The Wolf Of All Streets - SEC Imploding! | Safe To Buy Altcoins? | Crypto Town Hall With Lisa Rubin, Nick Morgan, Eric Sibbit, David Tawil, JW Verret, Bryan Jacoutot, Dan Held & Others

Episode Date: July 14, 2023

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The way we're going to do this show today, in my opinion, guys, is the first half I want to focus on the ruling itself. I think everyone's had more time to dig into it and look at whether we're overreacting, the good and the bad. And many of us are considering it like the best thing ever and time to buy altcoins and the SEC is dead and altcoins are not a security. It's not that simple. And I know there's people smarter than me on stage that will say the same thing. And funny enough, the SEC, to kick it off, the SEC, they put out a statement.

Eleanor tweeted it. And in their statement, they're making it out to be that, you know, making it out like the ruling was in their favor. Which obviously, yeah, exactly. Which, yeah so so there's two ways they could respond either they could respond to hey the you know we did not succeed we're going to appeal this and this is not right because xyz or they claim victory for them to claim victory just means that the ruling is not as as again as as one side or as simple as simple as we were saying earlier, or someone was saying earlier.

So let me read out their response, and then I'd love to get Rand's thoughts. I want Rand to really give us his full thoughts, since yesterday he couldn't join us. Let me read out the SEC's response. It's pretty brief. So to kind of balance out Rand's enthusiasm, or everyone's enthusiasm, really, the market's enthusiasm. So they say the following. We are pleased that the court, so we are pleased that the court found that xrp tokens were offered

and sold by ripple as investment contracts in violation of the securities laws in certain circumstances obviously that keyword here certain circumstances where it was the the institutional sales of the token violated federal securities that's's not what the SEC is saying. I'm just explaining for the audience. But programmatic sales did not. So if you're buying and selling on an exchange, it's not considered a security. Anyway, I'll continue with the SEC statement. In certain circumstances, the court agreed with the SEC that the Howey test governs the securities analysis of crypto transactions and rejected Ripple's made-up test as to what constitutes

an investment contract, instead emphasizing that Howey and subsequent cases have held that a variety of tangible and intangible assets can serve as the subject of an investment contract. Further, the call rejected Ripple's fair notice argument, noting that the Howey test is clear and that claiming ignorance is not a defense to violating the securities law we'll continue to review the decision so that's the sec's response obviously you know they're biased and and i don't agree with that response but i want to put it out there and we'll dig into it there's a few tweets a few opinions that i found online that kind of give us the other side.

But Ran, give us your full thoughts on what happened yesterday, man. The mic is yours. What are your thoughts on the ruling, the market's response, what it means for altcoins in general, what it means for crypto and what it means for Gensler and the SEC? Please, now's not the time for your mic not to work around um because i've just given you a massive intro to speak but it seems that you're not muted and can you hear him score or not i don't hear anything uh let me do like in the red corner yeah i'll bring him back up and let me let me go to david david i know you gave us you jumped in late yesterday so we didn't get your full thoughts on this so while waiting for rand to come back up, David, I'd love to get

a more, a longer response from you. I'm sure we want to know your thoughts, the pros and the cons of what we saw. So, you know, yesterday was an incredible day. I had an incredibly bad time to be on a plane while this was all happening.

I get off the plane and the whole world had changed. I think that at the end of the day, I keep calling it this morning and when I'm talking to people, it's irrational exuberant. It was a great day for Ripple. It was a great day for crypto. It was a great day for crypto Twitter. But the echo chamber of the long-term impact of this decision, we're not there yet. What I've tried to say today is from a baseball analogy, we're in the third inning of a baseball game. Crypto Twitter is up 7-0. It's a great place to be.

And everyone playing baseball would like to be winning 7-0 in the third inning. But we're a long way home. Everyone's going to spin what happened yesterday, but the market is the true indicator of the belief that the decision was great. There's no taking away that it's one of the first decisions. If you think that right now there are three major legal cases in the United States relating to crypto. There's the kick case, the telegram case, and now there's the ripple case. And the first two was a rain on the parade of crypto. And this is the first case where the SEC, and I used the example yesterday, dude, we cut Ivan Drago and Rocky, the SEC is bleeding. They look human. I got called a boomer yesterday. I'm 46 years old.

I was told I'm an old guy sports Gary Gensler, which couldn't be further from the truth. But at the end of the day, what we're talking about here is that we're looking at a... I always believed the SEC was going to win. Someone dug up a tweet for me from a couple of years ago where I said the SEC was going to beat Ripple in December 2020 when this case got filed. But at the end of the day, what people are talking about today, they're not under, this

is one district court judge. There's going to be an appeal of this. We are in the third inning. I'm going to let the smarter lawyers on the panel today get into the intricacies of the legal implications. But from a general layperson's perspective, we all need to appreciate third inning of a baseball game. We have a lot of room to go. And we found that the initial sale was a security. And they found that anyone who trades on the market, it's not a security. That's great for crypto. That's great for exchanges. That's great for all of us moving forward.

Yeah. Dave, I want to, Scott, if you give me a second, I want to just ask you, I mean, I get that you're a conservative lawyer. I get that that's what you need to be because that's why we love you. But I also want to ask you a few questions. I read the ruling. I read most of the ruling. From what I understand, the one place we failed, the one place we came short is that the original sale to institutions and funds was deemed a sale of unregistered securities. And for that, they'll probably get some kind of penalty, just like EOS Block One got a penalty for a fine for selling, for doing, they raised $4 billion.

They got a fine of $25 million, if I'm not mistaken, right? And I want to, David, I also just want to tell Ryan, Ryan, we do have the man himself, John Deaton, on stage as well. Yeah, I think we let Simon do a Celsius victory lap yesterday. If we are in the third inning and up seven runs, John, you've been the manager.

I don't want to interrupt Ran and David, but since we do have you, John, here, and you probably pushed harder on behalf of XRP holders, you've been filing the briefs, You've fought at your own expense. I want to know how you feel about this decision because that, to me, is more important than anyone else's opinion. Well, I appreciate that. Listen, I don't disagree with what's been said.

There is exuberance. It is just a district court ruling. There's appellate issues, all that. But crypto needed this. It took the... just imagine the office imagine if the fcc had won and the judge adopted their arguments and their theory imagine the political opportunity for gilson the anti-crypto people to use that uh and and say, we were justified in doing what we're doing. And so to me, the decision was exactly what it should be.

From the very beginning, I said, listen, limit the charges to direct sales by Ripple. Then I go away with 75,000 BP gold. We go away. I don't give a shit about Ripple. And if they buy Ripple, it's all in the group. But this, the token is a security and investment contract. Forever because of the official sale of Ripple. And what the judge did was validate and reject that. It's getting represented.

John, can you hear me? I can hear you. Can you hear me? John, can you hear me? Yeah, yeah, because I know you're on the move now. I think you're in a car, not on a plane. So your connection is pretty bad. What I'm going to do is, if you don't mind, John, I'm going to mute you for a bit,

just because we couldn't hear the last maybe 10 seconds of what you said. But I do want to give you that victory lap. So maybe when you're in a better, just put your hand up whenever you think you're in a place with better connection. Don't jump off, because I would love to get your thoughts. You're probably the one that we've been waiting for. But I'll give you a bit of time.

