The Wolf Of All Streets - Major Ripple News! Altcoin Season? | Crypto Town Hall With Bruce Fenton, Simon Dixon, Alex Tapscott, Dan Held, Thomas Braziel, Joe Carlasare & Others

Episode Date: July 13, 2023

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yo hey hey i hate when that happens i hate it and i like it what what specifically you prepare for a show you prepare the agenda you do everything yeah and then and then shit happens yeah uh yeah i guess that's the benefit of uh showing up every day no matter this is this is uh i don't need to be cheesy but this is simon's time to to shine really uh this is the big i told you so moment for simon who we've invited um all right we're waiting for the panel to join but have you gone through the indictment yet i i haven't because i was on youtube when it happened so i'm i'm counting on our team to hit us with the key points as it happens but it's a bad day bad day for mushinsky yeah so looking good i'll summarize it in a bad day bad day for mishinsky yeah it's not looking good i'll

summarize it in a bit the team has prepped everything so i'm gonna go through that in a bit just for everyone in the audience uh mishinsky the ceo of celsius has been arrested and he's been charged by the let's listen to this scott he's been charged by the cftc ftTC, SEC, and the DOJ. So now we're talking about how... In the same... Oh, yeah, and arrested this morning as well. We were talking... Remember when that happened with Binance?

We had... No, sorry, the SEC and I think it was the CFTC in the same day with Binance and Coinbase. Am I right? It was the SEC on Monday and then with Binance and the SEC on Tuesday with Coinbase. And CFTC had already done Binance, I think, weeks before. I can't remember specifically. Yeah, but just shows that for regulators, for these three-letter agencies, four-letter agencies to all act at the same time is not that uncommon.

I've never seen all. No, they're clearly coordinated listen i gotta tell you man for for me like as as a podcast host believe i started in 2020 it's always kind of a weird sensation when all these things happen because i i mean i think everyone knows i bought into c5 like hook line and sinker Voyager was my first sponsor in 2019. Celsius was a sponsor only for like a couple months. In 2020, I had Mashinsky, I had SBF, I had Steve Ehrlich. I think everyone did. Those were the interviews you were chasing. But it's always so weird because you have this sort of this feeling of how wrong and stupid you were back in the day when these things happened.

How was Mashinsky? I've never met him and i didn't do interviews back then listen he was extremely engaging he was exactly what you would expect for someone who was able to to pull this off i mean i thought you know he was the he had his story the creator of voice over ip and all this like you know and made all this money in the past and successful and if you know you would have had to done a i, extremely deep dive and very few people were talking about how some of that might have been a bit of a snake oil, but he was easily able to explain at the beginning, certainly where the yield was coming from. And listen, to a degree, I think a lot of these companies, when they were smaller and when the yields were a little smaller and it was easier to find before they had to go further out the risk curve probably weren't as dishonest as they were. Like Steve Ehrlich, Voyager, I started

just trading. They didn't have a yield product when they were my sponsor. That's what people forget. It was literally just a trading platform, but I mean, I lost millions on Voyager. I think everybody knows that at this point because I believed in it. And I think that it got to the point where if you had 9% yield and you were offering them and now you have millions of customers and that yield is gone, you either have to reduce the yield and lose your customers, which is what they obviously should have done, or they got egotistical and went down the risk curve and blew it. But I can't speak to Voyager specifically if there was criminal activity there.

I think they just gave a very stupid loan. But it seems like Mashinsky was doing things much more nefarious i mean the only good news i have after interviewing him in a positive light in those early years was that the last time i'd had him on was on a panel with i think caitlin long and mike alfred maybe bill bar high he just got absolutely annihilated like destroyed they tore him apart they tore his business smart model apart but yeah i mean listen like me like many people in this space i really believed like it was safe yield stupid you know and so it's weird when you see these things happen let me break down for the audience and anyone who's uh who who know who's gone through the indictments um feel free to unmute and kind of fill the gaps because it is it is happening i think the doj indictment got unsealed um less than half an hour ago like 10 15 minutes ago

so i'm gonna read out what i have so far and i'll be updating this is breaking now so i'll be updating as we go but to kind of summarize everything andrew who's a regular on the show ap abacus he said the following per doj indictment, legal minds expect Alex Mashinsky to face a lengthy prison sentence. Quote, these DOJ charges and the scale of capital involved means he doesn't have a meaningful path to a plea. Looking at 15 to 20 years. Securities fraud, wire fraud, conspiracy, trifecta of white collar crime. That was by Andrew. So I've got the SEC indictment here.

And again, I'm going to open up for the panel. Feel free to put your hand up Andrew. So I've got the SEC indictment here. And again, I'm going to open up for the panel. Feel free to put your hand up, Thomas. I'm going to go to you next. It's going to give us an overview and maybe go through the basics for anyone in the audience that hasn't been following the Celsius story. But let me read out a quick summary here of the SEC's indictment. Actually, I've got a one-liner. So SEC's Celsius complaint is quite detailed and reflects the key themes of the Ponzi. Using customer funds to trade and bid Celsius, running internal ops like a cult,

lying about personal Celsius buys while selling, severe mismanagement of uncollateralized loan book. And I'll go through the indictments and the complaint, the SEC's complaint in a bit. But Thomas, you've probably been following it closer than anyone else. Do you want to give us an overview of what we know so far? How serious is this? How does it compare to your expectations? Maybe starting with the basics. Sure, sure. Thanks for having me on, guys. Great to be here. No mean i think i think you know in my mind this was something that was likely coming the question was like just i guess the phrase the

veracity of the complaint like how aggressive it was going to be i mean i got sent this like an hour ago i had only on page 11 of 46 but uh which one are you talking about the the sec one criminal okay yeah i'm looking at the criminal complaint here in the southern district uh the Which one? Are you talking about the SEC one? Criminal. Okay. Yeah, I'm looking at the criminal complaint here in the Southern District. The sealed indictment this morning. I guess I can post this on Twitter if it's not posted. It's posted, right? Yes.

Yeah, it's public. If you want to pin it above, you could click on the share button and pin it at the top. But you've only been through 11 pages. How's it looking so far? Yeah, looking pretty damning. I mean, I suppose the biggest issue with the glaring thing, it's like kind of like with the trader that worked at Coinbase. It's like, are these securities or not?

And if they are securities, you know, it has huge implications for people's behavior. You know, manipulating the price of security is a serious offense versus, you know, sorry, I guess the people claiming tokens aren't security. So, this is pretty interesting. Have you ever looked at anything?

I just want to go back, sorry, so anyone could take this, but I'm going to start with you, Thomas. What did Celsius do wrong, from what we know so far you're in the complaint or just uh you want to go back to the examiner's report and then move forward to these complaints this morning both okay so you know effectively you're running a shadow bank where you know and when you run a bank, you have like a net interest margin, right? So you've got deposits and then you've got, which cost you money, right? They cost you a few percent a year if you're giving that as like CDs or whatever, and then you're making loans.

And that spread is your profit, basically. Well, profit before your cost. And they call that net interest margin. I mean, and what the examiner thought was very interesting that she did was she sort of showed that throughout the entire history of the company, it had a net interest margin that was negative. Now, some people that work in venture capital land or fintech might say, OK, that's fine. You see this all the time with companies. But, you know, running a negative net interest margin looks a lot like a Ponzi scheme. And so, you know, I think that's what she was sort of getting at. And then if you push forward to these complaints,

what the glaring issues are, just all the misrepresentation to investors. And then all of the basically cashing out using the company's token as a cash out vehicle. I'm going to read out the complaint, the SEC complaint, Thomas, just for the audience and for the panel as well.. I'm going to read out the complaint, the SEC complaint, Thomas, just for the audience and for the panel as well. And I'll go to Alex and Bruce.

So I'll read out the quick summary of five points. Defendants, let me show you everyone who got a hot mic. Defendants Celsius and Alexander Mashinsky raised billions of dollars from investors from March 2018 to June 2022 through fraudulent and unregistered offers and sale of crypto asset securities. They misled investors with false promises of high returns and a secure investment through the Earn Interest Program. Defenders manipulated the price of their own crypto asset security, the Celsius token. Investors were unable to withdraw billions of dollars from Celsius platform when the scheme collapsed in June 2022. Celsius filed for bankruptcy a month later, stating liabilities exceeding assets by $1.2 billion. Walked to a bunch of lawyers. Going to have a few of them join the show. He said he's facing 15 to 20 year jail sentence.

And then you look at the DOJ indictment. There's two interesting segments here that I took out, the team took out. The first one is the following. I'm going to read it out directly from the indictment. On or about September 8th, 2019, Mishinsky stated on his Twitter account, quote, I did not sell any Celsius tokens. I buy more every week. Look at that balance of 77 million Celsius

and remember what we told you when it is at $10 a token. What we told you when it is at $10 a token. Yes, in reality, Mashinsky conducted no purchases of sell during the period immediately preceding and after making this public statement. To the contrary,

Mashinsky was selling sell during this period. So that's the first one. And then the second one, there's communication between him and the chief revenue officer, which I'll read out in a bit. In 2019, Mashinsky shorted Bitcoin on behalf of Celsius and using Celsius investor funds. As senior executives at Celsius ultimately unwound the position, which resulted in a $15 million loss for the company. It also, in part, led to Celsius to create a recovery committee, which contemplated liquidating or selling Celsius to cover the loss. Celsius's financial condition only stabilized after a $20 million capital raise in August 2020. So it's been going on for a while. Bruce, Alex, we'd love to get your thoughts. Yeah, I don't have too much to add on this. I didn't follow the whole Celsius thing, other than just the basics like most people. I think that, I mean, a couple of thoughts that I have, one, it's just so

fatiguing to have these continued issues in our space. I guess it's just part of the thing. It's like the Wild West gold rush or something like that. It's inevitable. And believing in free markets, I believe that kind of buyer beware and that if anything, I'd like to have less regulation. And I'm not convinced that regulation helped that much, you know, even in cases like this where they bring regulatory acts. But, you know, clearly fraud and, you know, these these kind of things, allegations like this are very, very, very serious. You know, wire wire fraud. You can go to jail for a long time. One of the other things that strikes me, it's just I can't believe the amateur hour kind of low-level grifts that you see in this space still, even with billion-dollar projects. I mean, to lie in writing is just basic.

I learned that when I was 19, when I did my first training course at Morgan Stanley, it's like, you never, ever, ever, ever lie. Just don't lie. Like so almost everybody who gets in trouble, gets in trouble for like, just don't lie. Like there's so many ways to make money in an honest way. I mean, if you lie, especially if you lie in writing, you're going to get caught. And it's like, you know, your case is kind of like, like really in trouble, in trouble. If you, if you've lied, you know, something like this is not sympathetic at all to a, to a jury. You know, these items, when they put them in the, in the, you know, in that complaint, I saw the same thing in the, in the complaint there where it talks about, you know, some, something like that. They wouldn't put that in the complaint if they didn't

have solid evidence of, you know, that, that he's saying one thing and doing a different thing. It's just it's just really immature hour. And, you know, especially somebody like this, you know, he's an experienced person who's been in business. You know, I still don't have sympathy if a younger person who has no clue does it. You know, like I said, you know, I learned these things when I was 19. You know, some people don't you know, you don't learn until you have like your first professional job. I recommend that people, you know, I actually think it don't learn until you have your first professional job. I recommend that people... I actually think it's a good idea to have your first professional job at a place like Morgan Stanley or Microsoft or BlackRock or Fidelity, because you do learn at those kind of firms. You just don't do this kind of lying thing. So it's a real shame.

Yeah. I agree. Great. Yeah. Bruce, and I want to go to Jason Stone here, because obviously you were very much an insider in what was happening at Celsius. I mean, I guess you can give some context about key fight. You've had lawsuits back and then they acquired my company, and I, you know, widely the wide blanket statement is, you know, this was a whole different level than FTX. And I know it's taken a long time for people to see, uh, the DOJ and, you know, the CFTC SEC come after Alex, but, um, I think that that was because they wanted to build an ironclad case. What he did was on such a different level, and there's constant internal communications going back and forth between Alex and other executives, or Alex overruling executives, telling people internally, directing employees to do specific things,

going to the things that people have heard about him on AMAs, pumping the sell token while saying, you know, we're buying and then impersonally selling. I think there's just such a different level of not just incompetency, but criminality that even what we saw from SBF. You don't have situations where SBF was propping up FTT and then selling his personal stakes in FTT. Jason, let me read out a quote here from, I think, the DOJ indictment. So this is a Mashinsky's communication with the chief revenue officer. So that's the chief revenue officer first. The issue is that people are selling and no one is buying except for us. The value was fake and was based on us spending millions just to keep it where it is.

Machinsky replies, is Dogecoin's value real? How about the $5 billion for Solana? Everyone knows what these tokens are and want to buy them because they think price is going up. So as part of the internal communication, Jason, you're referring to it. And question to you, Jason, one more before we go to Dave and Thomas is, how does this compare to what you guys expected? Because I know you've been very vocal about this since the FTX days. agencies leading up to this, you know, going back 18 months. And I think that the reason that it took so long to build the case is because they wanted it to be so ironclad. Alex is a very good speaker. He's a very good manipulator. And he often has, you know, an answer for everything or

answer of his own kind. So I think that they really wanted to have the ironclad evidence and an answer for all his bullshit. We have Joe on stage. I'm going to go to you in a bit right after we go to Dave and Dan. It's a pleasure to have you. Just noticed you came up and I hope you had time to go through at least part

of the indictment. But yeah, Scott, I was going to go to Dan and then Dave, Scott, to get going to go to Dan and then Dave, Scott, to get their thoughts on this. Yeah, thanks for having me here. Going back to Bruce's point a few minutes ago where he talked about it's sort of shocking to see this sort of level of scam to happen in this last cycle. Bruce and I have been around a long time and I've seen every single flavor of scammer you could possibly imagine. And I also shared Bruce's sentiment that I thought that in this newest wave in the 2021 cycle, we'd see a decrease in scamming because of the regulatory landscape, the visibility, the want to self-police the industry that we would hold ourselves to a different standard and we just didn't see that happen which I think that was like the biggest shock for me as kind of an old-timer in the space and then also you know that the degree in which Celsius was

kind of this open secret that it was kind of fraudulent and kind of a scam was was really interesting as well where a lot of us knew Celsius was scammy and fraudulent. And internal talk on the street in terms of like, internal talk between people who worked at OTC desks and different trading firms and at exchanges, we all knew that Celsius was garbage. Hey, Dan, can you give a timeline for when that was? I'm sorry to interrupt, but at what point did you see that being the sentiment? And we had a lot of people that were very vocal, you know, Mike Dudas, a bunch of others. I mean, probably half the people on the stage or most of the people on the stage raised our hands and said, you know, I'm just not a fan of Celsius. I wouldn't do business with Celsius.

But despite that, it was kind of weird to see this open secret take so long to unfold. It almost took, you know, a couple of years after, about a year and a half after, you know, us all kind of feeling like, okay, this guy Mashinsky won. And what he's saying, what he's claiming doesn't make any sense. The on-chain data, what I'm hearing about the business, none of this really adds up.

So for me, it's always surprising to see how long it takes to see this unfold. I'm not sure if anyone else... Yeah, like internally, Dan, before we go to Dave, let me read out, Travis Kling just tweeted out a segment from the indictment. And I'll read out number 11. By 2022, Celsius business was unsustainable and it became clear internally that the company would fail. One employee called Celsius a, quote, sinking ship, while another wrote that, quote, there is no hope, there is no plan, and that Celsius's business model is fundamentally broken. On May 21st, 2022, a Celsius executive candidly acknowledged in an internal message,

quote, we don't have any profitable services. And it continues, a report that circulated among Celsius's executives, including Mashinsky, reached the same conclusion. The report began, Celsius has been consistently losing money and is facing an erosion in the capital position as well as liquidity constraints. The current business model is not financially sustainable. In fact, Celsius has incurred losses of more than $800 million in 2021 and an additional $165 million during the first quarter of 2022. Dave, similar to what Dan said, the alarm bells were there. How come they survived that long? Well, I can't answer how they survived so long. And I have to make a very important disclaimer. CS was a client of CoinRoute. And interestingly, the trading they were doing through us was profitable for them. So we didn't really get a chance to see a whole lot.

But I wanted to go back to make two points, one about Bruce and one about Jason. By the way, Jason, thank you for coming up here. It obviously takes a fair amount to be publicly talking about this stuff. The Bruce point is the nuance. Well, sorry, I'm on an elliptical train. So sorry about the hampering. I'm not that excited about this. The nuance here is the laws that enlist against fraud work.

And the DOJ indictment is extremely important. And frankly, when the perpetrators are brought out on the perp walk, in every one of these cases, it's going to be good for the market because it's going to signal deterrence against people doing the same thing. And the argument that we need new laws to prosecute fraud is frankly bullshit. The FTC complaint is a civil complaint, and people need to understand that difference. And they're doing it in order to try to get jurisdiction. And the question is, is the jurisdiction necessary? It's a very important one, and it's one that I can't remember who made it.

