The Wolf Of All Streets - Fire Gary Gensler! Free Crypto In The US!

Episode Date: June 13, 2023

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Gary Gensler is having a terrible week. There are a number of reasons for this, which we're going to talk about in this video. I'm also going to tell you why it could get a lot worse based on things that are about to happen. Also, we have Binance pushing back yesterday against the SEC. And of course, the moment we've been waiting 18 months

for the Hinman emails and docs dropping today. Now, as always, I have some decent perspective, but what I really want to hit a home run, I bring on a guest who has a hell of a lot more than me. That is John Rice, the editor-in-chief of Blockworks and just one of the best personalities in the space. I can't wait for you guys to hear what he has to say after I make this case against Gary Gensler and hashtag, of course, fire Gary Gensler. You guys don't want to miss this. Let's go. crypto space, where we're seeing some more legitimate pushback against the one and only Gary Gensler. Now, you guys may have seen yesterday that hashtag fire Gary Gensler was

trending on Twitter as a result of Warren Davidson and Tom Emmer putting forth an act that could potentially get Gary fired. Now, I don't think that's actually going to be happening. To be honest with you, I think it's probably political maneuvering, but at least we can take our victory lap while we can. But I've been tweeting fire Gary Gensler almost every morning for the last week. I asked everyone to tweet it and we got it trending.

So I feel like I'm a very important part of this movement. And you guys should remember that when the SEC comes for me and puts me in the gulag. I hope that you guys will write me letters, send me razor blades and candy comes for me and puts me in the gulag. I hope that you guys will write me letters, send me razor blades and candy when they come for me. But as I said, guys, there's a lot

of reasons that Gary's been having a bad week. Number one, of course, which we will talk about, is that the Third Circuit orders the SEC to brief why it shouldn't retain jurisdiction over Coinbase's mandamus petition. We'll get into that. Twitter put a community note on one of Gary's tweets. News broke that he applied to work for Binance in 2019. Woo, bad week. The House has a pending bill to fire him, and the majority whip posts about it with

hashtag fire Gary Gensler, and multiple House committees looking at legislation to regulate crypto, which generally excludes the SEC. And you would think that maybe that would be all the news we have this week because, you know, it's going to be a boring week, but no. As you may remember yesterday, and I wrote it in the newsletter, Tuesday today in general is a huge day. Of course, I just mentioned that SEC is ordered to respond. But we also have the U.S. District Court in D.C. to hold a 2 p.m. hearing on SEC temporary restraining order request

against Binance U.S., and Binance and Binance US has been pushing back. Today is the day. Internal SEC documents and communications regarding Bill Hinman's 2018 speech on Ethereum's decentralization expected to be unsealed in the Ripple case. The irony there is that most people are waiting for these documents to be unsealed at this point because they want to hear if Ethereum is a security and they don't really care about what's happening with Ripple. Of course, we also have a House Financial Service Committee 2 p.m. hearing titled The Future of Digital Assets, providing clarity for the digital asset ecosystem. And the public comment period closing for SEC is proposing changes to exchange definition

under the Exchange Act, potentially impacting decentralized finance applications. Did everybody catch all of that? Did you take notes? Did you take a breath? It is absolutely insane what is happening right now with this news cycle. Before we move on, I obviously have to mention that we are sponsored proudly by OKEx. And more importantly, I'm going to Silverstone for the British Grand Prix and to film a commercial with OKEx that I'm going to be in, and I'm going to get to visit the McLaren headquarters. And it's just worth it for all that. It's going to be absolutely amazing. But let's dive in. First of all, we did see that the

Hinman emails, I just want to mention, were starting to come out. This is Exhibit 210. I asked John Rice about it, who I'm going to bring on in a little while. He said this is actually still out and that by 11 a.m. we should get clarity. We will discuss that more going on. But the first reason that Gary's having a bad week, U.S. court gives SEC one week to respond to Coinbase's rulemaking petition. Now, guys, this is really complicated, right? And at the very basic level, this is where you've seen that Coinbase has asked the SEC for clarity on whether these assets are securities or commodities. And the SEC has basically not given any clarity. Now, a judge said that they have to respond within a week, but they do not have to respond whether these assets are commodities or securities.