Feel free to put your hand up whenever you think the connection's good. In the meantime, I want to get David's thoughts and then give the mic back to Ran because I know Ran, you asked a question to David. So David, just want to get your thoughts

on first answering Ran's question and your thoughts on what John just said and then we'll go back to you, Ran. First of all, who wants to follow John in this? I mean, John is the man. John secures everything. When I did Scott's show this morning, I said this. It's really fun. In my real life, I'm being a very pro-crypto person, very pro. Everything in my life,

crypto has changed my life, changed my business. So it's funny for me to be called a conservative taper here. Definitely in the echo chamber of what we do, I'm on the more conservative side. But John's right. This decision that came out yesterday, as that's why I was comparing it to the kick case and the telegram case, crypto won for the first time.

And more importantly, the judge got it right. I was been a big believer that they had brought these cases years ago, when things came out in 2014, 15, 16, 17, 18, 19, the decision would have gone the other way. But the world has changed in the last couple of years. And the judge looked at everything and said, God, what are you guys doing here at CSA? You have the institutional sale, which was wrong. And this goes back to the finman speech that everyone's talking about the him in speech basically said the institutional lead for the the initial sale of eth was there was a security sale but the first one everyone trades it on an

exchange these aren't two people coming together these are just people buying a a token and that was not in violation of the securities law. So it's good that the judge got it right. Now, every single, don't forget, we have the Coinbase case, the Binance case, the Bittrex case with all-star teams of lawyers, some of them on the stage. These lawyers now in the defense is here. This is going to be the first case that they all cite. But again, we're in the third inning. These are going to get a peel. There are a lot of delicate issues, but there should be enthusiasm. I am enthusiastic. And the court got it

right. And it's so nice as a lawyer to say the court got it right. They punished the initial sale. Brad and Larson, they have some issues, but they're going to pay a billion dollars. And the IP block, they're going to sell more Ripple. They paid a billion dollar fine. Who cares for them? So this is a win across the board, but unfortunately, third inning,

7-0, you know, anything can change. So Ran, I want to give you the mic back. I know we've got incredible attorneys on stage. We've got Lisa, we've got Brian, Joe, BlockProf as well. So, Ran, I want to give you the mic back, and then we'll go back to the panel. Yeah, so, I mean, look, I'm not a lawyer, and I'd love to hear from the lawyers. I mean, for any of the lawyers, just feel free to correct me or feel free to answer.

But, I mean, the one thing that I saw in the ruling was, as a layperson, from what I understand, trading of tokens on these exchanges is not trading in unregistered securities. And if that's the case, it kind of feels to me like the exchanges are no longer necessarily under the eye of Gary Gensler. Is that right? Yeah, that's, I think, a reach, right? If any of the lawyers want to talk, Brian, Lisa, anyone who's qualified.

Yeah, so Joe, Ryan, Ryan, I don't know if you can hear Joe speaking. Could you hear him? Yeah, I can't hear him. Yeah, so you still bring it back down.

So I'll try to offer an unbiased perspective on this, right? I think the court made a very confusing opinion because the court in its footnotes specifically states

that she's not addressing secondary market sales on exchanges. Yet at the same time, the rationale behind the programmatic sales and why that is not an investment contract, that seems to necessarily apply and suggest that their secondary market sales are in fact not investment contracts. So the court is kind of going at both ways of this. She's saying the programmatic sales by Ripple Labs, we do not think those

are sufficient because she applies this standard, which to my knowledge, I don't think there's substantial precedent from that you need to have the exchange of money directly with the original issuer. And because these were Brian transactions that accounted for 1% of the total global volume, we can't tile the issuer to the purchaser. There's not an exchange and there's not this expectation that you're buying the token from someone directly. So that is sort of, as far as I can tell, without precedent under the law. And I think that's going to be scrutinized significantly on appeal. But the larger point, I think if you read this opinion and say, this is it, definitively, if you're purchasing tokens on a secondary market, there is not an investment contract sale. I mean, that is, I think, a reach.

Yeah. And I can also just add, yeah, I agree with Joe on that. I'd also just, from a legal process perspective, this was definitely a win for Ripple. But where Ripple lost in this case is pretty significant because sort of the clever arguments that the lawyers made there, the essential ingredients defense, the utility argument didn't perform very well. The essential ingredients sort of blue sky argument that the lawyers made was kind of the very clever novel theory here that that was how we were going to beat the SEC under Howey. The court outright rejected that. And the way it won, the way Ripple won was through this sort of blind bid ask way of selling XRP, which as Joe said, I don't think there's a great deal of precedent in that. So to the extent this is appealed, I think you're going to have to maybe see a cross appeal from

Ripple because those issues that they lost on are significant. And the blind bid ask theory that the judge used doesn't have a great deal of precedent. So it very well could be overturned by the Second Circuit if the SEC decides to appeal. So that's something to think about. I mean, it's a... But Brian, we had attorneys yesterday say the SEC is pretty much guaranteed, not guaranteed, but almost certainly going to appeal. Would you agree with that statement? Absolutely. Yeah. I mean, if I'm the SEC, you've seen them ramp up just budgetary-wise, hiring a bunch of lawyers. They sort of state their reputation in the crypto space on these cases. If I'm the SEC, it's great, I guess, for them that they won the institutional case. But the retail case is really where their purported mandate is as an organization, as an agency, whether you believe it or not. I mean, that's a separate issue. But they're purportedly supposed to be protecting the little guy. That comes from their enabling legislation after the Great Depression. So it's very odd to me that the judge said, oh, well,

these sophisticated institutional investors, they need to be protected by the SEC laws and the SEC Act regulations. But retail, they're fine to go ahead. So I think there's a real disconnect between what this court ruled and sort of the agency's purpose and its authority and its mandate. So yeah, I think- Before going to Eric, Lisa, David, and the other panel, John, is your mic working now? Is the connection okay? Yeah, it sounds like it. Yeah, we can. The audio isn't great, but we can definitely understand

what you're saying. I'm on a train going on Charles Payne today too, but the reality is correct. He is damaged. So we'll go to Eric

Eric and Lisa my question to you is there is a a tweet here by Preston and he says the following so Preston Byrne is a partner at Brown Rudnick

and he oh Preston's on stage shit Preston I didn't know you were here how are you yeah for once in my life, I was being quiet. How are you? Thank you, man.

Good. Well, your tweet wasn't quiet. You say, Ripple's, quote, turbo fucked because they've got multi-billions of dollars in institutional sales that they're on the hook for. I thought it was less than a billion. I thought it was like 780 million. But you said it was multi-billion. I was wrong on that one.

It's 780 million. I thought it was in the billion. But, uh, but you said it was right i was i was wrong on that one it's 700 million i thought it was in the billion but uh but would you still say would you still say they're turbo fucked uh if it's it's 728 right so seven i thought it was like 780 or 720 like like david silver said can't they just effectively since garlinghouse and larson now are in the clear to some degree at least with this ruling to go sell xrp and that's not the of a security? Can't they just go sell a bunch more XRP? They're not in the clear. They're going to stand trial. They're not in the clear. They're going to stand trial for aiding and abetting and potentially recklessly violating securities laws. So they're not in the clear.

Is that criminal? Joe, you know better than me, but I'm saying at least their sales of XRP, I'm saying, were not deemed security sales when they did it on exchange. Is that correct or incorrect? The programmatic sales, the ones that were ordinary and regular, they were algorithmic, they were done with bots largely, and they occurred at regular intervals amounting for 1% of the total global volume on a daily basis of XRP. Those are in the clear. The institutional sales originally between funds and managers and people that had contract- Yeah, I understand that. Yeah. But they were involved in some of those transactions. And they're going to stand trial to see what their knowledge was and see, it's a question of fact the judge found, were they knowingly violating securities laws

uh that's not a very large deal you know joe just to clarify what we're what we're talking about if if larson gary house go sell if they go on to point it uh it's upheld now but coinbase starts selling ripple again they can

sell their personal ripple to to pick five years. Oh, I see what you're saying. Exactly what I was saying. Exactly. So Preston, because your thread is, you know, I used your thread as part of the agenda. You did a great thread on this. And anyone that's listening, check out Preston's thread. It's on his profile.