I think it was John Deaton this morning who basically said, why is the SEC not going after these people before they hurt people? That's their job civilly. Instead, they pile on after the fact and focus on technical violations. That's a really important point. Where I was giving the thumbs down to Jason is, honestly, this is exactly like FTX. And FTX might have even been on a bigger scale.

I mean, Sam effectively used customer funds to bribe, oh, excuse me, donate to politicians and to put his name and moniker on steamiings and to perpetuate the myth that FTX was so big that it was trustworthy, I failed to see how anyone could say that anything is bigger or more egregious than that. Right. And I think that's really important.

He was actually doing things with his time other than selling against what he was putting out there publicly in the market that's all that i meant you know uh he was he was actually doing something as opposed to just being out there saying oh ftx is this huge thing just so he can you know sell and personally cash out uh or at least that all night i don't know there are plenty of people there are people at ftx who would disagree with that too uh in terms of what he was spending his time on and how he was doing it and the whole you know the whole use of ftt and serum tokens to prop up alameda they're more or less yeah yeah they're both i know you and i you and i've known each other a long time and we both

agree they're both bad dudes, definitely. So guys, I want to, first, there's a bit of positive breaking news. The Bitcoin ETF just passed, went live in Europe, not in the US. So that happened as well today, but obviously we're all talking about Celsius. So I want to go to Thomas, and then we'll go to Joe, just to kind of break down what we know so far. But Thomas, we'd love to get your initial thoughts on what you've heard so far before I ask you a couple of questions. Yeah, sure.

Guys, it's kind of cool to be up here with everybody with all the different perspectives, industry people. I mean, my background as a distressed and sort of bankruptcy guy is it's interesting to see this stuff because they're characterizing everything as security and has big implications for some of the cases whether reorganization plans are going to work uh and like you know two big things just from listening to what people are talking about and also some of the you know seeing the filings and thinking further about it two things one short swing profits um that's like a rule people can look it up these are like existing fraud rules when an insider basically profits by know, sort of selling a company stock, I think they would probably apply. And so any forfeiture that likely Mishinsky signs with the SEC or whatever as part of a criminal or civil forfeiture action,

like the creditors would have dibs on that under short-term profit rules, I think. And then another implication is very likely to be what's called 546E, which is protection under the bankruptcy code for basically these 90-day withdrawals. People call them clawbacks in the public domain, but under the bankruptcy code, they're called preferences. So if everything's a security and the SEC indictments are coming out, they're civil or criminal, these have big implications for how the court's going to interpret whether 5.6E applies to

these quote-unquote clawbacks or preferences for retail investors, which has huge implications for the crypto ecosystem. So I think it's a good thing that they apply. I think they should, but I've got a lot of heat for guests. Yeah, Mario. Yeah, you want to hear

a funny story? Tom, what's up, you want to hear a funny story? Tom, what's up, man? Hey, how are you? Yeah, good, good. Is that I met Tom, I think it was last November, through mutual friends, because Tom buys claims for all of these distressed bankruptcy cases. And we were discussing that day, me selling my Voyager claim. I think, Tom, you guys were buying them for 60, 65 cents or something.

Yeah, we were a little. Yeah. And as we were discussing. Oh, shit. That's the day that you guys were chatting. And the claim. Yeah. Yes.

And I believe this is true. And then the claims went down like 50 percent. The option was no longer on the table. And then I took my is true. And then the claims went down like 50%. The option was no longer on the table. And then I took my 35%. It's like everyone, the FTX collapse reminds me of 9-11. Everyone knows what they were doing that day. I was doing a space and then it started collapsing while I'm on the space. Let me, before we continue, Scott, let me just give a,

and by the way, Scott, I think we should touch on the Bitcoin ETF, the first spot ETF in Europe that came out today. And I want to get John Reed's thoughts on how major this is, if he should be excited at all. But let me go through to our sponsor. Do you know about World Mobile, Scott? We've had them before.

Of course, you're friends with me. Yeah, of course, you're friends with the founder. Like I told you, I've told you the deeply emotional story that I've had with Mickey, you know, we've met on a couch in Dubai. Yeah, yeah. I'll let you help me out with a shout out because you probably know it better than I.

But I was speaking to Mickey today, earlier today. Sick project. So the way to kind of simplify for the audience, they're democratizing or decentralizing wireless network operators. So essentially, it's like, did you notice 10% of Americans don't have internet, don't have, sorry, network connection, 10%. And I asked Mickey to confirm it to me twice. So essentially, what Mickey does with World Mobile is, you know, their goal is to connect everyone everywhere while advocating for economic freedom and dignity, just reading that from their website.

But they use the blockchain, you know, they've got a proper use case for their blockchain. And, you know, this is one of my favorite sponsors so far. Their metrics are pretty impressive. We'll ask them a few questions in a bit. Anything to add on World Mobile, Scott? Yeah, I just, I love the ethos. I love the use case, but the use case makes sense. The use case makes sense.

I don't know about Mickey. I love with Mickey like you. i know but i you hear all these stories obviously and we're going to go back to the other stuff and this is not intended but we hear all these stories about like crypto which seem like a solution in search of a problem but when you hear their origin story which i tell literally all the time about uh the fishing village in zanzibar and how much just having like internet and from world mobile you know transitioned and transformed the village it's just a really incredible story i might make him tell it again for like the 17th time today we'll see yeah we'll talk about i will

bring up mickey um on stage in a bit but let me go to joe and uh john joe your initial thoughts on what we've seen so far and we'll go'll go to Ram afterwards. Yeah, thanks, Mario, and it's a pleasure to be up here with everyone. So my initial thoughts are this is entirely expected. We knew this was coming. In fact, I remember talking, I think, with Scott, one of the previous rooms, and sort of hinting at some of these. And I will tell you right now, I'll go on record saying that this is, again, the first in a series with many additional claims, both SEC and DOJ, that are coming in the next several months. So don't be alarmed when you get another shooter drop in a couple weeks here. I think it's coming.

But overall, I mean, the complaint is a fascinating read. I'm about 30 pages through the 46 of it. What struck me as kind of interesting is all these allegations of how Shinsky got so involved with the trading desk. I mean, there's this allegation here on page 18, where it says in January of 2022, when they were hemorrhaging cash from Shinsky actually took control of directional trading desk using customer accounts to place trades into the Bitcoin market. And they said he was doing this back in 2019. In 2019, he took a huge short position early. Spring of 2019, took a huge short position on Bitcoin. Obviously, that didn't work out very

well for him in the spring of 2019 when we rallied it through most of the middle of the year there. But overall, the Cahill thread, the takeaway of this is how instrumental in both FTX and in uh in Mashinsky's case uh with Celsius the their their native tokens were okay if you read this complaint which you'll see throughout the entire document is references the the seal the cel tokens and how that really allowed to continue and perpetrate this fraud they intervened into the spot market. They promoted the token. They created artificial, you know, there's references to sort of forums,

other groups to promote the token. And they pumped it to get people and get retail interested. And that, for the limited time they were profitable, the only reason they were was because of the CEO. So, you know, fraud is not new, right? Fraud goes back to the beginning of mankind. And I think that the interesting part of it now is that what we're seeing is that fraud being perpetrated by printing your own money with these tokens is making it far easier for these companies to survive, at least in a bull market, until there's a liquidity crunch.

So that's my initial thoughts. But obviously the complaint is very thorough and I'm still going through it. Yeah, I'm trying to find some. John, I'm going to give you the mic. If anyone has the tweet that goes through the communication between Mashinsky and the chief revenue officer, please do send it through. John, we'd like to get your thoughts on what Joe just said.

Sure. As usual, Joe just said. Sure. As usual, Joe's analysis is excellent. Spot on. When you have these cases of egregious fraud, they can't be brought overnight. And when you look at these complaints and the level of detail and the kind of exculpatory evidence that's presented, inculpatory evidence that's presented, whether it be in texts, whether it be in emails, whether it be in conversations. I think the fact that the SEC waited so long in Celsius is now explained and understood today. I mean, I think I wrote an

article in 2019 or 2020 when a bunch of states had sued Celsius and BlockFi, and I didn't understand why the SEC wasn't doing the same thing, because you could almost mirror those state complaints and file them federally. The laws were very similar. But as I think most people predicted, and I know Joe has said this, is that when there's a criminal investigation, sometimes the SEC will just stand down and wait until they complete that. And this is an example of that where, you know, you have these joint cases. I have not read anything about a specific about the DOJ other than the report. My guess is if the SEC, since the SEC has already filed and made it public, although they, they did the same thing in Binance in this situation, maybe there'll be a joint press

conference later today where everybody will talk about everything. There's a very large crypto unit in DOJ and they have not been bringing a lot of cases. So they're going to start. And I think this is just the beginning of that waterfall. And when it comes to obviously, I've said this lots of times in these Twitter spaces that a criminal case against binance it seems inevitable to me just like the one against celsius seems inevitable i mean all you have to do is read but would you say that but john would you say they're incomparable no i think i think there's different types of fraud because all of these people are running their businesses without any level of transparency or any level of regulation. There's no audit, no inspection, no licensing, examinations.

John, sorry to interrupt. I just want to ask a question. Maybe Joe has the color here. You made the point, obviously, that when there's a DOJ investigation, obviously, the SEC can step aside. This has basically been a year since Celsius collapsed, and we're seeing now this action come against Mashinsky. Should that be even more notable how fast SBF was put in cuffs and taken away? Because I would have expected it was going to take a very long time with Sam Bankman freed. Why does it take a year with something like Celsius, but SBF was in cuffs within months? Well, I think the biggest difference with SBF was the number of informants they had early on. So they had some really, really great information from excellent informants, top executives. They made deals with these people. These people sang incredibly loudly and for days and days and days. So that's always a big deal.

You can't really make generalizations. I mean, most of the cases that I brought during my 20 years at the enforcement division had a joint criminal component to them, especially the ones involving when I was chief for the 11 years I was chief. And you never could predict anything. Sometimes the criminal folks would call you up and say, by the way, we're charging tomorrow. We're arresting tonight. We just got word from one of our informants or from a wire or maybe through their grand jury. You don't know when you're the SEC because the grand jury information is secret. The wire that someone might be wearing might be a secret. The only thing you sometimes get is when they do a search warrant, they'll send the stuff over to the SEC and have the SEC look at that. So you really don't know. You get the call, they say, we're arresting tomorrow because we think they're going to leave the country. Oh, geez. Okay. We've got to get our- Judge, my question is, why didn't he leave the country? That's that's what I'm curious. I've been waiting to ask us.

You know, the arrogance is unbelievable. You know, I think all these guys should leave the country and stay out of it because they're all they've all got to be investigated. Maybe maybe maybe he wasn't able to. Maybe there were restrictions in place to not allow him to leave the country. Simon's giving us 100%. Yeah, who knows? I mean, who knows? Maybe. You know, I mean, you never can tell. You never know, again, what's going to trigger the arrest. And as the SEC brings, remember, the SEC, you know, in some sense, Cameron Winklevoss is right, that the SEC essentially issues parking tickets unless they're doing a TRO. They issue a penalty that everybody's willing to pay, and they issue an injunction that says,

hey, you can't violate the law again, which was essentially in place when you violated the law in the first place. But the criminal people can put everyone in jail. And I've never understood, for example, in Voyager, where people are representing that there's FDIC insurance, why DOJ isn't bringing a case there. Because if Voyager gets a letter from the FDIC insurance, why DOJ isn't bringing a case there? Because if Voyager gets a letter from the FDIC saying, hey, you are making representations about having FDIC insurance when you- John, that's a clear and easy- If you read into the fine print on that, it will be the argument.

I'm not saying it's agonist. That's exactly it. If you read into the fine print, it said that their banking partner had FDIC insurance. And if you dug even deeper, that meant- No, I get it. Oh, they certainly- No, I get it it that you were fdic insured i'm just telling you if you went deeper into the terms and conditions and read it it probably wouldn't but but you know you know what though that's exactly right yeah but you know what we we brought a case against ford when i was chief for they were selling these they called the money market notes and they were

they made them look like they were money these, they called them money market notes. And they made them look like they were money market funds that their employees were investigating. And they raised tens of millions of dollars from all of this. And the funds, they weren't money market funds. They were backed by the full faith and credit of Ford, not the full faith and credit of the US. And yeah, there were some fine print there. But when we dug into it, we found marketing materials or we found people who said things. So I agree with Joe. I would never defend them. I'm just telling you that because I've dug into it, that at least was sort of the narrative that the banking partner was FDIC insured. They very clearly said funds are FDIC insured. There's no, I mean. Yeah. And people don't know the difference. You get five victims to write an affidavit that says that they thought this was FDIC insured, which, you know, I had a victim on a Twitter space that I did who talked about things like that. So I can appreciate that. I think what's going on, I don't know if Mario, if you noticed the decision

that came down in LBRY yesterday, that was a very interesting decision because that judge not only did not recognize this idea of a lack of regulatory clarity, but that judge actually specifically upped the penalty to a first tier penalty because of the egregious nature of the conduct. What was the egregious conduct? Ignoring law that was absolutely clear. And this is something that the judge said. So everyone's always saying in crypto, oh, there's no clarity. Well, this judge believed that there were. Oh, we didn't get fair notice. Well, this judge ruled that there was fair notice from Howie and everything else and that due process argument and the discussions of Upton is just a bunch of nonsense. So it's interesting to read these decisions when these things happen. As far as the criminal cases go, one thing I know being chief of a unit,

you've got to bring cases. Your boss wants you to bring cases. Your job is to bring cases and find cases. So I think there's the largest group at the SEC right now is the crypto group. They got 33 new people just this year alone, and that's a huge amount of people. The criminal group has been now, I think, in form probably about a year or two. And it's a huge amount of people. The criminal group has been now, I think, informed probably about a year or two. And it takes a while to staff them up because you're trying to get staff from everywhere. But now it's time to bring cases. And you have these grand jury proceedings. And it's difficult when you're an AUSA. I was an AUSA also. It's difficult when to pull the trigger and say, OK, we've got enough. Let's make it public and make the arrest. So each

decision is completely different. But I think like Joe said, I love the way Joe said it, where he says, look, these frauds are frauds and you really don't have to be some sort of master securities lawyer to see them for what they are. And you don't need to be in crypto to pull them off.

No, and you know, that's- Yeah, but you can't create your own token outside of crypto either. But here's the thing, and you get into this ETF stuff. This is why the SEC won't ever approve a spot Bitcoin ETF until there's a Republican administration,

if there is one. Because they believe that the whole market, especially Tether, is completely manipulated. And it's laughable to me that all these companies come back with the idea, hey, we're using Coinbase for our surveillance. Well, you're using an entity that the SEC is operating unlawfully as a broker dealer, unlawfully as an exchange, and unlawfully as a clearing firm. So how on earth is the SEC with a straight face going to approve

a Bitcoin ICF that's relying on a company that they have no insight in. They have no transparency to their operations other than their 10Ks and Qs, which is something, but it's not. Earlier today, though, we saw the Bitcoin spot ETF get approved in Europe. Does that change anything for you? I get it. No, because I think, just like it doesn't change anything for me that if a Republican

becomes president and they make a Republican chair of the SEC, I don't think Chair Clayton would, who was a Republican appointee, I don't think Chair Clayton would have approved a Bitcoin spot ETF. Though I think if he was chair now, he would, because he's been paid by so many people in the industry to do so many different things. But putting that aside, I don't think that's going to change. I think that, you know, all think that all these personal attacks on Gary Gensler, they're not effective. I mean, they might make for some clickbait or fun things to talk about on Twitter, but they're not effective arguments. I teach my students, as soon as someone gets personal with you, just smile and celebrate because as soon as the judge gives the ruling, it's going to be in your favor because that's grasping. So I think that Gensler is a tough

regulator. He's made it clear what his views are. And the chairman controls a lot when they're at the SEC. They control the calendar. They control the staffing. They pretty much can control the way the enforcement pipeline works. And so they can get those cases in front of the SEC. And when it comes to these rulemakings, I just don't see them changing. I think the Grayscale judges were very receptive to this notion of the commodity, the futures Bitcoin spot to ETF, making the SEC's argument decision look arbitrary and capricious. That surprised me. I think it didn't surprise other people, but it really surprised me because in all

the years that I've been following the SEC, I've never seen them stop for an arbitrary and capricious ruling. I've seen them stop under the Administrative Procedures Act for not following up with the cost-benefit analysis they should and a judge declaring a rule invalid. But I don't think these judges have that as a remedy. And I think they made that clear in the hearing as well, which I listened to. So they might come back and say some negative things about the SEC's decision, but the SEC will have a lot of options to revisit that decision and think about all the cases that they brought in that time.

