Yeah. We got volatility on the launch and came we're sort of back we chopped we were exactly yeah we got volatility on the launch and came right back to where we started right exactly so i i think this is i

think that is quite positive and and dare i say bullish for for bitcoin i mean the longer we we go sideways without dumping further i think it only reinforces that we go higher um i just think you could go lower because there's you know i i i i and i'm not ready to say this yet because but one of the things i'm watching in james and eric's numbers is is there anemic tapering demand in these etfs over weeks one and two like again just for near near term price you know the next month or two like and and right now i'm seeing still growing demand frankly uh it appears like still growing organic demand for those products, which are primarily only being bought by retail or perhaps some independent RAs. But again, not available to the

to the big total addressable market, we think these are really geared towards. So I mean, in that sense, I'm pretty constructive that we're not lower. I mean, just because I stand in awe at the juggernaut of these sales that we're seeing. Yeah. And by the same and by the same metric, I think you would anticipate a tapering off of the sell pressure from GBTC. Right. So maybe one outpaces the other. But I don't think a month from now, we're still seeing, you know, 100100 million of GBTC Bitcoins sent to Coinbase every day. Well, yeah. And I don't, it might be too early to say this, but there was 18,000 BTC sent by Grayscale yesterday, which was like almost 800 million. Yeah, that was the largest. Today, this morning, they sent 400 million worth of Bitcoin. So, I mean, I, you don't know, it can be lump lumpy right some some redeemers might be coming in on one day and not on another day and who knows right but like if it is a downtrend that that could also be quite positive yeah i i totally agree with all that and mario and uh we have

some other time we didn't talk about jamie diamond, what is it to talk about? I think I mentioned it yesterday. What I was surprised is, I'm not sure if anyone else was surprised, I think this is pretty serious. I thought Jamie didn't like crypto despite understanding. He's a smart guy as much as you'd like to hate him. Extremely smart guy. And

for him to say Satoshi could come out of nowhere if no one's seen the clip yesterday. Satoshi. Yeah, for me, mispronouncing the name is not And for him to say Satoshi could come out of nowhere if no one's seen the clip yesterday. Satoshi. Satoshi. Yeah, for me, mispronouncing the name is not a big deal. And I was funny. But what's a big deal, in my opinion, is that you've got the leader of one of the biggest financial institutions in the world saying that Satoshi could come out of the woodwork and increase the supply of Bitcoin. And we're talking about an asset class that Larry Fink is going out there and talking positively about and is gaining market cap quicker than any other asset in the world.

And yet he doesn't understand that supply cannot be increased. It's five lines of code. It's five lines of code. But what concerns me, doesn't he have – it's a genuine question. And I tweeted about it with like a genuine question, but no one thought I'm being serious. Like doesn't he have experts by his side with all the money that they have, experts by his side that can tell him, Hey, technically that cannot happen after all these years and him putting his neck out there, his reputation out there talking negatively about it. Wouldn't he be informed? Like, is it common for, for leaders like himself to,

to shit on an asset class without understanding it and do that publicly? Like Ron, I'm genuinely, I think he truly believes that like uh even no matter because he's had a thousands of people tell him to your point who are who are experts i think he literally just believes that it could be changed regardless like you can't tell him anything ron like is that normal like i'm gonna use the word stupidity but not to be demeaning but it is that's the closest term I could use. At least, I mean, again, totally from the DC side here, it is pretty dumb. And even the lobbyists that they have both in-house as well as externally, I know several of them,

they're just like, yeah, look, this just gets you the headlines here. It's whatever. For them, his vendetta, he's focusing on way other bigger stuff and this gets a lot of just twitter engagement so but it doesn't but but right right what does it the reason i'm i'm really stressing this is that and by the way i don't hate jamie like again smart guy i have nothing against him a lot of things i agree with some things i disagree but just on that particular point wouldn't he have someone he trusts, a CTO or somebody that would come to him and say, hey, the supply cannot be increased. This is how it works, et cetera.