But I've got a question for you. In one of the tweets of the thread, you said, SEC should settle. Ripple's somewhat justified in thinking it has little wind at its back, as will some of the exchanges currently in litigation with the SEC for listing tokens like XRP. So they're feeling like they've got some momentum. But the decision is too preliminary, in my opinion, to rely on for long-term business planning. And then you've also asked, the decision raises more questions than answers. Then it answers,

how can a thing be a security in one transaction, but not in another? I'd love you if you could elaborate on this before we get Eric and Lisa to chip in as well. Preston? Yeah, sure. So I want to start by apologizing to my fellow members of the crypto bar

who think that I got a lot of flack. I wrote both a thread and a blog post. And people are like, what's wrong with you, man? Why aren't you rooting for us? Why aren't you cheering for the win? This is a win. Absolutely, it's a win.

I'm glad to see it's a win. And to be honest with you, Gary Gensler is the only person in the world who could turn me into a fan of Ripple or a cheerleader of Ripple in this litigation. Because Ripple used to engage in a lot of bad behavior, but now they've got the entire industry behind them, including me. So with that out of the way, I think this is a very, very, very, very, very preliminary ruling. And a lot of the feedback I'm getting from lawyers in the space is that they thought Howey was strangely applied, right?

So we run through the test to determine whether something's an investment contract by running through the Howey test, right? And that's got three elements to it, right? It's a contract, transaction, or scheme involving investment of money into a common enterprise with the expectation of profit arising from the efforts of others, right? And the two things that happened were two of those Howey limbs were deemed not present in two of the types of transactions which were at issue in the case. And so with the programmatic sales, it was deemed that the efforts of others prong was not satisfied. And then with distributions to employees, the investment of money prong was deemed not satisfied. So people looked at it and they said, well, okay, interesting judgment, interesting reasoning. On the efforts of others

prong, where they said basically, listen, because they were buying and they didn't know that the investment was going to ripple, there was no logical connection between the investment and the expectation of profits. And therefore, this should be treated as the purchase of any other commodity, such as gold or silver or oil or anything like that. It's an interesting argument, one which I would point, there's a whole line of cases from the 70s and pyramid schemes, the Glenn W. Turner case immediately comes to mind, where you had people who were relying on the efforts of others who weren't their contractual counterparties, right? So what would happen in a

pyramid scheme is someone comes up to your front door, one of your friends, you have a dinner, you sit down, they say, hey, if you pay me $100, right, this other guy somewhere else is going to have this thing and you can be on this training, and we can teach you how to sell this scheme, and then you can go do something else. So what you're doing is you're transacting with an intermediary, but you're still participating in the Wired scheme. So the open question, and it is an open question, it's not settled one way or the other. I came out early and said, listen, I think it's probably going to be reversed. I could be wrong. And if I am wrong, I will eat my hat. So I will take my favorite hat. I will cut it up into pieces and I will eat it. But my suspicion is that on that particular point,

it is, I'd say maybe two to one odds that the second circuit reversed. Right. So eventually if the SEC decides that they're going to do cross appeals, right. So I'd say more like- What's the timing on an appeal here like you say the acd like there's an appeal and you know the how what is the time uh time span of this appeal and what happens in the interim that does the current judgment hold until such time as the as the you know the the appeal is either successful or unsuccessful. So what I would say, I'm not a federal appellate litigator. It's a year.

Average appeal is a year in a sense. Exactly. This is an interlocutory issue, guys. It's not going to be appealed immediately. You got to get a final judgment to appeal. The judge and changes. Yep. Perfect. Just for a quick reset here, just for anyone, we are going to have also some market analysts later talk about what this actually means for the market.

But we're going to keep digging here much deeper on the legal side. I do want to go to the Paul Hastings team here because I love you guys. Lisa, Eric, I think that's the – Nick, that's you over there. I want to get your opinion. Obviously, your firm and the three of you have been deep in the weeds on quite a few of these cases, right? So maybe you can give us some insight into how impactful this actually is, if we're overreacting, if this is exuberance, or if it's reasonable to at least celebrate for today. Eric, I see you've got your mic listed. Go ahead. Yeah, no, I mean, this is definitely a big win for Ripple. It's an even bigger win

for the greater crypto ecosystem. I agree with the comments that it still is kind of early innings, right? And this could play out in different ways. I think the most impactful part of this is really- Is it just me that can't hear you, Eric Meyer? Just you again. Yeah, just you. I'll bring you down and back up sorry go ahead okay so um yeah you know so so the secondary market impact is the most far-reaching component here right and the the judge did reserve in terms of they're not really addressing secondary market transactions but if you follow the logic and the decision, right, where such a programmatic offers and sales through exchanges didn't implicate Howie, that has very significant impact for any

intermediary participant within this ecosystem, right? If you kind of apply that logic, even though the court expressly said, I'm not talking about secondary market transactions because that's not a case before me, just these specific sales. But that by itself, the recognition that the asset XRP in isolation is not a security is a big deal and that we have to look at every specific transaction and analyze them separately is a really significant win for Ripple and even bigger for the industry. I couldn't agree more, Eric. So this is Nick. The biggest impact of this is that it will shift the dialogue from this sort of static analysis of, is this thing a security

to the more dynamic analysis that the judge employed where you were having to analyze the transaction, which is appropriate. How is the transaction-based analysis not an inanimate object-based analysis? So I think that's the biggest impact we see from this. And before I know John Deaton had some problems with his mic, but before we let him off from his victory tour, I think I'm a litigator, so I'm looking at this in terms of litigation strategy. One of the incredible things that John did here is to get the investor's voice heard. I mean, while you litigate cases for the SEC, you try to keep the investors out of this case. And that's what the SEC tried to do here. And the judge let the investor's voice be heard and incorporated the feedback from the investors in the ruling that's um i think instructive in terms of litigation strategy going

forward yeah and yeah just to take it into the wider picture it has been interesting because like what is a crypto token has been such um area of debate for regulators, whether the FTC thinks it's a commodity or the SEC thinks it's a security or other people from the SEC are saying it's not a security. So there has been so much focus on what is the actual token. So it's such an amazing decision for this to say that the focus isn't on the token itself. It's about all the circumstances around the sale. If you're selling a whiskey casket by itself, it may not be a security, but if you're selling it in a way that there's passive income, that could be a security. So it is really great to have some clarity from a judge on looking at all the outside circumstances that

you have to see each individual sale to determine kind of what it is. Lisa, I've got one quick question, if you don't mind, Scott. So there is, I'll read out a part of the Coindesk article and I see John just gave you a 100% emoji. So John, Mr. Deaton agrees with you. Scott, you've got a hot mic.

So legal experts suggest the ruling falls short of settling the question of whether and under what circumstances a digital asset meets the definition of a security under u.s law so the question i have for you lisa is we saw outs um you know blowing up yesterday um i can't remember the numbers but we saw a few outs at 15 20 over 20 spike and obviously xr is over 70% I think it was yesterday but my question to you is is that warranted like does the case offer any clarity on what is considered a security or not on the secondary market because with my limited knowledge I'd be like yes because XRP was not counted as a security that means it's sufficiently decentralized So does this case give us any indication of how to determine

or when a project becomes sufficiently decentralized or there's no such indication whatsoever? Because I find that to be the most important aspect of it. I think that is a really interesting question. I think that, for example, they broke it down into three parts of offers and sales. The first one was to institutional investors. And on there, they were mostly actually focusing on the marketing. How was this marketed to sophisticated people who wanted to invest in the Ripple ecosystem?