Beatsy, Beatrix, Binance, Coinbase. They brought all these cases since then. If I were at the SEC, I would attach those complaints as exhibits to the declination letter for Bitcoin's body ETF because these are compelling attestations by SEC lawyers. Hey, John, I think we lost John. Yeah, oh, good. John, I think disconnected.

Yeah, so he said, John, while he gets reconnected, Simon, listen, nobody think disconnected. Yeah, so he said, John, while he gets reconnected, Simon, listen, nobody on this... Simon, don't... Scott, Scott, Simon doesn't know much about Celsius. I would go to someone that understands it a bit better. Nobody on this planet has done more work on this Celsius bankruptcy situation than Simon. Nobody's hosted more Twitter spaces.

Simon, dare I say this is your moment. Have at it, buddy. All right. Thank you so much. And I do want to apologize in advance if I'm somewhat more emotional than all the other guests. But, you know, it was this time one year ago that Celsius filed for bankruptcy. One month prior to that, my father passed away the same day that Celsius paused withdrawals.

I came out to try and support because I was a shareholder. We'd invested $10 million in the company way back in 2020. And that's in the equity of the company, I suppose. Mijinski has $1,000 of my Bitcoin, so it's worth about $30 million today. And because of that, for the last year, we built a relationship with every single creditor. Well, there's about 600,000 creditors, but about 10,000 were engaged in us doing weekly Twitter spaces in order to figure out how to tidy up the fraud and mess that Mijinski had created for thousands of pensioners and people's lifetime savings. In that year, we lost lives. We prevented suicides. We had people that

had to move countries because they couldn't afford to live, all because Mijinski represented to them that they should take all of their 401ks, all of their retirement funds and put it in what he believed to be Safer than a bank at the same time the company was insolvent the whole way through he invested in 18 million in an ICO That he never paid and pretended that he paid so it was fraudulent from day one Put the sell token on the company's balance sheet so that it looked like a multi-billion dollar company hiding a hole when all the time he was taking our bitcoin and pumping up the price to sell to manipulate it on ftx with sam bankman freed so that other shysters like sbf could borrow against client bitcoin and then persuade everybody to convert their stable coins that their retirement

funds into stablecoins. And there are pensioners all around the world right now that literally have drained their entire life savings because of what that guy has done. In his defense, he said that the yield was fake and therefore is not a security. So I did not commit securities fraud. And every lie that I told everybody was so bad that nobody was meant to believe it and he called it puffery and now today he is arrested and it's a moment for the people that over the last year 600 000 creditors of which approximately a thousand of them put their lifetime savings because they looked this guy in the face turned

up in miami at his conference while he was withdrawing tens of millions of dollars from his own account and he was paying people for the last year to troll all creditors because they own sell token in what can only be described as complete manipulation and trolling and he even turned off on my twitter space and his wife told everybody that i stole all the money and i shouldn't be trusted because he was the one that ripped me off and took a thousand of my bitcoin and i'm just glad that thousand bitcoin is collateral damage for everybody else that has suffered over the last year as a result of these guys lies at 11 30 today there will be a press release and finally there is no hiding to those people that have been harassing us over the last year trying to defend mizinski and his crimes because of you

just simply own cell token i have seen cell token in the center of a criminal investigation that has been used to defraud pensioners of their money and be used in order to incentivize a community of assholes that are simply using that because they get paid, if the price of cell token goes up, in order to harass people that are genuine victims of this case. For one year, we've been dealing with this shit because of that

piece of shit, Mijinski, and now he's in a cell where he belongs. Simon, that was... Man, I didn't expect that. I mean, tell me we just clap. Should we all just clap if we just maybe

all unmute our mics just all unmute your mics and just clap because that's what i feel like doing simon i know you've been waiting for a long time uh to to see some justice i don't know where it goes from here but uh simon my question to you, Simon, is how was this ignored by everyone for so long? Well, so if you want to go back into the history, so Muszynski lied about what he invested in the ICO. So he made the company look like it was bigger than it was. He then started trading client money rather than representing to us that it was institutional peer it was. He then started trading client money, rather than representing to us that it was institutional peer-to-peer lending. He told everyone that everything was over-collateralized. And Mijinsky was just about, I know that it sounds crazy right now, because when you look back at his videos,

I really wasn't following along. But week after week, he went on an AMA, put his children on there, put his wife on there and created a perception that there is no way anything can be wrong because he's got his children there and he's on an AMA every week. I wasn't watching any of those, but every week he was lying. And that just created an illusion. Now, many people were doing sound analysis and understanding what had gone wrong and understanding the exposure, but it was all hidden by marking to market that sell token and just outright lying and committing fraud on those balance sheets. The reason it took an additional year, this investigation had been going on long before the pause um and i did say to everybody on twitter this month will be a bad month for alex mcginski because there's

still a lot more that's not actually covered here um but he was an incredibly persuasive and incredibly charismatic and he took the pitch of bitcoin financial freedom exit from the shysters, the ability to earn yield because the banks are stealing from you. And this has been a constant theme we've seen over the last decade. BitConnect, whatever it may be, they will take the pitch of Bitcoin and say, I'm disrupting the banks. Celsius is disrupting the banks. Take your retirement funds and give them to us and

then people would buy into that vision and that pitch for what Bitcoin with was and the freedom that it brings and he would beastify it and make it into something you know like he was the one that was creating that and this grandiose so narcissistic sociopathic behavior was detected by some but he duped many including myself and it wasn't until it was too late that I got to actually discover what he was doing and what he was saying to people yeah I bought it hook line and sinker as well Simon as everyone knows with both I mean Machinsky and with Voyager. And it's, you know, I'm obviously much like you, still in disbelief and a bit ashamed, I would imagine. But, you know, it's a different time. But it's incredible to see what you've done

to rectify it since then. Really amazing. Simon, I've got another question for you. Go ahead, Ryan. Simon, have you been working with the DOJ? Have you been contacted by the DOJ? No comment. That's a yes. Ask more, Rand. That's a yes.

Okay, now. What else? So, Simon, you said there's a lot of things that haven't come out yet. What else is left? Like, we've got the CFTC, FTC, DOJ, and the SEC. Yeah, there's a reason why Hoss, the management, are in Israel, and that the company was originally created through a shady ICO deal where Mishinsky invested in a rug pull, and in return, he invested in their rug pull, and then that was then invested in sell and they did a back and forth transaction and since then there's been plenty

of shell companies located in Israel that have misappropriated client funds and a lot of that is still to come the DOJ indicted Ronan today as well yeah that's really interesting check this shit out Ronan today as well. Yeah, that's really interesting.

Check this shit out. Ronan still worked for Celsius. And he applied in this bankruptcy for a bonus in order to get us out of bankruptcy and sell the fraud to some other. He literally said, I want a bonus in order to achieve that result. And he's still at the company until this day, trying to achieve that result. The thing that I would be interested in, Simon, your opinion on this, how many more indictments from the Celsius Guide group team do you think will come? They did only one other besides machines today do you think that there's more coming there's another piece of shit in this

whole process and he's probably a bigger piece of shit than alex mcginn skin his name's daniel leone and daniel leone seems to be getting away with murder at the moment he's in israel and he's very connected to some very dangerous types of people that I've been warned against throughout this whole last year. And we still need to find out because he was the one that took the sell token and borrowed loads of clients stable coins against the sell token in order to, you know, inadvertently pull out money from the estate. But yeah, we've still got Daniel Leone. And my guess is that everyone else, the people that are just cooperating witnesses,

they're not the people that they really want to go after. I'm sure they're negotiating. And then you've got all the assholes with Cell Token that have been wash trading, manipulating the price, and using that in order to think. They've literally been saying, they've been using this whole story that FTX shorted Cell Token and took them down,

which is probably true, because when you're a scumbag like Mijinski and you hang around and manipulate prices with a scumbag like Mijinski and you hang around and manipulate prices with a scumbag like SVF, then you probably end up falling on each other and turning against each other. And he probably did short the sell token and naked shorted and take the whole thing down. But the only thing that that did is it exposed all the fraud and the three billion dollars that mizinski misappropriated and fraudulently and got rich off and even bought he gave 50 million

sell token to his wife and then his wife takes to twitter to try and say that i'm the person behind the whole thing and that everybody should come to me in order to try and get my money and i've been paid by sbs in order to try and take take sell take then remember and i remember i remember those days simon back during ftx days um when the drama was unfolding and i've got a couple questions for you first you talked about the a lot of people in israel that are somehow involved and some dangerous people you're warned about. Have you received any death threats? Have you had any communication with them? I've had plenty of situations over the last year that feel very uncomfortable to me. Any to share?

No, nothing that I'm going to share at this stage. Let's let justice play out first. The other question I have, and I've asked this to John earlier, and why do you think Mashinsky didn't leave the country? Let's let justice play out first. The other question I have, and I've asked this to John earlier, and why do you think Mashinsky didn't leave the country? In my mind, and I was thinking this during the FTX days as well, it just seems so evident, and he knew he fucked up. Was he allowed to leave the country, Jason?

I'm not sure, but yes. He had like five kids under the age of 18 and you know school in new york i think that that probably played a big role um in why he stayed that that's my best guess and then is is his wife part of the indictment in any way because i know she's been pretty vocal and not sure how involved she was. Does anyone? I don't know. But she is she. Nothing like that. The Celsius UCC are suing her because all of the Celsius t-shirts that said,

safe to learn a bank, that was an Operation USA Strong that received a bunch of the money and the proceeds of crime in order to, you know, and during the bankruptcy, she actually created a t-shirt to profit from the misery of creditors by creating a t-shirt called Unbankrupt Yourself. And she's, you know, she's, so she, they still have that company. Alex Mazinski by the New York Attorney General, Letitia James, is looking to ban him from doing business in New York. But the irony is that that business is an operation that says, keep all of the business in New York. And he's the chairman of that company right now. And he's probably going to be banned from doing business in New York. But the UCC

are looking to sue Chrissy Majinski as an insider that benefited and received a significant amount of cell tokens. You know what the funny thing is? The piece of shit Majinski probably was just logging into her account and he sent his wife under the bus 100% and was not actually

her. Of course it was not her. She doesn't know. Literally, she recently gave a conference on NFTs and her level of knowledge of this industry was not somebody that knew how to commit some of the crimes that were perpetrated with her wallet addresses. He was logging in and doing it all under her name. And so she's, I don't know what implications that is,

but from my perspective, it was him. And it's a very difficult situation. What do you do when you've got a grandiose, so narcissistic piece of shit like Mijinski for a husband? And you found out that your penthouse and everything that you've got, whether she's the grand design engineer behind his motivations or whether he was actually motivated to do this because he was trying to keep up with the jameses um and uh you know afford the penthouse and the lavish lifestyle and claim that him and sbs are billionaires in all of his conferences where he was saying i'm the largest you know what he said i'm the largest account holder at celsius that's because

you were given a bunch of cell token, you used up Bitcoin in order to manipulate the price of cell token, you didn't pay for it like you were obliged to, you negotiated a contract that pardoned your $18 million investment in the ICO, and you took those cell tokens and you sold them to your clients, OTC, and left them dry in this bankruptcy. Sorry, I just get a bit over the top. I think, you know, Mario, I think what's going to happen is what usually happens after these big criminal cases are filed. There are three types, and this always happened in the cases that I worked on. There are three types of informants who come forward. There's the profiteer who's

looking for a whistleblower reward and wants to dump every document and anything else that they have in hopes of getting some kind of whistleblower reward. There's the disgruntled person, maybe an employee, maybe a victim, but more likely an employee who's ticked off about everything and worried about their own skin. And then in this situation, there's a very unique cadre, like there was in FTX, of fairly wealthy and somewhat sophisticated advisors, whether they be lawyers or accountants, other professionals, who suddenly are going to see a lawyer and their lawyer is telling them, you've got exposure. We better get in the door first. We better talk to the prosecutors first. That's what happened with Alameda at FTX. Let's talk with Caroline. She came in there very early and she was advised by the former director of enforcement, who I'm sure said to her, look, you've got real exposure here. If we don't get in there first, we're not going to get any consideration at all. They're just going to go to the next person. So you have a very, very extensive list of informants that are going to

come out and help you very quietly, whether they do it through grand jury testimony or through providing documents or just informally providing you the roadmap like they did in FTX, where you can draft a complaint that was drafted. It looked like, you know, the investigation had been taking years. So you're going to see a lot more happen. And Simon, here's Mario. Hey, go ahead, Rob. Yeah, go ahead, Rob. So first off, Sam, my heart goes out to you. You're a good man in a bad, dark world. And next time you're in New York, I'll buy you a beer, but it's heartbreaking. And look, if there's any satisfaction and justice being served, I know we're all looking forward to that. So a few things. I have two interactions with Mashinsky, and I'll share some lessons learned so folks could just protect themselves. So one was in my prior role as the head of crypto at Cross River. And so met a lot of these knuckleheads, including Mashinsky, his team. That was one of the shortest phone calls we had. It was a 20-minute meeting with them. After that call, I said, guys, we will never issue a loan to Celsius. And there's some

other actors I can't name we spoke to for fear of defamation. We'll come back to that in terms of how do you get industry self-accountability when you can't call out bad actors for fear of a lawsuit. Like look at Dudas. He's dealing with 3AC, for instance. So three observations to make here. One is Celsius was more brazen than FTX. Not in dollars lost, but it was out in the open. It was a Ponzi scheme. Mashinsky was cashing out and dumping on retail day one. It was also willful deception, whereas FTX, quote, it's your coin. And that're non-custodial and you stay,

you control your keys and you think hard about your information security, OPSEC, risk, all the rest, or you work with most regulated players. That's it. Celsius is an unlicensed player and that's a no man's land. That does not work. And there's still smaller exchanges, especially international, that are nonsense. The other lesson is this. If you have a non-bank pretending to be a bank, that ends in tears. So that's actually what attracted my interest to studying Celsius and also Genesis early on because all these knuckleheads were borrowing short and lend long. You can borrow long and lend long. That's what Blackstone does. You can borrow short and lend short. That's what a money market does. But you can't borrow short and lend long unless you're a bank. I was just going to say unless you're a bank.

Exactly. Because you've got deposit insurance and a lender of last resort, and they didn't have that. And this daisy chain loop started to self-destruct because of all these borrowing relations. So look to that. What is the business model? How are they licensed? And the third point, and this was a great point, I thought Dan, I think, brought it up earlier, is that people in the industry knew, except those are enterprises that were doing due diligence and have just access to better information and perspective. So the question is,

well, how do you create an enforcement mechanism that's faster and earlier than the SEC, who is always late to the punch? And by the way, when the SEC doesn't take action quickly enough, it inspires other bad actors to do more of the same. And the suggestion is a self-regulatory approach. FINRA, which is a self-regulatory organization, it used to be NASD, which created NASDAQ, has to approve any broker deal application and the business plan. And the industry is missing that. And the industry's closest, the industry knows where the bad actors are and if you don't have the stamp seal of approval or the permission from finra which is an industry-funded industry-led organization then you don't have the trust of the public so trust all matters in a

trustless world hey ram question but you can't do anything with a finRA license, Ram. I'm not talking about a new SRO. I'm getting into the historical industry. What I want to focus on, I don't want to go down the FINRA path because we've litigated that to death here. You said that you started looking into Celsius and also started looking into Genesis. Do you have any, I don't want to pivot too hard here, I do want to go back Celsius,

but in your looking, we've had a lot of conversations here about Genesis and DCG and Grayscale. Do you have any specific thoughts on what's happening there? Sure. Well, two observations. One, let me wrap it up with Machinsky. So this other infamous encounter.

So I was on a panel with Machinsky in May before they blew up. And, you know, again, it was like, hey, they're non-banks acting like banks. And I said, at a minimum, every player should have proof of assets and reserves and liabilities on chain. And that's a core principle

that any SRO should have. It's a self-regulatory standard that people adhere to. By the way, he said he had that, which was a bald-faced lie, and retail investors don't diligence that. And the same would have... They can't. Say again? I said they

can't. And I think that's one of the biggest problems here is that you take these things at their word and there's no way for retail to even find out. There are mechanisms, there are principles, there are guidelines that one can establish and you can set up a third-party audit. I don't want to get into the mechanics of it. All to say is there's a framework that could be applied

and that could have protected against the issues around Genesis as well. So in Genesis, same issue, they're borrowing short, they're lending long. The day the CEO at the time, Mike Morrow, posted this quote unquote, we shed risk. I asked him, well, on Twitter, how did you shed the risk? Did you sell a receivable at a loss? And if so, did that cause an impairment or did you hedge it with CDS? And if so, who was your counterparty? There's no CDS market here. No answer there, but that's the common pattern on Genesis DCG. I look, this is my opinion. I would say that this has a lot of indicia of an Enron, right? Many of the things Enron did at a one-off basis were legal. You can have a special purpose entity. You can have a subsidiary that's wholly controlled by your CFO. You can have intercompany dealings. None of those things on their face are illegal. However, if you have a set of actions that are designed to deceive and mislead the public, then that's crossing the line. Do you believe that that's specific to Genesis or the DCG organization as a whole? So, look, I think we're... Can I just interrupt?

