The Wolf Of All Streets - Breaking: SEC Sues Binance | Crypto Town Hall

Episode Date: June 5, 2023

Breaking: SEC Sues Binance. What does it mean to Bitcoin and crypto? Join Mario Nawfal, Scott Melker, Ran Neuner, Ryan Selkis, Mike Alfred, Simon Dixxon and more. Crypto Town Hall is a new daily Twitter Spaces hosted Scott Melker, Ran Neuner & Mario Nawfal. Every day we discuss the latest news in crypto and bring the biggest names in the crypto space to share their opinions. ►►OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000!  👉 https://www.okx.com/join/SCOTTMELKER ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Let's kick it off. So heads up, you'll see the space is glitching, the numbers glitching today. And I don't know how long these attacks will continue for, but I'll figure it out with Twitter afterwards. What's on the agenda today, Scott? We've got quite a few topics, but I think we're going to focus pretty heavily on what's happening with Apple and what that likely means for metaverse and AI, of course. I mean, for anyone who doesn't know, today is WWDC, which is their big yearly event when they tend to roll out sort of their biggest plans and platforms for the future. Of course, I'm trying to honestly get to the bottom of this CZ story.

And I think that we'll go through that as well. A lot of people claiming that he potentially is no longer going to be the CEO of Binance and that, how about what's his name, Richard Tang is going to be taking over. I believe that's his name. My brain is not working as we try to get going here. And all of the obviously conjecture surrounding that. And then, of course, we'll dive into the market, what's happening in macro, because you can't have a conversation anymore in crypto without talking about macro or becoming

an armchair economist, right? Watching them. I'm looking at the number of Followers that some of these these people have got it's it's it's definitely but something good So never got zero followers and unfollowing anybody hundreds of these guys Yeah, I could see that the team is sending a bunch of them in the WhatsApp group. That's the issue with and you can do this on other platforms as well

just do bot attacks on people. Some people on Twitter make their account private if their account starts to get bot attacked. I'm sure Twitter support will sort it out. I've never seen it on Spaces though. We all have the thousand shillbots in every single comment on Twitter,'ve never seen it on Spaces, though. We all have the, like, thousand shillbots

in every single comment on Twitter, but getting it on your Spaces seems far more... Yeah, but they're wasting money. I think it's just... For them, and I see... By the way, I see one of the people that I think could be part of it, part of the audience.

But yeah, I don't really care, guys. I'll just keep doing what we do and let those people do what they want to do but i know i'll never i'll never name people man i never never have never will um but let's let's go let's go through the the headset john just quick ability doing market updates go yeah i'm seeing that largely everything in in the legacy markets which we like to call them, is breaking news. SEC sued Binance and Chao Peng Zhao for breaking U.S. securities rules. That's according to an article by Bloomberg that literally broke three minutes ago, four minutes ago.

Holy shit. Okay, wait, let's get that up. I mean, no surprise. And I'm sure we're going to get the number four tweeted. But if you look at Bloomberg, five minutes ago, SEC has now sued them. I don't know what they sued them for. It's literally the first time I'm seeing this. suit again, right? So this is a bit more of the same. This seems like piling on my first instinct from what we've seen already from CFTC and other regulators. And my sneaking suspicion here, first take just hearing this, is that this is going to be similar to the Wells notice to Coinbase. It's going to be about unregistered securities offering to American citizens. Yeah, I agree. It is civil and we know that the SEC,

I mean, can the SEC afford to take them on given the fact that they got like, you know, they're doing the ripple, they've got some big lawsuits and I guess they're just using taxpayers' money to just keep doing this in the guise of keeping investors safe.

Just to confirm, did you say the SEC because I'm just throwing talking something to the background. The SEC is just, it just came in now, did it? Yeah, here's the headline. SEC sues Binance and CEO Zhao of breaking US securities rules, Bloomberg.

Yeah. Bloomberg reported that the SEC sued Binance of breaking security rules. Earlier, the US CFTC sued Binance for violating US derivative rules. Today, media sources speculate that Binance may change its CEO.

Okay, so the CEO rumors are accurate then? I don't see. I think they're rumors. You know what it feels like? It feels like another attack on Binance. It feels like another coordinated attack on Binance. I'm going to be honest.

All these things just don't make sense. They're happening at the same time. You know what I mean? And this has started from multiple angles. I mean, we obviously, we've been talking about this for months. But the fact that the regulator went after BUSD and went after Paxos specifically to do that without even mentioning any of Paxos's other stable coins was showing that there was sort of an initial salvo against Binance in the first place. And we've only seen an uptick in rhetoric and different regulators

and departments piling on in this situation. I mean, this just feels like, like you said, it's just yet another escalation. But I don't think, I mean, we just feels like, like you said, it's just yet another escalation. But I don't think, I mean, we're going to see the news here, obviously, but this doesn't really fundamentally change much in that environment for me.

Yeah. So do we have more context on, can you send through the article in the group, Ryan, and can you just give us a bit of an overview? Is there more in the article, more details?

I haven't got the article. I've just got a couple of tweets. I'm looking for the... I just see headlines. Yeah, I'm mainly seeing headlines, to be honest. I'm mainly seeing headlines. So I'm just, yeah.

But that doesn't catch any of us. You know, when the CFTC investigation came out, it didn't catch any of us by surprise. But, you know, considering now we're talking about Binance, we're going to focus a bit on that for now. When you looked at the CFTC investigation, Ryan, and Scott,

what were your thoughts? Like some of the things there, I know a lot of it was old stuff and like old Binance is different to new Binance. But how concerning did you find that stuff? Look, you know, I think that I've known CZ and I've known Binance since the absolute beginning. And I think that every startup goes through the same kind of growing pains and the business that they started isn't the business that they are today. Do I think that they acted in bad faith? And when I say bad faith, knowingly trying to break the law no that there may be potentially

break the law by not having the right systems and processes in place because their business was growing really really fast and because their systems just didn't support their business in the early days of their of their lives um yeah possibly possibly so um i think i think look if this gets criminal if we get criminal investigations against cz when i think no not criminal investigations but a criminal indictment or something along those lines i think that's when the game changes but until i think until then this is par for the course and i want to remind you of another thing i want to remind you that the the sec and the cftc consistently uh get the banks to pay them huge fines for for wrong doing so it's like it's you know if you're in banking the fines for wrongdoing are like it's like part of the course it's like you know it happens in

banking all the time and banks pay these penalties all the time so i don't think that this is such a such a such a big thing. And I think also the market has become a little bit more immune to it. You see Bitcoin moved down $50 since this announcement. It was one of these like, it's just another event. And to be honest, no matter what the SEC says, you come to think to yourself that CZ and violence can possibly probably afford any penalty or any settlement, or even they are one of the red companies that can afford to actually take the SEC to court and actually fight it like Ripple. Now, the SEC, when they go to court, don't have a very good track record.

They've lost, I think, four out of the last five major cases, if I'm not mistaken. So saying that this is headlines, I think, four out of the last five major cases, if I'm not mistaken. So I think this is headlines. I think the market's responding accordingly by not responding. I think this is just more headlines. BNB is dropping. I mean, BNB dropped on the news in a matter of minutes from 305 to 285. Not huge, but I would say the market's responding there. But I totally agree with you.

And I've made this point. We're going to go to the guests here for their thoughts. I know we had other topics in mind, but we have to discuss this. And CZ has said it himself. I've given this example many times. He said, look, when we were building Binance, it was like the automobile. When there were first automobiles and Model Ts, the car went slow. There was none on the road.

They didn't need regulation, but they kept building cars. And regulation eventually caught up when the cars got faster and more dangerous and they needed security and protections for consumers. What was Binance to do in that environment except for continue to innovate and hope that they'd eventually catch up? I mean, Ran, we both know CZ, obviously. What's his job now? Is it to be CEO of this exchange or is it to talk to regulators and take selfies? Because that's what I've seen from him every time I've been in person with him. He doesn't even have time to run an exchange anymore. He's talking to regulators all around the world, trying to catch up and be compliant. So my feeling is that this is, once again, a lot of things that happened in the past. We still don't even have clear regulation for them to know if they're violating it or not and that largely with the

spotlight on them now you have to imagine that they're trying to get as compliant as possible yes and i think um look i think it's easily unique to you because ever since i've known him he's actually been the guy that's been in the spotlight and taking selfies and i've actually often asked him how isn't that you managed to run a multi-billion dollar decentralized organization with your staff all around the world and he said he's his answer is always the same he says I've had I've had amazing people to work with me but having done done this before myself and being a CEO myself on it you've got to have a you've got to have a coordinator for those for these people and I think that his role is you know has always been to play coordinator to play coordinator for these people. And I think that his role has always been to play coordinator

for these people. I want to just really quick rant. Go ahead. Sorry, I just wanted to say one thing. I can literally read the entire Bloomberg article for you guys right now in one deep breath.

Finance Holdings Limited and its chief executive officer, Changpeng Zhao, were accused of breaking US rules according to a federal court filing by the Securities and Exchange Commission. That is the entirety of the Bloomberg article. So it's hard to do more than conjecture still. But I do think we should jump to some of the guests here if they want to jump

in, Rand, before I didn't mean to interrupt your last thought. But Bruce, you always have a passionate opinion about this, and you obviously were the one who was hosting CZ last time I was in person with him. So what do you think of this? Yeah, I mean, I'm a good friend of CZ and I see him often and I've known him for a long time. So I wouldn't comment, you know, specifically on his case. But, you know, it's a tragic thing that the United States has been so anti-business, you know, what used to be known as the land of the free and a place that you're supposed to be able to go and pursue the American dream has just made it, you know, totally impossible for, you know, nearly impossible for crypto businesses to to to operate here. And what one of the most things that's most frustrating to me about it is that the regulators are lying about it. You know, specifically Gensler, who has this meme that he keeps repeating, like, oh, just come on in and register. And then the other meme that he repeats often is this sort of, you know, these statements that kind of indicate like our whole industry is millions and millions of dollars on lawyers trying to comply with these absurd dictates that nanny state Karen's, you know, decree on us from their positions know, they're pushing this narrative that, you know, people in the space don't care about regulations.

It's like, you know, really think that with all of these billion dollar companies and all? I mean, who do you think that these firms hire as their lawyers? You know, the local DUI lawyer? No, they're going to the top law firms in the country. They're getting former regulators. They're getting former federal prosecutors. They're getting the very, very top tier attorneys in the country. They're getting former regulators. They're getting former federal prosecutors. They're getting the very, very top tier attorneys in the world. And in many cases, companies like Binance and Ripple already disclosed it with $200 million and Coinbase and others. You can see publicly that these companies spend tens and tens of millions of dollars and even smaller businesses spend millions. So the idea that in the United States of America,

you can say, hey, I want to do this entrepreneurial thing. You go into a law firm, you know, the idea that in the United States of America, you can say, hey, I want to do this entrepreneurial thing. You go into a law firm and you say, how do I do it? And you pay the law firm two, three, five, ten million dollars, and they still can't figure out how to do it because our regulations are so, you know, cryptic and corrupt and backwards, you know, backwater third world style corruption. You know, it's just a shame. It's a shame. And, you know, we've really got to do something about it as a country because it's absolutely

tragic, the opportunity that's been squashed by this, you know, kind of nanny state interference and with no benefit either. It's not like they've stopped frauds or prevented anything. You know, the biggest fraud in our industry was somebody that they, you know, purposely, you know, paraded around and rolled out the red carpet for. Right. Who was also offshore. Who was also offshore, like Binance. Exactly.

I do have a little more context here. So, guys, I want to read you guys a bit more. This is referencing the New York Times about what it is. And it is actually not the unsecured securities angle I was talking about. The SEC has accused Binance of mishandling customer funds, as well as lying to regulators and investors about its operations in 13 charges filed Monday. The regulator said Binance had been mixing billions of dollars in customer funds and secretly sending them to a separate company controlled by cz was that forbes that reported that last week or it seemed like a pretty uh pretty shaky yeah yeah

yeah hold on that came out of reuters but this is this is scott uh yeah initially yeah the last report that we all ignored as a nothing burger but if this is true so it's two parts but this one the mishandling customer funds mixing billions of dollars of customer funds that's something that we said there was no evidence when Reuters put it out. But if this is true, we'll see how the market responds. I could be wrong, but how serious is it? Yeah. And then it says the charges included misleading investors about the adequacy of its system to detect and control manipulative trading. Regulators also said Binance did not take sufficient steps to restrict US investors from accessing Binance's unregulated exchange. Yeah. Mario, doesn't this go back once again to like whether.s investors from accessing finance's unregulated exchange yeah mario doesn't this go back once again to like whether this is happening now or it's a bunch

of stuff that happened as they were getting compliant but this is billions of dollars moved to another deal yeah like again i'm i'm pretty objective as everyone knows people are going to say that okay bitcoin binance coin just just dropped about $7.02. It's about $7. $2.90 from $3.05. Yeah, exactly. It's relatively stable now. So again, I look at the knowledge of a lot of people

by just looking at the price of the coin instead of just giving my own opinion. And based on what I'm seeing right now, it's relatively stable at $2.91. So, recovered from the low of $2.90. So, yeah, if this is… Yeah, I don't know. Like when I first read it, we'll see.