And it was saying that, of course, financial institutions are more interested in the profits that they're going to make later on. So I actually think that the case overall didn't appear to focus too much on whether it was decentralized or not, but more about how it was marketed and whether people who were purchasing the token were expecting to get some kind of passive income from investing in a common enterprise of building this ecosystem or not. And so I'm going to turn it to Eric and Nick, because I feel like they have some interesting thoughts on the secondary market as well. Yeah, well, and you still have to look at like, what is the asset itself, right? So the secondary market component is still undecided to some extent, right? So let's just say

hypothetically that the asset here was a security token it was was common stock on a blockchain right the mere fact that it was you know it's still common stock even if it's been offered through programmatic sales in a market right um so you still have to understand what the asset itself is right and you're right it didn't really kind of go into the analysis of if we're making an argument under decentralization and there are no efforts of others. So it didn't get into that level of detail. So there are a lot of undecided questions there. But I think the primary takeaway is really that we do, as Lisa mentioned, have to look at every specific transaction and decide, is that an investment contract, right? And under those facts and circumstances, and that part

itself, together with the fact that the court stated that in isolation, this asset is not a security, is again, I think it's a really significant development. And JW, David, you guys have had your hands up forever. JW, please first. And then David, what do you think of what Lisa, Eric, and Nick just shared? Yeah, I think one of the things they're hinting at that's really cool is that this is a great case for airdrops, and this is a great case for DEXs. It's good for Coinbase. It helps the odds in their favor in the fight ahead. It doesn't make it a win for Coinbase, but where it might have been 80-30, and I'm betting on a fighting chance for Coinbase, now it's more like 50-50 and at least a partial win for Coinbase at district court.

We haven't even gotten yet to the fact that the Supreme Court might be interested in curtailing the administrative state, might use the major questions doctrine that Coinbase has raised to do it. That's a longer term fight. This helps the odds all around in the shorter term fight. We haven't talked enough yet about airdrops in Texas.

I want to echo props to John Deaton, JD. I sent you a case of oranges. Oranges were in Howie. I sent a case of oranges to your office, buddy. So I hope you enjoy them. The one takeaway here is I think this signals willingness on judges

to learn about crypto technology and not blindly apply the Howie test. Historically, SEC used Howey for scams that had no economic reality behind them. Now you've got the judge willing to say, you know what, there is a real difference between Ripple and XRP. And I'm willing to think of the third component of the Howey test in a more sophisticated way, because this is not a scam where I give the benefit of the doubt to the SEC. And I'm willing to see the limited connection between Ripple and XRP in interpreting that

component of Howie. That's a big deal. And I think that signals flexibility and just a willingness to be to get in the weeds and learn about the technology from the judges in a way that Gary Gensler has not been doing and he's been doing at TalkingPoint. That's a big deal in and of itself. That might help us with the second surfing as well.

David, put your hand up. David, I know you've got a lot to say. You've been waiting for a while. I want to add one question to the discussion as well, David. Do you think, and I know you don't like to predict the market, but do you think that projects are too excited about this ruling? It's a big deal for airdrops.

It's a big deal for DEXs, for centralized exchanges. But how big of a deal is it for other protocols that the SEC considers a security? It's a big deal. So I am a recovering lawyer. Thankfully, no longer practicing Skadden Arts, Davis Polk. So good places in my previous life. But now I get paid to make people money. And so to your point, I need to think about what the future holds from this ruling.

I think everybody on this call would be surprised if this eventually, as written, becomes law of the land. I think there is significant risk on appeal that elements get changed. Maybe not first, but certainly elements being taken into account get changed. Also, we've got a bunch of other litigations going on and the likelihood that other courts will follow this, you know, to the letter of the law, I think is unlikely. And then we'll start to have some fragmentation in terms of judiciary. I think, however, this is incredibly important to show that the judiciary on the whole is certainly thoughtful about the asset class. And I think it also represents an important change in the tide. And I think that that might be the most significant thing. I think administrative agencies, and this is a with a ton of money, to go ahead and bring a different set of sentiment, maybe not in the executive branch and the administrative agencies directly, but certainly I think this helps in those legislative branch. And I think I've thought for a while that where this all gets settled is in the legislature. And I think that this will give pause to legislators that have been on the fence about where we go with respect to the crypto

industry. Do we go ahead and do a bunch of heavy lifting to enable the crypto industry to succeed and to develop and to exceed whatever is going to be done outside of the United States. And I think that that is incredibly significant vis-a-vis the outcome of this case. And David, to your point, Congress is marking up effectively two bills, stablecoin legislation, and of course, market structure bill. And now we have Lummis-Gillibrand being reinvigorated and brought back up as of yesterday. That was breaking news. And I think one of the notable parts of the new Lummis Gillibrand proposal is that the CFTC would regulate exchanges. So if we're talking about the implications for Coinbase, imagine a world where

the SEC is basically deemed not in a position to regulate exchanges at all while having this enforcement action and that power is given to the CFTC. I don't expect that necessarily to happen overnight, but that is what's being proposed, right? Yeah, that is correct. And I think that this ruling gives all of that some more firepower. To Mario's question, in terms of, I don't like to predict pricing, but where do we go from here? Look, having been around markets, not necessarily crypto in a large part of my professional career and smart markets, hopefully at that, the day one euphoria is certainly not where you're supposed to go ahead and place your chips, especially if the euphoria is based upon questionable outcomes. And so therefore, I wouldn't do anything today. We'll probably see a

fair amount of volatility. But I do think, look, in the case of Coinbase, the shorts are getting squeezed to hell. And I think that they will continue to get squeezed. I think, you know, MicroStrategy and GBTC will continue to go ahead and perform. Obviously, everything going on with ETFs was also bullish. And then obviously in token land, you know, we're bullish on the biggest out there. And then to Mario's point about smaller projects, I believe that if those smaller projects are framed in the right way, and we could talk about this more, but if they're framed in the right way, I think they will be able to avoid some of the heat. But certainly some of the enterprises that are represented by tokens, they are not going to be able to go ahead and sit within this Ripple decision. Yeah. Zach, listen, I know you may have a different take on this. I brought you up. It's good to see you here, man. What do you think? So it's a fascinating case and definitely has the potential to be a watershed moment in

securities regulation of crypto. I think there are sort of two questions I have here. One is there's this language in the case. Let me just pull it up where the judge seems to say that XRP, the token, is not a security. And I'm curious on others' thoughts as to whether that is actually what a ruling the judge needs to make and whether that's dicta and whether other judges will respect that so xrp as a digital token is not in and of itself and then it lays out the how we test criteria is this now a settled question at least in the

southern district or is this something that you know the embodiment theory is still live out there. The other question I had on the sort of third context of sales, the gifting of XRP to employees at Ripple and the payment to people who are developing applications, there's a court uses a very, very narrow definition of investment of money. So the first Howey prong is you have to invest money in the asset in question in order to have an investment contract. And previously, most of the folks I know in the crypto law space have understood investment of money to be an incredibly broad concept to include paying fiat, paying crypto, providing services, even in some cases, airdrops. And it seems like the way the court is treating this, which is requiring a