In about five minutes, I think there's going to be some kind of public announcement on the Mishinsky side. I don't know if you can find where that's happening. There's a live broadcast, but... We'll look for that. Can you go off and find it? Yes, I mean, yeah.

You can usually find those. Go ahead, Mario. You can usually find those on the Facebook. Mario, you can usually find those on the Facebook page for the United States Department of Justice for the Southern District of New York. That's how I usually find them. Oh, thanks, Carlo.

Can you send me through the link to that, Carlo, if you don't mind, via DM on Twitter? You got it. I'll stream it. Dan Ram, I want you to continue. I'll be brief. I'll be brief. Yeah, we'll find it a lot off.

But yeah, so for Genesis, there's no question, especially now that Cameron has delivered the receipts I'll be brief. I'll be brief. I'll be brief. which is absurd. The second is, has Cameron made the case that DCG directed Genesis? I don't believe that case has been made. However, we'll learn more in Discovery. Cameron did share an insight around this October lunch where allegedly Barry made certain representations to there being a duration mismatch that was temporary. Of course, that duration mismatch was the promissory note, which was caused by DCB. So again, it's a pattern of misleading, but he has to do more there because otherwise you get a he said, she said. And again, we'll come through that and discover there's no question in my view that

Genesis committed fraudulent behavior. Yeah, because we've heard countless times on this very show, people kind of hinting at, but not being willing to commit to the fact that DCG, not just Genesis, might be next. We actually have some rate-breaking news I'm seeing here from Tier 10K. Ripple sales of XRP do not constitute offer of investment contracts from a judge. Wow. We're going to dig further into that because the market has been waiting for clarity on that very much so for the past years. So Mario, we got to get the- Hold on, hold on, hold on. What does that mean exactly? Just one sentence. So Ripple sales of XRP do not constitute offer of investment contract. Judge, which judge?

That would effectively, listen, we're going to dig in more, but in my mind that the argument, So Ripple sales of XRP do not constitute offer of investment contract. Judge, which judge? That would effectively, listen, we're going to dig in more. But in my mind, the argument, even after library, has been whether or not the sale of the actual asset, XRP especially, secondary sale constitutes an unregulated or unregistered security. And this would say that effectively it does not mean that XRP being traded is not a security. There's other people here who could probably give more insight. I don't want to comment on it deeper, but that is the good news side of what people were looking for. Carlo, can you shed a bit more light on this particular tweet? And it's about 1130.

So if we can find me. Yes. So it's on the DOJ, U.S. Attorney's Office for the Southern District of New York. I sent you the link. They're announcing there'll be a press conference today at 1130 a.m. to announce the indictment of Alexander Maszynski, the founder and former CEO of Celsius and Cohen, Celsius' former chief revenue officer. And there's a link there to watch the live broadcast. Perfect. We'll be streaming it here in a few minutes. What time do you say it is Carlo? It's now. 11.30. Oh, is she right? So that's how the Eastern. So that's now. Cool. I'm going to play it right now. As soon as

it starts, I'll be streaming it here. Scott, I'll send you through the link so you have it as well. It's on the USA OSDNY. Let me send it in the link group. All right. It's been a a while we haven't streamed anything i don't have login details for facebook scott so if you can play it and just put your mic close to it'd be great i don't know how to do it dude i'm a boomer i'm no idea that's from shreds you got to be on shred

i don't see how i can log into facebook i need to log in to be able to play it all right let me know when it starts, Carlo. We can start streaming now. All right. In the meantime, so I'm just setting that up. XRP is up 14%. Yeah, so this is based on the... Yeah, exactly.

So this is based on the current case. That's what I was trying to say, is that it's not just a random judge's opinion. This is a ruling. This is really important. Jesus. I'm going to dig in further as everyone's listening to this stream and try to get... How the market is reacting massively.

It is? I just saw that XRP is... I'm opening a chart now, but that XRP is up 14% very, very quickly. Oh, absolutely massive daily candle. XRP went from 47 cents to 54 cents just now, like in a matter of minutes. So the one hour candle on XRP, I'm looking at the chart, this is a Bitfinex chart. So it is the largest volume I've ever seen on a one-hour candle. Shot RSI to 97, which I don't think I've ever seen. This is the most massive buying of any token I've ever seen in a short period of time. And are we seeing much reaction with the other coins?

Scott? Not really. I think it's pretty limited to XRP, but I mean, absolutely massive buying in the last few minutes. Huge. All right, so I'll be streaming this in a few minutes. While I'm doing that, any thoughts, Bruce, Dan, Simon, on the XRP, the comments by the judge. Yeah, that's a pretty big case. Just for full disclosure, I'm a shareholder of Ripple Labs, the company. We could spend a whole space on Simon's full disclosures. But, you know, that's pretty interesting. So, you know, I think that really probably signals

a turning point on some of the the layer ones um you know i don't xrp obviously isn't a proof of state thing so it doesn't relate to that argument um but it it i don't know what happens next and what the objection process is maybe some of the more legally minded people out there. But an investment contract is the definition of a security by the SEC. And they're saying that it's not a security. We've had these arguments of sufficiently decentralized. The big thing with XRP is about 60% of the supply exists on the company's balance sheet. Now, what's interesting and related to the Celsius case is they don't market to market, even though it's a company asset. And so the company, they wanted to IPO

after getting through this case. And the last funding round was at about a 10 billion valuation. The tokens alone are worth more than that, just the ones that sit on their balance sheet, but they don't market to market. So you don't get some of the fraudulent action where you can make it look like you've got an asset that's worth more and is more liquid that you got with Celsius, the company, just to tie the two together. Just wow, I'm watching the chart. It's going absolutely insane.

Do we have the uh the DO working on it now has anyone else has it streaming doesn't look like it's started yet I'm on their Facebook page haven't seen it drop yeah so they have a link um shit I'm an idiot um I clicked on like some spammy link I thought it was them yeah someone, someone pretending to be this. You just got your wallet trade. No, no.

Good job. So it begins when I clicked on a link in the comments. So when it starts, just interrupt us. I've got the Facebook page open. And we do have a press release out already. I'm just going through it now. So I'll read out what U.S. Attorney Damien Williams said. I will start the link.

Oh, perfect. Yeah, cool cool let me check out that group oh beautiful hasn't started yet yeah this is the link I have but this is the spammy one you clicked on the same one did you click on it from the comments or the Facebook page no idea I'm just I don't know what's going on my phone's blowing up

yeah you've clicked this is not the actual link so just a heads up I don't know what's going on. My phone's blowing up. Yeah, you've clicked a little lie by yarn. This is not the actual link, so just a heads up. This is a spammy link. This is not the actual. I assume the shoot should be started on their Facebook page. So just back to the, oh, yes, I was reading out the statement here by U.S. Attorney Damien Williams.

Man, we've got the Celsius bad, not bad news, good news with Celsius. And then we've got the good news with X. By the way, Damien Williams is the same guy with the Cream Finance just days ago. So Southern District of New York, very busy. Oh, wow. Oh, they're on fire. And I have to add, Mario, in line with what Mr. Stark said, I think we can predict that Mr. Williams is going to say now is the time to come forward. If you have information about this case, come to us before we have to come to you. That's consistent with what was said during the FTX press conference. And I anticipate the DOJ is going to have more of that particular stance when it comes to whistleblowers and defendants who are interested in cooperating. So I'm going to read out-

Carlo, do you mean specific to... Okay, go ahead, Mark. I'm going to read out what he said, and then I've got a question for Carlo, is what can we expect next? This is, for me, Mark. I read out what he said, and I've got a question for Carlo. What can we expect next? This is, for me, what we're seeing now. I talked about it with the Cream Finance case as well, is that pretty much any scammer during the bull run should be sleeping with one eye open, and that kind of makes me happy when I see that. So I'm going to show you exactly what Damien said.

Quote, exactly one year ago today, Celsius Network, a crypto platform that at its height managed approximately $25 billion in customer assets, filed for bankruptcy protection in the Southern District of New York. Over the course of the past year, we have worked quickly to get to the bottom of what led to Celsius's collapse and to understand how a platform that advertised itself as, quote, the safest place for your crypto could have left investors holding billions of dollars in losses. Today, we have the answer. Today, I am announcing the unsealing of an indictment charging Celsius, so Alice Mashinsky, with orchestrating a scheme to defraud customers of Celsius through a series of false claims about the fundamental safety and security

of the Celsius platform. And for participating in a scheme with Celsius chief revenue officer, Ronnie Cohen Pavon. Is that the guy that we said, Jason said that was still in the company? No way. Ronnie's no longer in the company, is he? No, he's still in the company trying to get a bonus, but I imagine. Oh, so that's him that was trying to get a bonus. And is he based in Israel or the US?

Yeah, he's based in Israel. And does Israel, Israel has a tradition treaty with the US? I believe, yeah, he's based in Israel. And does Israel, Israel has a tradition treaty with the US, I'm sure, yeah? I haven't actually looked at that, but I think there's favorable reasons to be in Israel. I'll check that in a second. And for participating in a scheme with Celsius, Ronnie Cohen Pavon to inflate the price of Celsius proprietary token cell token. This case, like the others my office has recently announced alleging fraud in the crypto economy, may appear complicated, but the message we send today is quite simple. If you rip off ordinary investors to line your own pockets, we will hold you accountable.

Whether it's old school fraud or some new school crypto scheme, it doesn't matter one bit. It's all fraud to us and we'll be here to catch it. Before I deserve an applause. Carlo. Really quick, Mario. I'm just seeing, you know, Meta Lawman, who we've had on quite a few times. He did tweet a quote from Judge Torres and he's saying this is the ripple decision is out. Like we're digging into this, but this is pretty much it, the Ripple decision we've been waiting for. But XRP as a digital token is not in and of itself a contract,

transaction, or scheme that embodies the Howey requirements of an investment contract. Massive. That's beautiful. We're going to dig into this even further because it looks like we might be getting more into it. Are you not into Facebook? Facebook is the only way of getting... Yeah, the press conference started.

Let me start playing it now. They're just getting their... Their mic hasn't started. I'll play it now. On April 26, 2021, shortly after I became the Attorney General, I announced that the Justice Department had opened a civil investigation into the Louisville Jefferson County Metro Government and the Louisville Metro Police Department. Our investigation

sought to determine whether those entities engage in a pattern or practice of violations of the Constitution or federal law. I'm here today to announce the findings of the investigation. I am also announcing that the Justice Department, Louisville Metro, and LMPD have agreed in principle to negotiate toward a consent decree. Here with me from the Justice Department are Associate Attorney General Vanita Gupta and Assistant Attorney General Kristen Clark, who is in charge of our Civil Rights Division. I also want to acknowledge Mayor Greenberg, Council President Winkler, and Interim Chief of Police Gwen Villaroyal. Thank you for joining us today. In 2020, LMPD officers shot and killed Breonna Taylor in her own home in the middle of the night.

The officers were executing a search warrant but found no evidence of any... Guys, that's unrelated. Yeah, yeah, I'm just saying. No one, I don't think a machinsky shot anyone. So Simon, the link you sent me is unrelated to... Or maybe they're going to share it later. Oh, they share it a bit later. But while you were talking about this, Scott, you sent through a message in the group saying,

Fred's like, no security season begins. But this is it. This is the ruling we've been all talking about. This is the highly anticipated ruling, no? I believe so. We're getting to the bottom of it. But I mean, the SEC is just getting their asses handed to them by judges left and right.

You've got to love to see it. I'm sorry. They're just absolutely getting annihilated. And I keep reminding people, just because Gary says it doesn't make it true, and the courts are pushing back left and right. Bruce, I saw you thumbs up, and you've got to love this. Yeah, it's great. I've had high hopes that America will right itself and, you know, combat this ridiculous, you know, deep state administrative state that's acting as the fourth branch of government.

You know, we all learned in school we're supposed to have, you know, three branches of government, not four. And laws are supposed to be made by Congress, not, you know, petty bureaucrats like Gensler who just sit there and try and continually expand. It's not just him. It's the FTC. It's all kinds of these regulatory agencies. The SEC has completely failed in its mission. Its mission is to protect investors. We all just heard from Simon. Did they do their job for Simon? Did they do their job? No, they did not protect investors. They do not protect investors. They have three goals, protect investors, maintain fair orderly markets, and facilitate capital formation. Can we facilitate capital formation? No. It's almost impossible to become a security legally, and the exemptions don't work, and you can't even register, and you can't even do it as a token.

There's a million problems with that. They've just completely and totally failed, and they need to be smacked back down. I love this industry. I've been- Solana. Bruce, Bruce. Solana's up 8%. XRP's up 22%.

So across the board, we're seeing what Fred just called out-season. Fred is in- Yeah, well, dude, if these things- Polygon's up 9%. Litecoin's up- Fred just called out season. Fred is in. Yeah, well, dude, if these things. Polygon's up 9%. Litecoin's up. These coins dropped. Cardano's fine.

Polygon, Cardano, obviously all the ones that have been being delisted and have been listed over and over again by the SEC. If XRP secondary sale is not a security, then the SEC has wasted their time listing 68 of these separate assets and altcoins as securities, potentially. How does it work? These should at least retrace the moves that they made down because of the bad news, which was 30% overnight on some of them. But how does it all work? So you've got a judge saying it's not a security, but the SEC is saying it is a security.

The SEC doesn't mean shit. The SEC gets to say whatever they want, but it's not law. That's the point. And the SEC has never actually, besides Ripple, been going after these actual projects. They've just been passively listing them in enforcement actions against other companies. So in the Coinbase suit, for example, they randomly list, you know, 12, 13 assets. In the Binance suit, they randomly list a few. Each one, they just list them and those coins suffer. So effectively market manipulation without ever having to go after these coins, ever having to go after these tokens, ever having to go after these projects. I mean, a perfect example, and the one that's perhaps most notable, is that the SEC obviously settled with Kim Kardashian over promoting Ethereum Max, which, by the way, she did in a transparent manner. But they said she had to disclose how much she got paid.

But the SEC never, and she was charged with promoting an unregistered security, but the SEC never went after Ethereum Max for launching an unregistered security. So you can see the hypocrisy in the way that they're trying to do it. SEC never went after Ethereum Max for launching an unregistered security. So you can see the hypocrisy in the way that they're trying to do it. They're basically just passively manipulating the market by deeming these things securities without actually having to go after it and do it. And this is the first, I mean, real major win on behalf of the industry, assuming that this is what we're reading is actually true, that if the secondary sale of Ripple is not an investment contract and not a security, then that should be lights out basically for the SEC. Yeah, that's what I was going to ask.

Yeah, one really important thing to note on this is that when something is ruled not a security by a court, the SEC has zero authority over it. Zero. That'd be right. They can't. So, for example, if those five, you know, whatever, 15 assets that they say Coinbase, blah, blah, blah. You know, if a court says those aren't securities, SEC is not the scam police.

They only have authority over security. So if something's not a security, they don't have any more authority over it than they do over cookies or butter or cars or anything else. It's not their job. So they have nothing to do with Ripple. If Ripple is not a security, then there could be any number of different crimes or actions or anything alleged about Ripple, but it's not the SEC's business. It has to be left to other agencies, Department of Justice or something like that. So what happens next, Carlo, if you can give us some clarity, because we're all worried about every token being considered a security, but then now we see this ruling, potential ruling, we're still waiting for confirmation, that contradicts the SEC. Well, obviously this is going to trigger a slew of filings in the cases that are still pending. And it is a decision from a federal district court. So there's going to be issues concerning whether those circuits it is definitely a huge development for the space.

And I think it vindicates the position that Deaton in defense of Ripple has been saying all along. And I think this is a great day for crypto. John Deaton is a great American hero, let me tell you. Because we had met a lawman come on here and say the exact same thing. This guy at his, we got to get him on here, by the way, we should invite him right now. He's been on many times. But I mean, the guy single handedly at his own expense, not getting paid, filed brief after brief after brief in both the Ripple case and Library case. And he's the one who forced the judge to effectively say that the secondary sale of Library was not a security, which is the precedence for this. And he did that by himself.

I mean, the guy should be applauded on a level that people don't even comprehend. I mean, he basically put this entire industry on his back and carried it through this entire process. I'll try to get John in here. Yeah, he should get to do his victory lap today on this show. Yeah, we'd love to get some more thoughts on this while we're trying to break down what it means. But if you can elaborate a bit more, Bruce, Dan, because Bitcoin, go ahead, guys. Yeah, I mean, look, I'm a Bitcoin moderate these days to where I think Bitcoin is the most important project in the space and really key to

you know, I love the trade-offs that it has made in terms of decentralization to enable it to be, I think, the most robust blockchain out in the crypto space. I think this is sort of undeniable. But the moderate in me as well, I'm not... Obviously, equities and bonds are completely centralized, but it doesn't make those bad assets. It just makes them a type of asset. And similarly, we've got different types of crypto assets that resemble equity, you know, the governance tokens, for example.