We don't even know if that's their job or if that's the job of legislators. What we do know is that the SEC basically has to come back and say if they will or won't do this or will honor this. It's semantics. But either way, we're getting much closer to Gary and the SEC being forced to give some sort of clarity and answer. Number two is that Twitter adds a community note to US SEC Chair Gensler's tweet. You may have seen this. Gensler, Coinbase's alleged failures deprive investors of critical protections, including rule books that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest and routine inspection by the SEC. And then they got hit with the community note. Coinbase has repeatedly attempted to get guidance and include the SEC. Recently, Coinbase has had to sue to attempt to get simple clarity over the issues of that this tweet alleges Coinbase

is guilty of. Yes, I tongue twisted that into oblivion, but you get the idea. Getting corrected by Twitter. And then, of course, maybe the biggest bombshell that made me LOL dying and I'm dead. Binance lawyers allege SEC Chair Gensler offered to serve as advisor to a crypto company in 2019. That crypto company, of course, being Binance, allegedly met with CZ to discuss this, made some claims that potentially he could, you know, help them out because he understood regulation, had some inside connections. Guys, we know how that's things work in Washington. Now, after doing this in 2019, coming after the very companies that he tried to get a job for. I mean, and also back in that day, we have quite a few pieces of evidence that maybe Goldman Gary here had a different opinion as a private citizen and MIT lecturer than he does as a regulator. And the question, listen, people are allowed to have strong opinions loosely held.

So maybe he just changed his mind or maybe he became a politician who's angling for a better job and is doing what he thinks will be politically popular to get that job, which is probably Janet Yellen. I don't think that Gary Gensler

believes a single thing that he's saying right now. I think he's super embarrassed by his relationship with SBF, how they failed to save American citizens from the pain that came with FDX and his relationship with SBF. But now they're overcompensating and pushing back in the other direction. I mean, look at some things that Gary said back in the day. Let's check this out. You'll hear debates about initial coin offerings and what's a security debt back to the beginning of the era. You already know in the US and in many other jurisdictions that three quarters of the market

are not ICOs or not what would be called securities, even in the US, Canada, and Taiwan, the three jurisdictions that follow something similar to the Howey test that we've talked. Here it comes. Listen. Three quarters of the market is non-securities. It's just a commodity, a cash crypto. Non-securities, a commodity, a cash crypto. Oh, it's got to be like out of context did I name those four? They're not securities. Right. But I mean like Algorand, which is one of the ones they've named in every single suit, that has to be a security. I mean, it's terrible. We hate it, right? I mean, obviously. No, it's Algorand. He's a professor over in the computer science and AI lab and touring award winner. He's got a company that has an interesting thing it's like a jury selection it's like picking somebody for the jury uh that's that's picking this short group of 12

nodes that might do something uh and every block has that selection process but then there's another broader group that then can check the work of the jury. So often there's kind of a second automated way because trust isn't there. Trust. Ensuring that there's a quick second check. Did they decide guiltier or innocent correctly, so to speak? Again, I apologize if I'm a little oversimplifying Silvio's brilliant work. I mean, it's Silvio's brilliant work.

He's brilliant. It's a great idea. It's all about trust, guys. All about trust. Gary loved this shit. Let's be real. Until he got a job where he... And he loved it so much that SBF became like his best friend.

Come in and register. the only guy who he allowed to actually come in and try to register was spf and obviously we know that they were working together to come up with sensible regulation for the market that also would have given protection to ftx but let's not get down the road of conspiracy theory because it's not conspiracy theory it it's not conspiracy theory. It's literally transparent. But it gets worse. It gets worse for this guy. Representative Davidson introduces SEC Stabilization Act to remove Chair Gary Gensler. This is where we got the fire, Gary Gensler. It's awesome. And simply proposing this structure, Gary, with the face cross, he goes down and the commissioners

come up. This would give people like Hester Peirce more power. There are a lot of sensible people at the SEC who hate Gary Gensler, who believe differently, who think we should have safe harbor and sensible legislation. But yeah, guys, if you didn't know, of course, because Misha, our producer, is a legend, we said, hey, Misha, we need to talk to Warren Davidson tomorrow on Spaces. And he made that happen. So at 1030 a.m. Eastern Standard Time, Warren Davidson is coming to discuss this on Twitter Spaces. But yeah, guys, it's pretty bad. I mean, this is what Warren Davidson recently had had to say about Gary Gensler before even proposing this act. Your record of failures to protect investors and abuses of power make it clear that we need

to restructure the Securities and Exchange Commission. The failures are many, but let me cite some of the abuses. You average more than two rules proposals a month. You inappropriately provide inappropriately short comment periods. You have unworkable and unlawful esg closure mandates on the market you have essentially a hotel california rule for crypto where you can check in anytime you like but you can never leave you have endless discovery with no resolution and no clarity for the captives uh no i'm just gonna go ahead and remove that it's a lot it's a lot but we know that warren dav Warren Davidson doesn't have much love for him. And finally, the last thing that we discussed there in that list, multiple House committees looking at legislation to regulate crypto, which generally excludes the SEC. So guys, the Hinman docks today could be wildly painful for Gary Gensler. Now, let's be clear,

the Ripple case comes from the John Clayton era at the SEC. But Gary Gensler inherited it, and he certainly doesn't want any precedent that these assets are not securities. Guys, it's time. I'm going to bring on John Rice right now. We're going to discuss all this. He can give us more clarity on what's happening on that last one. John, how are you, man? I'm doing well, Scott. How are you?