You would think, but it hasn't materialized yet. And then, again, I just want to also highlight, like, he is one of the biggest proponents of one of the bank lobbying groups, Bank Policy Institute. And they're the ones who are largely behind that Elizabeth Warren bill that gets a lot of attention from fans trying to ban it. So, I mean, behind the scenes, they're actually trying to push legislation like the Warren bill to try to kill stuff. But I am a little shocked. Even his lobbyists do admit, like, I have no idea why he's not trying to learn more about this. It's just ignorance at this point. But, hey, I mean, crypto is generational.

So maybe we learned a lot. Can I take the other side of this real quick? Like, I mean, I think he absolutely knows how it works. I think this is purely political. I don't think. Yeah, I don't I don't think there's any chance that he doesn't know. I know a lot of the folks that have worked at JPM on digital assets, and they all know, like everyone there knows how it works. So I so then I think the question is different like what is the strategy of coming out and appearing to many of the world's experts to be very stupid i mean but i think it's it's a political calculus but i think 99% of people yeah but 99% of people hear him and have no idea right so it's very easy from the echo chamber to say he looks stupid but he only looks stupid to people who hate him anyways everybody else hears him and yeah, this makes a lot of sense. Just like Elizabeth Warren can literally come out and say, hey, you know, $80 million of crypto has been sent to Hamas. You can prove her wrong. It can be retracted. And she'll continue to use that talking point because 99% of the people listening believe it

and don't know better. Yeah, I agree with Alex. You know, I think he totally understands it. I think this is political. So I thought the most interesting part of that exchange was how Jamie Dimon basically contradicts himself. So at one point, he says how he believes in free markets and Joe Kerning can trade Bitcoin all he wants and he doesn't want to interfere. the government should ban it. And the American Bankers Association and the Banking Policy Institute are trying to ban it with the Elizabeth Warren bill, like ban self-custody and these other things. So, you know, he's saying one thing in front of the camera, and then behind doors, he's actively trying to ban it, which isn't, you know, based on any kind of free market principles. So, I thought that was actually the most interesting part of that exchange. Yeah, it was funny. I had Max Keiser and Stacey this morning of my show, and I was asking about that. And Stacey actually made a very funny point.

She said it sort of sounds like projection, you know, like this sort of phenomenon we have where if you're guilty of something, you go out on a roadshow talking about that exact thing and how everybody else is doing it. I mean, JPM, obviously JP Morgan, he talks about, you know, money laundering or all these things. And JP Morgan every year pays fines literally for all of the things that he claimed Bitcoin is used for. Like very, very well documented, you know, like money laundering. And it's just really, really interesting when you see it. He has a problem with all these things.

But JP Morgan just passively does all of them every single year, pays their fine and moves on. But I tend to agree that there's more thinking behind this than just the stupidity. What I found really entertaining is, you know, when he used an expletive on TV, like Bitcoin is certainly living rent-free in this guy's head he doesn't want to talk about it anymore he says i'm not going to talk about it anymore and 20 minutes later is talking about it again on tv but i mean he said you know stop asking me about this shit or whatever it was literally on live tv from wef um he's bothered he's bothered it's slightly triggered so i think that that's amusing at the very least. And to be frank, I mean, JP Morgan is an authorized participant in a number of these ETFs.

They have JP Morgan coin. He did differentiate, at least in his mind, that there was usefulness to the technology and talked about tokenization. So to say those things and then pretend he doesn't understand the supply, I think he gets it. Yeah, I want to move away from Jamie just to go to Joe and then Sam and Ron. The question for you, Joe, is I'll just get your general thoughts on first the ETF numbers, but more importantly, the Coinbase versus the SEC yesterday. We've had different perspectives. I think it's really important for the audience to hear different lawyers give their thoughts on it. So that's the question for you, Joe. And then Sam and Ron, I'd love to get your thoughts on Trump again, openly saying he will never allow CBDCs and whether he does become president. How important is that for the industry? What powers does he have?