And I'm not, you know, as the libertarian, the OG libertarian inside me really dislikes the idea of looking to a government entity for permission to create a financial asset. So regardless of how you feel or regardless of... Sorry to interrupt, gang, but it looks like it might be live now. I just saw an update on their website. What is it? You're talking about the Celsius One? Yeah, it looks like it. Okay, Doris. I think we're too into the XRP case now.

Do you want to play the Celsius One Scott or it's old news now? Play it. I think we should play it and then we can get to the other one. How are the markets looking while I get that set up? Up. You've got

a bunch of Celsius creditors that are all on here. They're going to jump off onto the other thing. Yeah, I'm playing it now. Hold on, Simon that are all on here. They're going to jump off onto the other link. Yeah, I'm playing it now. Hold on, Simon, do you have it? Oh, Simon just held it. Oh, there it is. I hope this is the right one. Yeah, it is.

Since then, my office has exposed many of the industry's biggest actors as frauds. We brought cases alleging insider trading in digital assets, manipulation of the market for crypto tokens, criminal exploits of smart contracts, and investor fraud at the core of some of crypto's biggest players. And each day this week alone, my office has announced criminal charges shedding light on fraud in the cryptocurrency and digital asset ecosystem. On Monday, we announced charges against a defendant who allegedly used an old-school technique known as spoofing to create a website that impersonated OpenSea, the world's security engineer at an international technology company to steal approximately $9 million from a decentralized cryptocurrency exchange. These were the first criminal charges ever brought involving an attack

on a smart contract on a decentralized cryptocurrency exchange. And just yesterday, we announced charges against two defendants, a father-son duo, who allegedly engaged in a scheme to steal money from sophisticated and novice investors alike by offering a variety of fraudulent cryptocurrency-related investment services. This was simply old-school, old-fashioned fraud where the defendants made allegedly false promises about crypto to get money from victim after victim, which they then allegedly used to fund a lavish lifestyle. And now today I'm joined by our law enforcement partners to announce another significant step in our drive to root out corruption in the crypto

economy. Exactly one year ago today, Celsius Network, a crypto platform that at its height managed approximately $25 billion in customer assets filed for bankruptcy protection here in the Southern District of New York. Over the course of the past year, we've worked quickly to get to the bottom of what led to Celsius's collapse, to understand how a platform that advertised itself as, quote, the safest place for your crypto could have left investors holding billions of dollars in losses. Today, we have the answer. Today I'm announcing and on ceiling of an indictment,

charging Celsius's founder and CDO, Alex Mashinsky, with orchestrating a scheme to defraud customers of Celsius through a series of false claims about the fundamental safety and security of the Celsius platform. And for participating in a scheme with Celsius's chief revenue officer, Ronnie Cohen-Pavone, to inflate the price of Celsius's proprietary token, Cell. Together, these schemes allegedly when, in fact, from its inception, Celsius was taking far greater risks with customers' money than Mashinsky advertised. We allege that while Mashinsky was lying about

the true risk of providing crypto assets to Celsius, he was also causing the public to purchase sell at inflated prices. This personally benefited Mashinsky because he was secretly selling his own sell tokens at prices he knew did not reflect the token's market value. We allege that Mashinsky repeatedly claimed that he was not selling his sell when, in reality, he was selling huge quantities on the open market, lining his own pockets to the tune of $42 million. In addition to the charges against Mashinsky and Cohen Pavone, I'm also announcing that we've entered into a non-prosecution agreement with Celsius itself that reaffirms the commitment of the company's new management to maximize the recovery for victims and to cooperate with our efforts to hold those responsible for this fraud

accountable. The cases we've announced over the course of this week may all be different, and the allegations may be complicated, but the message is simple. If you lie, cheat, or steal, or if you rip off ordinary investors to line your own pockets, we will hold you accountable. Whether it's old school fraud or some new school crypto scheme, it doesn't matter one bit. It's all fraud to us. And we'll be here to catch it. Now, bringing a case of this complexity requires close coordination with our law enforcement partners, and I want to thank our incredible partners at the FBI for their work on this investigation, as well as our partners at the SEC and CFTC, who brought parallel civil actions today for their cooperation and hard work on this and so many other cases in this space.

Finally, I want to thank the career prosecutors from my office who are handling the prosecution, Noah Solowacek, Allison Nichols, and Adam Hopson, as well as their supervisors, Scott Hartman and Matthew Podolsky, the chiefs of our Securities and Commodities Fraud Task Force. I now want to invite up to the podium FBI Special Agent in Charge, Michael Brodak. Thank you, Damian, and good morning. My name is Michael Brodak. I'm the FBI Special Agent in Charge of the New York Office's Criminal Division. This case highlights the great work and outstanding partnerships shared by the agencies represented here today. As the indictment alleges, Mashinsky and Cohen-Povan knowingly engaged in multiple complex financial crime schemes while serving in leadership roles at Celsius. As alleged in large part due to the false portrayal of Celsius by Mashinsky, the company became one of the leading operators in crypto, and both defendants were fraudulently manipulating the value of Celsius's proprietary crypto token, CEL.

With the price of CEL propped up, they then sold their personal holdings of the token for significant gain. Mashinsky earned more than $40 million, while Colin Pavan netted about $3.6 million. This case is yet another example of what we see too often with complex financial fraud cases. When something seems too good to be true, it probably is. The FBI will continue to ensure that anyone committing fraud and deceiving the public through the misrepresentations of a business's financial standing or practice is held accountable. Through the actions today, the FBI hopes to be able to give the customers of Celsius, the victims, some measure of justice. I'd like to thank, for their partnership, U.S. Attorney for the Southern District of New York, Damian Williams, Southern District Securities and Commodities Fraud Task Force,

the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the special agents, intelligence professionals, and forensic accountants of FBI New York Office's Securities Fraud Team. Thank you. I'd now like to welcome to the podium Gurbir Grewal, Director of Enforcement at the SEC. Thank you, Damian, and good morning, everyone. Today, in a parallel civil complaint, the SEC also filed charges against Celsius Network Limited and Alexander Mashinsky, we allege that they engaged in an elaborate fraud involving hundreds of thousands

of investors and at its peak, over $28 billion in assets on the company's balance sheet. As alleged in our complaint, there were multiple aspects to defendant's ski. First, they falsely promised investors, quote, financial freedom. They promised them, quote, economic opportunity. And they promised them safe crypto investments with high returns through their earned interest program. Second, they misled investors about the viability of Celsius's business, often completely fabricating their financials. And third, they fraudulently manipulated the price of Celsius's own crypto asset security, the so-called sell token. Ultimately, the defendant's elaborate crypto fraud collapsed of its own weight, when their lies and other fraudulent conduct could no longer prop

up the Celsius platform and its offerings. And when it collapsed, unfortunately, it left thousands of investors lined up at the doors of a bankruptcy court, hoping for some recovery of their lost investments. Today, along with our federal partners, we're holding Mashinsky and Celsius responsible for their lies and for their deceit. Now, the U.S. attorney has detailed aspects of the scheme. I'd like to share a few more that are relevant to the charges brought by the SEC this morning. We've alleged that Celsius and Mashinsky made numerous false and misleading statements to induce investors to purchase sell and to invest in the earned interest program. Among other things, they misrepresented Celsius's central business model

and the risks to investors by claiming that Celsius didn't make uncollateralized loans, that it didn't engage in risky trading practices, but in reality, it did all of those things. We also allege that Celsius and Mashinsky misrepresented Celsius's financial success to make the company appear more successful and stable than it was. In fact, by the spring of 2022, even though they knew that Celsius was failing, Celsius and Mashinsky continued to prop it up by telling the investing public a very different story, claiming that, quote, all user funds are safe and that Celsius, quote, continues to be open for business as usual. Again, the reality here was much different. Celsius had approximately $1.2 billion more in liabilities than assets on its balance sheet at the time it filed for

bankruptcy. As we detail in our complaint, defendants also manipulated the market for the sell token by, among other things, publicly touting a buyback program where Celsius purchased the amount of sell needed to make interest payments to investors. But again, reality was much different. Celsius bought at Mashinsky's direction millions of dollars of additional sell to bolster its price and to induce other investors to buy it. As part of these efforts, they timed their sell purchases to have the greatest market impact. Now, the misconduct here is yet another example of the need for crypto market participants to come into compliance with our securities laws. Those laws are in place to provide critical protections to investors. Those protections include robust rule books that help prevent fraud and manipulation.

Those protections encourage proper disclosures, and those protections require routine inspections by the SEC. None of those protections were available to the investing public with respect to Celsius's offerings. And this case provides yet another stark reminder of the consequences of noncompliance in the crypto markets. I'd like to recognize the SEC team that worked on this matter. Randall Friedland, Christian Eskunst investigated the matter under the supervision of Pei Cheng, Stacey Bogert, David Hirsch, and Jorge Tenrero. Sachin Varma, Peter Rosario, and Adam Gottlieb assisted in our investigation.

And H.B. Roback will lead the litigation against Mashinsky under the supervision of James Conner and Olivia Chet. Finally, I'd also like to thank our law enforcement partners this morning, the U.S. Attorney's Office for the Southern District of New York. I think we've covered enough, Scott. But let's go back to the XRP story. And I know, Simon, you know, first congratulations, Simon, and everyone else. You got what you've been fighting for for a long time.

Mario, really fast, really fast. Simon, was there anything new there? That's all I want to know really quickly. Or was that effectively a very quick summary of what we've discussed yeah that that just touches on the surface like there's there's a lot more to it but yeah there's nothing new that came out of it let's go to the srp story i have been looking at the news uh uh scott and the iq news so i'm seeing from steve uh from uh pally to uh lawyer steven i believe steven pallyally writes his name. This is what he said. He put a clip. So basically institutional sales were securities transactions. This is, I mean, this is really

the final, we're getting the full thing. Programmatic sales and distribution to employees were not securities. Court punts on whether secondary market sales are securities transactions, see footnote 16, but trending that way. But so I'm not seeing much. I'm still digging in and not seeing the clear statement that there's not. The Southern District of New York concluded that, so this is where blockchain, the Southern District of New York concluded that Ripple's programmatic sales and other distributions of XRP, which is what you just read, Scott, did not shoot the offer of sale of investment contract. But institutional sales of XRP constituted the un not constitute the offer of sale of an investment contract, but institutional sales of XRP constituted the unregistered offer and sale of investment contract.

This is the best we could hope for. Brad Garlinghouse is spiking the ball in the end zone right now. So, I mean, pretty convincing. This is what Brad Garlinghouse just had to say on Twitter. Do you want me to read down Adam Cochran's summary? In a minute. Let me just read what Brad said. Go ahead, James.

Obviously, this is Tim, right? We said in December 2020 that we were on the right side of the law and we'll be on the right side of history. Thankful to everyone who helped us to get today's decision. One that is for all crypto innovation in the US.

More to come. All right, so... They're dancing on... We're all dancing on Gary's grave. Let's enjoy it for the few moments that we have. Go ahead. Adam says the following ripple case. Here is the good and the bad, but it's mostly very good for all else. For Adam to say anything positive, it's a big

thing. And a surprisingly big win. Literally. He said a surprisingly big win for XRP. First, judge did decide institutional sale fundraising was securities. No shit. Two, but fundraising was securities no shit too but that was the pro but that the programmatic sale on exchanges didn't meet third prong of howie what's the third prong scott okay sorry i i'm not reading the actual case no no what's the third problem the howie test third is it with the expectation of profit yeah they give it no simon yeah the giving of money what expectation

profit to common enterprise three okay now i've got it i've got them differently i've just googled it now number one is investment of money number two is common enterprise three is expectation of profit and four to be derived from yeah i thought the investment contract was... Yeah, so... I don't know why he's referring to three. All right, so sales to users via exchanges was fine as long as it was through order book and not ICO, IEO, launchpad-like things. So launchpads still considered securities.

Bounties, investments, and others using XRP, grants using XRP, and transfers to executives in XRP not considered securities. Bounties, investments, and others using XRP, grants using XRP, and transfers to executives in XRP, not considered securities. Overall, a huge win. XRP is one of the most centralized foundations with, yes, a very good point, with a key figurehead who has standard sales via exchanges and informal distribution programs. If those aren't securities, then nothing sold via exchanges is. The moral. 1. Don't do institutional private rounds

OTC. 2. Sell via exchanges. 3. Distribute via protocol natively. 4. Fuck you, Gensler. There you go. Adam and you agree on one thing, Scott. P.S. I'm at the leading edge of the fire Gary Gensler.

And if it's following, if XRP isn't a security, clearly BTC and ETH are not either. Good luck on stopping the ETH now, Gensler. And then last comment, he has one huge fucking winner here in his exchanges. True.

If institutional sales, OTC and direct token sales raises securities, sorry, direct token sale raises are securities, then all selling is going to flow through public order books again. No more billions in convertible funding rounds early on. Yeah, and by the way, new XRP should get relisted in all the places that delist it. Who delisted it?

Coinbase, for example, a number of people ages ago when the suits first came out, so it should be getting relisted and be more readily available for trading, which it really isn't on many avenues for Americans specifically. Last question before we go to our smarter panel. How's the market responding?

Oh, wow. Hold on. By the way, Scott, these exchanges all delisted xrp binance us bittrex bitstamp coinbase crypto.com etoro warby okay coin um and others suspended cracking qcon poloniex oh wow i had no idea yeah it's this is gonna be i mean this couldn't be obviously better news for xrp but it's just massive news for the entire market. This has to take all of the appeal away from the SEC to continue going after these. This is a massive win for altcoins, massive win for altcoins. And for the industry in general. Listen, Bruce, it's funny. I tweeted something that effectively every company that's been

passively named in one of these enforcement actions by the SEC should all get together right now and sue the SEC for harm, because obviously their coin prices were massively affected to the downside. This was basically market manipulation. And Bruce, you immediately responded saying that the entire industry basically should get together any crypto company in the country that has any sort of means and just sue the SEC. we should you know these guys love to bully everybody and use stolen worker wages to uh you know pursue companies and waste everybody's time and grind our industry to the to to a halt we we could have a much better world a much better economy we could have tens of

thousands of legally traded securities tokens and all kinds of amazing things, all kinds of jobs. And they've gummed up the works and hurt the entire industry. Yeah, we should absolutely, we should bury them. I mean, they were already fighting a double front war and they're losing and they're strained on resources. What if 500 of us all sued them with really good lawyers and really good systems? You know, let's bury these fools. They're complete tyrants, and they have no legitimacy. I love this industry, the securities industry, and I don't want a scammer in our industry. And by scammer, I'm talking about Gary Gensler.

I don't want him in my industry. I want him out. I want him out of my industry. I want a clear industry without scammers, and he's a scammer. He doesn't belong in our industry. He's got to go. I think we should totally do that.

Yeah, so this is kind of what I was saying. This is very interesting where it goes from here. So if you hold tokens on your balance sheet and you sell them to somebody, then you need to comply with all the disclosure requirements, suitability, accredited investors, or file it as an S1. If you want to go public and any of that stuff, you obviously can't file it as an S1, as Bruce has always talked about.

But then if XRP is not a security in itself, it's kind of the orange groves argument if you construct an investment contract that gives you entitlement to plots and a share in the profits of growing oranges it doesn't make the orange itself a security so it's kind of defined i think a very interesting part but now if you say that these layer ones are not securities then you have to go into the weeds in order to comply of is the company doing an airdrop are they doing a distribution is it a governance token or are they actually selling and raising finance so they've now said and made that distinction but then what happens next and this is what i've always been saying to Scott,

that if it's not the SEC that's regulating these tokens, the rest of the world is putting together virtual asset service provider regimes focused on money laundering. But the next phase will be market manipulation because at the end of the day, the exchanges are engaging in all sorts of shady activities where they're pushing up the prices,

they're getting their bonuses, they're getting all those. So that activity now needs to be regulated in these exchanges under a virtual asset service provider regime as opposed to the Securities and Exchange Commission, that type of act. So this creates that distinction. And once we have that distinction, you can then put together effective regulations around preventing all the shady activities that happen on the exchanges. But then the exchanges don't actually need to register as securities

exchanges in order to trade XRP if if this is if this is the ruling and you just need to have effective disclosure when selling those tokens and benefiting from them so it's gonna it's gonna create an interesting distinction from here on in because bitcoin yeah what's going on guys i think this is a massive win for crypto for the first time in a very long time crypto actually bagged the win and uh odd enough it came from this xrp versus sec case and um i think it actually makes a a good stand for how coinbase is dealing with the sec case as well i know they've been going at it so it's going to be uh some very interesting development yeah i want to get John Reed, guys.