That New York Times article, when did it come out, Scott? Just now? I'm just literally reading it in breaking. That was on DB's account, but a screenshot from New York Times. Okay, so that means just finding this all out in real time but that was just now yeah so cz tweeted um our team is all standing by ensuring systems are stable including withdrawals and deposits that was four minutes ago we will issue a response once we see the complaint the client i think it means complaint haven't seen it yet media gets the info before we do. He starts with four,

which we all... Can you remind... I don't remember four. It's basically saying... He'd given a list of things, and number four was to basically ignore FUD and fake news and nonsense and just keep building. Yeah, but if the news...

Say four. Yeah, exactly. So if the news came out, like it could be fake news, we'll see, but if the news came out, initially Reuters reported it, Bloomberg and then New York Times, these guys worry about... They'll get news wrong. And you remember, I'm one of the main guys fighting against mainstream media. But at the same time, for all

of them to report it, if this is wrong, they either have legitimate sources so they don't get sued, otherwise they're fucked illegally sued otherwise they'll they fuck uh legally um but we'll see it says billions of dollars it doesn't say when it when it was what are the different can someone give us the different angles the best case scenario angle and the worst case scenario angle from what we're seeing uh that that's to a guest any of you can jump in by the way i'm gonna go silent for about 30 seconds while I actually dig into the complaint, which was just actually shared, which I can put into the nest here via a tweet from tier 10 K showing the actual complaint. But go ahead. Not that it's good news, but it's good news because if they're alleging fraud and all these mishandling of things, you would think the DRJ or Herbert Yalc would be getting involved, like some kind of criminal things.

To me, this might just be typical SEC overreach and just calling a pig a chicken or whatever. So I don't know. But Brian, just a question on that, Brian. And by the way, if there's any attorneys in the audience, my team, can you please find us attorneys, Romy? And there's people that are critical of Binance. Let me see. Catskill, for example, Romy, is great. He was there with the FTX saga.

And Scott, what was that gentleman's name? I don't know if you remember. The gentleman that is a hedge fund guy. He was one of the most critical. Mike Alfred? Yeah, Mike Alfred. i can get mike uh is his sure i'll contact him but you guys talking by the way guys i've been in the nest above for anyone in the audience who wants to read the actual complaint so we don't need to conjecture

uh which i think a lot of us will be doing sort of in real time here it's 136 pages so i don't uh count myself getting through it but it is there uh yeah i'll just you said there's a bunch of people going through it scott so what you could do is the team will be looking at different um different sources to see how what others are summarizing as the key points um but brian you were just speaking before james jump in you're just saying how um there's just an overreach by the by the sec but basically scott said it could be i basically, it could be. I'm sorry. It could be. Yeah, it could be. Right. But if they said,

okay, so, okay, hold on. BNB has just dropped down to 286 now. So it's dropping as we speak. So it was at 300. The colleague is down 6%.

The security in the complaint, officially. Binance here is number four. Binance and BAM Trading have unlawfully engaged in unregistered offers and sales of crypto asset securities, including Binance's own crypto assets called BNB and BUSD.

And they're even calling a stablecoin a security here. I've been puzzling this since March. If you look at Binance's share of the spot volumes in Ethereum and Bitcoin, they were 80% market share back in March. Now they're 40%. Binance is getting killed already on this. And I've been trying to work out, is it the fee holiday that's ended, has led to no one wanting to trade BUSD? Or is there some sort of behind-the-scenes regulatory pressure really pushing them down?

I mean, this is a massive drop in market share. And I don't know. I haven't got the answer for what the reason is, but it can't just be the fee holiday. There must be some regulatory pressure on this. So the part that concerns me the most, and and please feel free to disagree and in the comments as well let us know if you guys are on the same page as us or at least as me or not but what concerns me the most now let me get let me get waheed on here cnbc article about it as well let me get waheed be good to have him. Is the... Oh, no.

This reminds me of FTX days, not because of the stories they're saying. They're saying, like, the news is breaking, crypto news is breaking live. I haven't done a crypto one for a while. But the... So this is dominating CNBC. It's at the top of CNBC. So the news is being taken.

So you see, I'll read out what CNBC said. It's a very short article, but it's pretty much what we know. The SEC filed 13 charges against binance and cz alleging that it co-mingled billions of dollars worth of user funds and sent them to a european company controlled by jow so before i continue and again we are working with lawyers but is there anyone else that could give me free so so waheed i'll read out again what's he are you still cnbc piece what's your stance on this waheed because last time when we were doing the whole ftx thing and and binance was facing a lot of scrutiny

you were pretty vocal in saying guys let's not just start putting all the exchanges in one basket where do you stand on this because there's a lot of bits and pieces to it that we're going to be discussing the the the bnb and busd talk is being considered securities is probably one of the major ones but my question to you is um for me what concerns me the most is the following a commingled billions of dollars worth of user funds and send them to an eu company controlled by cz doesn't say when that was but my question to you is there is the why do you think that could have done? What are the different theories? Andrew's here as well. Andrew will be great for this. Go ahead. And we see the similar patterns at Binance. They're basically saying there is absolutely, and, you know, they've got the proof points of the European transfer and all these other things that they cite. And they're saying there's really nothing here that's different to FTX. Unfortunately, I don't know if it's true. I don't think it is.

But that's basically, they're just drawing the, you know, the patterns. This is very different to the lawsuits, obviously, against Coinbase and Kraken. Both of those are to do with securities, specifically enlisting securities, at least allegedly. Obviously, we don't believe that's true. But here, it's a little bit different. Here, it's more FTX-like accusations. It's FTX-like accusations,

but it seems like it's about things largely in the past. By the way, I'm making no value judgment as to whether that's right or wrong, but there's nothing here that would indicate that customers funds are, or were at risk just because I want to be very careful about how we talk about this and spreading any fear, uncertainty and doubt. Correct.

I just thought that. Yeah. Yeah. I mean, I was going even further i would say um the way i read what i see here they're just throwing spaghetti on the wall i kid you not i you know like basically a you made a transfer really no proof you know you're not cooperating blatant disregard for federal law basically we don't know what you're doing etc so honestly

yes so it's more spaghetti on the wall. Yeah, so the question is exactly. So another way of looking at it is that what happened with that money sent, and Andrew, I'd love to get your thoughts on this, but what happened with that money sent to the other company? Was it in 2017 when they're facing regulatory issues and they had to move funds from one company to another just to allow the exchange to operate?

Could that be the reason back in 2018 or 2019? What were those commingled funds used for? Because with FTX, we know they were used illegally. So I think this is an important thing to note. And Andrew, I'd love to get your thoughts on this. And if you can split it into two parts, Andrew, start with the best case scenario, because we've heard get your thoughts on this. And if you can split it into two parts, Andrew. Start with the best case scenario, because we've heard some worst case scenarios already.

Start with the best case scenario of this, and then the worst case scenario. Andrew? And good to have you back, man. It's been a while. Andrew, are you there? Yeah, hold on. I had to turn my mic on.

Oh, shit. Space crash. Go ahead, man. Best case scenario is this is an sec fight much like uh coinbase um and as you can imagine binance would have the funds to pull that off and have the ability to fight this long term and potentially you know the worm the proverbial worm turns and and you know, agencies become, you know, there's new leadership in a couple of years. And there's new changes, new laws, and there's adjustments as to, you know, how this whole thing plays out. In other words, you run out the clock. The problem here, though, is that that's best case scenario, right? That's best case scenario. It's only an SEC thing and they fight it. They've got the money to do so. They've got

the ability to do so. The biggest exchange in the world. So that's how that would go down, best case scenario. I can't imagine that that plays out, and here's why. One, the minute that this hit, I got a bunch of messages from agency folks that told me the following. The docket associated with this inside the SEC is very, very light. That's not a good thing. That usually means that there is more stuff coming that's going to be stuffed into that docket by other agencies. That's what that means. So usually when something like this hits, the SEC, if it's only the SEC, is going to stuff everything that they've got into that docket and move forward. I've been told that the docket, the jacket, the file is very, very light and that there's more to come. We all know on here that the DOJ has had an open

inquiry into Binance for several years. And I know there's been talk on this basis that, well, this is all old stuff. These agencies, and for all intents and purposes, Operation Chokepoint 2.0, don't care whatsoever about how long ago this stuff happens. They're acting now and they'll take action in whatever way that they want to. That's been proven time and time and time again. I've posted a couple times in the last six months that BitsLotto was a beta test. If you guys remember, we all laughed at BitsLotto. But remember, half of the agency personnel was on that stage. And we didn't really think about it. But nearly every agency that matters when it comes to financial services had somebody standing on that stage. And deep

into the Bitslotto jacket was a connection to Binance. It was a beta test. Okay. So here we are. And best case scenario, this is SEC versus Binance. They fight it out. They spent a lot of money and somehow they win or the clock runs out and away we go. But I'm being told that the docket is very light, that there's more to come, that shouldn't be a surprise to anybody. And here's something else that's not based in sourced information, but it's something to think about. There's probably a reason why exchanges like Coinbase and Gemini have a twofold reason to spend lots of money, lots of relationship capital, and lots of time very quickly building exchanges outside the United States.

Yes, currently, the environment in the United States is not conducive to running a crypto exchange here, right? But secondarily, what do you think their lawyers, their relationships, how much time has Coinbase and Gemini spent with regulators over the past four years? Enormous amounts of time. Do you think they might've had an idea that at some point, Binance is going to get hit and hit hard? And where's that volume going to go globally? There you go. Scott, before you jump in,

by the way, Scott, if people request and we can't see the request, it's very common when you hit big numbers in this space. Always happens to us after 10 minutes. Yeah, exactly. But yeah, so go ahead, Scott, if you want to ask a question. I've got a question for Ryan as well. No, you go ahead.

I was just clarifying. Yeah, Ryan, initial thoughts on this. We heard Andrew just saying, I want to sum up what Andrew's saying. The main point that, Andrew, you mentioned is that the docket is very light, which means that there's more stuff coming from other agencies, which this is the highlight of what you said. Ryan, obviously people, especially people outside of crypto, are just saying, you know, are going to obviously reference FTX. And I think it's foolish to do so. And even though we should be concerned and we should be looking into it and wait for more information

to come out. Can you tell us what, and ask the same question I actually asked Andrew, what is the best case scenario out of this? And I'm sorry to frame it this way, just kind of simplifying it for non-crypto people, but what is the best case scenario out of all this and what's the worst case scenario that we could see? I don't want to disappoint you. I'm not going to answer that precise question just because I want to try to avoid speculation that is not based in any reality. I think analogizing to FTX

is probably extreme, almost certainly. But I try to make a habit, having been around for a while, of not vouching for anyone's books that I haven't seen. I find that incredibly unlikely because you can see the volumes. You just know where most crypto business is located right now, and it's internationally and it's on Binance, right? So to me, the odds that there's anything crazy like FTX is, you know, I don't want to say negligible and then have it bite me in the ass, but it seems pretty low probability just because Binance is such a large player and has a legitimate business that's done very well and is the market leader. So I do think that this is entirely kind of regulatory and compliance in scope, most likely. And the comment that Andrew made on the docket, I think, is fair.

You know, remember, they also had the CFTC action, now the SEC. And and so there's really only one agency that that people have speculated on that is remaining in that conversation, and that's the DOJ. And that's obviously where the biggest risks lie in any financial services business. So, you know, I think most SEC, CFTC-related inquiries or, you know, lawsuits or complaints, that's going to be something that results in fines and some type of action that's financial. I don't want to say the cost of doing business, but it kind of is the cost of doing business in a market that's not explicitly regulated and doesn't have clear policy guidelines in place just yet. Let me just read some more news. Ryan, I'm just going to try to just read some more news,

giving the audience and yourself a bit more context. So the team is sending those out as they come in. How many pages is the report, Scott? Yep. It was like 160, 130. I just closed it because my eyes were bleeding. Yeah, people are doing that for us. So both Pauly and Brooks testified to the SEC.