Okay, that was a lot, right? Not a little. There's plenty to go on, isn't there? There is. And so listen, that last one, four things to know about crypto legislation as Congress comes back in session this week. Largely, this is hinting at the fact that Congress is not happy that the SEC has all this power, potentially pushing towards the CFTC, which strangely is what Sam sam bakeman freed also seemed to want to do right the industry has long favored the cftc as a regulator over the sec especially with this regime but what's happening here specifically what could happen on this angle

that could reduce the power of the sec and gary gensler? Well, first off, I think the bill that's being advanced potentially here is something that would reduce the SEC's power and basically hand over control of spot trading in the crypto industry to the CFTC. And this is coming from Jared's whip, Tom Emma, along with Warren Davidson. They're calling it the SEC Stabilization Act. And the kind of key point here is, as you outlined in the graphic, it would stop one political party from having an overall majority on the SEC. So there would be three commissioners from one party, or no more than three commissioners,

no more than three commissioners from the second party. And the point there is, as Davidson kind of points out, to reduce the power of a tyrannical chairman. And that's what he describes Gary Gensler as in this potential bill. He talks about the abuses of power. He talks about firing Gary Gensler. And the whole point here, I think, is to kind of what they're saying is that Gensler has politicized this industry, failing to note that crypto is actually a neutral technology and instead imputing motive to people who have political kind of ideals around whether or not people should be allowed to find financial freedom, whether that be through crypto or other means.

Okay, let me take the other side of this, because I think it's important to understand the other side of the argument. Let's say that Gary Gensler is completely rational here, that all of these assets are actually securities, and it's the legislator's fault that he doesn't have clarity. So when the only tool you have is a hammer, everything looks like a nail. Is there an argument here that what Gary Gensler is doing is his mandate, is his job, and it's actually the job of provide a lot of clarity to the exchanges And he's saying, you're listing unregistered securities. But since he's at no point actually gone after these particular token protocols and said, you're a security and made that clear to the exchanges, he's put them in an impossible position. How can you run a crypto exchange without securities if you don't know which ones are and are not securities. So again, I mean, Gensler really, his agenda and the way he's acted is in bad faith.

I think that's the key term, the one that we keep using. It's in bad faith. If you have good faith on both sides, then at least you can come to an agreement if you fundamentally disagree with the other person. But it's sort of this meme of come in and register, and then the laughs and says i'm supposed to hit a button on the website there's no way to register the exchanges can't get clarity so it seems like he's being purposely vague in an effort to never have to answer anything and as long as there is no mandate from congress or someone else he can do that because there's nobody cracking down on him and nobody's stopping him. He basically has unlimited power in his little arena as long as nobody makes a move to stop him, which they can't do without congressional theory. And the big problem here is that what he's doing now is tying up these cases in the courts and they're going to be tied up for years.

You know, if one of these cases goes to the Supreme Court, we're talking five, six, possibly even seven years before there's some kind of clarity. And there's a body of thought. There are people out there who think very strongly that what he's trying to do here is extend regulatory uncertainty for as long as possible. Now, what would your motivation be to do that? He's an ex-Goltman guy. Traditional finance has been slow to respond to this technological breakthrough and the stuff that we have going on in crypto they are they're surprised that they don't understand the buy so you've got lots of kind of reasons why perhaps he would want to slow

down progress but that progress is not going to get slowed down in other countries it's uh there was there was a brief brief yesterday in which it was alleged that essentially his security exchange definition would lead to the de facto expatriation of all DeFi from the United States. And the idea that we're not allowed as Americans to build an alternative financial system in which ordinary people can participate, well, frankly, I think that's bullshit. And I think most people in our industry do too. well frankly i think that's bullshit and i think most people in our industry do too yeah i i think that's somewhat clear here you want to laugh let's watch uh let's take a look at a video together of greatest hits of gensler in front of congress these are these are fun welcome the testimony of gary gensler chair of the securities exchange

commissioner i'm asking a specific question is Is Ether a commodity or a security? And again, it depends on the facts and the law. I'm asking you a very simple question about the second largest digital asset. Congress has said that there's one agency that secures an exchange commission under this. And you won't answer my question and you're the head of that agency.

What about Ethereum? Is Ethereum now a security? We had this. I heard your exchange. They've been in place since 2015. You say in your statements that there's clarity in the market and the rules are clear. Just come on in.

You can't even answer the question. Did you, the SEC, perform any of that cost-benefit analysis internally? So the SEC looked at, I think, over 6,000 public registrations. So that's a yes. I should, statements, I would, over 6,000 public registrations. So that's a yes. Statements. I would like to see those documents provided immediately. Are you willing to do that then? I'm a firm believer in congressional oversight.

I know that I'm not. Sounds like we now have an understanding that you're going to actually send us your analysis. So I know that the- Yes or no. Well, I know that our staffs are working with- We have a minute. Yes or no. And I believe know that our staffs are working with... We have a minute. Yes or no? And I believe in congressional oversight and I need...