literal investment of money is a real departure from that. And the question is, is that going to stand on appeal? So if either of those questions are interesting to folks, I'd be curious to get thoughts. No. I think on the token issue, I think the judge looked at it too narrowly. Yes, it's true. And if you talk to Lewis Cohen, who wrote a book-length tome on this- Ineluctable modality. By respect. Yeah, right. I mean, whom I respect a great deal. Lewis is a personal hero of mine. But the token by itself, right? If you turn around and you say, well, we've just hashed a Genesis block and there are tokens in it, and you can send those tokens to people and those

tokens are held by those persons and it just kind of runs itself. That's not enough, right? You have to look at the totality of the facts and circumstances of the contract transaction or scheme. So, but the thing is, scheme can be very, very broad, right? And I think that this judge took a very, very narrow view of what a scheme is and then basically said, well, okay, so you've got the token and if Ripple's selling it, it's part of the scheme, but if Ripple isn't selling it, or if there's a blind between Ripple and the purchasers via the means of a cryptocurrency exchange, then you're not going to have that scheme anymore because they don't know where their money's going. We've seen it, particularly in the airdrop cases from the 90s. So airdrop cases, there haven't been a whole lot

of airdrop cases for crypto, but there were airdrop cases, there haven't been a whole lot of airdrop cases for crypto, but there were airdrop cases for stocks. And so back in the day, the logic behind the enforcement actions of those enforcement actions was that something valuable was moving in both directions, right? And that all of that value that was intended to be created. So let's say I sign up, I go to marmotstock.com and I go and get my marmot tomato business stock. And all I have to do to get the stock is provide an email address. The consideration is I provided the email address. It's a peppercorn coming from me. And then for the company, it's priming a market for your security, introducing liquidity, getting more shareholders, building enthusiasm for the business. So there is value moving both ways in that transaction. And that is something which could be considered a scheme. So if the

question is, where do you draw the line? Where does the boundary fall? I think most people in crypto would say, you draw the line where, or most of the cheerleaders of the decision would say, that they agree with it. And they say, listen, you should draw the line when the company sells it. That's a securities transaction. And when the secondary market transaction happens, or if there's a blind and the user doesn't know they're actually investing in the literal company, then it shouldn't be a securities transaction because of all these reasons. I'm not sure that survives on appeal when the SEC focuses on it, right? Obviously after the trial is done and all that. So that's the first issue. The second issue is the consideration issue around the other distributions, right? So Ripple made the three types of transactions

were institutional sales, programmatic sales, and other distributions. And the other distributions were distributions to employees. And Zach's absolutely right. The one thing that jumped out to me when I was reading this is they said, well, in that particular element, the investment of money prong, right? If we, again, run through the Howey prongs, if they're all there, then you pass the Howey test and you're a security. If you fail it and you drop one of those prongs, then you're not a security. And the judge in this instance said, well, you know, here you go. Here's the problem. There's no investment of money by the employees in their relationship with the employer because there's no consideration. And once again, that's the sort of thing where there's usually a lot of considerations moving

around. So a lot of attorneys have looked at that and they've said, this is kind of puzzling. Now, mind you, there are potential exemptions, right? If you're giving securities to someone or something that is a security, if you're granting those, there are exemptions for that, right? So that's actually something that you can lawfully do in the United States. But that wasn't an issue in the united states um but that wasn't an issue in the case so from from from that standpoint i think there are two really i think zach's 100 right i think those two issues are very very uh salient and important i think that people are going to without a doubt the crypto industry is going to take this decision and try

to model new products right and? And new approaches to distribution of tokens. But I think we have to ask ourselves, let's say you take this Ripple decision and say, okay, I'm going to do a programmatic ICO, right? Well, there's going to be a new, I guarantee you within the next week or two. A hundred percent. The next thing we're going to see is people finding novel ways to launch tokens based on this language. So, but if you did it, right? And if you did it, if you, if you did it, if you copied, and this is what I said about Ethereum a couple years ago. Well, Ethereum's not a security.

If you did the exact same thing today, right? Knowing what we know, right? Would the argument change, right? Knowing what we know about the decision. Because you have to look at Ripple in its historical context. It was really the first sort of, it's really the first sort of, it's really the

first sort of scheme of its kind that made it this far. If you look at Telegram, if you look at Kik, even if you look at Library, you didn't have a scheme of this size, right, being attacked by the SEC. And Ripple was also around a lot longer than Telegram was. Telegram got knocked down before they even managed to create any tokens, right? They were still using SAFs or, you know, simple contracts for the future, forward contracts for tokens. So this was a thing

where the SEC came in late. The scheme was already up. People were using it for a long time. Hey, Preston, I don't want to interrupt, but I think we're getting way too deep in the weeds here,

honestly. Sorry. Let me ask. I'll tell you, it's not your fault, but I think... Can you hear me? I hear you, yeah. Oh, shit.

I thought you had the same rant issue. I had a question. Sorry to interrupt you. Look, I have a question for you, Scott. This is what I'm interested in. We had David answer it already, and I know we don't have analysts. Generally, we have market analysts that come in

and tell us what they think the market will do. And they measure charts, they look at fundamentals, they understand code, etc. But in this case, and Ryan, if you're with me, I think this is a great question for you as well. But I actually want to ask the lawyers, is the market overreacting? Because this is what I care about. I'll start with that. I mean, you probably know that lawyers are very much a very conservative people. So they're going to be very wary to answer the question of whether the market's overreacting. But,

but let's open it up to the lawyers and, you know, the market. Yeah, we had, because we had David give that feedback. Right. That's why I thought,

because like, I know they won't predict the price, but then they'll tell us if like, should we, should, should projects be more comfortable that there there's a high possibility they're not a security and the sec is losing ground maybe it's a better way to frame it because if the answer is yes that means the markets are responding

and i want to say logically but they've got you know good reasoning to to to spike but if they say otherwise then maybe the markets are overreacting and we could see a correction and And we did bring up Elliott Trades. After we get the lawyers' thoughts, Ran and Elliott Trades, you guys are the experts at looking at the markets. But let's start with Preston. Do you think the markets are responding from a legal perspective, are responding to that big of a win for all these different projects or protocols? If I knew how the markets were going to respond, I might not be working as a lawyer at the moment. To be honest, I mean, my job is to determine what law enforcement

is going to do and how that affects your business on a long-term time horizon. So, you know, it's really out of my wheelhouse to answer that. I'll try with, we'll go to Brian and then Bruce. Brian, go ahead. I think, yeah. So again, from a price standpoint, I can't really say whether or not the market's overreacting to this news, but I do see sort of what the big narratives coming out of the decision are.

And from that perspective, I think there's maybe just a little confusion about how important this decision will ultimately end up being. For example, I saw a lot of people saying, well, now as a matter of law, XRP is not a security. And we talked about this. I think Preston talked about it. A couple other folks talked about the import of that. And I think it's kind of relatively unremarkable that a token in isolation in a vacuum is not a security, right? It's the transaction that for an investment contract, transaction that occurs alongside or with that token.

But I did see a ton of people talking about that as if that was this great, great victory. And it's certainly not a bad thing to see, but I wonder if the market is overreacting to things like that. Just Mario. Yeah. But Mario, we kind of got some clarity. And Brian, you can answer this as well. But everyone said before, we've gotten deep in the weeds here in legalese, obviously, about the appeal process and what's likely to be appealed. This is going to take a year. And we know that narratives drive this market. So if right now, the prevailing narrative, and let's be honest, traders, investors are not going to understand the deep legal implications. What they see right now is that XRP likely in secondary sale is not a security. That means

that probably a lot of the other ones deemed in these enforcement actions passively are not securities. And we're not going to get further clarity on that for a long time. Shouldn't that be exceptionally good for the market, whether rational or not? Well, I think one of the other things you have coming over the horizon are these big cases against Coinbase and Binance. And so, look, if you're looking for something to justify at least the price action that's had so far, maybe you have to price in a lower chance of a crypto apocalypse by the SEC, where the major exchanges get shut down and liquidity goes away. They're losing. That's a good point. They might not even have control over it.