Can he really stop the implementation of a CBDC for how long? So that'll be the question for you guys. But Joe, good to have you on stage again. Thanks for having me up. So the ETF one is going to be much shorter. So I'll be the question for you guys. But Joe, good to have you on stage again. Yeah, thanks for having me up. So the ETF one is going to be much shorter. So I'll start with that. With respect to the ETF, I've been talking about for months the fact that you'd have a GBTC overhang and you got to clear all that out. And it's a significant vehicle.

And I think you're getting to the end of that. So in terms of like the price reaction, I'm not particularly surprised. I think if anything, it's been encouraging some of the flight to some of the other entities. And I expect that particularly surprised. I think if anything, it's been, you know, encouraging, you know, some of the flights to some of the other entities. And I expect that to continue. The real interesting question is, at what point does that stop, if at all? And, you know, I don't know anyone's guess on that, but I don't think there's anything concerning about the flows from that perspective. I definitely think there's demand. And I think props to the Bloomberg folks and others. I think they've been pretty much spot on with some of their targeting with respect to the flows. And so I still think, you know,

the $10 billion number, you know, somewhere between 10, 14, by the end of, you know, 12 month period following the launch, it still makes a whole lot of sense. And to me, it's probably my base case. But regarding the yesterday, okay. So this is, I think, confusing for a lot of people because I was listening to some of the armchair legal analysis. And what a lot of people get get wrong in the context of a motion to dismiss is that they start to focus on the merits. OK, the merits of the underlying argument. And that's not really the posture of which a judge looks at motion to dismiss. Motion to dismiss has to have a well-pleaded complaint. And then the judge decides, is there a factual inquiry here that I need to look at? In other words, do we need to go through discovery to resolve a factual dispute? And, you know, you could have a terrible case.

And I have, you know, many of them that have been filed against my clients that gets to go forward to discovery and the judge says look um i can't say based on the pleadings alone that there is no potential um appropriate relief from for the plaintiff that there is no universal facts where the plaintiff could succeed which is you know effectively what the standard is for a 12b motion you have to basically prove that there's no, it's a legal impossibility for them to succeed in the claims. Now, the most likely scenario I think you get from something like this hearing is you probably have the judge dismiss some of the claims, just sort of giving my particular take on it. I think the staking claims in particular

are very vulnerable. The most powerful part of the argument, just from a litigation standpoint that I really sort of tip my cap to was the argument by Coinbase, where they basically were arguing of the staking platform and how, you know, they seem to explain it very effectively to the court and the court was persuaded by that. And then there was a commentary about, you know, how the terms and conditions was basically said, we're staking these at your direction, that he used the phrase checkmated the claim, that basically because the SEC attached those to the document as pleading, and the terms and conditions say, we're doing this at your direction, we don't really control it, that effectively disposes of that particular claim. But you got

to remember, there are multiple claims in multiple different buckets of this suit that has been filed by the SEC. I think they purposely filed it with many different legal theories so as to, you know, basically increase their chances that some of the theories will proceed. And, you know, my base case is probably that the judge dismisses some but not all of the complaint and portions of the complaint move forward, which is typical, right? There is an outside chance the judge could dismiss it without prejudice, meaning that the SEC could have a chance to re-plead it under a different theory or add more facts. I don't really think that that's particularly likely. I think the far more likely scenario is she kind of cuts back at it, cuts back some of the arguments,

and then moves forward. But, you know, the judge, to her credit, I think was very focused on trying to create what she called limiting principles. She really wanted to see like, OK, I don't want this to open up Pandora's box with respect to private claims on all sorts of other assets or all sorts of collectibles and different things. So you had all these long sort of philosophical discussions about what the nature of investment contract is. Is there does there need to be a formal contract, which Coinbase rightfully conceded under the law, there does not need to be a formal contract. And then if so, you know, what is the nature of the contractual privity? What sort of relationship needs to exist between the issuers and, you know, the secondary market?