We need to get John Reed and the attorneys, everyone that covered the Binance story and the Coinbase story a week or two ago. I'm really interested to see how this impacts their case. Does that make their case a lot stronger against the SEC? They've got to be dancing at Coinbase right now. They have to be so excited at Coinbase right now. I mean, the key of the Coinbase right now. They have to be so excited at Coinbase right now. I mean, the key of the Coinbase enforcement

action is that they're listing all these unregistered securities, and if a court says that they're probably not that, and that secondary sale is not a security, then the SEC's case doesn't hold water. Just reading now a piece on this. So what can the SEC do next like legally speaking

what is the process is did they lose the xrp case this is it yeah hi uh this is george from gordon law they they can so they've won at the southern i forgot where this was uh what district this was in. But they can definitely appeal, and they're going to appeal. We can almost guarantee that there will be an appeal, and then we'll see what those judges say. But right now, there's no, we don't understand what was part of the Howey test that didn't pass the Howey test for security. So once we see that from Judge Torres,

we can understand a little bit more of why this wasn't the security given the Howey test. The courts have been pushing back on this literally constantly, by the way. So regardless of what the SEC says, the Voyager bankruptcy attorney pushed back hard against the SEC in these similar claims. Grayscale, they pushed back against the SEC and similar claims. I mean, the SEC is literally just getting destroyed by the judicial system in the United States. It's very possible, too. It's very possible, too, this may set up finally in the Supreme Court to come down with a case that updates the Howey test when it comes to digital assets, because we've all been complaining. We're trying to use a really outdated legal doctrine to interpret a new and revolutionary way of doing finance. So how does that link to the library case as well? Because in that case,

I think it was a couple of days ago, that no decision was made. There was no position by the judge. I think John tweeted asking for some sort of clarity. So the library case will obviously benefit from what we saw now with XRP. Gordon? The library is wound down, but go ahead, Gordon. Gordon or Carlo, go ahead, guys. It's hard to say. We as lawyers don't really get to tell federal judges what to do. So I think this might spark another request for further ruling on that subject matter. But it's really going to be up to the judge's discretion.

The judge wants to issue any clarification. One other question as well, Carlo, on how common is it for the SEC to lose a case like this? I think this is a stunning development and a real strike to them. You know, they've enjoyed a great winning streak because what they've done is essentially forced settlements. There have been very few cases that have been able to go the distance with them, especially given the limited appellate rights that you have. And when you force a settlement, you essentially put a gag order on the parties and you essentially kill any issues

that were in dispute. So this case going as far as it did, because there was a lot of aggressive litigation, actually put the SEC on its heels to have to defend the allegations it's made. And this judge in particular did not find that their claims had merit. Now, it's interesting too, to observe, jumping back to Celsius, you keep seeing this pattern of concurrent prosecution and concurrent filings. Every time there's a major criminal case being brought against one of these crypto platforms, it always seems to be in tandem with CFTC and SCC action. So I predict they're still going to go aggressively against any fraud in the space, but I think they're going to

have to recalculate their strategy when it comes to this position that all of these tokens are securities. Yeah, I agree with Carmelo. In terms of fraud, that's kind of where the exchanges are at. They're more in that space because last time i was checking out what gary genzo was saying um it was it seemed like their strategy was that in normal uh finance that the brokers can't trade against their users but um in crypto the coin bases of the world could be trading against their users depending on their market activity. And we wouldn't be able to see that. So that's another layer that might not-

That is different though. Yeah, I agree with that. I mean, listen, people are talented trading their customers. I didn't see that in the Coinbase case. They had their insider trading case, but I haven't seen that necessarily in this enforcement action. It was more of a BitMEX thing and then in the Binance action that was heavily claimed, but I haven't seen that necessarily in this enforcement action. It was more of a BitMEX thing. And then in the Binance action, that was heavily claimed. But I haven't seen that in the Coinbase action. Listen, the bulk of the Coinbase action is about unregistered securities. Yeah, definitely.

Yeah. And if we get that clarity from Ripple, the SEC is on their heels big time in that case. The SEC is getting smoked. Let's go. let's go. Mickey, not only are you the sponsor of the show, and I'll give you a shout out actually again, because I know you've been waiting for ages. Anyone that wants to check Mickey's project,

he's on stage now. I want to get your thoughts, by the way, Mickey, on this ruling and what it means for you as a project. But Mickey's project, World Mobile, which me and Scott are big fans of, Scott is friends with Mickey. They essentially democratize or decentralize wireless network operators.

You guys just got, I think, an ex-SoftBank executive, the head of India, came in as an advisor to you guys. And you've got a pretty interesting

announcement to make. So, yeah, man, I'll give you the mic for 10 seconds. Tell us about World Mobile and then give us your thoughts as a project on this ruling, what it means to you

and what it means for, you know, does it give you peace of mind? I'll go the other way around because it was quite emotional uh first of all hello everybody thanks for having me on scott saw you with james the other day um mario looking forward to meeting you in dubai and uh always a fantastic show that you put on but the reality is the reality is is that um people need to stop chasing yields all All this magical internet money, all this Ponzi to get 9% and to get 20% and to get 15% that just doesn't make any sense. So for us, you know, we came out with something that has absolutely massive demands, almost infinite demands.

People are chasing gigabytes. People are bringing money into the network and paying with actual cold cash don't chase yields if you chase yields you're going to fall on your ass at some point simple as that i'm very sorry for everybody that has but i think it's a very important important note to take and the future is real world projects that actually have demands that are bringing in money that people actually want and need to spend not just because they're looking for a crypto token to go up 200 300 400 500 and get the yield at the same time and then on the xrp ruling uh mickey what are your thoughts i've met brad a few times you know i think they've done things right i think they're they're really good in this industry

um i think it's massive massive massive for crypto and i think it signifies uh signals a new a new era for us really with new regulations and and clear a clear line all right man and a quick question to you before we continue to the show and thanks for partnering with us and tell us more about world mobile man because again we had a call before the show and um on personal level, I fucking love your project. And obviously you're a partner of the show as well. Thank you, man. I appreciate that. World Mobile has a new economic model to incentivize people to put up infrastructure where there currently isn't any. Around half the world is totally unconnected.

And probably around 70% of the world, including the unconnected, is underserved. So we recognize this. We've been in the industry for many years. And we saw a way to take a swipe at the oligopoly and to bring the money back to the real people, the people community first, community building. So World Mobile is something that we believe is the most real project in crypto. And yes, none of these yields, none of this funny stuff. Real money coming from real people's pockets to pay for data, to pay for voice, to pay for the internet like we're using the internet right now.

We're going to be chatting to you in a bit, man. I appreciate being on the panel. XRP's up 30%, Scott. So I think everyone's celebrating. Hector, Jason, I want to kind of move the discussion and Hector, Jason and Nick, if you guys can tell us what does that mean for the industry? What does that mean for Alts?

What does that mean for all the projects? And, of course, for exchanges? Yeah, this is Nick. Thanks for having me up, guys. I think, first of all, Ripple is our lead investor, actually, and we're very, very happy for them. I think it's a huge win for all of us I don't know how many of the speakers up here have started a company

that actually has a token which I have and I've been through the whole situation of spending a lot of money in legal fees to figure out actually how to create something that's a utility token and not a security right and it's a hard way to go through

millions of dollars in legal fees because there isn't a blueprint from the SEC of how to do things, right? So you have to guess all the time, things change all the time, and you have to go back. And so it's a nightmare. So hopefully, the SEC learns a lesson after this whole thing and they will finally give us what we all want, a blueprint of how to launch a project the right way and to do everything by the book and do it right without having to guess and assume what you need to do to actually launch a project if you want to.

So I was just sending messages, celebratory messages. All our groups, all our project groups are just celebrating right now. Hector, Jason, maybe give us another side of this. Are we getting too excited too quickly? Because I can't see anyone not being excited. Even I was talking earlier, even Adam Cochran is saying this is extremely bullish.

So we'd love to get your thoughts, Hector. Yeah, so I've been reading the filing and just some things that stood out for me were so basically the stuff is categorized into like three different buckets. It's the what we call the programmatic sales, which are just what they call Ripple's blind bid-ask transactions, and then institutional sales, which are direct sales into a large group like hedge funds. And so the hedge funds, institutional sales were deemed security. The programmatic sales were deemed not security. And the reasoning by the judge is because in the blind bid-ask transactions, programmatic buyers

could not know if their payments of money went to Ripple, which to me stands out as a very weird argument. Because if you go right now and make a purchase of Tesla and you sell it to another person, according to this premise, it's no longer a security because the money did not go to Tesla. It went to another third party, which I find to be very weird. And then there's also this economic component to the programmatic sales, which they keep iterating due to economic realities of the programmatic sales. And they list that programmatic sales represented less than 1% of total XRP global trading volume. So does that really mean that the majority of XRP that's out there is under the security ruling? How do you handle that and those secondary sales when then now if you go sell them, they're no longer securities? I think it's a very back and forth, not very clear decision by the judge.

So representative Tom Emmer tweets the following. I'm going to read that here. Where is it? Where is this, Tom? The Ripple case is a monumental development in establishing that a token is separate and distinct from an investment contract. It may or may not be part of. Now, let's make it law. And it highlights this part of the ruling.

XRP is a digital token. It's not in and of itself a contract transactional scheme that embodies the Howey requirements of an investment contract. I want to get your thoughts on this, Jason. Jason, are you there? You got your hand up, man. While waiting for Jason. Mario, while Jason's coming up, I want to add, this is great timing because we just saw that yesterday, Senators Gilda Brown and Loomis reintroduced their proposed bill in the Senate. So great momentum, hopefully, to get this over the goal line now. The shift in momentum is insane how quick it was. Just a few weeks ago, we're talking about how

alts are dead and alts were dumping and how all alts are going to be considered securities. And now the entire momentum changes because of one ruling and something that none of us expected. I'm sure no one here... Did anyone expect this the way it went? Anyone at all? I thought so. A lot of people thought...

I mean, I think there were a lot of people who thought that... Genuinely thought that the XRP would lose this case, especially after what we saw two weeks ago? Yeah. I mean, I would have put it at 50 50 but it's a really good news yeah let me read out more uh more charles hoskisson tweeted well done xrp one small step for xrp nation one giant leap for crypto and then we've got here ted says the following tldr seed rounds raises are considered investment contracts again that doesn't come as a surprise but xrp is not considered a security generally

which should lead the market to speculate that other altcoins are not securities now is there any circumstances and maybe carlo you can offer some clarity on this one carlo carlo or bruce or simon is there any circumstances where other altcoins could be deemed securities despite XRP not being considered a security? And I'm not talking about private rounds, and I'm not talking about launchpads. Again, for anyone listening, launchpads are considered securities. Just keep that in mind. So any launchpad should not be celebrating right now. But Carlo, go ahead. Too premature to say, because I got to dig into the opinion. Spent the morning getting up to date on Celsius and that indictment, you know where you buy it back in relation to the profits of a centralized company and it's a you know even bnb at least

it's got its own layer one if you're creating an erc20 token that exists on top of ethereum and then it is connected to the profits or expectations of returns of a company. I don't think that because XRP is not a security, the same arguments are going to apply for that type of thing. So I think this is a layer one argument, but I don't think it means that companies can start coming along, issuing tokens that are you know buy and burns and that type of stuff and then start to start to get back to what everyone was doing in

2017. What does that mean? What would that mean for Coinbase now? So well coin I mean I think this sets the framework which the regulators want this industry to be a Bitcoin commodity, Ethereum potentially commodity, and then a bunch of layer one innovation that could happen under some kind of regulatory regime that prevents market manipulation and all sorts of stuff. So I think it goes back to what Coinbase was already doing when they were deciding what tokens to list. They were going through analyzing them from the Howey test, requiring legal opinion that they're not securities. And then over time, lawyers just refused to take on that liability anymore because they couldn't find those arguments. So I think what it means is that Coinbase potentially, depending on the full outcome of this, goes back to a similar business of what it was doing.

And then you can still have tokens in the future that want to be securities, that are securities, that require disclosure. And they even, I know for a fact, because they bought our broker dealer and ATS, they can trade those securities and go for the security token market moving forward. The industry that Bruce is trying to push that never really happened. So overall, I think Coinbase will see this as we were doing what we always thought we were meant to be doing.

And, you know, we were making sure that we weren't listing securities and these other things. We put them through a test and now there is case law and clarity. But it's going to be very interesting to see what happens next, because at some point they have to make they have to draw a line and say this is what a security is and this isn't what a security is and then what's the regulatory regime for those that aren't securities that can still be subject to all the shenanigans

that the manipulation of tokens like what Mijinski was doing with the CELT. I'm curious I think really important, sorry Mario really quick, important to note maybe it was Carlo who said it. It was a point I was going to bring up that Lummis-Gillibrand was re-ignited yesterday and re-proposed. Really important that in that proposed legislation, which is coming from a Wyoming Republican and a New York Democrat, they said that exchanges should be regulated by the CFTC

and not the SEC. So that also is pouring a lot of cold water on the SEC's enforcement action against Coinbase because it could literally pass into law in the Senate that it's the CFTC's jurisdiction and not the SEC. The only point I want to make today, really, guys, at this moment, the SEC is absolutely getting an island and being dumped on. We should be just dancing on their grave, even if it's only for a day. Sorry.

I am exuberant. Let me summarize it again for the audience, anyone that just joined. I see a lot of people joined in the last half an hour. So we've got here, Meet did a great thread on this and i'm gonna read it out because it sums up the uh the ruling pretty well paul states that the tokens themselves are not in and of themselves investment contracts and are therefore not securities rather the transaction in which they are sold or otherwise transacted is often poor. Key distinction here and argument many have been

making. Nice win. 2. Institutional sales of XRP to sophisticated investors satisfy Howey. So they are considered securities. That's not a big deal. So who cares because that can be covered under exemptions to registration under Reg D. Programmatic sales to public are differentiated. Specifically, as these sales were blind, the buyers could not have known the money was going to ripple. So commonality and investment in the common enterprise could not have existed. This is a huge ruling. I want to break this one down. Carlo, are you still with us? Let me see the stage. All right, you're there, Carlo. All right, Carlo, Simon, I want to break this particular one down a bit more, and I want to understand it.

So I'll read it out again. Programmatic sales. The reason I'm doing this is there's a lot of projects listening and seeing if this applies to them. Again, this is not legal advice for anyone listening, obviously. Programmatic sales to public are differentiated. So programmatic is essentially on exchanges, which is why this is a big win for exchanges.

Specifically, as these sales were,-unquote blind, the buyers could not have known the money was going to ripple. So commonality and investment in the common enterprise could not have existed. This is a huge ruling. So can you explain why is that such a huge win? Why that particular section is the most important and how that applies for other projects? We'd love to get your thoughts, Carlo and Simon. I think that's important because I think that's been a large part of the argument that Coinbase's counsel has been making.

We are far removed from securities here because of that detached relationship. I think that this only bolsters what Coinbase is trying to establish in their case with the SEC. And I think this further removes digital assets from the Howey test standard, which I think everyone on this panel will agree is a bit dated and flawed. Simon? Yeah, so it's just trying to draw the sand between if you have a token that feels sufficiently decentralized, whereby it can be traded on an exchange in a similar way to what we're used to in the crypto markets, how do you distinguish between those tokens that directly benefit the company and are correlated to the

company versus the ones that may not need the same level of disclosure because they're bought and sold on an exchange so it's making the distinction between the primary markets and secondary markets as we call it in in capital markets um and uh and the you know the key is that the reason that you know many i mean if you look at, the company, their number one source of revenue is selling the tokens. But I'm sure those were sold with full disclosures. But you can't expect an exchange to make those disclosures because they'd have to operate more like a public reporting company whereby you can download all their financial reports and stuff like that so this is all about crypto not disrupting capital markets by trying to make that distinction because the end result of all of this is that everybody would

end up delisting from the new york stock exchange and list on a crypto exchange if it was a different type of regime. And that's the bigger picture that they're trying to make the distinction between the tokens that were sold by Ripple, the company, versus the tokens that are bought on a second. To add further to this call, also Woolsey's speculative motive by the purchaser of an asset is not enough to evidence an investment contract. And because they didn't know they were buying from Ripple, they did not derive that expectation from Ripple's efforts. That one's a bit shaky.

Like, I don't get how the judge ruled that. And by the way, it's good news. Mario, how is that any different from every, like, if right now if you buy Tesla on, I don't know, TD Ameritrade, and you buy it from me, you're not buying it from Tesla. Tesla has no impact between me and you. How is that any different than this? Does it make any sense to me?

No, Tesla definitely meets the definition clearly as security. No, but they just said anything coming directly from Ripple, XRP coming directly from Ripple, Ripple is a security. So Tesla issuing share directly for me, to me is a security. But for some reason, when I then take that Tesla or take that Ripple or take that XRP and sell it to you, Bruce,

it's no longer. So how is that? No, they, they said it was a securities offering. And I think they're going with the idea that. Sorry. And you can,

you can be decentralized so that the instrument is not a security. But in the case of Tesla, since that's a stock, the instrument is still a security clearly under them. So is that the only difference? It's kind of like the argument. So you can have a contract, which is a simple agreement for future tokens. And that contract is a security um but the you know the underlying asset was you know this was the argument that people were making when they were trying to comply uh the saft is a security but the underlying token is a utility token um and it gives you entitlement to that token just like the orange growth is a security the investment contract but the orange isn't but the the hector's point though is interesting so so what's contract, but the orange isn't. But Hector's point, though, is interesting.