They might not have jurisdiction over exchanges by the time these suits even come up. That's a very good point. Bruce, before I go to Elliott Trades and Rand, Bruce, what do you think?

Yeah, I think that it makes sense that there would be a rally. You know, I was on the other side of this when the SEC first had that major lawsuit against Ripple,

where they said that they believed XRP is the security. I, I said very loudly, and I got a lot of hate from the, from the XRP army, which was quite an experience. But I said that any exchange that keeps listing it is crazy because if the SEC, if, if basically the, you know, if the ATF comes into your store and says, Hey, we think this, uh know, gallon of milk is a bomb, then the smart thing to do is say, OK, I'm not going to sell that anymore until we go into the court. And I prove that this is a out of your mind to continue to offer it. But now that's switched completely. That is completely the other way around now. Now I think that it's a very, very different narrative now.

So I think that's the big deal. I loved how quickly the exchange I loved how quickly the exchange relisted it yesterday. Yeah. Yeah, Kraken and Coinbase were within an hour or two, I believe. Crypto.com as well and Binance US and Gemini's

apparently looking into it, could be listing it next. But the irony is we got all these announcements from all these exchanges that the SEC is actually up against, but we didn't get any announcements from people like Robinhood. You know, right now they don't have any crypto-related lawsuits. But all the ones that have got crypto-related lawsuits, Kraken, Coinbase, Binance US, Binance US, all of them listed. It was almost like to say, all right, look at this, bang. That's a big vote of confidence.

True. Look, let me go to Elliott Trades, Ryan. Let's get an analysis's a big vote of confidence true look let me go to elliot trades ran let's get let's let's get an analysis a deep analysis of the markets elliot trades you know things are still looking bullish bitcoin is above the 31k mark wolf what was this scott what was the the gareth gareth had him had a certain level he said if we break through and most people agreed on that space it's like 31 oh i, we're back on there, been there. I don't think, technically, I don't think Bitcoin has done much on this news.

Obviously, it's been focused on the altcoins. Well, it's at 31.3, bro. It's 31.3. No, it's great, but it was at 30,800. I'm sorry, we're talking about relative moves of 70, 30, 40% at one point. I think Bitcoin is ranging. I think it will benefit from this,

but right now, Bitcoin is sideways. Scott, one will benefit from this, but right now Bitcoin is sideways. Scott, one of the things I spoke about on my show today, and I know you'll appreciate this because you've been around for three cycles, I think, or two, at least two. I know you were here for two, I don't know if you're here for the third, but is that we always get the Bitcoin dominance rally.

We always think this is going to be a Bitcoin-only rally. We have all tempted, and we tempted to sell all our alts into Bitcoin. And when that temptation gets to the highest point, when most people capitulate and sell all their alts, that is when we get some kind of news or some kind of catalyst that brings in alt season. This is an alt season catalyst.

This is not a Bitcoin thing. This is an alt season thing. This is all these alts that we previously said were securities may or may not be securities anymore. And also the SEC, this SEC that regulates by enforcement, has now had its arms cut off because it can't regulate by enforcement anymore because there's now a ruling that basically prohibits it from or blocks it from regulating by enforcement. Now, the only way that Gary Gessler knows how to regulate is to regulate by enforcement,

but he's got to do it now without any arms. So, I mean, that Gary Gerson knows how to regulate is to regulate it by enforcement, but he's got to do it now without any arms. So, I mean, that's an Alcoin thing. Elliot, I want to get your, I want you to dig, sorry, not dig,

go deep into the market, response to the news. What are your thoughts? Is Alcoin going to lead the bull run now? Are they going to outperform Bitcoin? Are we going to see Bitcoin dominance drop now? Are they going to outperform Bitcoin? Are we going to see Bitcoin dominance drop?

Or are we just all overreacting? Yeah, thanks for having me. It took me a while to digest the news, but then seeing Coinbase relist and all these exchanges relist so quickly, it made me really... I spent the vast majority of yesterday reading the opinions

and reading the actual documents. If you've been around the space or if you've ever worked with projects, essentially for the last two to three plus years, the prevailing guidance from the top legal firms was effectively to exclude U.S. persons from the initial token offering stages, the SAFT stage of the token creation, which effectively conforms to the securities regulations. And so the way that this rule was laid down is something that I find funny because you have this judge who's not a crypto person, and we have all the lawyers and all of these analysts in the world, And nobody once thought, you know, this very logical gap between buying a token on an exchange and actually sending money directly to a common enterprise. And that logical't even their argument that of why they should be excluded from the law. And you have this judge just being like, well, actually, to me, here's the logic. And the judge kind of came in and I don't know, maybe we should like really, this

judge is going to go down in history because this is a really sound argument that you can't actually justify and prove that there is a transfer of money directly to the project through the programmatic sale. And that is one that is, you know, when you think about it, it's just very easy to visualize how the flow doesn't very clearly go to the project. Now, that said, I also think that it's really important to realize that a lot of the ways that tokens have been created over the last three plus years or since the sort of, you know, wave two of token creation was also to exclude U.S. persons, which is, I forgot which offering it falls under, but there's essentially an exemption that it falls under where it's not actually a direct violation

of securities laws either. A lot of the times also these token sales. Is there a Rugby part? Yeah, yeah. There you go. There you go. I'm not a securities lawyer. I'm not a lawyer.

Brad, did you just say Rug-D instead of Rug-D? Oh. A Rug-D, the Rug-D form. That's funny. No, but okay. So I'm not an expert, by the way. I'm just a market participant. And so, you know, a lot of these things, and by the way, a lot of these token sales are

for like $1 to $3 million, and then the tokens will explode in valuations by 10, sometimes hundreds of Xs in market cap. And so with the project selling on secondary, that is a lot of the stuff is outside of the grasp. If this ruling holds, a lot of the stuff that a lot of the prevailing altcoins have done is outside of the purview of what the SEC can touch based on this ruling. And we don't know if it's going to hold up. Again, I don't have a crystal ball. I'm not an expert, but it is extremely significant. The data shows that once the market gets hot and once Bitcoin enters into price discovery territory, altcoins tend to outperform, or at least the ones with

liquidity and that are part of the modern crypto trend, those tend to outperform. And so I've always been weighted into the altcoins because I like that and I'm willing to accept the higher risk for the higher reward. And just like in 2019, everyone was abandoning the altcoins. And I said to myself, this time I'm not going to do it. And I don't care if people call me stupid. And I still don't care because I see history repeating so many ways. And I also see Bitcoin going to those astronomical price targets. I love Bitcoin. But this ruling is huge. And it really solidifies to me that altcoins are probably going to have one of their biggest moments coming up. I would be shocked if they didn't, or there would have to be some major change legally. Look at the language that Larry Fink is using. He said crypto like four times in his statement on CNBC this morning. Not just Bitcoin, correct. And in fact,

I didn't even hear him say Bitcoin. And so I think that there is a very significant language there, and I don't think it's accidental, right? And so I don't know. I'm always been bullish on the innovation stuff. I know that there's a lot of problems with it. I think that there's going to be a middle ground. I've always been bullish that there's going to be a middle ground for innovation here in the States.