I'm guessing these are Binance employees. So I'll read out one part of the account that's summarizing that. You guys are talking SEC. You've got to start respecting Nate Oates. Nate Oates, back-to-back coach of the year in that conference. Should have been. I mean, those teams go to the tournament. He's sending the guys to the league.

Like, are we talking about that with the SEC? This guy can coach, folks. All right, guys, so just – okay, Rico, just let me quickly read out the bits and pieces to give you more context. So the SEC is claiming – Show some respect. And then if you want stocks to buy, I'll give you Brian Hodgson at Arkansas State, Danny Sprinkle at Utah State, Jared

I don't know how he got up on track. Yeah, guys. So let me just get back to the topic. So the SEC is claiming that Solana, Ada, Matic, Filecoin, Adam, Sand, etc. are all securities. So I'll read out the section. It's section 8.

The crypto asset traded on the Binance.com platform and Binance.us platform include assets that were offered and sold as securities. Number 352. Since the Binance platform launched, defendants have made available for trading on them crypto assets that are offered and sold as investment contracts, and thus as securities. This includes, but is not limited to, BNB, BUSD, and the units of each of the crypto asset securities further described below, with trading symbol SOL, a dramatic file coin, Adam Sand, mana, algo, AXS, and CODI. Did you see this next tweet? It was number 111. As Binance CCO bluntly admitted to another buy-in finance compliance

officer we are in december 2018 we are operating as a fucking unlicensed securities exchange in the united states yeah and there was bro and there was bro at at the end of that which is you know funny in and of itself i guess one one positive positive upside here is if you're trying to read the tea leaves a little bit, if this is just a civil agency action, like Ryan talked about, the SEC and the CFTC, then the earlier information about CZ stepping down and somebody else stepping up as CEO, that's actually a positive. That may be a precursor to fines and adjustments to leadership, yada, yada, yada, and changes in KYC AML, Kraken-like. That has a feel to it like that. If you're going to try and look at this from a best case scenario standpoint that's a tea leaf so to speak that sounds and feels um again civil in nature um but again i

think this will evolve um there's probably more to come and i agree with ryan you know let's take away the whole FTX stuff. But again, the concerning, the biggest concerning thing here with, with some of the language is the, the, the phrase co-mingling of funds. If I'm Binance and if I'm anybody involved in leadership there, that's a problem. That's a, that's, that's not a civil thing. That's a, that's a problem. Yeah. Guys, just if, if I could finish the thought that I had.

So I think what we can separate are the civil and anything kind of beyond that. And the one area where there's still some speculation is, are there any actions coming from the Department of Justice? And I think this is something that's been rumored basically since the CFTC complaint was issued a few weeks, couple months. I don't know. I lose track of time. But based on some of the language in that complaint, and it seems like this one as well, that's where the concerning language and the speculation is around the DOJ's involvement. If this is just SEC and CFTC related about US specific jurisdictional issues, then you're talking about a fine, you're talking about litigation. And ultimately, Binance is going to argue that they've geofenced the US, whether or not that's successful is TBD, but that plays out in the courts. So really the only impact that you could imagine

seeing in the markets right now is around some of those tokens that are named in the SEC complaint, and this is more side door regulation by enforcement and kind of side door enforcement on some of these tokens. I think the bigger concern, and not to lose sight of this, is what happens if there is an action by the DOJ and if it is forthcoming as it's potentially rumored to be and then what's included in there. That would seem much more likely to trigger some type of leadership change like was floated in Coindesk in the Bloomberg article this morning and is kind of part of the rumor mill. I think even then I would take a tempered approach towards absorbing that information. One of my friends, a long-time investor that knows some of the principles here within the industry, made a comment that you're not really a credible market in the eyes of US policymakers, or credible new asset class or financial services, be a part of the infrastructure until you've

added some company with a billion dollar fund. And so I think the best case scenario is that ultimately Binance and some of the other major professional... Did the space crash? Oh, yeah. Sorry, you dropped out for a second. Yeah, that some of the major market players are able to settle and have a clean bill of health,

a clean slate moving forward after some pretty massive find. And so to me, that would be what we would be looking out for, just so we can rip the bandaid off, get to the other side of this, and kind of handle some of these big overarching issues during a bear market versus on the next run up. So I'm just going to ask a quick question. First, I'll give you a quick update for the audience. Binance Coin is down 6%, 6.3%

and Bitcoin is down 2.5%. But the question that I have is regarding the response by Patrick Hillman. And he says the following, and it kind of brings a good question. For every journalist calling and asking, bizarrely, we have not even been given a copy of the complaint ourselves.

Smart PR move to rob us of our right to defend ourselves publicly. Is that common? Is it possible that the complaint was leaked? Actually, maybe, Scott, you were going through it. Was the complaint leaked? It's hard to tell because it seems that at at least cd is saying outright that uh the media gets this information before they do and that they didn't even know and he can't respond until they've had a chance to read it so that would be the implication yeah so i'm trying to get um

if anyone else patrick who probably won't join so i'm good but if you can uh give him a shout it could jump in he'll be great um but the great. But the next question that I have is, I'll go to Andrew again. Andrew, as I continue going through this report, one thing that wasn't mentioned as part of the talk is that our securities is XRP. Is that something worth noting? Well, now that you mention it it is interesting uh to note uh i would imagine that the sec given their ongoing battle with ripple and in regards to xrp uh would not want to complicate

the situation as they've been um not winning uh in that in that long-term litigation. And again, if this is just an SEC issue for Binance, the Ripple and XRP team have laid the groundwork for how do you fight the SEC, the way that you fight the SEC with barrels of cash and lots of lawyers. Because they have an unending amount of those things. So you simply have to fight and fight and fight. And it's generally time that is on your side, right?

Coinbase doing the same thing. Again, my concern here remains that this is just the beginning of the story. I would add that Ryan is somebody that really should be, you know, everybody. I'm sure everybody in this space to some degree follows him, but should listen to him. He's got his ear to the ground and is a very, very level headed voice in this space. So smart commentary whenever he speaks and whenever he tweets um but it you know this is a fluid situation it's a monday um it's the sec it's civil as of right now um but we'll find out

you know we're gonna find out what's gonna happen here i i i will i will say say definitively that the existence of the charge by the SEC, even though it's civil, of commingling of customer funds, that is very, very, very problematic, no matter how small in scope it may or may not be. Remember, all of these agencies, they don't exist in all different points of locations in the United States. They're all buddies. They're all close to each other. They're all next. And as it relates to crypto, this has all been coordinated. It's all been coordinated.

No question about it. It's all been coordinated. Would it be strange if over the next 48 hours this Binance story evolves and somehow Elizabeth Warren makes a comment on the existence and people have been hurt by Binance and crypto and the you know the concerns legally that that wouldn't be a surprise at all right so the coordination here just begs the you know the eyeballs associated with is is this it is you know a couple hours of the sec sues binance is is that the end of this proverbial story it just i don't think so it doesn't feel like it um but speculating as to what may come next um i'm not sure it's just so yeah we have that co-mingling of funds is just really that that's that's a problem yes that's that's the one i press on and mike we're going to go to you in a bit because i i know you've got some some uh strong opinions on this first jaw so you put a thumbs down when andrew was speaking i want to go back

to the commingling of funds how serious is this because there's two ways of looking at it one way is you know regulation wasn't clear and and you know the banking sector was was um definitely not crypto friendly a few years ago um so was that just cz trying to get out get a get get um get past all the hurdles that any crypto company was facing back then? Or could it be something a lot more sinister? What's your stance on it, Joe? And then we'll go to Mike afterwards. Yeah, no, I think this is setting up a potential rumor.

It was referenced earlier, the DOJ action. But to me, and I apologize for joining late, the most interesting aspect before I yield the mic here about this is this, how broad and sweeping the requested relief is with respect to the entities, which is basically that they want to be seeking injunction, preventing them from operating as an unregistered exchange, including any crypto assets or securities or other non-security assets, which are fascinating. They make that allegation because it's arguably outside their jurisdiction. I don't know how you can read this complaint and not now read the Wells notice that was issued to Coinbase with expecting the exact same relief, basically, that they have not properly registered as an exchange, as broker-dealer in the United States to offer these types of assets. If the eventual, the big question with the Wells notice of Coinbase, which was how broad and

sweeping that was going to be, if it's as broad as sweeping as this is with respect to the request of relief, you're going to expect maybe not on the co-mingling front, but a very similar complaint sought against Coinbase once the expiration of this Wells submission expires. Joe, I don't disagree that that's what we might see, but isn't that a bit absurd considering Coinbase has registered with the SEC, had a direct listing, is publicly traded. Obviously, their accounts are extremely transparent and audited. I mean, I'm not disagreeing that potentially we could see the same sort of claims, but I want to make it clear this is a vastly, vastly different situation. Joe, hold on one second. Joe, don't repeat the nonsensical line

that Gensler gives us, is that they just need to register, because we all know that that's a lie. Hang on. They did register. I didn't say that, okay? I'm just saying I don't know how you can read this complaint and what is being requested and not be very nervous at Coinbase. I think that that assessment is fair. Mike, we promised we would come over to you. Obviously, for anyone who doesn't know Mike, listen, we've been talking about Binance for, you've probably been on this train for a year, right? And when we spoke about it privately,

you obviously say not any sort of vendetta or aggressive attack. You just want the truth and believe that you see it, correct? So Mike, I mean, what do you make of the fact that we're seeing this news today? I know it was not unexpected for you. You've been telling me it's coming for many months. Yeah, look, it's not surprising at all. And I think there's a tremendous amount of nuance here. I think you can both believe that Binance is not a good actor and also that the SEC is not a good actor. I think Gensler is the worst SEC chair in the history of the Republic. I think the Grayscale stuff, the Coinbase stuff is total garbage. And at the same time, I think the CFTC and SEC are both smart to look at Binance because I view Binance as a slightly better version of FTX,

Celsius, BlockFi, et cetera. It's not clear to me that they've done anything correctly historically, right? So they don't have a CFO. They used to have one, but that person resigned around the same time that the Grayscale Bitcoin Trust premium flipped to a discount at the same time that Three Arrows and Celsius and BlockFi and a bunch of these firms sort of became early stage insolvent. They don't have a board of directors. They don't disclose who their executive team is. They move domiciles constantly. I can go on and on and on. We've talked about this ad nauseum, so I won't bore people with this. But again, it was never emotional. It was never personal for me. I've never cared that much personally about what happens to Binance. But I see tons of social media influencers holding Binance out as a good actor, as a good firm that everybody can trust,

and they're better than FTX. And my view is that it's essentially exactly the same, just larger. And it's so much larger that it hasn't failed yet. But if it continues to operate in the same way that it's operated historically, it eventually will fail. So the question I have is, do we care more whether the SEC and CFTC are able to put so much pressure on Binance that they're able to shrink it down so by the time it fails, the impact smaller or do we want them to be allowed to continue to operate with essentially no guardrails globally and eventually blow up in a catastrophic way in a similar way that FTX BlockFi and Celsius blew up so again my view is SEC is fucked right like I don't I don't actually think Gary Gensler should stay in that role very much longer.

I think he's made a mess of the entire situation. And at the same time, I don't think that Binance is a good actor. Mike, there's a lot to parse there, obviously. And you made an interesting point that we've been sort of discussing here before. And I think probably true of a lot of the larger companies in crypto that kind of came into existence over the last five to 10 years. But is it possible in your mind that there was bad acting or co-mingling earlier and that now they've become compliant as we were discussing before? And maybe these

are things in the past that have been solved presently? Because it's very different. FTX obviously was actively, effectively even letting their customers deposit into Alameda directly and not into FTX, right? So we know exactly what was happening there. It was fraud and it was commingling of funds. In this case, we haven't really seen that funds were ever at risk being traded. So there's a lot of nuance here. And I just think we have to be careful about going down the same as FTX road. So how do you parse that? So one thing I would say is that this is a pattern of abuse that goes back to the very beginning of the company. It's a cultural component. CZ's made it very clear from the beginning that he does not want to follow anybody else's rules or regulations. He's not

going to stay in domiciles where he's going to be held accountable. Very similar vibe to what you get from like the three arrows guys. Like let's just move around as much as we can, or what's his name from Tara Luna, right? Like let's just move around as much as we can. So basically nobody can hold us accountable. So it may, it may be true that based on the pressure that CZ has gotten over the last few years, that he's made some adjustments, right?