Okay. All right. Moving on. You've shortcut a lot of the Administrative Procedures Act. It appears that what you're wanting to do is hurry things along before Congress can have its due oversight. And you as an agency have chosen to stonewall, obfuscate, and not do your job. There's a lack of clarity here in the marketplace. Can you at least agree to that?

I think that the clarity is there. The law is clear, right? Okay. Listen, that's a cute video, right? But Sidney Field, I feel bad for the guy. I literally watched that and i feel a little bad it's like trinsworthy i don't feel bad for the guy but i don't think he's going to resign i think you're going to have to stick with it with fire gary kensler he's not uh he's not going to get fired i mean right this is let's be honest this is i think this is well i mean it would have to eventually get to the through the democratic Senate and through the president. Right. Well, I mean, at the end of the day, you've got to remember that, you know, a liability at the ballot box doesn't last very long on Capitol Hill.

And there are I mean, my sources tell me he is an extremely unpopular man, not just with these Republicans who are trying to oust him, but his chances of getting Janet Yellen's job are zero. He's just he's not he's not liked he's considered to be arrogant he's considered to be overreaching he's considered to be somebody who uh is ambitious beyond his i i don't know about his intellect but but certainly beyond his mandate and and i just don't think people like it um so so yeah whether he gets i mean i can't see him getting the treasury job i can see him eventually an outstep when he becomes enough of a vote loser for the Democrats that they have to jettison him. Listen, I've seen the numbers, 108 million customers on Coinbase in 2022, add in Binance, add in all the other exchanges, people. But I've made the argument that most of those people hate us. I don't think just because you have a Coinbase account that you have a favorable view of crypto and it's your one thing that you're going to vote on.

I think we're a very, very small community, but it only takes very small communities in particular places to swing elections. Well, it's small, loud, and wealthy. That's what it really comes down to. But the problem, of course, goes all the way back to SPF and the fact that even now, if you want to have any kind of political leverage on Capitol Hill as a crypto lobbying firm or association, you have to deal with the legacy of the fact that sbf had become close with numerous politicians uh on both sides of the aisle and that his team was donating to republicans while he was donating to democrats and claiming that he was doing uh dark money uh kind of contributions to republicans as well on both i mean chinese bribing chinese officials the guy knew how to get along in life, didn't he?

Until he didn't. But yeah, I just think that at some point, someone's going to turn around and say, look, this community is loud. This is becoming a politicized issue and we're on the wrong side of it. And, you know, at the end of the day, the really sad thing about all of this is that it shouldn't be political. You know, crypto is a technology. Technology is neutral. People are good or bad. How you use crypto, how you decide to, you know, whether you go out and try and exploit investors the way Gary Gensler is saying some of these people are doing, or whether you're trying to build something for the good of humanity, he's treating it all the same. But at some point, we have to remember this is neutral. And I think the political climate in the US is just so toxic, Dale, that you literally can't even talk about a neutral technology

without being on one or the other side. Whether the Democrats see this as a losing issue or not, that's going to kind of determine whether Gary Gensler still has a job in 18 months. Right. And he won't have a job much past that anyways, because his term will be up. Right. And so I think there's so many ways that Gary loses his job. Right. I mean, it's either, like you said, push back and he effectively just gets fired. He resigned. I think there's definitely the chance that he quietly moves on to another job and it's positioned as a career move that he's chosen to make. You know, the old I left, I break up with you before you break up with me maneuver. But either way, SEC commissioners,

SEC chairpeople generally on average only last two years, not because they get fired, because they're politically ambitious. Maybe they're're liked maybe they go get a job in the private sector i mean clayton literally is like at a massive crypto funds all these guys brian brooks went to binance us uh judge chris john carlo who's cftc is you know it's a digital dollar project and writing books about uh crypto it kind of makes you wonder if maybe okx will give Gary Gensler a job after this. Don't we all wish that CZ had? Yeah, it would have been

we might have a very different player at right now. I think the funniest tweet was I tweeted I tweeted at some point I kind of wish CZ had given Gary Gensler a job, that idea. And Bruce Fenton, you know, who's been on Twitter Spaces with us a lot, my friend,

he retweeted and said instead SBF and FDX did. Yeah, yeah. Unfortunately, that was, yeah. Well, CZ lost as a result of that too. You know, don't piss in your own house. So you and I have talked about that actually. These attacks that we see from

platform to platform seem to always come back to bite the attacker in the ass right we all know at this point basically that sbf and ftx were involved in attacking luna right but crashing luna and their successful short doing so effectively ended up putting a humongous hole in ftx's balance sheet that led to all their problems your kind of point that you're making here loosely, listen, CZ said, listen, we're selling all of our FTT. We don't necessarily trust FTX. Well, now they're under the regulatory spotlight somewhat as a result of all the government blowback against FTX is now hitting everyone. It's like being collateral damage in that explosion. It seems like everybody should say to keep to themselves at this point.