So what's the difference between a Tesla share that gets traded on an exchange versus an XRP token? Is that because XRP is more decentralized than Tesla? All stocks are, yeah. Well, all stocks are always securities under the definition of the 33 Act. Every single stock is always a security. It's right in the definition. It says stock. Less of a. It's right in the definition. It says stock...

Then have everyone move. Have Tesla move tomorrow and just issue tokens for everyone. But there might need to be... There might need to be... I reckon there's more around the whole Hedman argument. I think this is where...

I think this is the whole foundation of it, yeah. But are we really talking about the fact I'm still digging into it but to answer the confusion there with Tesla This is the original stale of XRP that would have been the security right and that all the secondary sales since or not I mean that would be how it's different than then Tesla. No, no, no, but the crypto like you said, but it's close So what Hector saying is that why the secondary sales of Tesla are considered securities, but the secondary sales of XRP are always securities. And when you go back to Inman or anything regarding the crypto, there's a precedent here that things can be sufficiently decentralized with time, that there's a sliding scale. But in the argument, they say there's even a relationship between a central entity in the

institutional sales. So there is no sufficiently decentralization argument when they're first issued. But yet for some reason, in a secondary sale, because Ripple, in the argument, it says, because Ripple was not a direct beneficiary of the sale, therefore it's not a security. That doesn't make sense to me. It's the exact same thing as any other secondary market security. You buy Uber directly from Uber, yeah, that's a direct sale. But if I buy Uber on the secondary market- Yeah, the XRP token, but the purchase of the XRP token doesn't necessarily accrue value to the company Ripple, correct?

Exactly. Anything else could be made that same argument, right? It actually does, because they've got 60% of the supply on the company balance. But I guess I'd love to learn about it. Yeah, sure, of course. But that's the same argument. Well, it's just like owning real estate or something as well. I definitely think that there's something around that sufficiently decentralized that we probably haven't actually dug into, I reckon. There's a footnote right here. It says on page 18, the core holds only that a common enterprise existed between Ripple and the institutional buyers. The core did not reach a question whether their common enterprise extended to encompass other XRP holders, which, again, that's the weird distinction. But the real question in the essence of this is,

look at Ripple Labs, look at XRP. Does XRP need some type of disclosures when people are trading it on a secondary market? Just like if you buy shares in Tesla, you expect some kind of disclosure standard so that you can say, well, you at least had access to the type of information. And that's where it goes. And so if you have this sufficiently decentralized, eventually there's going to be some kind of disclosure statement requirement. And this is where it gets a bit funky because Ripple was layer one and they're arguing, I guess, sufficiently decentralized

and it could stand without the company in itself. It's, yeah, it's very murky. Nick? Yeah, I wanted to go back to something else very, very quick, Mario. You said earlier that any Launchpad tokens are considered securities, and I assume a lot of new founders are listening right now. So could you clarify that? No, man, I can't. I'm not a lawyer.

I just read it out. I really care what I say. But essentially, what I understood... Go ahead, Nick. Yeah. The reason I'm asking is because how about launchpad tokens that did not or will not sell to us um residents and and citizens how about those well the sec doesn't have jurisdiction unless it's sold so if you're on a dex and an american ends up buying it all the same yeah anything anything it doesn't involve americans don't worry about like all this doesn't really matter to you

um but if you're targeting os investors this is where where um yeah where it matters and obviously yes the u.s would still say it's a security but it doesn't necessarily matter it's really important to just think to just step back because it's easy to get caught in the weeds of all these things. Every single case has different facts and circumstances, and every single case is different. So you want to be careful about going too much in the weeds about reading into things like the issue where they mention about the common enterprise between the institution and XRP and Ripple. Those are specifics to to this case it's totally different from tesla because it doesn't matter if it's a common enterprise because we already know it's a security it's already a security 100 every single stock is a security always is right in the definition of the 33 act which which which by the way howie's only part of so you're looking at a

part of a part of a part so you have have the securities definition of 1933. Okay. It's this big, broad definition. It includes stocks and bonds and all kinds of other stuff, including investment contracts. That subset called investment contract is defined in the law and also by a court case called Howey, which specifically said how you define that particular thing. And it has those three prongs that everybody knows about. And they're zeroing in on one prong. So it's a subset of a subset of a subset. It's not relevant to something like Tesla, which it doesn't matter if it's an investment contract or not. Delete that whole part of the law. It doesn't matter. It's a stock. Stocks are securities. So all stocks are always securities. All bonds are always securities, 100%. Where you get into something like this, it's a question of whether something's a security or not. That's the important thing.

And you got to always go back to that definition. Just Google it. Definition of a security 1933 Act. Usually one of the first, I like the Cornell definition. It's all the same definition, but Cornell has it nicely formatted so you don't have to wade through 88 pages. But it's a big fat definition. That's what matters. Anything under that definition is under the jurisdiction of the SEC and you're required to register as an exchange and broker dealer and all that yada, yada, yada. If you are not under that definition, none of the SEC's business. So every single thing in all these cases comes down to this thing is, is it under that definition of the 33 Act or not? And when it's clear, like a stock or butter, butter is definitely not a security. Stock is definitely a security. Those are easy.

When it's a gray area of like, well, is this thing, is it not? Is it a bond? Is it a stock? Is it an investment contract? That's when the courts come in. And what a court says, that's where we are now with this one. What a court says matters a great deal. If it's not a security, SEC has nothing to do with it. If it is, then you treat it under this whole regulatory regime. And Carlo, one last question I have for you is, what will the SEC, how does the appeal process look like? How long does it take?

And what is the likelihood, statistically speaking, based on this particular case? How common is it for appeals to succeed? So the appeal process will be initiated immediately. They'll file their notice of appeal. It'll then get designated to the court of appeal for that particular jurisdiction. They'll set a briefing deadline for each side to submit their proposed briefs. It's going to be based on the record. So it's going to be based on all the motions, all the pleadings and orders that were filed in this case. And I anticipate the SEC is going to vigorously fight this decision because a lot of time and

money has been invested into this lawsuit. And ultimately, someone's going to have to appear before Congress and explain how the resources at the SEC are being used, and are they being used to indeed protect investors, and are they being used in a way that's obviously maximizing their mandate. And this loss is probably bad for that funding initiative. So I think it will go up. I predict this case will probably go up to the Supreme Court because of the implications broadly on so many other pending suits. I have to jump out at this point, Mario,

because I've got to go to federal court today and appear on, of all things, a Bitcoin fraud case. So I appreciate the time as always. And I'll be happy to jump on again in the future but i think all in all this is a great day for crypto i appreciate it look man um carlo appreciate being here and for everyone else like where um there's an argument to be made now that um altcoin season is here scott is that an argument you'd make because i'm sure ryan will be saying this

in his video tomorrow yeah i i need i didn I don't know what's going to happen with future price action. I can just tell you that there's no reason, at least the argument can be made, that the things that have been holding them down and the fear and uncertainty and doubt surrounding points is gone. I don't expect that means that

everything should go up, but I will say that the major obstacle to them doing so has been removed mickey are you there man who is it all right bro let's let's dig into world mobile man you're a partner of the show been been waiting for a while to have this chat i appreciate being patient with us but man before we kick it off with a bunch of questions tell us about world mobile i've talked about it a few times you've been on the show before and um and you know me and scott on a

personal level love what you do and obviously um the show loves what you do as well as a partner but go ahead man tell us what you do we we have a new economic model to put our infrastructure where there isn't any the world's half the world is unconnected and a lot of the world is underserved even where i am right now there's 3g connection only in a developed country so what we've done is we've taken all of our now so all of our experience all of our skills and we've distributed hardware across the world to show that there can actually be a sharing economy that earns enough revenue to incentivize the people who are hosting that sharing economy to run it. So the use case makes a lot of sense. And I know you've had your token for a while.

So I'm curious, when you say you put infrastructure where there isn't any, can you elaborate? I know we spoke earlier and you mentioned something about air nodes. Can you talk about what this infrastructure is? Like, how does it work? Let's say I want to participate. What do I pay? Where does the token come in? It depends where, right? First of all, on the front layer, there is nothing to do with crypto. The reason for this is if you want to connect a billion people or more and you want to... World Mobile has the name, right're we're many associators to only africa but actually we're in asia uh we're now in the usa and we can talk about that later

but you you need to be able to make sure that you follow regulations a lot of the things that uh machinsky and others didn't do so what we made sure to do was make uh to the crypto layer is actually at the mobile core so the first layer are called air nodes air nodes can be put up on a roof on the side of your house in a busy populated area in a remote area they range in price if it's like our network in zanzibar which is primarily made up of wi-fi nodes this is very cheap a wi-fi node um as you know you go to buy a router, $300, $400. A commercial router, $600, $700, $800. We then feed that with fiber. Where we don't have power, we use solar power and a backhaul that connects an air node

from the point that we do have the internet. And boom, you've got connectivity. In an African village model, it makes a lot of sense because it's the most compatible. So people may have old phones feature phones phones but most phones connect to wi-fi if you're talking about places like the united states of america wi-fi isn't so beneficial it is for offloading what does that mean when people are watching netflix when people are watching heavy stuff wi-fi can be really fantastic the throughput is

really fast everything's really strong. But actually, the reality is, is that people... But Miki, why do you talk about the US though? The US... I guess most of the US is connected. That's not really market, is it? I think you'd be surprised, right?

The US is... Okay. A lot of the US is connected, but around 10% of the population is completely unconnected and 30% of the population is completely unconnected, and 30% of the landmass is unconnected. 10%? Hold on, did you say 10% is unconnected?

Yeah, approximately 30% of the land. Even if you're connected and you're driving through 30% of the land, you're disconnected. That's mental. Exactly. So you go from place to place, and then all of a sudden you're driving through Utah, or you're driving through Nevada, and then you've got no connectivity at all. It's annoying for people who listen to Spotify or Apple Music on the way, but it's even more annoying when someone's trying to have a business meeting, a Zoom call, in a place that they can't. So not many people think this and actually lots of European countries outside of the capital or major cities and towns also very bad so it's a

problem why is it a problem is because telecom companies they're an oligopoly they've done a great job so far but clearly they've left half the world off of line because it's not profitable to connect the unconnected or to connect the underserved so using their legacy infrastructure using their legacy business models, they've kind of eaten up the market but can't get any further. So what we've brought is a new business model, a sharing economy.

What we've brought is off-the-shelf hardware as well as our own proprietary patented hardware and combined it and found a solution not only to fix the rural problem but also to fix what we call the Swiss cheese, the holes in connectivity. Before I ask about the token, because I know this is where Simon's going to start

trying to understand it. Scott, did you have a question first? I wanted to actually ask about the plans in the United States then, specifically. The plans in the United States. So we have just secured Spectrum, quite a large chunk of it, a big win for us and a big win for the world.

What Spectrum, man? What Spectrum? Spectrum is in the airwave. It's what you transmit with. It's very expensive to buy. And most of the big companies hold it. And that's why you don't see many small companies coming out. So it's something that's absolutely needed in order to run a telecom network now a lot of the other decentralized wireless players um you can probably name them scott rather than me but um they're using cbrs they're using completely unlicensed spectrum and this is great but what they're doing is they're building very small cell network that really can't cater for a mass adoption so we know that you can use cbrs you can use wi-fi by the way cbrs is very similar to wi-fi it goes a little bit further in distance

but has a lot of the better properties for handing off so when you go from one cell site to the other if you notice with wi-fi in a hotel for example you go into the lift you cross one area all of a sudden it takes you five seconds ten seconds to to. That's not good if you've got a call happening. That's not good if you're streaming something. Mickey, look, the solution makes sense. The problem you're solving makes sense. But where does the token come in? I know that's a common question we ask every crypto project. Because you said on the front end, the front end doesn't have a token, which is actually a good thing, a selling point, because a lot of people don't want a token. They just want fiat.

So the front end is cash, but where does the token come in? The token runs the mobile core, so it's the fuel of the network. The token is what the Earth node operators, there's 1,000 Earth nodes in total. I think we already have 980 operated right now, approximately.

They're one of the biggest NFTs on the Cardano. I think the biggest NFT on the Cardano blockchain. But the token itself is there to reward the Earthnode operators for running the network themselves. Without the Earthnode operators, the Airnodes are useless. Without the Airnodes, there's no revenue to feed back in to then do the buyback for the token. Okay, that makes sense.

The other question I have is, is decentralization is always sexy, like decentralize this, decentralize that, but a lot of times it doesn't make sense. So why should telecommunications be just decentralized? What's the purpose of it? Because you talked about not having coverage on 30% of the territory in the US.s 10 of your citizens and obviously in other

countries it's a lot more but why don't the oligopolies the big companies why don't they offer a coverage why do why do you guys solve that problem like i said before their business model their legacy infrastructure doesn't allow them to typically if you want to enter into the mobile market you know put 300 million dollars in your pocket and then go out and raise another 300 million dollars and then you can enter into the market licenses buying infrastructure from samsung ericsson whoever it may be it's a game right they know how to play they've been playing it for 30 years they jump in and they control them the the market again, evidently, with half the world being unconnected, and not just rural Africa, which a lot of people think, USA, Europe, London city centre, all these places,

that model has stopped working. The growth of connectivity hasn't happened. But even more than that, us, the payers, the users of a network, deserve to know what's happening with our data deserve to understand how much we're getting billed and when on an immutable record deserve to actually have a say in the network now telecoms is a 3.5 trillion dollar market without value-added services when i talk about value-added services i'm talking about banking the unbanked i'm talking about netflix i'm talking about all these different elements that run on a

mobile phone or or run through an internet connection so there's so much there to share and there's so much space there to to cover it's just crazy to me and has been for the last five six years that nobody's done what we're doing people have tried to do something similar helium did with iot and it was a great model and they showed that um when i say a great model a great model to show their share and economy can work a terrible model for revenue because iot is not ripe yet maybe in 10 years 7 years 12 years people machine to machine will start to pay more but i think you you know how much the Helium network makes. Yeah, yeah. Can you compare?

How do you compare to Helium, man? Because I was waiting. I know you're a partner of the show, but I still ask tough questions. They have a million nodes out there approximately. They've very much been inspired by our model. So I think they're going after a similar thing with CBRS units. And they claim to be 5G,

but it's actually 4G+. I guess the easiest comparison is to say that with our 400 and something nodes that we've got in Zanzibar, where we've been fine-tuning the share and economy, running only Wi-Fi, I think we're making three or four times a month what they're making a year.

Sure, man. These are some good numbers. Anything else interesting? I know you have a new team member that you've... What is this called? I was going to ask. Go ahead. I was going to ask the same question, but then one more.

It's a massive honor. We already have an incredible team, right? You've got James Tagg, the inventor of the touchscreen telephone that you're using right now, that we're all using right now to you to to listen to twitter i made the first um voice over ip call over a mobile network many other patents one of his latest patents is uh an antenna that um what's a world mobile patent but you know james is a co-founder of world mobile we've got chris watson one of the most esteemed uh telecom lawyers in existence. We've got the core team. We've got regulators.

But our latest addition, Manoj Kohli, is on the next level. I think he's considered one of the three top CEOs of all time for telecommunications. He joined Bahati Airtel million customers just in Delhi. When he left, there was 450 million customers not only that his last eight years he was the the head of softbank india uh he's very famous in india he's very famous around the world and to have someone like him agree to be an advisor is uh is next level we recently sat and did a workshop with him for four or five days in in la and um yeah the guy is the work that i say is he's on the next level and he believes in us right that's that's the most important he's been watching our progress

for the last three years uh speaking to him every six months and now we speak to him every week uh and he's helping us he's helping us to get to where we need to do and to to kind of disrupt this trillion dollar economy and and connect the rest of the world. That was my next question. Yeah, Mickey, that was my next question. We talk about disrupting it. Is there a world where we can replace it? I think so.

I think so. Look, mobile network operators, by choice or not by choice, they are stuck. So if somebody brings out a new model, a model that works, a model that incentivizes the people who operate this infrastructure, the air nodes and the earth nodes, then I truly believe that we can change the world. We can not only connect everybody, but we can also do something, the dream and the promise of crypto, right? Everyone talks about mass adoption. Everyone talks about banking the unbanked. You know, these are a key words, just search it on Twitter.

How are you going to do that everyone needs internet first of all if you want to get mass adoption and you want to work in uh in the in the the third worlds you need to give them internet second of all the third world also exists for 10 of the people in the united states of america and that's why our recent announcement today of acquiring Spectrum is probably the biggest achievement for us as a company. And definitely puts us in a league of our own as a DY player. Man, I don't have any questions. Scott, anything else? So that's it. It's a pretty dope project. I know you're a fan as well. Pretty good news, man. It started with Celsius, which is getting arrested.