And I will just say, okay, one of the things that anybody listening to this case should put at the top of their head is the judge specifically said on the record that she thought these are tough issues. There are two judges that appear to, at least so far in the federal system, have different opinions on some of these issues, that there's no circuit authority regarding where things stand. So anybody who's looking at these things cannot say in good faith, oh, it's clear cut. This is not a security or this is a security. The law is opaque.

The law is confusing. The law is almost 100 years old. You need to get in the frame of your mind. These are not simple issues. And even if this one judge rules in favor, that doesn't close the door on our system. Our system allows circuit splits. It allows judges to disagree with one another. And so you get, you know, higher courts to weigh in.

You know, you will continue to see confusion and ambiguity in the interpretation. It allows judges to disagree with one another. And so you get higher courts to weigh in. You will continue to see confusion and ambiguity in the interpretation. So anyway, I'll shut up with that. That was a really thorough summary, and I think a lot would agree with that. Andrew just brought you up. I saw you requesting. I'm sure you have thoughts. Yeah.

Andrew, did you hear me? You were connected. I had to turn my mic on. I think Joe is as level-headed and as right about this issue as anybody. I think this goes the distance in the same way that the Ripple and XRP process both went a long, long way down the road. It didn't happen and wasn't turned around and adjudicated quickly. And also at the same time, the quote unquote decision that was finalized or nearly finalized with Ripple was kind of half baked, kind of split the baby type of thing. I think we may be headed in that direction with Coinbase and the SEC. I also agree with just about, you know, most folks on this panel that, you know, yesterday wasn't a slam dunk from the Coinbase side. You know, the judge was,

you know, fairly level headed as to her comments and her questions. And both sides had some not-so-great moments. There's been some commentary out there that if this does go the distance and all the way to, let's call it a Supreme Court, I don't think it gets there again. The XRP ripple thing didn't. That would be a warm, fuzzy space for Coinbase. But, you know, this stuff is fairly, I'd be surprised if there was some sort of speedy, you know, four to six weeks, you know, best case scenario for crypto, you know, return six weeks you know best case scenario for crypto you know return on this particular hearing um and again to to to jump on joe's thoughts um yeah this this is going to take

a while it's going to take a while and there could be a bunch of different angles that, you know, we don't foresee right now. The good news is, is that Coinbase is as, if you look at it from the SEC standpoint, you know, they were part of the process by which they approved them, you know, going public, that gave Coinbase and just an absolutely enormous treasure chest of, in war chest to fight this particular battle. They're going to continue to need that. On top of that, the other thing for Coinbase is they're now involved in spot Bitcoin ETFs and the process is there. So there's a lot to like about Coinbase's position, not only their arguments, but also their standing now kind

of beginning to weave their way through the TradFi world. It's just that legally, this is going to take a long time. Yeah, I mean, and people have to remember that when this suit was filed by the SEC against Coinbase, That was a time when the court hadn't really pushed back against the SEC anything crypto regarded, and there was no ripple decision at that point. Right. I mean, Joe, isn't it important to note that if this goes into discovery and continues on, even if it's parts of it, as you said, that we're talking about years down the road for this to be settled? Yeah. I mean, so let's just think about timeframe there. I have a motion to dismiss pending in a significant case, significant exposure. It's been pending for seven

months in the Northern district of Illinois. So like, you know, this motion to dismiss, it would not be unusual at all for the judge to wait months before giving a ruling on it. So I, but then you get the ruling in the case itself, even if it goes fully forward. I mean, you're talking about years down the road. I mean, this SEC could completely be turned over by then. You could have, yeah, I mean, you could have a new president, right? You could have a totally new president by the time you get a ruling on this. So I completely concur with what Andrew was saying. I mean, litigation takes a ton of time. And, you know, to me, if you're a market participant and you're sort of speculating based on a litigation, you're kind of doing it wrong.