Yeah, I mean, I'm pretty sure a lot of this stuff with Binance was underway by the time all this FTX stuff crumbled. But he absolutely accelerated this process, CZ, by kind of denigrating FTX publicly, by announcing that massive trade of

FTT publicly. And, you know, behind the scenes, as a journalist, you tend to know a little bit more about what's going on sometimes. Well, you know, that Binance, the FTT balance sheet, the FTX balance sheet that was leaked, that was offered to other people. You know, it wasn't just a coin desk. Some of us said, go do your own dirty work to Binance, but it was out there.

That's quite a revelation. And I'm not disparaging to Coindesk, but that's effectively proof that Binance at least had a vested interest in that attack against FTX, SBF. I think it would have come out either way, to be fair. But they're basically sending it to publications and saying, here's a hit piece you need to take down SPF. Do you want it? I don't know what specific document they were talking about, but a member of Binance's team reached out to me and another person at Binance reached out to a member of my team saying, we have dirt on SPF. You need to look into this guy. Do you want us to send you the documents i said no go do your own dirty work it was done later yeah you and i had a lot of conversation about this uh this weekend because

i came to you now that i'm doing this twitter space as i get like these in and i get inundated with rumors and uh you know insiders telling me things so everyone knows then i had to call john i said how do you handle this stuff man i'm not an investigative journalist and basically we decided you just keep your mouth shut yeah unfortunately uh a lot of what you hear in this industry is gossip and rumor and uh you know unless you can corroborate it with a with a reliable source you know generally i mean at blockworks for example we have a very simple rule. We do not run one anonymous source stories.

We don't do it. That's their prerogative. It's their media outlet. I'm not even hating, but that's their thing. The one anonymous source is like most their articles. And listen, they often come out to be true. And to their credit, on that

particular source, Ian Ellison did a fantastic job of converting come out to be true. And to their credit, on that particular source, it was, you know, Ian Allison did a fantastic job of converting that into something of value. But yeah, there's no room in this industry I think for media companies to be turning around and saying, hey, I heard this rumor from somebody so I'm going to write a

headline that says, unverified rumors. CZ is the subject of an Interpol red notice. Well, that was brutal it's a result of a yeah yes there's been so much irresponsible reporting in this industry it's it's somewhat astounding but uh you know i think that's true of all news everywhere now listen i want to pivot to something i didn't ask you about this but this is from john reed stark who used to be at the sec basically guys i'll give you the TLDR. He's saying that DOJ enforcement action is coming against CZ and Binance. Binance and CZ just added a uniquely qualified criminal defense all-star lawyer to their legal team, George Caneos, former chief of the major crimes unit in the U.S. Attorney's Office for the Southern

District of New York and former head of the SEC's New York office and former SEC enforcement co-director. Binance is clearly preparing for criminal prosecution and continuing to hire the best defense attorneys in the world. But I doubt even Iron Man, Captain America and Hulk could get Binance out from their current perilous legal quagmire. Now, John, I've had him on spaces as well. We've had some healthy debates. He is very, very, very critical of the crypto industry and very defensive of the sec as where he used to work but it does seem like uh we are heading in this direction speculation um the end of the day i mean if you're involved in in crypto as the head of an exchange right now i'd be hiring every lawyer that would that would sign up for me because the multiple

investigations from the cTC, the SEC, you've got to start thinking about anytime you may have broken an OFAC rule, anytime you may have engaged with a validator on Ethereum that had once run through tomato cash. I mean, you've got so much at this point. And that's just in the US. And we've got to remember, this is a global phenomenon. The US is not the only place for crypto so uh yeah i'd be hiring lawyers left right and center if i would see i don't think there's a huge amount to be read into that um yeah he's rich and he's rich and he needs to be prepared for anything right i mean the the block uh who did not definitely take a whole shit ton of money from spf definitely not um they have already there's reporting finance

criminal indictment may already be filed under seal. And that's coming from a former SEC chief, which is John Reed Stark. Yeah, exactly. They're reporting speculation from John Reed Stark, which is fine. I mean, it's fair. Fair game, I guess,

in the reporting business to report what somebody else is speculating. But I don't think that adds anything to the conversation. It doesn't prove anything. So listen, I want to talk now about Hinman because right before we went live, I started getting, hey, the Hinman docs are out. You told me that what I have here,

which was this, I'll bring it up, but I showed it at the beginning, this Exhibit 210, none of this is new, right? And largely a lot of this is still redacted so you think that there's likely more coming i mean how are you guys there's a perfect chance to talk about it but how do you sort through this much documentation i mean this is short but with all the exhibits we're talking about thousands and thousands of pages of information right right? Right. I believe there's a total of 350 documents that will eventually be available.