Then while we're talking about this and going through the indictment by the DOJ, we have the SEC complaint, we have the CFTC, FTC. And during that, Scott, you get that notification of XRP judges ruling. And then we didn't know whether to believe it or not. I remember at the beginning,

you kind of read it, but you were hesitant to read it um and also i didn't know if that was like if it was like a small statement by a judge or if this was the actual like really the final thing exactly exactly exactly exactly and obviously the the reality is guys is that we're gonna have a new bull run come there's gonna be lots of other companies that come to fuck a load of people. Excuse my language. My kids do go to French school, so. Right. Excuse.

And people are going to forget. But every time more people remember, like Simon, who was on the call earlier. I don't know if he's on now. Man, you're losing a thousand bitcoins, you know. Maybe he could afford to lose it and he didn't have to move country and he didn't have to move houses and he didn't have to change his lifestyle maybe he couldn't he sounded really emotional and there's going to be so many more people like that because 95 to 99 of crypto is a scam and what we need to do is we need to back

real projects real builders and look at the use case if the use case is a ponzi and it looks like a ponzi chances are it's a ponzi if the use case is giving you a yield you jump in early and you're aware of it giving you a yield you're just shitting on everybody else this is maybe uh okay for some people for us it's not in the projects i've always been involved in have revolved around supporting people and their growth what why world mobile is different than any other project that i've been involved in number one it's a real world use case for crypto number two no magical internet money all the money comes from people buying top-ups with the credit cards with whatever they they do on online or from their pocket and walking into a shop using data using voice and boom

their money enters into the ecosystem and gets shared appropriately between anode operators and earth node operators i truly believe that there isn't anything more real than world mobile uh mickey last question for you and i want to go to david to get his thoughts on the xrp uh ruling um question to you is is um first for world mobile well done man everyone wants to check it out it's pinned above and so you can check out world mobile or hit up mickey his profile is on stage um my question to you man is how's the experience how's the ama here i know you sponsored the show. It's the second time you're on here. How was the experience, man? Listen, I love Scott very much.

We've got a mutual brother from a different mother in James Bowwater, global ambassador for World Mobile. I'm getting to know you pretty well. Looking forward to sitting with you. What you're doing is amazing. You're actually honest, truthful, and heads up, you guys don't, you haven't been given tokens by us. I just want everybody to know that. This is not. truthful, you know, and heads up, you know, you guys don't, you haven't been given tokens by us. I just want everybody to know that.

This is not a blind shill, right? Yeah, I would, hold on. I would appreciate tokens. I don't know if you, you never asked me, but I would appreciate tokens for the record. Come and buy an Earthnode, man, or buy some Airnodes and actually, you know, a real revenue coming into the system. Because that's what it's about. It's about sustainability. And again, going into the USA, our Operation Airnode has been fine-tuned in Zanzibar.

Our community, our diehards have been watching it happen. They've been watching nodes go online. They've been watching revenue come into the system. Different milestones that have happened. Now, this USA news boom operation air node can actually go into full force so over the next weeks months we're going to see that happen um and i think you've shared a link there as well join.worldmobile.io it's at the top yeah it is tip on top amazing carry on doing what you're doing thanks for having me on appreciate me i'll be

be delighted at any time to to join any conversation just ping me and we're good thanks bro thanks for having me on appreciate me i'll be be delighted at any time to to join any conversation just ping me and we're good thanks bro thanks for being a partner of the show um and i was gonna wrap up the show now as we always do after um uh in ama or partnership or sponsor but uh david's on stage david before wrapping the stage i wanted to to get your thoughts on the ruling man that came as a surprise or not huge surprise i just got off the plane i've been on planes since 6 30 this morning my To get your thoughts on the ruling, man, that came as a surprise or not? Huge surprise. I just got off the plane. I've been on the plane since 6.30 this morning. My phone's blowing up.

I mean, huge shock. And everyone's making fun of me because for years I've said the ripple is going to lose. But it's not the only thing I take from reading everything this morning and when walking off now. This is a split decision. So put aside the enthusiasm that the echo chamber is having. I'm sure everyone's saying this is great. This is a split decision down the line. Everyone's going to appeal this.

Ultimately, they hit Ripple for the institutional sales, which is how Ripple made the money. But then saying that the programmatic sales and the distribution to employees were not securities, it's crazy. Also, and don't forget this, it's a big footnote that smart people are pointing to. They're saying the court does not address whether the secondary market constitutes an offer. So they punted on the biggest issue that touches most people in crypto. And this is just now going to get resolved. There's going to be a trial now.

This isn't over by a long shot. There's going to be an appeal. But I called this completely wrong. I'm eating crow with all the older, smarter lawyers who said that the SEC was going to win this. What this really is, is a huge indication of what's going to happen for Coinbase. Because this is a great decision for the Coinbase case. Because now the SEC, it's like Rocky. I keep saying, when Rocky Balboa said, I haven't heard the bell yet in his fight with Tommy in like Rocky 5 or whatever it was.

Here, and this is really important, what this does for Coinbase is this is like Rocky against Drago when Rocky lands the punch and Rocky's bleeding and Drago is bleeding and he goes back to his corner and they're like, look, man, he bleeds. The SEC is bleeding now. And whether legally or the appellate courts change this, Ivan Drago is bleeding. I can't believe it. I'm shocked. I was wrong. But right now, this is the right decision in the right time. Everything has changed. The SEC dragging its feet against Ripple and Coinbase for years. They deserve to lose this because if this case was brought against Ripple when they first did those institutions, they would have stopped Ripple in their tracks. If they had sued

Coinbase at the beginning years ago, they would have stopped them in their tracks and they would have stopped Ripple in their tracks. If they had sued Coinbase at the beginning, years ago, they would have stopped them in their tracks and they would have had more power and leverage. The decision today is Drago bleeding. It just gives everyone else in crypto hope that they can now beat the SEC. It's crazy. It's crazy that I was on a plane for this whole thing. So what does that mean? First, what does it mean for the rest of the market and all other altcoins? And what does the appeals process look like and what is the success rate generally speaking statistically speaking for appeals so it's it's impossible the sec i'm sure i'm going to go in they're going to appeal this probably fairly quickly so that part of the appeal

probably six months to a year this we're still in the beginning part of the games it's there's nothing that's going to change fundamentally today uh markets are trading i'm not a market guy i'm not a trader guy obviously but legally uh the sec is going to come in they're going to appeal the part they lost don't think ripple's not going to appeal this either ripple's got to appeal the institutional sales for how all these guys got rich. They are on the hook for that money. Those are deemed security. So Ripple has to appeal this also.

So this is a mess. This isn't a slam dunk victory that even though everyone's going to spin this as a win for themselves today and the markets clearly like it, this is a mess. This didn't help clean up the mess. David, you can't say you can't say

this isn't a win for altcoins though it's a huge win for all coins but don't forget that footnote that the smart lawyers uh are all talking about on crypto twitter today they're talking about the altcoins saying that the trial court punted on the decision saying how the constitute offer and sales of the secondary markets that it's they're punting that for now so it's a unique call so can you can you explain again you explain that that's why you know so can you find a bit more so i'd interrupt you just want to understand more the footnote if you don't mind. So the footnote is on page 23 of the decision. There's two aspects for altcoins. The one aspect for altcoins is how the altcoins, whether it's an ICO or how they raise the money initially, but for altcoins and everything, it's about secondary trading. So the court

didn't rule on secondary trading, i.e. today, if Coinbase decides to relist XRP, because I think in the US, someone was trying to convince me and I was texting on the plane, so I don't know how true this is, but the biggest exchange in the US where you can still do XRP is Uphold. Whether or not you were able to go into Uphold and buy XRP for the last couple of years, that secondary market resale, is whether or not that is still legal, that question was not answered by this decision. Now, from Altcoin's perspective, the Altcoins and why people are saying this decision is great for Altcoins, again, this was summary judgment. This was a matter of law. This is why the SEC is going to be the first one to run

in and appeal this decision. What the decision says is that basically, as long as you're not using it for money and you, the company, are not profiting directly, that therefore then it's not a security and this doesn't meet the Howard test. That is why it's a phenomenal decision and why I had to pick a winner between Ripple and the SEC today. It's clearly Ripple's users and people who hold the tokens. It's why if John was on earlier, I have no idea who's on already. For those guys, it's a huge victory because that is the first decision that has come in hardcore

that says anything from people trading person to person is not a security and it does not meet Howard. And that's a huge decision that's hugely favorable. It's also exactly why the SEC is going to go appeal it in the next week, 10 days, 30 days max. I think they have 30 days to appeal it. They're going to go run to appeal it. But that's a huge victory today. And that's why markets are ripping right now.

Because it's the first time anyone's ever said that. And you talked about the appeals process. I want to ask the question again. What's the process? How long does it take? And what is the likelihood, just purely based on statistics, the likelihood of success for the SEC to appeal this? Well, the likelihood they'll appeal it, I'd say, is 100%. No, likelihood, they'll definitely appeal it. But what happens next? Could the SEC overturn this? Of course. I mean, the appeals court's overturned it all the time.

If you just think from a Republican to a Democratic view, this is out in California. So the Ninth Circuit is a more liberal circuit. So on the Ninth Circuit, you're looking at more liberal judges who are going to be more consumer protectionist than the judge in this case was a little bit. But here it's such an ambiguous 50 50 split impossible to call right now and look the supreme court took a coinbase case already nothing's going to say that the supreme court's not going to take this case time frame 18 months uh took until a hard conclusion. But public news today, good for alts today, good for everybody in crypto today. Bad for Ripple themselves. The institutional decision saying it was a security guarantee. That was expected, no?

Well, I think the smart lawyers over the age of 45 all thought Ripple was going to lose. From that perspective, hard to really say. And you called it wrong. Before going to Mick, you're right about the markets, though. Ripple's now up 34%, Cardano 10%, Solana 13%, Polygon 12%. So yes, Marcus Teller is up 17%. Marcus is doing extremely well. Mikko, we'd love to get your thoughts. Yeah, no, thanks for having me up. Obviously, as someone in the XRP community, this has been extremely exciting. For me, the most important note, and totally understand what David was saying was what Brad Garlinghouse tweeted out.

XRP as a digital token is not in itself a contract transaction or scheme embodied by Howie. So obviously that's super exciting. In terms of what happens to Ripple, I think a lot of us understood that Ripple was going to get some kind of slap on the wrist. And kind of like Binance and people talk about early days things happen that probably weren't allowed those things yes ripple will have to pay a fine for but the thing we were really looking for and what john dee has been saying since day one

is this is putting the token outside of the sale making sure everyone knew the token itself was not the security and it seems like to, that is what we got in this ruling. And that is super exciting for not only XRP, but for all of crypto, because finally, we will have some clarity around the token itself not being the security. And that gets rid of a lot of the issues that right now the industry is really suffering for. So super exciting. I think John Deet has really been on this since day one. He pretty much forecasted this exact ruling two years ago. And it looks like it's right in line with what we got from Judge Torres today. Yeah, I'm trying to get John in here.

He's probably out celebrating with his friends and fam. But I think we've covered it pretty well. Tiffany, I've brought you up as well. So we've just kind of recapped the xrp story i want to recap the celsius story i know you've been impacted by celsius and you've been very vocal against them and against machineski want to get your thoughts on what we saw today as well more good news with the with action by the sec cftc ftc and doj and Machinsky's behind bars. Yes, finally, it's taken long enough.

I'm going to be honest, I just woke up, but I woke up to a ton of tags in all the news articles. So I'm actually catching up right now too. But if anyone does know or follow me, they know that I've had a long adversarial relationship with Alex Machinsky, so I'm very pleased. Prep yourself for a lot of interviews today. So Alex Mashinsky is behind bars right now. And the indictment is damning.

There's a lot of communication they have that they've shared. And everything that you and Simon and others have been saying seems to all be true, unsurprisingly. So yeah, I'll let you enjoy your day for everyone that listened to this been a pretty epic space it started off with i remember i was talking to the team in the back end and um and they they tell me we're chatting we're like there's not much news today it's gonna be pretty quiet let's talk ryan selkis has an incredible thread if you guys should check it out i'll see if i can find it and pin it and we're gonna go

through that thread with r. We had that scheduled. And then half an hour before the space, Mashinsky gets arrested. And we see the diamonds get unsealed. And so while we're doing that, so we started covering this as a major breaking news story. Told Ryan we'll do it on Monday. He was okay with it.

And then while we're covering this, we have the ruling and the XRP.. He was okay with it. And then while we're covering this, we have the ruling and the XRP. And I remember Scott reading it. And even though it was pretty clear what he read, he took a while to believe it. Disbelief. Disbelief. It's insane. It's just funny. And he's behind the scenes messaging in the background, like, guys, verify this. Guys, is this true? And then he's reading. I'm like, bro, you're not even reading the full thing. You can't believe it that you're not reading the full tweet one tweet from like it's hard to break it's hard to break these little three a thousand things at once and

tried to actually vet it were you were you with us were you with me on the during the ftx tiffany was there were you there with during the ftx spaces yeah yeah i was into oh you joined a lot yeah you joined listening yeah you there with during the ftx spaces yeah yeah i was into oh you joined a lot yeah you joined listening yeah you guys were obviously the best course it's it's it's just by the feeling of just news breaking as you're doing it is uh it's pretty surreal something you don't get because you're you too why are we continuing this why aren't we continuing this space it's the 46th because he can't beat a dead horse, bro. It's enough. There's nothing ongoing.

Machinsky's not on the run. If he escapes jail and he's on the run, then we'll do it 24-7. Tiffany and him. Yeah, I miss... I'm sorry to come up, but you're also missing... I'm just kidding. Go ahead.

Am I in the... No, but I met him in person in New York. Oh, I saw him. When did you... BitBoy. Oh, she was with BitBoy or something and sat in the front row of Christy Michlinski's speech. I mean, the trolling in person was astounding. Did you troll her? Did you yell out anything or just watch nicely?

Well, BitBoy and I were already in New York for NFT NYC. And then I got some DMs that Chrissy was speaking at NFT NYC don't know why they allowed that to happen but um yeah so we went and just sat right up front and then kind of chased them down afterwards I was mostly chasing Chrissy down I have more personal beef with Chrissy but was was Alex there as well yeah this is what we this is what's fascinating this was really weird is that alex mashinsky i know he's got his kids at school but he's walking around the u.s he knows he fucked up he knows how to put through conference he was then at the conference that's what's crazy and then you had

um um uh oh i was gonna say sam beckman fried's girlfriend i forgot her name she was out in a cafe in new york She went from Asia. Her name is Tiffany Farr. She was in a cafe in New York. But then we realized she ended up being a whistleblower. So she did a deal with the authorities. But cool. All right. Well, that's another saga that comes to an end today.

That one started back during the FTX period, even pre-FTX. And then we've closed the book on this one, and we've closed the book, not closed, but kind of closing the book on the XRP case. We'll see how the appeals. Mario, can I just say really quick? Yeah, bro. Can I just say really quick that we've been on a lot of Twitter spaces.

We've covered a lot of things. Simon's five or ten minutes of catharsis there about his experience with Celsius and seeing this was perhaps the best moment that I've seen or heard on any of our spaces. Yeah, he was, during FTX, he was like, this is all very emotional when it came to Celsius and I should have asked him a question.

He had a story he would share a lot then where someone was, it goes on a space, I think it was Simon's space, not mine. And he tells him, Simon, like I was planning to end my life and you're the reason I didn't because he was offering constant updates to people impacted by Celsius.

So he shared that story a few times. And when I asked him why you do this, because he would spend hours and hours with me on spaces, it helped me tremendously. And then, so he didn't share that story today but another another thing he did today he didn't do prior he started cursing like crazy i remember the terms i've never tried to say a bad word i was almost like jarring like hearing your parents uh your parents cry for the first time or something yeah he says scumbags and fucking scumbag arsehole yeah it was it was

epic oh my god i'm so mad i meant that no it's it's in there yeah listen back on the recording yeah about the blow your mind he went like off on my cat like 10 cuss words in a row expletive yeah at the at the about 30-minute mark, I think, Simon. So listen to the recording. I'll end the space now. Fast forward until you see Simon's face pop up on the panel and enjoy the show. When he takes the mic, it's the highlight of the show,

and I agree with Scott there. But I remember me, Scott, and everyone in the back end because Rand is not on today, but everyone else in the back end, the team, is like, oh, what the fuck is going on? Simon is off the hook. All right, guys. I think that's it.

Scott, anything to add? Oh, shit. You knew it. You knew I was going to do it. All right, guys. I appreciate it, everyone. Bye. Thanks a lot.

See you tomorrow. Yeah, Friday. Tomorrow, same time. Bye, everyone. Bye, Mario. Bye, Scott.