He's agreed to follow some rules. He's agreed to segregate some accounts, et cetera. But when the culture of the firm from the beginning is such that it's literally designed to evade regulation, I don't think that's going to change until CZ is no longer the CEO. And I don't think CZ would ever step aside willingly unless the company fails a la FTX. I don't think there's any substantive change though, candidly, Scott. I've looked really closely at this over the last seven, eight months. And if you look at the way they operate, it really has not changed at all. He has a whole bunch of in-house market makers that are trading tokens against customers probably in the very similar way that Alameda was trading on the FTX platform.

The Binance US platform was completely commingled with the Binance. The Reuters just did a great piece today on the bank component of this, that literally Binance US executives never had control of those bank accounts, which explains why Brian Brooks and Catherine Coley and all these folks were scared shitless of working there. They didn't want to end up in jail and they probably could have ended up in prison if they had continued to work for CZ. So yes, it's true. If you talk to the investors, I've talked to some of the largest investors in that initial $15 million round in Binance and they all say what you just said, Scott. They said they're working

hard to make it better. And I'd love to believe that, but I see zero sign that there's any sort of significant cultural change within Binance that would enable those changes to happen in any substantial way that would actually make the company safer. And so my view today is Binance is just as risky today as it's ever been. And these lawsuits of anything, even though they may be misguided on some dimensions, will lower the risk for the average finance holder. And for example, Paxos. Paxos is a safer company today because they're not supporting BUSD. When they were supporting BUSD, I was very concerned that Paxos was going to collapse.

I think, unfortunately, for people who believe their valuation was going to be held up by BUSD and all of this other garbage. Maybe that's gone, but in terms of its long-term safety, I think Paxos is a much better company now. Mike, have you read the allegations about Paxos in this complaint? What specifically? I haven't gotten all the way down to there.

If you control F, trust company A, which is and read all the allegations about Paxos, they sanitize the name, but they make it very easy to know that is Paxos because they talk about the NYDFS's order on February 21st, cease and desist order, which was Paxos. So we can reverse engineer that all the allegations relating to trust company A are in fact relating to Paxos. So you should read them. Can you give me just a high-level summary of what you saw? Did you like what you saw? Did you not like what you saw?

What did you read? Well, I'm not going to comment for a variety of reasons, but I think you should read them. We'll have someone dig in and find that language in the research group. Guys, take a look at that, and we'll bring it back around. I see a lot of people have their hand up. Ryan, I saw you quickly came to respond, so please go ahead, and then we'll go over to Matt Tiger. Yeah. I think whenever there's a negative headline and there's speculation, people can get spun up, and this is not a criticism of the comments that were just made, but I think people can get spun up around the worst key scenarios. So just to take a step back, what actually matters for folks on this call?

It's the health of the industry. It's the health of Binance to the extent that they're doing business with Binance. And it's the long-term brand impact that negative headlines around Binance and any of its supposed actions are going to have on the ecosystem and the any of its supposed actions are going to have on the ecosystem and the rest of its players and their ability to move forward. But in terms of immediate risks, the absolute number one risk is insolvency. The number two risk is criminality. The number three risk is regulatory hiccups, right? And everybody is having issues in bucket three, and they're all civil. Number one is the FTX scenario, right? So

if you just look at Binance's earnings power based on its market position, based on how dominant it's been, and based on the fact that we've never had any kind of reported leverage issues or reported insolvency or major hacking issues, just their earnings power alone can support a tremendous level of fines. It could support a tremendous level of legal bills. And I don't necessarily put as much, just to play devil's advocate, I don't necessarily put as much credence into these guys are similar to three arrows argument so much as every company in crypto is playing some form of jurisdictional arbitrage based on different local governments' ability and willingness to engage with this new tech and think about how it fits within their existing regulatory structures.

So you are more likely to move around if there are governments, if there are domiciles where you are able to get in front of the right regulatory bodies and feel like you're developing a safe nexus. Now, obviously, you want to do it in major markets to the extent possible, but that just hasn't really been an alternative in the US. It's only recently been an alternative in the EU to a limited extent with MECA. It's happening a little bit more with Asia. But there was this five-year lookback period since Binance has been around where everybody is going to play catch up and have to do some level of remediation in terms of how they were operating five years ago,

and four years ago, and three years ago. So that kind of brings me down to number two. If you think that Binance's market position and earnings power rules out insolvency, and again, I'm not vouching for them, but I'm just saying Occam's razor, I would tend to believe that insolvency is not an issue for them like it was with FTX. So now you're talking about the commingling issue, the criminality issue, have there been sanctions issues? Have there been other risks that are going to be flagged in court orders? And that has kind of been telegraphed in some of the complaints and some of the things that have been insinuated in the CFTC and now this SEC complaint. So that's really what to look for. And at this point, you know, that process has to play out in court and we just need

to see what else is in the government's hands before, you know, we jump to these wild conclusions. Yeah, right. It's likely that there, I would expect that there was probably shortcuts or early missteps during the company's scaling. And whether they were intentional or based on rabbit scaling or somewhere in between, I think that there's a lot that can be remediated just based on the financial cushion that this company has and what they've already telegraphed as potential new leadership that would come in if things went really shit sideways. Yeah, Ryan, I'm already seeing the insolvency tweets all over Twitter, of course, and people jumping to that conclusion and going down the

FTX rabbit hole, which I think we expected. I think it's important to note, just for reference, that the last time we saw this FUD, I believe it was when BUSD was obviously being targeted and Paxos. We saw, and during FTX, $6 or $7 billion, maybe more in withdrawals from Binance that were handled somewhat seamlessly. Also to note that we've seen the same with tether um so they have been let me let me let me give a market update test it yeah go ahead yeah let me give a quick market update and then we'll continue just binance sorry bitcoin is down almost six percent now it's at 25.5 and then binance coin is down over 10

it's at 273 and continues to slide. It's at 272. I didn't even see that Bitcoin crash while we were talking here. Pretty, pretty crazy. I just saw. Yeah, I just checked it now. It's down 5.7%. Can I respond to some of the stuff that Ryan just said?

Yeah, go ahead, Ryan. And then we'll go to Mike. Yeah, go ahead. Yeah, just 10 seconds, right? There is an element here where Binance is such a large player that if there was an FTX 2.0, it's kind of curtains for the industry. So this space doesn't matter. Let's just be honest here, right? I just think that it would set us back for so many years that the market would look, you know, structurally like a brand new market if there was another major kind of bankruptcy insolvency that took out this many market participants. So I just first of all, I don't think that that's the case.

And I think we're talking about the wrong thing if people are speculating on insolvency. But, you know, the other issues are very real with respect to compliance, with respect to sanctions, with respect to commingling funds. So we're just going to have to wait and see. And I'm hoping for the best, but this is going to be a multi-year issue that has to work its way through the markets and out of the markets before we have a real clear compliant pathway for some of the big crypto exchanges, onboard new customers and actually cross back into traditional financial services and not just the insular crypto community. You get a thumbs up from me, Ryan. I just want to make a few comments because it seemed like

some of yours were in response to me. I want to be super clear that over the last seven, eight months, I never once said that I thought Binance was insolvent or would be insolvent. Imminently, what I talked about was all of the red flags and risk factors that make Binance different than most other companies of that size historically, right? Which, again, I've given a list of 100 of these things that would lead you to believe that there are potential issues there. I don't think Binance

failing, if it were to fail, by the way, that's not my call at all. I don't think necessarily Binance fails, but if it were to fail, I actually don't believe that would be that problematic for the industry. I think in a year or two, the industry would be stronger if a company that was allowed to operate like that failed. But I want to go back to the point from the beginning, which is that Binance doesn't have to be insolvent to be doing the wrong things. So for example, they always claim that they didn't borrow money and they didn't lend. And then all of a sudden, you learned from the Mazar report that they do in fact lend out Bitcoin. And then all of a sudden, their PR person was like, well, yeah, we do lend some out. Then they claim we never co-mingle, we always segregate the

accounts. And then a month or two later, it was like, well, we actually do co-mingle pretty much everything. And more importantly, they re-denominated people, right? So people deposited Ethereum, people deposited USDC, people deposited other tokens, and they re-denominated them into BUSD or BNB behind the scenes. And so you don't have to be insolvent. Celsius initially probably wasn't insolvent, but they kept taking people's Ethereum deposits and reinvesting them in shittier coins that underperformed Ethereum. And so even though they still had the coins on paper six months, a year, 18 months later, they didn't have them in the right denomination to give those coins back to people when they wanted to take them out.

And then the last point I just want to make on this is that it's very hard to have these conversations because there are like 20 people or 50 people in the industry that actually have access deeply to see the financials of some of these companies, to have conversations with the CEOs, to get the inside intel from the hedge funds about what they're hearing when they trade with some of these counterparties. The problem is that all the insiders are conflicted. Nobody wants any of these companies to fail. Nobody wants any bad things to happen to the space because that'll impact their mark to market on their funds, on all the investments that they've made. The CEOs of all the companies can't talk because they'll offend all of their customers. I remember this when I was running Digital Assets Data, I was afraid to say anything

about anyone in the space because I didn't want to preclude getting business from them. And so I just think we have to be honest with ourselves. You can't actually say what you really believe about these companies without having it have some negative impact if you're deep in the space. And if you're not deep in the space, then you have no idea. So if you're just a social media influencer speculating, but you don't actually talk to the counterparties who are trading with these firms every day, then you're just not going to know. So I have no idea what's going to happen in the very short term. But what I'll say is that I'm not calling or rooting for them to fail. I never called or rooted for them to fail. I've simply said it is a far riskier company than most people in this space are willing to admit because they are conflicted. End of story. I agree with that. Before you do,

Joe, Scott, just for all the new people, can you just give a brief overview of what we know so far? And I'll kind of mention a few of the tweets that will be good to reference, but you want to just give a quick overview for the audience? Yeah, happy to do so. I'm actually scrolling back because there was a great tweet here that sort of alluded to all of it. We've seen that there's an SEC enforcement action against Binance. This is on top of previous action from the CFTC and other regulators. Not altogether surprising, but I can sort of hint at what it's about here.

The main points of the document against Binance and Zara as follows, that they unlawfully solicited U.S. investors. The defendants engaged in multiple unregistered offers and sales of crypto asset securities. That's the one we were all anticipating. The defendants defrauded equity, retail, and institutional investors about purported surveillance and controls over manipulative trading on the Binance U.S. platform. The defendants evaded regulatory oversight in the United States by unlawfully offering essential There's a lot here, guys. Yeah. Yeah. I think the bottom line here is that there's a pretty massive claim here of quite a few misdeeds by Binance, including commingling funds, which is, I think, a triggering word for everyone.

And we're just trying to parse it and get to the bottom of it. Of course, there's a 136-page document that we've only all seen within the last hour so we're doing our best to report accurately on it yeah and just have joe before before you jump in judge sorry do you mind okay joe you have to if you have to jump off i'll let you go and then i'll mention a few things people tweeted um that would be worth mentioning but do you want to go first joe yeah so the the big story here guys, even beyond the allegations, I just wanted to tell you guys because I just got through the complaint. I actually have to jump on a call with a client who's personally affected by this.

So I'll just tell you the key thing that's different about this versus most SEC enforcement actions is that in the prayer for relief on page 133, there is a reference there that the commission respectfully requests a temporary and preliminary injunctive relief, including not limited to the freezing of assets, a verified accounting, repatriation of assets, expedited discovery and preservation of documents. So let me translate what that means. In a typical lawsuit that's filed, it gets really slow moving at first. It can take months for the defendant just to appear and answer and begin the process of discovery. This means the SEC is going into court in the near term, in the near future, to seek a TRO or a preliminary injunction, effectively very similar concepts, where they're trying to freeze assets. They're actually trying to get the verified accounting.

That's different than most litigation. That's the key takeaway that I can leave you with. I wish I could talk more, but I got to get jump on a client call. Joe, can I ask you one question about that? Would that, would I cannot be just related to us? It's no, no, it's, it's all the BAM entities. So LBAM trading, all of them, they're, they're, they effectively make the same allegation of the CFTC made, which is that these are all part of the overall umbrella. So we're seeking freezing of all these assets. We want an injunction that compels you to preserve the documents.