When I joined the show just a little earlier, I think we were up to about 279 of those documents were available on PESA. My team is going through them literally right now, even as we speak. I'm keeping my Slack up here in case I can see anything dropping. But yeah, what you have there, I think,

is still some of the annotated or commented upon uh google documents of the original speech from hinman which uh went went out in june 2018 and some of the uh other members of the sec were commenting and you can see that on the right there they were commenting specifically on his speech and saying can you elaborate on this point i thought you were going to say more clearly that Ethereum was not a security. That does come up in these Google Docs. But I think there's also some emails left to drop. There are, as you say, thousands of pages, I think 2,200 or 2,500 pages of Docs here. So even for my fastest breaking news reporters, Casey and Catherine, this is a hell of a lot of

information to go through to try and figure out where exactly is it that Stuart Oldertory, the chief counsel for Ripple, is so excited about the release of these emails. And Ripple has been excited. They've been excited because they think there's something in here that's going to turn the court case in their favor. I don't want to conjecture as to what that may be but just broad strokes what are the best and worst case scenarios of hinman so like it was a huge thing that the judge even asked to have these released right because a lot of people viewed it as the lynchpin in this entire thing but even if this is the most damning possible documentation of hinman's speeches and beliefs, that doesn't mean all of a sudden XRP gets to not be a security and that every cryptocurrency is a commodity.

And right, I mean, you'd be hyperbolic about the effects of this. There's definitely some caveats here. Excuse me. First off, I think we've got to be careful because when Judge Torres said that we could unseal these documents, they'd be made available to the public, she specifically said they are not related to an agency position, decision, or policy. So it may well be that these are still, and very much so in the way that Hinman presented his speech, he said, these are my views. They do not necessarily represent the views of the SEC. That was never the case. And so even though the SEC has kind of weighed in on that speech, it doesn't necessarily represent an agency position.

So that's probably the worst case scenario for XRP. The best case scenario, I would say, is if there was discussion that XRP, at the time that this speech was written, had achieved what they called sufficient decentralization. That was a term that came up for the first time in the Hinman speech. And it was basically him saying, look, although something may be a security when it's issued, there may be a point at which it has become sufficiently decentralized that it is no longer a security and should be overseen basically by the CFTC when spot traded by individual investors. And I think that's probably the best case for XRP is that it had achieved the same sufficient

decentralization as Ethereum, which is what they were what hinman was talking about in that speech so there's a difference between the offering itself when it launched and what happened afterwards and secondary sales and what eventually ended up being the case for these a lot of people even point to the library credits case library they said listen i mean this is a you know this is a unregistered security offering, but secondary sales are not sales obscurities. That, I think, would be the best case scenario for crypto right now.

I mean, look, I think everybody in the industry knows that there are certainly securities out there. There are lots of tokens where people have awarded themselves. Yeah, I mean, they've developed the protocol which is obviously reliant on the efforts of others. They've made an investment of money. They've satisfied the Howey test. But there are others that very clearly, I think, have decentralization as a core point of their philosophy. And why we're treating decentralized networks in the same way as we treat centralized entities makes no sense whatsoever yeah i mean i said this yesterday most all coins are probably securities and i still think the sec is acting in bad faith and i believe the definition of security should not be based on legislation from world war

two see it's easy to be rational right i actually do think most of these things are probably securities but that actually begs the next question it's's why is that bad? Right? So it's the very terminology and the very way that this has now been positioned that security is the death knell for these things. In a rational market, there should have been a way to become a security. That should have been a good thing because it could be traded everywhere and let's move on with our lives. Well, I think that one of the big differences between the traditional security and crypto is that crypto tokens actually make the network work. You don't need stock in Apple to make Apple work. But within lots of these protocols, the tokens are there to secure the network. They enable some kind of trading of value within that network. They enable smart

contracts to work. They enable smart contracts to work. They enable gas fees to be paid or whatever it may be. And so they're actually an innate part of the technology. It's not like stocks and bonds where you've literally got a piece of paper that says you're entitled to X. And that's pretty much it. Other than that, the company doesn't require these things to operate. Crypto does. Yeah, so they actually have utility.

Crazy. It's just run on layer one without a token. A lot of these things don't need tokens, but you can't run a layer one protocol without a token. You just can't. You literally cannot now. People can go down the rabbit hole of whether proof of stake itself is a security and all these things, but you cannot secure a proof of stake blockchain to

make it work without having a token. That's it. And right, Eric, if that makes it a security, then there definitely is a real issue there with definition and with the Howey test simply needing to catch up with modern day life. I don't know if you saw, I'm sure you did, but this was Garlinghouse yesterday. Someone tweeted at him,

any thoughts ahead of the Hinman doc release? We are all appreciate, we are all appreciate a ripple. Appreciative, I guess. Fighting for this important public disclosure. He said, Wish I could go in depth now, but we've waited this long. 18 plus months. I don't want to overstep. Suffice it to say, that's their lawyer he tagged. And I believe they were