And yesterday was definitely a big step in that direction. That's my take. Dareth, what do you think as far as altcoins in the market specifically? Yeah, so thanks for having me. And a couple things. So number one is the altcoins have had a huge move, right? We've seen Solana rip up. I actually pulled the trigger on going bearish with a trade signal short on Solana off of

these levels. I think the SEC is going to come out with guns blazing. They're not going to just lay down and die. I mean, I love the crypto Twitter narrative, like this is the biggest win ever. And it may turn out to be that. But I do think we have to be real realistic that Gary Gensler is not going to just be like, oh, whoops, I lost. Let me just go away now. Right. They don't even think it's a loss. I mean, they obviously, as anyone would have predicted, they framed it as a win in their response. Yeah, I do the same thing. You know, I take a loss on a trade and I'm like, okay, guys,

it could have been a million dollar loss. We only lost a thousand bucks. So that's the way he's trying to frame it. So it doesn't seem like that, but I really think that they're still coming for it. I mean, and again, if we don't have the SEC monitoring what's going on in crypto, where we do need, there has to be some sort of police force that's monitoring, especially when you see what's going on and what went on with Celsius and with FTX and all this other stuff. So there's got to be something, and I just hope it's positive overall. I agree. Brad, what do you think? Well, I'm just posting a chart here, so I'm still on the same thesis as before. So come back to me. I'm just going to pin the chart. You can see what I'm looking at. Okay. Can I jump in? One more thing I just want to mention is that just looking at Bitcoin dominance,

Bitcoin dominance historically, if you go back to last year or two even, has a history of having these breakouts and then it retraces to the previous breakout level. And what we saw here recently is Bitcoin broke out in dominance above 49% and 50%, and it ran all the way to about 52%. And now it's come back in and just tagged 50% again. So to me, that's something that I pay attention to because Bitcoin dominance should continue to go up. And so this tells me that, again, all coins may be off of this massive move, a sell versus Bitcoin. But hold on, if there's one and a half years until this appeal happens, if this appeal happens, et cetera, et cetera, for the next one and a half years, for specifically the things that were spoken about in the Ripple case, we're in the clear.

Yeah, Matic, ADA, Solana, exactly. Okay. No, no, Scott. I got my chart up. I think, hold on, let me... Hold on a second. One second. Before we talk about Matic, ADA, even Ethereum, I think the market needs to realize one thing. The one thing that we haven't addressed yet

is we haven't addressed staking. So the difference between XRP and ETH, Cardano, and all of those is all the other ones are proof-of-stake tokens, which give you staking rewards and staking yield for doing proof-of-stake. Now, the XRP token token as far as i understand doesn't have that mechanic now the xrp token doesn't have the mechanic and those do there is

another another uh fight that the sec can take and say look um the reason why we've cited and if you look at every single token that they actually cited every single one of them is the yield earning pos uh proof of stake token so um the sec could turn around and say look um anything that has yield is a is an investment contract or whatever you want to call it um and therefore that is a security so i think be careful when you when you um compare xrp and and stella xlm to to the other other tokens because there's one massive, massive, massive surplus. Brad, I saw your chart above. You can address it, but it's ridiculous. You're not wrong, but we're talking about one day since the XRP case ruling.

Do you believe that we should have seen all altcoins outperform Bitcoin on the year because of one day of price action? No, look, I've been saying the same thing for like two years now like pretty much have not seen anything that changes my long-term view of this i've been saying that they're gonna there's gonna be a lot of reckoning i've been saying there's this contagion in the system and it's gonna cause a lot of bankruptcies etc it doesn't matter um but the parallels between this cycle and the last cycle are pretty much identical for the long-term structure of the market. And if you guys remember back in 2019, I've said this before in here, but in 2018, Bitcoin found its bottom at the end of the year. And then 2019 was just a year of a lot of roller coasters

for crypto investors and SAFT holders. Middle of 2019, the SEC had already done a whole bunch of actions against the different ICOs. Crypto tokens were running out of treasury. They were starting to sell all their ETH. The coins were going down so much that they had to start laying people off but SAFs were going on sale and people like the insiders were like

oh my god I could have got telegram I couldn't even get into the telegram you know in 2018 now I can get it for 50% off I'm gonna go buy it the people were flipping I think we lost Brad everyone Everyone else, just me. Yeah, I lost him. Ilya's hands up.

Ilya. Yeah, so one of the things I wanted to point out here is, you know, last market cycle. Oh, Brad, if you're back, you can hop back in. I didn't mean to cut you off. Yeah, sorry. I have myself limited to an hour and a half a day of Twitter, and my warning went off and cut me off, So I had to give myself permission to talk. So anyways, the NFT market and all these super overvalued crypto projects, the DeFi coins and a lot of the ones that just went parabolic in 2020 and 2021, I think they're like paralleled perfectly to the SAFT market because the SAFT market went

illiquid. It didn't go down 99%. It went from like exuberance, excited, maybe a little bit nervous. In mid-2019, people were still buying SAFTs thinking like, oh, well, this is a good opportunity for me to get this thing at 60% off because some firms are going bankrupt and they have to liquidate their SAFs. And then all of a sudden, the liquidity just went to zero and there was just no way to get any liquidity on your SAFs. And I think that a lot of people are way over indexing the reduction of risk of doing ICOs and buying altcoins here because of this case. And the way that I interpreted it as just as a kind of like somewhat biased Bitcoiner, but like not, I have no dog. I don't care if Ripple is a security. It doesn't affect Bitcoin. I'm a Bitcoiner. I follow these markets. I have

a lot of friends that are like coin owners and whatever. So I talk to them a lot and I'm on the pulse of it. I actually don't care. It's like Bitcoin cash is not a security. It doesn't affect me. So people are accusing Bitcoiners of being biased against this, you know, wanting Ripple to be a security, but like, it doesn't matter. It's still competing with Bitcoin. So I'm just saying that everybody for their own protection should be interpreting this a little bit more nuanced because the language that the court is using is it's not,'re not saying xrp is not a security they're saying it's not necessarily a security and then they quote case law from the telegram case and build on the precedent of that

which zach has explained to me before that this court especially the circuit likes to build on the precedent of previous rulings and solidify those things rather than making new rulings and the language even in the previous telegram case was that it's not it's not they're not saying that the gram token was not a security they're saying in this case it's not simply the digital token which is little more than alphanumeric sequence, blah, blah, blah. And then they go on to say XRP as a digital token is not in and of itself a security. They use the contract, the Howey language to say security, basically. So I just think everybody's way too exuberant. And this is euphoria, really. This market pump is euphoric. And they even put in the footnote, like Joe mentioned earlier, the court does not address whether secondary market sales of XRP constitute offers and sales of investment contracts,

because that question is not properly before the court. So everybody seems to be euphorically taking this news as if I can now do programmatic sales on DEXs. I can now be sure that my secondary sales of my coin that I created or that I'm a VC in is out of security. So I'm in the clear and people are promoting altcoins and stuff as if there's this one year period or whatever while the SEC appeals and tries to fight that logic of the secondary programmatic sales stuff, because a lot of people disagree that that doesn't have any precedent and it doesn't make any sense. But regardless, the long-term view of this thing is very similar to 2019. And I do think that we're

going to see capitulation. I don't think we've seen real capitulation yet. I mean, I know Mario Lothar's NFT profile picture, which was one of my signs of the crypto bottom, but it isn't that for you specifically. Hold on, hold on. I need to understand. You don't think that we saw capitulation? No, I don't. Because even the most bullish of people, like my friend Ennio, who's here on the spaces, Ren, I listen to his spaces. And even my good friend Ennio seemed like he had one point

that completely capitulated. How much more do you want for people to capitulate? Remember, liquidity's gone. SEC attacked the biggest protocols and i mean what do you want you want me to put a shut a closed for business side on the door what's capitulation okay you go and look at the charts of coins pre-2020 and now and they're still up like a lot of them are still up like 50x from where they were before we ran into the covid stimulus era i don't think we've seen real capitulation on on jpegs that are still worth the price of a house

yeah the market's coming down liquidity's drying up but this is mid-2019 like you know this is a this and if you look at my chart which scott doesn't like it doesn't matter it's not a short term chart it's not that i don't like your chart I'm just saying I think it's a false equivalency because you're specifying it's about the XRP case. No, I'm just saying, I was just saying it's an update after the XRP case. I've been using this measurement for a year and a half, a year or so. Because everybody's telling me, oh, we're in a bull market when Pepe happens. Like, the alt season's back on, we're in a bull market.