We want accountants in there and we want to do that on a preliminary basis. What that means is we want to do that before the finance gets there day in court effectively. We want an order from this judge indicating that assets on the platform are frozen and cannot be moved, which is. That increases client assets. Yeah. Yeah. judge indicating that assets on the platform are frozen and cannot be moved which is significant yeah yeah and just under the law preliminary relief tro's it's extraordinary relief right it's a very high bar um sec doesn't even normally seek this type of relief because judges are are reluctant to grant it they they want to have people have their day in court and present evidence they don't like to do things on a preliminary basis. And if they do it, it's usually for a certain limited time period, 30

days, 14 days, something like that. So here's the key thing. There will be a hearing in the near future. Sometimes it's within 48 hours where the SEC will be in court. They will be for a judge. They will be presenting evidence. They will be saying, you need to freeze this now because there's a significant risk of irreparable harm. That is the standard imposed by the law. Hope that makes sense. And we do have two other attorneys, Joe. I know you have to jump off and do jump back on when you're done with the call if you have some time, but if you have any extra information to share. So I appreciate you, Joe. I want to go to a lawyer. I appreciate you being here. And there's another attorney that I think dropped off. So I'll try to see bring him up but i want you to jump in on on what joel just mentioned the trl how concerning is that

why do you think that the sec is seeking an injective injunctive relief um a preliminary injunction and to freeze the assets and what could what does that mean for binance well i think it's pretty obvious that this is a crypto in general, right? There's a lot of ways to go about this. If their goals were, let's say, people who wanted to make crypto back on proper rails. But what this means for Binance, I mean, it could be very bad. The US government has quite a bit of power when it comes to banking relationships. We're seeing Binance coin recover to 7.6% drop now. It's back up. It dropped all the way. Now, if you can hear me now, bring it down.

Yeah, let me bring it down and back up. Yeah, so it's down to um 282 it's up to 282 now it was down all the way to was it 270 something 275 i think 273 and it was back up to 282 we're seeing bitcoin bounce up as well and now it's a 4.4 percent drop it dropped as low as let me see what dropped as low as where is it uh what it dropped as low as. Where is it? Two, 25.5. Yeah, 25.5-ish. 25.9. Yeah, yeah.

So let me read out a few tweets that the team said and I think are worth reading. Scott, you can see them. I pinned them. I replied to them in the group. So let me go through those. So there's one here that's interesting. So DB, so it's just T10K, which is a pretty good account.

As far as I know, it's a pretty good account to follow. But these are just tweets we're going through. It says, the SEC complaint versus Binance. Binance's U.S. affiliate transferred at least $145 million to an account of a CZ-controlled entity. And then that account bought a yacht. So this is, again, we're getting bits and pieces of the report um so i would love some thoughts on this and and whether this is uh how concerning this is because like what concerns me the most is two things the there's three things that concern me if i continue

going through tweets and that's with me with the limited knowledge compared to the panel and what i'm hearing is number one the fear that this could create let's say binance is very little to nothing wrong not nothing wrong but very wrong, nothing to be too concerned about. But I'm worried about the fear this is causing, what that could do to Binance as an exchange. So that's the first thing. The second thing is the co-mingling of funds, which again, we don't have clarity where those funds are. Obviously that tweet I read is just, we're talking about one particular purchase, and it doesn't mean anything, but it's at least worth asking questions and then the number three is the uh the freezing of assets that the sec is requesting what joe

mentioned earlier um and how how big of a deal this is before i read more tweets i'd love to get those some thoughts on these three particular points that i mentioned three particular concerns and what joe said earlier uh i'll go to simon do you want to jump in yeah hey guys um i do want to say i haven't actually read it yet i just jumped in so i'm just catching up as as we go through um but from the list that um scott read out earlier it looks like they've listed pretty much everything a financial institution could do wrong um and and listed everything um so you you know, if you were, and again, we've got to be really careful with our words here,

but what have we learned in this space that, you know, if we used to do this whole proof of key thing where every year we used to ask everyone to withdraw their funds from exchanges to check that they still had one-to-one backing and the right amount of funds. The SEC's announcement, just from what Joe said, the only logical conclusion that someone rational can come to is that you need to at least withdraw your funds. And for an exchange, that's not an issue for somebody that is utilizing those funds

in ways that they're not meant to be utilizing them that is an issue and so it really gets to put that theory to the test and the other thing that we've learned in the crypto space is that you can use a token and if you're not that one-to-one and there's only you know if you are one-to-one it doesn't really matter what the price of your asset is but clearly um you know binance token was as a security as a as a token could ever be it was connected to the profits of the company um It was the clearest ever indication. When in 2017, everyone was kind of creating utility tokens and they were like, yeah, you can use it to get membership.

You can use it to get access and therefore it's not an investment. It overset the line when they said it's connected to the profits of the company and we'll buy back the token to push up the price based on how successful we come become as a company that was when it when it really crossed the line when utility just turned blatantly into this is a this is a company security without all the benefits of equity without all of the disclosures that are required and without any of the risk warnings and so if it um you know the real test here is does bnb you know is that keeping you know that i think they've reported in the in the past that they've got 40 billion dollars of operational funds is that bnb the the

answer is we we don't have a clue nobody knows the answer to that question. And an exchange of the size of Binance that is dealing with... I've always said that you don't need to be regulated to know that respecting client money is very, very important. And, you know, only allocating the bits of client money that are allocated to that particular thing means that you don't have an issue. And if you invest in a security, then you can lose your money in a security, but you can't be demanding money that doesn't exist. And so that gets to be put to the test. And that's a problem. And I do disagree with if finance goes, our industry goes. It just puts us back. We've been here before. And people start to realize that you need Bitcoin in self-custody. This is the second time that that's been directly responded to. Early equals wrong in investing. And my point is, if we had another catastrophic failure in a critical piece of global market infrastructure and liquidity, it would set us back years, many years. because this is coming on the back of Signature and Silicon Valley Bank and Silvergate, you know, basically getting shut down or seized or acquired.

And so we're losing a lot of market infrastructure on the traditional kind of financial rails and settlement platforms, like SEM, and some of the banking institutions that these counterparties were actually settling with. If you do the same thing with global settlement on crypto to crypto rails, which is where Binance has an outsized position in the market, and it's the widest reaching global marketplace, that's going to set back market structure for years within the crypto space. So yes, there will be others that absorb that volume, that absorb that demand. But I think I wouldn't be sanguine about what the market outlook looks like under a doomsday scenario that's as bad as people would speculate on. Now, I don't think that's my base case. My base case is

ultimately this is going to be settled. It will probably be, depending on whether there is action from the DOJ, it'll probably be a historic fine that is ultimately negotiated. But there's reason to be optimistic that if we rip the bandaid off here and get to the other side of this, and Binance is still a going concern, but it's just coming into more sensible regulatory framework in the US and abroad, and they take their medicine, then it's a clean bill of health or as close as we're going to get to a clean bill of health with a pretty integral market player for the next several years. So just for any attorneys in the audience who are inviting some... Go ahead, Ryan. Yeah, actually,

Ryan, I'm glad you're here. And really quickly, before you guys jump in, Binance says they believe the SEC... Yeah, I was going to read that. ...baseless, and we intend to defend ourselves vigorously. Not that we would... Not that it's unexpected that they would say that, but they are making that claim. Okay, I appreciate lawyers.

So, Ryan, I'd love to get your thoughts on... There's a whole bunch of things in the report get your thoughts on on you know there's a whole bunch of things in the in the report that we'll be covering and there's more coming out i'll be reading out shortly um have you gone through it and what are your initial thoughts i've been to a couple of them and i think i share the same sentiment as as ryan i think that these things when they happen around the sec they seem much more serious than they are now remember that this this is what the SEC, this is effectively the SEC's best foot forward. This is all the things that they want to get Binance out for. And I think that what's going to happen now is Binance is going to start defending them one by one. Now, they're not going to get a clean bill of health,

that's for sure. But I also think that it's just a case of there's going to be a fine or a series of fines. We all know that Binance can afford to be a fine or a series of fines. We all know that Binance can afford to pay the fines. We kind of know the quantums of these fines. I mean, you think about Block.One and EOS, where they did a $4 billion ICO and ended up paying a $25 million fine. I don't remember the exact numbers, but those were the orders of magnitude that were being spoken about here. And I think that the markets, I'm not going to say overreacting, but the market's reacting a little bit harshly to the news here.

So Ryan, I just want to make sure you're aware, Joe did mention something important and he had to jump off for a call. Hopefully he joined back. But he did mention that in the report, hidden somewhere in the report, that the SEC is requesting a preliminary injunction. So they're requesting to freeze Binance's assets which is not and it's not common for the sec to do that are you aware of that as that's one point i wanted to mention so that is i don't know if it's common but it's not uncommon for them to request an injunction it's not that that's that's not uncommon and i think specifically they're going to get an injunction into Binance.us and not Binance International. Remember that Binance International is a blip on the radar when it comes to Binance. They're going after everything everything complete freeze and every entity

and it's all new they're going after so Joe's an attorney and they're going after both Binance and Binance US Binance just posted a somewhat long form blog with a response so we're going to just say

that is out now and available I'll put it into the nest but we'll be just saying that that is out now and available i'll put it into the nest but um we'll be able to review that and also dig into that imminently yeah let me get the first part let me yeah mike i'll read out the first paragraph of this and then mike i'll let you jump in to respond to rand randy feel on mute you've got a lot of feedback on your end we are disappointed that the sec chose to file a complaint today against Binance, seeking, among other remedies, perpetrated emergency reliefs. From the start, we have actively cooperated with the SEC's investigations and have worked hard to answer their questions

and address their concerns. Most recently, we have engaged in extensive good faith discussions to reach a negotiated settlement to resolve their investigations. But despite our efforts, with this complaint today, the SEC abandoned that process and instead chose to act unilaterally and litigate. We are disheartened by that choice. That's the first paragraph, and I'm pinning it above. There's a few more. I'm going to quickly read through it now. Scott, I'm sure, reading through it.

Mike, I'd love you to respond to what Ran just said. Yeah, so I was just going to say Ran brought up a good point related to the settlement. I spoke with, again, one of these investors who's deeply involved in finance, who's connected with somebody who was in Asia with CZ at the time. And I think it was in January, I tweeted about a likely multiple billion dollar settlement. They were talking about a $2 billion plus settlement. I know Andrew was on the space earlier, thought that was too high, but I think that's more or less the right number. And I think that was to resolve all of the criminal investigations that

were going on. My question and slash concern now would just be, you've got a CFTC lawsuit, you have an SEC lawsuit, and then you have criminal investigations. And then there's some other agencies that are involved in some of this as well because of the Iranian component to this. So I just wonder whether maybe they were in settlement negotiations and at some point some of the agencies went rogue or they decided not to operate together. And given that Gary Gensler is a political power grab type of person, potentially kind of went off the reservation and just said, hey, we're going to move forward on our own because we are not satisfied with the way these discussions are going. Or it's possible that they're just operating completely independently and they were never involved. But I did expect that there would be a multi-billion dollar settlement announced in the first half of this year. obviously that hasn't happened and now you have the sec moving forward and i

think they're probably all linked and i think finance basically alluded to that and that blog post that um their settlement discussions have broken down and and and now you know you have this issue yeah so just two things uh two conflicting pieces of information so based on uh this on this response by Binance on their website, and Hany Scott pinned it above, and based on what CZ and the other guy, the PR guy said, this came as a surprise to them.

We haven't even seen the report, which I still need someone to answer me like a lawyer, maybe you can tell me whether this is coming. Why is the press talking about this without Binance even having seen the report apparently? But then Eleanor terrett she put out a tweet um about 40 minutes ago and we just invited her she was meant to come to the space she'll be joining after an interview she says the following according to a source close to binance the company knew there was a quote high

likelihood that the sec would file the quote exact same compliant the cftc oh they file the exact same complaint the CFTC did, but marking the assets as securities. They were apparently not made aware that the action was coming down today. So that's from Eleanor Terry. Go ahead, Lawyer, if you can give us some more clarity, it'd be good. Yeah, I mean, as for why the media is jumping to conclusions and sensationalizing it. Everyone can draw their own conclusions.

But unless there's something seriously criminal that's surprising here, then they can freeze the funds, but they're not going to lead to an ActX situation unless there's not enough funds. And I think there's been a lot of evidence that there is, right? So it seems to me like this is, again,

an attack on crypto and not an attack on Binance in particular. But all the legal issues, they will get cleared up. These things will see the light of day. So it's just interesting. Lord, can you give us some clarity? When someone hears commingled funds, obviously

after FTX, all the alarms go off. And there's someone tweeted and someone referred to a tweet by Sam saying, you know, I'm not going to comment on another sparring partner. So already people are linking this FTX. Can you explain that co-mingling funds is not equal whatever mentioned. It could mean different things. What is the best case scenario for the co-mingling of funds?