well worth the wait. So clearly the optimism is there. And they know what's in here. They've seen it. Absolutely. We're just waiting to find out what the emails themselves say. I think sometime around the 11 Eastern, I think, is when we're supposed to see the drop of the next batch of documents. So we'll be watching out for that very carefully. Flatsmack here, comment, how hard is it to register a security? Well, A, it's very difficult, but B, in crypto, it's impossible. But John, I'll let you answer. Well, I'm not a lawyer, but I will say that when Gensler says, come in and register, what he's actually talking about is filing in a form called an S1, which is essentially a form

that allows you to become an exchange dealing in securities. So right there, you've got this kind of circular reasoning whereby if you're saying, okay, I want to be an exchange dealing in securities. So right there, you've got this kind of circular reasoning whereby if you're saying, okay, I want to be an exchange that deals in securities, you're acknowledging that the assets in which you deal are securities themselves, which has not been ascertained by law, which has not been prosecuted by the SEC, which has not even been alleged by the SEC until you get to these tangential court cases where they're saying, okay, Coinbase, you're running an unregistered securities exchange. And then Coinbase turns around and says, well, which ones are securities? And it looks like what the SEC did was take a screenshot of the front page of the tradable assets on Coinbase

and say, right, these are all securities. And finally, actually, kind of interestingly, in this last Coinbase lawsuit, for the first time, the SEC actually went into some degree of detail as to why they say these particular assets are securities, and they got it wrong. They misunderstood, for example, how Solana actually works. They misunderstood the idea that burning a transaction fee is not the same as reducing the overall supply and the inflation. Solana is an inflationary asset. They described it as a deflationary asset. The SEC has... Look how hard it is for us. We sit in this industry day in, day out, all the time, surrounded by the tech. We have this process of osmosis by which we absorb everything that's going on and I can't tell you a tenth of the tech that's now involved in

DeFi and in Layer 1 protocols. How the hell is the SEC supposed to understand that without really immersing themselves in that technology? Right, but that's a slight defense of the SEC. This technology has moved so fast and I've said that it's to

be fair like you can't expect them to catch up they don't have the resources they don't have the people and we launch 9 000 tokens a week yeah exactly yeah i'm pretty sure i can teach them how peep works though so there's that yeah so i i mean listen it's it's a quagmire it's a shit show but i think that it's important then to remember that just because we're seeing this shop and all tactic by then doesn't mean they're going to win or they're going to be right i mean and you're like not advice but like in your instinct do you think that this plays out horribly for the industry that maybe we get something in the middle do you think this actually leads to some sort of clarity Are we talking about we get clarity in five years when Coinbase

suit is finished? Yeah. I mean, this was always going to happen at some point. It was going to be some kind of reckoning where the laws that exist today meet an industry that doesn't really fit the laws that exist today. And at that point, action needs to be taken. The question is, who takes the action? Gary Gensler question is who takes the action gary gensler has decided to take the action on himself and he is a regulator an unelected bureaucrat who has basically kind of given himself an outsized mandate to chase down and enforce regulation against what he describes as securities but this really does and it go right back to the point you made at the beginning of the show, Scott. This is the job of Congress to make sure that laws that support and instead what we're doing is as as was alleged yesterday expatriating sending offshore our best people our best ideas to go work at this point look i'm a citizen of the uk as well i'm a dual

citizen and um i love the idea that you know london is being welcoming to a16z and all of a sudden everybody's over there saying hey look let's go work in london well you know in the worst place i don't get it sometimes i mean yeah the rain it gets to your nerves but but and they have a shitty football team in arsenal sorry if anything's you know but um but but i wouldn't want to go back to london i don't want to go back to london and i want to come to america because america is the country where there's the greatest opportunity. And it's being shot down by Gary Gensler. And all I want to see is Congress step up.

I want to see enact laws that reflect what's really going on in the world in terms of new technological innovations. I want them to say, here are the rules, follow them. And for Gary Gensler to listen. Perfect, man. I don't want to take up any more your time by the way for everyone we've been trying to get john on twitter spaces but somehow he got shadow banned and we literally can't search him to invite him and when he tries to request we

can't get him on the same thing was happening with jeremy kaufman do you know if you're still shadow banned because if not i would love for you to join today i don't i don't think i am but you know if gary's listening to this and probably having a word in Elon's ear and saying, I can't, but that's something. But if you can join later, I would love to have you. I'm going to have a couple more things to do here, but I'll reconvene with you after and see if we can get you up there. Sounds good, Scott. Thanks, Andy.

Thank you so much, John, for your perspective. Absolutely loved it. All right. See you. So, guys, there's just one more or two more little things that I want to discuss today because I caused quite a stir on the Twitter machine yesterday with a chart. This is the chart. I didn't actually post the chart, but we talked about it. This is Bitcoin dominance.