Right. And again, not financial advice or anything, but it just seems like, you know, if you can't you're not you can't wait for clarity on all these issues. And even if even if you get a ruling that's favorable, Coinbase is going to appeal it to the SEC. Coinbase will absolutely appeal that and test that in a higher court. So yeah, I mean, this is years in the making. Yeah, I mentally go back to when we had the Ripple decision, what big news that was and how we discussed it here. And there's obviously a lot of nuance. Still, there's people who believe Ripple outright won. There's people who think they outright lost. There's all the confusion as to what it meant. But I can tell you that the market or the public believes that Ripple won. And so even if

this Coinbase suit is not exactly what people want, it goes into discovery, it continues on. Right now, I think the precedent in people's minds is that these are not securities and that it's somewhat remains unsettled. anything bar i think in my mind anything barring horrible news from the judge on this allows uh this market to at least continue until that point they settle in a conflict i think that's pretty big context for for all of this is that the sec wins like 99 of the time we forget that we're living oftentimes in a, you know, in a crypto bubble where, you know, the ripple, you know, decision, you know, split the baby, you know, most people think that that they won, you know, grayscale, yes, they won led to all those ETFs. But that's

just two cases, right? The SEC, you know, 99% of the time wins. So that has to be considered as well as we go through this long term. Like Coinbase has a war chest. Most of us agree with Coinbase's arguments, but at the same time, contextually, the SEC wins 99% of these cases. They just absolutely do. So they may not win here, but there are scenarios where Coinbase will have to appeal. Where do they go with it? Time and circumstance could all change over the next 18 months. We could have no decision that's meaningful over the next 18 months. As Joe said, there could be an entirely different political landscape over the next 18 months. As Joe said, there could be an entirely different political landscape over the next 18 months. This could drag out. We've got an entirely new leadership at the SEC and they just boot it, kick it, say, do whatever you want. We have no idea. It's tough to make decisions, monetary decisions based on what went on yesterday when, again, context, SEC wins 99% of the time.

But at the same time, you know, it's a unique situation because of what and who Coinbase has become, you know, over the last year. Yeah, I think the point that I was trying to draw, Mario. Yeah, Joe, before you jump in, I've got a question for you, Joe, and you can respond to Andrew. If Coinbase loses the case, and I'm not talking about the dismissal, just the entire case and they appeal it, what happens with the markets and the tokens listed while they appeal it? Would they keep the tokens listed? I know it could be a silly question, but it's not my area of expertise. Yeah, so it's interesting because Coinbase had a precedent set all the way back with the Ripple case where they sort of implicitly deferred to the sec once it made a public statement about whether something was a security they actually delisted xrp when

that case got filed and i think they've taken a far more aggressive posture in recent years most notably with this because they're just saying no screw you we're not going to delist them we're going to continue to trade these tokens uh regardless of what you're filing in, you know, in federal court papers saying they are or are not securities. So to answer your question as directly as I can, I think nothing happens. I think if it gets appealed and they lose on a dismissal and they do choose to appeal it, which is a question, right? Then at that point, you know, the tokens will continue to list and continue to trade on the platform. But the one thing I really want to sort of highlight, which I think is key to understanding where the SEC is at on this one, is that, you know, they had an original posture,

which I think they thought flawed, which was to go directly after issuers. And they filed, you know, several suits, many of which, you know, as Andrew alluded to, they won, right, against directly against issuers. And what I think they decided in the wake of FTX collapse, and then the idea that we need to move, be more aggressive towards this market is, well, that's not working. Our old strategy isn't working.

And we're going to pursue claims directly against exchanges out there. And that's really what you saw, I think, with the three suits we've been filed against, you know, Kraken and Coinbase and Binance, more of a full-throated attack on sort of the industry. Now, the interesting thing about that for me is that if you listen to the oral argument yesterday, they seem to once again be pivoting from arguments where they're fully adopting the position that the tokens in and of

themselves are, in in fact investment contracts. They're not really arguing that. There's some suggestion of that in prior proceedings. They suggested it in the Ripple Labs case. They're no longer sort of doing that. They're now saying that the secondary market, the blind bid-ask transactions, that those are effectively, you know, it constitutes purchases of investment contracts. And that's where the judge got into that whole question about like, well, if it is, is there a rescission? Is there a right of rescission? Which is sort of a trap door for them to argue in.