Yeah. So the reality is that to run on an organization like Binance is incredibly complicated. And you, at least in the early days, they probably all had to, right? Because you've got money going in one account and then someone else is selling that asset and it's coming out of another account. And it's really complicated. And I think what we've seen is after FTX, companies like Binance have been making very big efforts to not only make sure that that's not the case, but that everything's accounted for and done properly. So if there's some commingling, I mean, I think that's likely just how it was done in an accounting way. Money in one account,

money out of another account, let's throw up tonight or we'll throw up next month because there's so much money. I highly doubt it means... The only thing that would matter is it would mean that in the end of the day, when we do the accounting, there's not enough money there. And I doubt that that's the case. I don't think this yacht purchase proves anything that indicates to me to be nervous. Again, I think that there's a lot of ways to go about doing this and getting information in front of a judge without scaring the crap out of

an entire industry that you seem already hellbent on destroying. I think it's important also, really quick, Mario, I just want to say that when this came out in Reuters, I believe last week, Patrick Hillman from Binance quickly responded to the commingling of funds saying that it was specifically about customers purchasing BUSD and was just, I can't speak to the validity of this, but was just how it was basically skinned on the website, is that they were depositing or buying BUSD and that they were never actually commingled beyond the money from the customer's account going to purchase the stablecoin, which was immediately redeemed and put into their account. So this has actually been addressed on this accusation,

although this may go deeper. That's a good point, Mario. For the commingling, it is, you're right, a bit of a catch-all, but there's further commingling. It is, you're right, a bit of a catch-all, but there's different layers. And they're all pretty serious, but they have different severity. So the first is, do you have the financial controls in order to ensure that all the right funds

are in all the right places, belonging to all the right people? And so when you're in a multi-jurisdictional regulated business, each of those entities will be regulated in their own right. And normally a regulator would require an audit of that entity. So if all funds are put into one omnibus wallet and then you're going to have full segregation of US entity

from all the other entities then that's one layer the most obvious layer is operational funds versus client funds but then when you've got like fdx i'd like 160 different companies and each of those would have their own segregation as well where it gets really complicated is when you have lots of different products. So if someone's just putting money on a spot exchange, then you would not co-mingle that with money that is being lent. And then if you end up with directional risk, which is where everything blew up with FTX and Celsius, because essentially they weren't even moving the funds. They were just allowing people to change tokens on a database for free. And then you're kind of just completely gambling.

You know, those are the outrageous ones. And we hope that that's not the situation here. But there's lots of different layers of what commingling could mean. And one of the things that was pointed out, if you have a client wallet, then you've got the stablecoin thing. That's even more complexity and nuance to it. So if you're swapping in,

which stablecoins are backing which? And are those backed one-to-one? And then what if you have a DPEG? Suddenly you're in a situation where that could cause some kind of issue. So these are all the reasons why there are separate entities and you've got to have really robust financial controls to ensure you don't end up... And we know they don't, and that's the key point, Simon.

You just nailed it right there. You have to have robust financial controls, and we have all of the evidence to know that binance does not have financial controls what's that's not mike mike that's that's not or did not mike that's not or did not they do not today they don't have a cfo they have a they have an office of the cfo with 20 people because cz is afraid of one person knowing where everything is. So CZ is the linchpin of the entire financial strategy, obviously. But unlike in a large publicly traded global company, you would see there's no audit, there's no third party oversight,

there's no governance, there's no board, there's nothing to keep him in line. So again, nobody's saying they're insolvent today. That isn't really the point. That's a really, really small component of this. The important point is that they're not doing anything that you would expect a normal, well-run, well-governed company to do. And so over time, that creates risk. Even if the risk isn't immediate insolvency, again, nobody's saying that. I'm not saying that. But what we are saying is that they're not doing anything correctly. They're not doing any of the financial controls correctly. They're not doing an audit. They tried to do an audit and the audit was such a disaster. It never finished and Mazar's basically shut down the process. None of the auditors want to take the risk of destroying their entire business and becoming the next Arthur Henderson auditing these companies because it's basically impossible to do it because the data is not even all there, right? There's no way to confirm what's going on on the Binance Smart Chain. There's no way to confirm whether or not the BUSD,

the Binance peg version was fully backed. And of course, Binance admitted in Reuters that in an article that it wasn't backed by more than a billion dollars and that they're sorry. The problem is there's been like 50 sorrys, 50 mea culpa's and no real fixes. And we're still there. So the SEC thing is almost like a red herring. It's just calling out stuff that was already there. This stuff has existed for years. I called it out last fall and I said, all this stuff is there. Do you want to believe that this company is operating above board? Do you want to believe your money is safe or not? And my argument is simple. It is much, much riskier than it appears because the entire industry is conspiring to convince you that everything is okay because their economics and their incentives are aligned with

that. So yeah, it could be the riskiest company in the world, but everybody in the industry is going to tell you it's fine. And so if anything, at least even though Gary Gensler is a total idiot in a lot of ways, if anything, it's at least putting a spotlight on the fact that all of these crypto companies are not being run correctly. So Mike, a question for you. I agree with Mike on that point. I also want to probably take a little bit of an unpopular opinion here and say that I actually think that this is one of the good things

that can happen to our industry. And the reason why I say that is because I love CZ, I love Binance, I love what they've built. And I do think that they are one of the best exchanges in the world. But I don't think that any industry is healthy when you've got one company, one centralized point of failure, which controls such a big part of the industry. And I think that if anything, these attacks on Binance by the SEC and by any other regulator, I think that any of these attacks actually in the long term are very good

because what they will do is they may get people to move away from Binance and to start moving to other exchanges that they believe are much better regulated and they can't face the same kind of attacks that Binance can take. So I think one of the biggest custodians here is probably coinbase and i'm quite surprised to see that their share price actually isn't up actually down on this but i would say if you know if the if the sec is going

guns blazing against binance this is long term a very good thing for the industry i to be honest with you ask me why one of the biggest risks in crypto one of the biggest risks in crypto for me is by dance then the sooner we can get away from of the biggest risks in crypto, one of the biggest risks in crypto for me is Binance, then the sooner we can get away from Binance risk in crypto for all of us, the better. And no disrespect to CZ,

no disrespect to Binance, I think they've got a great business, but I just don't feel comfortable that one incumbent has such a big market share in an industry. I just think that

from this point, I think that in the short term, we may feel a little bit of pain but in the long term we'll create a a landscape where there are multiple big players and the and money will flow to the ones where consumers feel um the opposite of what mike just described so they'll feel they'll go to places where they feel people are more regulated more transparent and that's why it's a mystery to me. I think Coinbase should be flying today.

Yeah, but actually to respond directly to that, I mean, Coinbase, and we're talking about how BNB is down and it's slightly recovering. Coinbase is down like almost 11% on the day. And I'm a little bit, you know, I love to get people's reactions about whether, I mean, I think Mike and others talked about, oh, you know, Binance has had issues with custody. I mean, what's our opinions about how Coinbase does it, right? Or other people, right? I mean, I'm definitely left with Coinbase. It's just sector risk. Yeah, Coinbase has, you know, I mean, they do a lot of stuff in like cold, you know, cold storage, right? Like, you know, like, you know, not even hardware wallets where they're like literally putting stuff into safes. You know, I know companies like NYDIG and, you know,

I'm pretty good friends with the president of NYDIG. And they literally put their cold storage, you know, wallets, their private keys into places and have people with machine guns, literally like protecting these private keys, right? So, you know, really interesting. And they hold stuff for large institutions. So I guess, you know, Mike, you mentioned, and maybe this for the group or Mike, you know, hey, you know, let's move our stuff to places that are better. So if we're talking about centralized Mike, you know, hey, you know, let's move our stuff to places that are better. So if we're talking about centralized exchange, of course, I think not your keys,

not your coin, very much about that. But I mean, do you think, for example, Coinbase is a better run? I mean, it's down way more, even more than Binance today. Yeah, yeah. But just to be clear, though, and by the way,

I was head of strategy at Nidig, so I know a lot about what Nidig does and Nidig's a great company. But the market reaction in a single day has nothing to do with how well run a company is, right? The market can go up and down, individual securities can go up and down. A lot of it's market beta, right? It's quant funds, it's crypto funds, it's people who hold a bunch of these securities. They need to de-risk a portion of their book. And so they sell anything that's liquid. I don't think this is a referendum in any way on Coinbase today. If you just look at the facts at the high level, Coinbase is a publicly

traded audited company with a named board of directors. Many of the people on the board, you know. They're people that you know, they're personally responsible and yeah, they're indemnified by the company, but they don't want to ruin their reputation in doing it. They have financial controls, right? ruin their reputation in doing it. They have financial controls, right? Because their auditor in order to Deloitte, I think it is, has to come in. It's either Deloitte or Ernst & Young, but they have to come in and actually review every single transaction or a sampling of those transactions in order to make sure that they're legitimate. And so they have to prove reserves because they have to say, look, we hold all of these assets one-to-one. Remember, Coinbase doesn't lend the way that FTX, Celsius, BlockFi, Binance, et cetera, have all admitted

to doing lending. They don't take your tokens and turn around and lend them to some offshore crypto fund that's domiciled off the coast of Asia somewhere. They don't do that. And so I think the response that Coinbase stock today is actually quite rational though, because the market is correctly pricing in the broader regulatory risk of operating in the US at all. Clearly the US regulatory apparatus is going to attack any company that provides crypto services, irrespective of whether they're run properly. So you can both say that Coinbase is a substantially better run company than Binance. I think that's pretty clear. And that's not even my America bias. That's just looking again,

the high level facts about the corporate governance, the way the company is funded, the way the company is structured, the audit, et cetera, the transparency, right? If you just look at that, it's clearly different, but the market doesn't care right now because the US government appears to want to attack anything that's moving on US soil. And of course, Coinbase is way easier. It's a way easier attack surface to attack in the US because they depend on the US markets for survival and Binance doesn't. So before you jump in, Ryan, just quickly, let me read out. CZ just tweeted less than a minute ago. He said, a preview of what's next. We need to unite. And he quote retweets Woo Blockchain. The Woo Blockchain tweet talks about how the SEC accused Binance US of providing trading for securities.

And it included BNB, BUSD, Sol, ADA, Matic, Filecoin, Adam, Sand, Mana, Algorand, AXS, and Cody. So just on that point, and they did not include XRP. Just want to point that out as well. So I'd love to get your thoughts, Ryan, on what Mike just said, on what I just read out in LCZ's tweet, but also in the audience. I want to get a sense of how worried is the average user or the investor

in the space, in the ecosystem? So you put it in the comments. How worried are you? What questions do you have? Try to be as detailed as possible so I can go through them to get a sense of the audience and the sentiment here.

Ryan, go ahead. Well, I think some of this, we're wishing for a reality that doesn't currently exist when it comes to some type of clarity in the US, internationally, in terms of what the rules of the road are with respect to crypto. The problem with the SEC action today is no one trusts the SEC under Chair Gensler. He's ineffective. He's guilty of almost daily doublespeak. I think he's corrupt and he's beholden to some of the most powerful senators that are his progressive allies and frankly, the only people in DC that like him. So this is not coming from a good place or any degree of good faith. Anytime you see an enforcement action or a legal complaint that just lists a broad smattering of assets and is frankly just part of a power grab to slowly eke out ground wins when it comes

to the SEC's jurisdiction. The SEC has failed at protecting investors in every meaningful way over the last several years when it comes to crypto, whether it's the grayscale ETF, whether it's being asleep at the wheel on FTX, whether it's just not understanding the magnitude of some of the lending issues that hit the market, in large part because of the toxic collateral asset or GBTC that's an SEC reporting company. I mean, the list goes on and on. This is just not an agency that's operating in good faith under its current leader. Now, these agencies are not monolithic, right? There's a lot of good people within the SEC that I think would be thoughtful

about crypto policy and a regulatory framework that would actually work and protect investors and ensure the markets are fair and efficient. And we actually saw a preview of what that could look like with some legislation and a draft bill that was dropped on Friday. But to the point at hand with Binance right now, the reason I say we're kind of conflating a reality that doesn't exist in some future state. I would actually look outside of the exchanges and look to what's going on with like Tether and USDC as like a perfect counter example. And another similar situation is playing out. We had banking crises. We had a bunch of regulatory heat on USDC and US dollar denominated stable coins. And Paxos got slapped on the wrist. USDC deposits came down. Since the beginning of the year, Tether issuance is up. So this offshore Euro dollar

that's intentionally operating in a little bit of no man's land and has created this Wild West stable coin that's the backbone of a lot of global crypto trade, that is now the dominant currency because we don't have any clear regulatory frameworks in the US or abroad just yet. Europe making some progress. US, there's some legislative proposals that are just getting out of the gates. But I think it's a little bit difficult to have this conversation and conflate like, what is the SEC accusing Binance of with what can reasonably be anticipated from any good faith crypto infrastructure company in terms of what their expected behavior is? Now, there's been a lot of good comments on Binance's financial controls or its governance structures or historical sins of the past from

2018, 2019 that are alleged in this complaint. But the reality is there are no clear guidelines right now for global crypto businesses. And we have a bunch of companies that are working, in my mind, to the best of their abilities, at least today. And those that have made mistakes in the past are likely trying to remediate those mistakes. And we're just going to be in this state of limbo and some of these negative headlines and some of these really shitty situations because there's been gray area and in a down market where there's already been a bunch of market damage from three arrows, from Terra, from FTX, everything is going to get magnified 10 to 100X or 1000X whenever there's been a misstep from a crypto company. Because they're not explicitly blessed by the state. They're not explicitly regulated.