Okay. I've talked about it a lot. I even put it in the newsletter yesterday saying, hey, if we break above the 49%, this range we've been in for two years, we want to see it come down. Because if not, Bitcoin dominance would go to 57%. And that can mean it's really bad for altcoins. And then you guys probably saw the conversation that I had yesterday with Mike and Dave on Macro Monday. Got me really thinking about Bitcoin dominance.

And so then now I got to find the tweet and I got to find it. But basically, I tweeted yesterday, hey, I realized Bitcoin dominance is stupid. Caused a lot of controversy. There's people who are very passionate about Bitcoin dominance. But I'm going to tell you the reasons that I'm no longer going to be using it. First of all, in this very stream, a few months ago, I had Korean Jew crypto. You guys might remember. And he said, Bitcoin dominance is stupid unless you take out stable coins, right? So this is

Bitcoin dominance. Now we got to find the tweet because it has all the numbers. But let me, I'll make the case for you really quick on why this matters. First of all, in previous cycles, when we looked at Bitcoin dominance, and you have to be comparing apples to apples. When we looked at Bitcoin dominance in the past, we were in a market that either did not have stable coins in one of those cycles or stable coins were a couple billion dollars in the next cycle. And you have to remember back then, the reason that Bitcoin would dominate so much is because people would FOMO out of their altcoins and into Bitcoin. The only way to get out of the market was to sell your altcoins into Bitcoin, then Bitcoin into dollars if you chose, but a lot of people would stop at Bitcoin. So here, these are the metrics right now on the market, which we were talking about yesterday. Total market cap is about 1.05 trillion. Bitcoin and ETH, I don't really consider ETH an altcoin. I got a lot. Bitcoin maxis freaked the fuck out on me and told me, Ethereum, altcoin now, okay. Non-Ethereum altcoins, but 710 billion.

Stablecoins are 126 billion. Everything else is 214 billion. That's 20% of the entire market. Altcoins not named Ethereum are only 20% of the entire market. Very, very small, nearly irrelevant. Like if they lose another 10% of market share, it wouldn't even matter dramatically. But when you consider the fact that we now have stable coins, even if you take out stable coins from that dominance and you do Bitcoin dominance minus stable coins,

it's a bit disingenuous because that's like pretending stable coins aren't the main off-ramp now and that Bitcoin is, and that's really not the case. And even more importantly, the thing I've told you the most times when talking about Bitcoin dominance, this is not a tradable asset. We're drawing lines of resistance and support we're putting rsi on here and indicators there's no traitors what causes support and resistance yes is a great visualization it helps it makes some sense but what causes support and resistance people putting orders and humans making decisions we don't have that that with Bitcoin dominance. So to really chart it,

you already have to understand is a bit of a meme. So I was discussing this on Twitter. People were pointing out, well, it finally broke above 49% this weekend. It broke key resistance when Matic and all of these dumped. My point was there, that's cool. Maybe it's coincidental. Maybe it's impactful. But Bitcoin dominance reacted to the dump of those altcoins. It didn't predict them. It's a lagging indicator. That's a result of what happens in the market. It's not telling you what is going to happen in the market. So for me, I'm just not so into it right now. Right now. More, most importantly, if you are into it and it works for you and it fits your system in some way, shape or form, have at it. My judgment of whether it's important or not should have nothing to do with you. If you have a way to use it and it's

important to you, have at it. Great. Right. The only other chart I wanted to look at here was XRP, which by the way right into resistance now terrible looking daily candle for now clearly uh people buying into the hinman hype uh now already selling that off but it is one of the clearer charts we have you know you have this very clear break of resistance retest of that and the 50ma and this pump but i wouldn't touch this under that 59 cents if it does break above that it should be looking at 91 cents. I think a lot of this is going to be dependent on what happens. True survive. It's telling you that Bitcoin is holding up better than alts. That's right, which we know because you can see the price action. And that's my point. So it's not that

impactful for me because it seems kind of obvious. Guys, that's all I've got for you today. Like I said, I'm going over to Twitter spaces momentarily. My schedule is a bit intense. But we have Warren Davidson. We have the hashtag fire Gary Gensler congressman coming to discuss the SEC Stabilization Act, why he proposed it, why he thinks Gary needs to go. And yeah, you just got to do it.

It's on Mario Noffel's account, but I have tweeted the link on my Twitter. Guys, I will be back of course tomorrow. I don't know if you noticed, but we are kind of trying to change the format here a bit.

Each day I really want to focus in on one really impactful thing like Gary Gensler, make a much more compelling and deep case about it, and then review a bit more of the news and talk to a guest about it. For me, that seems to be the best way. But we have a lot of plans and ideas to really get YouTube popping again, even in the midst of this bear market. So I appreciate that you guys always stick with me. Absolutely amazing community. You guys are the best and I will see you back here again

tomorrow. Peace.