But to me, like the pivot away from arguing that the thing in themselves are securities is not only one that's supported by law, but it actually puts them in a really tricky spot because then they have to expand this whole scope in creating distance between issuers and secondary markets, which is very tenuous because there's not a lot of case law on that subject. I mean, I've talked with some of the other bigger lawyers in the space, and I guess there's a handful of

precedent you could kind of use, but they're not really, they don't really fit. So, you know, the judge had that back and forth where she said, well, you know, the laws, I'm paraphrasing, but she said the law has had a good run. Maybe it needs to be updated. She was at least intimating at that. But that's like a real big thing. If the SEC is abandoning this theory that tokens in and of themselves can be securities, then, you know, that puts on very shaky legal ground, I think. Yeah, exactly. And that's all because of Ripple. Go ahead, Nicole. Yeah, no, that was what I was talking about earlier, but I think Joe put it really well. And just going on whether or not this is a win for Coinbase or Ripple or whatever,

because I think this is important. I think if you ask Ripple and Coinbase prior to the cases, if they thought they were going to win outright, both of them would have told you no. And Brad Garlinghouse and Brian Armstrong have both alluded to this. I don't think either party thought they were going to win 100% of the case. David Weisberger really broke this down earlier in the call. And it's important to understand the nuclear option for crypto was what Joe was just talking about, which was calling the tokens in and of themselves securities. So I think what we need to understand is this argument by the SEC is failing in case after case. And that's the really big win here. Whether or not Ripple needs to go to the SEC and register a specific institutional sale,

or whether or not the SEC needs to register a specific product, right? Those can be done in an administration that's willing to work with these issuers, right? Processes can be set up. What couldn't be set up was making a cryptocurrency trade like an equity. And that was the nuclear black swan scenario that would have kicked this industry outside the United States. So I think the win here is that we have judges who are able to understand and willing to understand the nuance here and create rules that are going to make sense and not be some nuclear bomb for the industry. So whether Coinbase or Ripple win every single argument, I think the point that needs to be taken as a win here is the nuclear scenario isn't being brought out and we have judges who are willing to look at nuance.

Everything has moved in the direction the industry would want since the worst case scenario when all of these were filed. One of the things that was fascinating about the oral argument is that CoinUS's counsel, they made a tactical decision to concede that theoretically a token in and of itself could be an investment contract. But he disputed the fact that any of the tokens listed in the actual complaint were in fact investment contract. That's curious, right? Like, so he said something like, yeah, there could conceivably be a universe where some type of token could be, but I don't think any of these are. Well, if you go and look at the list, I mean, you had VGX, which I think is the Voyager token, which to me is like the closest possible.

If that is not an investment contract, then I mean, I don't really I think 99 opposite of what Gary Enzo says, then 99.9 percent of tokens out there are not investment contracts because look at look at what happened with VGX, how that was actually created and the purpose of that token and the efforts behind it and so forth. Yeah, I agree, Guys, I think we're up against it with time here. I think we covered it exceptionally well. We didn't really get into the Trump CBDC conversation, Mario, but I think we can touch on that tomorrow. I think that's sort of a lasting evergreen topic. And we'll see what the market has for us tomorrow and what the news cycle has. Thank you. I do want to say, guys,

to me, these spaces are always incredible, but I just love that all of you come here with no real incentive and spend this time with us discussing these topics and that we really get to share time with legitimate experts and get your takes. I appreciate all you guys on the panel. And I think that everybody who's listening should be following all of them. When we bring someone up, it's effectively an endorsement of us that these are the people that we're looking to to get the accurate information

and understand what's happening in these markets in this new cycle. Otherwise, you'd just hear me and Rand yelling at each other. Nobody wants that. So I appreciate everybody here. You guys should be following all of our panelists. And we'll see you all tomorrow.

Bye.