So I always take that with a grain of salt. Whenever there's a complaint that comes out like today's complaint, that's not to absolve finance or anyone else on the wrong side of this from all wrongdoing. But it is to say that, you know, if I were to put my chips on the table, I would say, you know, nine times out of 10, this is going to be resolved with some combination of exorbitant fines, a go-forward operating plan that includes a much heavier dose of compliance than what we've seen previously from any of the impacted entities. And then in severe cases, maybe a leadership change. That's not to say that the whole thing's going to unwind or the whole company's going to get shut down. Ryan, I think you made an interesting point about the SEC not

being a monolith. And I think it's important for people to also understand that just because the SEC or any regulator claims something does not mean that it's true. And that is up to the legal system to define. And the SEC has had no lack of trouble with the legal system. Judges have been pushing back against the SEC consistently in a number of these cases, including Grayscale, the Voyager bankruptcy judge. So I want people in the audience, especially because I know with a lot of Mario's people here, we have a lot of non-crypto native people necessarily in a very large crowd. Just because the SEC says something does not make it true. And this will take a very, very long time to be litigated and sorted in court.

It does feel like the SEC is throwing effectively every claim that they possibly can at the wall in this single suit to make it take as long as possible and make it as complex as it can be. But it is certainly possible that the SEC will lose on a lot of these points and that they could lose in a lot of the other cases that are setting precedent for that that is a precedent for this that are happening now uh joe go ahead yeah joe before you go in go ahead to ryan and i will go to joe go ahead yeah i was gonna say i was gonna say the sec doesn't have a very good track record in court number one and i think again scott you brought it back to the crypto users but we don't jump on the twitter spaces and we don't

break news every time that this happens in the banking sector believe me this happens a lot in the banking sector we're just not focused on it um as i said it's part for the course in the banking sector for the banks to pay huge fines for issues with the sec with the cftc and with other regulatory bodies we're just now coming into crypto and yes yes, I believe that mistakes were made, but I think we're just starting to get into the game. And this is actually what the game is when it gets played. All right, so we do have Joe back, which is great, Joe. You've been giving us a lot of insight into this.

I need to talk about the freezing of assets as one point of concern before you have to jump into a call. I want more clarity on that particular point. I'll read out a quick tweet. It goes back to what Ran said. The SEC going harder, says a tweet by Otto Suh and the SEC going harder at Binance, Coinbase, Crack and Ripple than it ever did at FTX.

That says all you need to know about the situation. And just taking a bit of a jab on the SEC. But Joe, can you just explain to us again, you kind of mentioned it and you had to drop off for a call with a client that's impacted by all this. And you talk about the preliminary injunction about the freezing of assets, Binance assets, which is very uncommon by the this. And you talk about the preliminary injunction about the freezing of assets by an asset, which is very uncommon by the SEC. I want more context on this because

I'm really stuck in my mind. I wouldn't say it's very uncommon. It is the exception. It does not tend to happen, to my knowledge, in many crypto cases. At least the ones I followed, they typically have a more drawn out process. But going back to the site, at least the ones I followed, they typically have a more drawn out process. But going back to the site, somebody made the comment, I couldn't quite see on my phone, that the SEC is not very successful in court. That's fundamentally wrong. Law 360 had a report that every of the suits that have been filed in the last 10 years, 95% of those filed by the SEC end in a settlement that is consented to by the SEC, meaning they, in their minds, they won,

or judgment in their favor, 95%. So that's almost as good as Japan. That's almost as good as Japan, Jeff. Yeah. Yeah. So the notion that they don't have a lot of success in court is wrong. They get maybe not all that they want, but that's the whole nature of an enforcement agency. You overcharge and under deliver in many cases. But anyway, let's go back to the... I'm told from a source that I can share that there's likely to be a preliminary hearing on this in the next 48 hours. It's being set right now with Binance's counsel, because they're not going to do an ex parte, meaning without the Binance's counsel being present there. That will be in the

DC circuit. So we're going to have that set. We'll have the date. I'm monitoring the pacer docket. I'll report it as soon as it pops up here. That will be regarding the preliminary relief that was sought regarding the freezing of the accounts. And again, just to make it abundantly clear, I've checked the complaint on this two times. The order seeks to freeze all of BAM's accounts. Not just the US, not just Binance US, it's freezing all of the accounts associated with the entity. That's how they go through this long multi-page explanation of how it's effectively one entity, that there is no real distinction. And they show the commingle of Binance US assets with foreign assets, which gives the

jurisdictional hook to the SEC that they need. And I think going back for a second to the discussion, which is fascinating about Coinbase and why Coinbase down 10% in the day. The reason why is because remember, keep in mind, we got a Wells notice against Coinbase and the Wells notice is somewhat cryptic. It doesn't tell you how broad sweeping the relief sought against Coinbase will be. If you read this complaint, guys, there's no way you can read it without getting a clear understanding of the SEC's position that these exchanges, crypto exchanges broadly, are broker-dealers. They're clearing houses. They have to comply with all elements of the Exchange Act. They have to comply with elements of the various regulatory requirements regarding clearing houses, and none of them are

doing that. That's why there's this sort of broad spread. You read this complaint and look at the position that's taken in writing by the SEC. There is no justification why they cannot bring the exact same suit against Coinbase. Joe, I just want for clarity there with the freezing of funds, because I think that's really important. You're saying they're calling for it for the duration of this, but why would Binance ever actually do that until they're charged or found guilty or anything? I mean, that's- Well, that's, yeah, that's a preliminary injunction, right? So that's the whole point.

It's extraordinary preliminary relief before any finding a fault. It's basically saying we want to maintain the status quo because court, if you do not maintain the status quo, there is a chance that there can be irreparable harm to customers and people interacting with this exchange. It literally, the law describes it as extraordinary relief. It is not granted. I understand that, but they can't actually force Binance to do that as the United States regulator right now, can they? But that's what I'm looking for clarity on. Well, it depends where the money's at, right?

Ultimately, if you get an order from a court, let's just play this out. Say there's a hearing and they are successful in convincing a federal judge that there is a sufficient basis to enter an injunctive order. If that's the case, it will be temporary in nature, meaning that the judges will set a time limit on how long it will be in place. And number two, the question is, even if you get an order, will a court that is subject, will a jurisdiction respect the order? Put it that way. Obviously, accounts in the United States, yes. Everything in the United States will be frozen if that order is entered. Outside of the United States, it gets a little bit more dicey. Where is, in fact, where's the money held? Are those jurisdictions going to observe the order? Are banking partners with them? Is there ways that international courts

could potentially respect the order? There's a lot of jurisdictional issues outside the United States. But theoretically, yes, there are jurisdictions where money could be held, where accounts could be frozen. Just to clean up one more point. Okay. I'll just tell you this, and we know this recently from all the issues with the stress in the US banking system. Sometimes, guys, it doesn't necessarily have to be an order that can be enforced to create enough of a panic. And I'm not suggesting anyone panic. Okay, that's never a good thing. But you know how social media works, right? And how things can spread like a virus.

And if there's at least the threat of this order, if there's a hearing, that can cause a ripple through the entire industry, I think. This is a point I was mentioning earlier. And I wanted to ask it. Ryan, perfect. It'd be good to take it. I wanted to ask that question without actually

playing a role in causing any panic is that how much of an impact will this have, especially with a hearing in 48 hours and Joe, if we're seeing a hearing so early, preliminary hearing, and before going to Ryan is that, so I've got two questions for you, are preliminary hearings like this common

what does it take to be able to get a preliminary hearing? And the second one is, do you have any insight into preliminary injunctions, so freezing the assets of buy-in house? What is the success rate of such action based on your knowledge, Joe? And I know this is a tough one. Yeah. No, it's not actually.

There's data on this. So of the TROs that are fought, which is the TRO can be, the distinction between a TRO, temporary restraining order, and a preliminary injunction is largely that TROs can be entered ex parte, meaning that Binance's counsel doesn't even have to be present. Sometimes counsel bring those purposely to try to get one-sided arguments in front of the court without opposition making the case. And they think that judges will be more inclined. In my experience, they're less inclined to grant TROs. Preliminary

injunctions are one typically where they are entered with the other counsel participating, presenting contrary evidence, trying to beat the standard. And I will tell you, based on public data in the federal court system on TROs that are filed, there's like less than a one in 14 chance they actually get granted. So yes, they're sought frequently. They get right to the top of the court's docket. They bring the court up to speed. Sometimes there's a hearing, but the vast majority of them are actually denied. And that's for the reason that in these types of situations, judges say, yes, you may have a viable case here. You may have a likelihood of success on the merits, which is part of the elements of a TRO.

However, we do not believe it justifies an extraordinary remedy of doing something now. Go through the normal process, get discovery, follow your motions, and then I'll rule on it. I don't need to act right now. And typically, to show irreparable harm, it has to be something more than compensatory damages would be sufficient. You have to show there's a risk that all the money might be gone. There's a risk the entire entity might be insulted. There's a risk that someone may steal the money and it will never be recoverable. Those types of things could rise to the level of a TRO, but generally not. Yeah. I just want to say, Ron, and then you're going to know. Sorry, I just want to say one thing.

I mean, that would literally be freezing the accounts of tens of millions of retail customers around the world, effectively freezing their bank accounts, which is how a number of people around the world use their Binance accounts because they're interacting and utilizing stable coins effectively. So I just cannot imagine that a judge would rule on that to hurt that many people around the world just to get here at Binance. I think you also got to take into account that these regulatory agencies, you got to take into account that what they're going for is they go for the jugular and then they negotiate their way from down there.

They go for the maximum that they can go for legally within the confines, and then they know that they're going to be negotiated down from there. They started and said, well, we want X, Y, Z. Then you've got to take into account where this comes from. This is a normal legal tactic that not only regulatory agencies use, but lots of agencies, lots of lawyers use. For the better part of more than, let's just say for the better part of a decade, right? The SEC could have brought this suit against exchanges operating in the United States.

And you have to ask yourself why they haven't. The allegations in here, the broker dealer, clearing house requirements, that the exchanges satisfy the requirements of typical exchanges, all of these things could have been filed five years ago. So you have to ask why they're doing it now. Ryan, I know you've been waiting. Please go ahead, Ryan. Well, I think the answer as to why it's happening now is pretty obvious because they're going to have a pretty significant backlash towards anything that even appears unregulated or a foul of US securities or other finance laws in the wake of FTX. But I know we have so many people coming into this live broadcast, even since the beginning and some of the comments that I made previously. But just to reiterate, there's four different things that can be conflated here. There is Binance US versus

Binance International. And I think we have to think about those two as related, but potentially treated separately. There's what are the tokens that are outlined in here? And what is the SEC claiming? And do they have standing to make those claims in a complaint against Binance versus directly against the projects? There's the criminal versus civil elements, which is night and day in terms of what we should be thinking about in terms of potential fines and liability and what would happen in the worst case scenarios with a big exchange like Binance. And then there's the credibility of the regulators and the various enforcement actions that are coming out, both, you know, in the U.S. and internationally. And I think to start from the top, you know, I don't know, Joe, probably as the data, it sounds like on things like an injunction. Scott made a good point about the number of impacted investors if something like that were to be granted. But there's also the element of, is the US likely to win an injunction

versus an international entity and all of its international users and legal entities? And I think that seems like it's pretty low probability. But regardless, I think you're going to have two different paths for what Binance US looks like on the other side of this versus Binance International. In terms of the criminal versus civil, just to reiterate for all the newer listeners, this is all civil right now at the SEC. So worst case is really fines and restrictions on what their behavior is in the U.S. markets. The concerning unknown in this whole situation is whether there is a subsequent action on the Department of Justice's side, which could include significantly larger penalties and significantly larger claims to the extent that we're looking at things like commingling of funds or sanctions or OFAC violations, et cetera. That is just rumor and speculation right now, but there have certainly been some hints dropped in the CFTC and now this complaint it looks like. Then there's the SEC's

approach towards tokens and the clarity that they've offered historically, they've done this several times now where they try to designate certain tokens as investment contracts by going directly at the exchanges and some of the secondary trading marketplaces versus to the projects themselves in these decentralized communities. that just came out a few minutes ago from Jeff Roberts at Fortune. He makes the note, the SEC in this complaint cites its 2017 Dow report to say that Binance broke the law by selling BNB tokens. But the BNB sale came before the Dow report, as you can see from the SEC's own complaint from June 26th through July 3rd. So this kind of goes back to my previous point of, you know, the SBC is not necessarily an effective or good faith regulator under his current leaders. It's being very reactive in large part because of the egg they have on their face from the failure to recognize FTX and its shortcomings early on and the fact that they'd had meetings with FTX and Sam and his team rather than

some of the other regulated entities in the US. So now they're flailing wildly and Binance is just the latest entity that's going to be in their crosshairs, but certainly not the only one. So let me just give a quick market update. And Scott, I see you on mute, so I'll give you the mic right after. So Apple does have a conference right now that we're going to be talking about in which they're going to be unveiling their headset, their VRAR headset, which we don't know much about yet. We'll be getting updates on this.

We'll be sharing it here as well because I know it is major, but the focus is still going to be Binance and the investigation. A market update is Coinbase is down over 10%. Binance is down 8.5%. That's Binance Coin. And then Bitcoin is down over 10 percent um binance is down 8.5 percent that's binance coin and then bitcoin is down five percent so we saw a very brief recovery of both uh very very small recovery from both binance and btc but seems to have stabilized for now i'm guessing just investors are going through the report trying to make sense of it um i also want to give an update on this so you can see

here it's not me hosting the space me scott and Ryan. We are doing a daily crypto town hall. Many of you know about as well. We started it last week. And we were going to be doing a normal show today until the Binance news broke. So you'll be seeing us every day at whatever ET. So it was like, what, two hours ago? 10, 15 Eastern Standard Time. Yeah, we jumped to the first few attempts, as everybody knows.

Yeah, exactly. So we do that every day. So anyone that wants to jump on as a sponsor or work with us, just hit us up, any of us three, just DM us. But otherwise, Scott, I'll give you the mic while you're unmuting because I try to go into the news. See what else. Scott, just real quick, I have to jump,

but thank you again for including me. Thanks, Ryan, appreciate it. More regularly, thanks. Ryan, I think you do share but thank you again for including me. Thanks, Ryan. Appreciate it. More regularly. Thanks. Ryan, I think you do share a lot of time, and we appreciate the time. Thank you. Eugene, you have your hand up still, so I'm going to let you go ahead, because I know you still wanted to respond to what he was saying.

Yeah. I mean, I think it was all very interesting. And one other thing is the kind of why now question. But I think a big question around, I mean, this lawsuit is like 130 pages or this complaint is 130 pages. So still going through it. But the question is, how different is this, right? I mean, some folks have said, hey, you know, this is like, you know, kind of par for the course. And in many ways, I agree with that, right?

Like finance companies in general have to deal with this. But on the other side, I'd love to hear. And as I look through this, think about how different this But on the other side, I'd love to hear, and as I look through this, think about how different this is than potentially other complaints, right? To what extent is that? Because I think the big thing is that the US, I mean, Binance has like 10x the trading volume last 24 hours than Coinbase, right? I mean, it's phenomenal how much Binance has grown versus Coinbase. And it's got to irk regulators and also U.S. lawmakers that Binance is not under the control of, you know, of the U.S. in so many ways. Right. I mean, Binance has, you know, left Singapore, for example.

I was just in Singapore speaking at a crypto conference and everyone in Singapore is pointing to potentially Hong Kong and even more so Dubai, which I was just at as well, as being sort of the next centers for potentially where crypto is going to succeed over certainly even the US, right? Because the US, because it has a world reserve currency is sort of like fundamentally arrayed against this idea of decentralized money. And I think that that's going to rear its ugly head more and more. Coinbase, as we know, has started opening operations in Bermuda and is starting to diversify away from the US. But if you're the US regulator, you got to say, well, you know, Coinbase is firmly an American company, you know, unlike Binance. So I guess the question is, is this just, hey, you know, we want to make an example out of Binance or is the SEC and U.S. regulators overall have, and I don't want to get too tinfoil hat about this, but do they have a deeper agenda against certainly non-U.S.,

particularly non-U.S. regulated centralized exchanges, let alone decentralized cryptocurrency, which is global, obviously? That's a question. Well, I think that there's a clear uptick in rhetoric and action against companies, both stateside and abroad. I mean, it's hard to think of it as anything otherwise when you see what's been happening with Coinbase, who had over 30 meetings with the SEC in the process of getting their direct listing and being listed on the stock exchange, right? I mean, for the SEC to now come back around and claim that a bunch of things that were already presented are problematic is nonsense. And so I think this is just a symptom of the larger issue here. Joe, you jumped in. Go ahead. Yeah, well, there will be a suit against Coinbase, guys.

I mean, the Wells notice. Of course. Absolutely. It gives a prescribed time period from which there should be a complaint filed. We know based on the timetable the Wells notice was issued, it will be some point before early to mid-September. So that's coming, right? The shoe's going to drop in that.

And I think the sweeping nature of this complaint, just to reiterate again, the fact that they're taking this position that is really an broker dealer unlawfully in the United States. That will be the allegation and the complaint. And we'll see. We'll see what relief is instructed. Are they going to seek a similar TRO against Coinbase and asking them to freeze assets? I mean, as an American, I'm rooting for US crypto companies, but the more I think about it as an investor, I wonder if... AI has a similar thing, right? I mean, EU has made AI development so prohibitively difficult that it might be better for European based AI startups like Stability AI behind Stable Diffusion to just kind of go elsewhere,

right? And I think if America wants to be part of this next wave of finance, I say we embrace the ripples and the coin bases of the world work with them. But nowadays, I wonder, like, I think this is going to be Hong Kong's game potentially, right? Dubai's game, other sectors in the world's game. Yeah, I was meeting with entrepreneurs in Dubai, and it's just phenomenal what's happening out there. Joe. Yeah, Joe, I'm far more optimistic than you. I don't think that I don't think it's fair to throw the baby out with the bathwater here with Coinbase. I do think that we're seeing a bit of

a roadmap for what could potentially come from the SEC against any given company, but I think it's very clear that they view Binance as far worse of an actor than Coinbase. Once again, they approved Coinbase listing. People keep repeating repeating that's but yeah yeah but that's not right we have zero reasons we have zero reason zero reason to believe that coinbase has co-mingled customer funds it doesn't matter that that is irrelevant for the purposes of whether they're operating in an unregistered exchange which is the absurd position and let me just speak to that issue again the fact that you get a red registration statement approved okay it's an entirely different division okay and it's bureaucratic red tape i agree it's nonsense and it's completely absurd reasoning but you basically have people

that look at the paperwork and say are you disclosing everything are you making sure that you're not hiding anything for investors for a publicly traded entity or we're going to green light that even though the underlying activity itself is not lawful in their mind. That's how absurd their reasoning is at the SEC. With all due respect to the people at the SEC, that's what they're doing. And I would not, again, I'm not overly negative, or I don't think this necessarily has to be the case.

I'm not even making a prediction on this. I'm just saying this complaint, as drafted against Binance with the positions they're taking regarding what it means to be a crypto exchange and necessary regulation and registration makes me believe that the complaint that eventually comes against Coinbase is more likely to, in fact, be broad and sweeping. And I think that is something everybody should take note of. Yeah, I think it's a definite possibility. I'm still, and I know you just addressed it, I'm stuck on the fact that the SEC approved this exact business. Right. The thing is, though, what he's saying is that when the SEC does a, they're not approving

a business. In fact, they're really, really specific when they, when you do securities offerings to say the SEC is not approving this. They never approve any offering. There's no offering that they approve. What they will approve is a registration statement. And they basically say, this is complete. You've disclosed all the things you need to disclose. You've got the auditing that you need to do, and you've got the stuff that you need to do to be a publicly traded company. They don't make they don't pass judgment, just like if it was a marijuana business in Colorado or and they want to expand at most make sure that there's disclosures of that saying, you know, our industry is heavily regulated or whatever, but they're not, by approving the offering of a public company, they're not passing merit on the business of that company. The investment, yeah. It's, is your paperwork complete? That's basically what they're doing.

Is your paperwork complete? Bruce is 100% correct. And Joe's point, and I wasn't giving you a hard time on this earlier joe when you when you i said you're repeating the sec's line it's i know you don't agree uh you're just you're just and i agree with you unfortunately i think you're you're right um but i take more issue with the sec's position of of you know i think joe is right unfortunately they probably will use this if they're listing a list of whatever, several coins, eight coins or something that they say are securities, which Coinbase trades those. I mean, if the SEC has a position that those are securities and you need to be an exchange to trade those for Binance, then presumably that means that Coinbase has to do it as well. So it wouldn't surprise me if that's part of it. But the point that I always hammer on that I think is particularly egregious and unfair about this is that Coinbase doesn't have a mechanism to do that. Coinbase tried to do that. They've actually acquired, I believe,

two or three broker-dealers, at least two. So again, going back to Gensler's line of like, oh, just come on in and get registered, as if that's all we needed to do. You know, you think Coinbase wouldn't have paid 100 million dollars to solve this problem a year ago or two years ago or five years ago? You know, the whole industry has tried and there's been many, many, many efforts of companies to try and, you know, just come on in and get registered, as Gary says. And it's not workable. And being a registered broker dealer isn't workable either. I'd love to send a letter. Maybe one of the lawyers wants to volunteer, but this is the problem. We spend so much money on lawyers. It's just a waste of effort, and I wouldn't want to spend a bunch of money on

it. But, you know, I mean, we're registered broker dealers. Does that mean we can sell this stuff? Say, oh, okay. You say ADA is a security. Great. We're licensed securities. Can we do that? Wonderful. I'll put up an ADA Bitcoin trade pair on my broker dealer tomorrow, see what happens. Of course, we wouldn't be allowed to do that. So it's a no-win position. It doesn't matter what license you have. We have a zillion licenses. It doesn't matter. We can barely do anything with them. The SEC has made it impossible to do business with the licenses or without the licenses. And that's what I think a lot of people don't recognize that. And frankly, you don't hear that from a lot of the companies that have tried to go down this road because they're afraid of the SEC. They're afraid to say it. And they're

also afraid of looking bad for their investors where they've spent a lot of money on these wheel spinning efforts. Such smart comments from both Bruce and Joe here. And I think it's important to point this out because a lot of people aren't going to want to hear it. But yeah, the SEC can approve your IPO, but also at the same time, not tell Coinbase how to register as an exchange. And I've got to run guys too, but I just want to make one more point. I think that my high level takeaway for me is that it's nuanced, but you have to understand that it can both be true that the SEC is not correct or out of line in the way they're approaching regulation in the US in a way that's destructive to our competitiveness, in a way that's destructive to companies that are

trying to play by the rules. And it can also be true that Binance is operating in a way that is reckless, that will eventually cost their customers money. I think both of those two things can be true. That's going to explode some people's brain because they want to jump immediately to saying, holding up the number four and saying, everybody's just trying to basically make Binance fail. But that's not the case. I don't think most people want Binance to fail. We just want people to stop deluding themselves and stop pretending that it's a great well-run company because it simply is not. Binance to fail. We just want people to stop deluding themselves and stop pretending that it's a great, well-run company, because it simply is not. I got to run. Bye.

Okay, Bruce, also I think it's worth pointing out how significantly and radically different the user experience would be if it was done under securities versus how people are used to trading crypto, plus the fact that if you want retail involved,

then all of the offerings would actually have to be approved offerings. So if we're saying ADA is a security, then that would have to be an approved security if it's available to retail. It would be a radical shift in the way the Coinbase and most people are used to trading crypto.