I'm like, no, this happened last time. Bitcoin found a bottom at the end of 2018, which would be the equivalent of the end of 2022. And then it went up like two, 300% over the year, but it dropped 50, 60% too. And we had a capitulation at the end of 2019. Bitcoin had a great year, never found a new bottom, but crypto followed Bitcoin for 2019.

Most of them actually got wrecked though in the middle towards the end of the year and that's when real capitulation happened at the end of 2019 which i think is going to be the end of this year because you still have a lot of garbage overvalued altcoins that are way up from 2020 levels you still have a lot of stupid logic out there with people shilling nfts even though bread bread, Brad, Brad, Brad, Brad, Brad, Brad, hold on. You're in the middle of a raging bull market in equities. Every single stock market in the world, almost every single stock market in the world

is near all-time highs. The Nifty in India is at all-time highs. The NASDAQ is almost at its all-time highs. The European markets are at an all-time high. You've got some, the markets are in a raging bull cycle. Crypto is nowhere near its all-time highs. In fact, most markets are in a raging bull cycle crypto is nowhere near its all-time highs in fact most altcoins are still 80 percent down from their from their their their peaks now obviously their peaks were overvalued but the market is a mechanism that goes from um

from euphoria to to to uh to panic and fear on an oscillator and we were in panic and fear and now we're just starting to recover so i mean to say to say that you know like not everything needs to go to zero for the market to start recovering no i don't i don't think everything's going to go to zero that's not been my supposition around what why i think crypto is still going to see a capitulative moment i just think everything is still extremely overvalued in crypto. Most things are way overvalued. And Ran, you are still out there talking about buying this coin, that coin, this coin. Mario still has people coming on with crypto projects on the space. Tens of thousands of people are tuning in, wanting to buy and speculate on these coins. But the growth of my audience is at one percent of what

the growth of my audience was in the in the in the bull market we've managed to build a very very loyal community but i can but our shows are still getting 25 of the views that they got in the peak of the bull market but that well i just show i'm gonna go the industry ain't gonna go to zero it's just gonna we're just gonna remove the tourists. Well, okay. I don't necessarily agree that there's a legitimate industry for promoting altcoin projects. I don't think that's an industry, really. I think that's still a piece of the last cycle that the regulators are trying to clean up right now. And people haven't really...

What do you mean promoting altcoin projects? Like, a lot of this stuff, people are seeming to take this SEC versus Ripple thing as if digital tokens are not securities, so they feel fine promoting digital securities. What do you mean promoting? Just let's get building in projects, like bringing projects on your podcast,

taking sponsorships, promoting ICO. Hold on a second. Let's define, because to come here and make blanket terms, shilling and stuff like that. Number one, we don't accept, we don't show, we don't do project interviews

on our show. We have sponsors, like big networks have advertisers and we have exactly the same relationship with the sponsors as the CNBC would have with its advertiser. That's the same here on Crypto Town Hall and the same on any of my shows. The word shilling implies that you are paid to promote a project without disclosing that it is a sponsor or an advertiser now we don't do that well i would

love to have a longer conversation about this um with you guys i mean this not what this topic's about i disagree i think that the regulators are going to be a little bit more strict on these types of promotions it kind of they've made a whole bunch've made a whole bunch of actions around unregistered securities promoters and stuff. And I know a lot of people try to schedule a contract out. But promoters means that you're getting paid to promote a project. It's very different from a sponsor or an advertiser.

I think it's a high-risk behavior that if you're still doing that, it means you haven't capitulated. I just think it's a high risk behavior that if you're still doing that, it means you haven't capitulated. It means that there's still people that are willing to go out on the risk curve and take money from crypto ICO projects to bring them on shows and be a sponsor of the podcast. No, no, no. But Brad, as I've mentioned to you, we don't do that. We talk about- Maybe you don't but i deal a lot with adverts and sponsorships with her words and sponsorships which are exactly the same as adverts and sponsorships or cnbc which you now work very closely with and i know exactly what the guidelines and the templates are

and what the distinction of a sponsor and an advertiser is relative to promoting projects now we don't promote projects promoting Promoting projects means we get paid and possibly get paid in tokens to speak about a project and to get people to buy the token. We don't do that. But you're still talking about coins that are overvalued garbage

that people are probably going to lose their money on. Well, that happens in the NASDAQ. Well, first of all, that's your opinion. I'm just saying that's not capitulative behavior. I'm saying we haven't had capitulation yet because you guys are still doing that stuff. But in the traditional market, people talk about

small cap tokens, small cap stocks all the time. Yeah, okay. This is two different conversations. I'm just saying I don't think that there's capitulation yet because you guys are still excited about I think that your 20 minutes of Twitter has run out.

Me, but there is, I mean, if we're being genuine about it, if the gauge is whether people are still excited or not, you admit there are cycles, and there was a, as Liam just pointed out, there was definitely a time very recently that people thought it was going to zero and were not excited. So if you admit that there will be a time

where you're excited again, being excited right now for certain people is not a sign that there's no capitulation. That makes little sense. Well, I've charted it out, though. I don't think there's been a long enough time capitulation on crypto yet. I don't think there's been a price capitulation. It's the longest bear market in the history of crypto by the number of days. I think the differential is

something like 15 or 20% from the previous bear market. Well, let's talk about it in a couple more months. Just mark this conversation and let's talk about it in a couple more months because I'm patient. I think that... Rebasing here. I got to bounce though, guys. Thanks for the convo.

See you later. The question is whether we're in a bear market and for how long. If we want to look at analog in terms of legal decisions having impact on market movements, we actually have to go back before 2019. We have to go back to 2017. Specifically, in 2017, you had a bunch of adverse SEC determinations being made in June, and that didn't stop the market from doing an absolutely face-ripping rally over the course of late 2017, early 2018. So this is the opposite. We've got a favorable ruling from a U.S. court, so I suspect that we're probably going to have some favorable market movements in that direction, although I'm not a financial advisor. It's just a $2 thousand dollars for anybody paying attention sorry i was that was just a very quick update for us i didn't

mean to interrupt but i was just saying that for breaking things i mean ethereum did just break two thousand dollars meaningful well and so but and like that's awesome like that's fantastic but like let's look at if we i've been thinking about this because I know Mario asked me earlier, he's like, what do you think the markets will do? And I gave him kind of a smarmy, stupid lawyer answer, which I apologize for. That was... Well, I don't really apologize for it. I'm a lawyer's lawyer, so that's just how I speak.

But I think if you look at what happened in 2017, in June of 2017, there was the Dow report, which was released. And that was kind of the first warning shot across the bow saying, listen, guys, if you're doing ICOs, this is the SEC's official position. You then didn't really get the first wave of enforcement action until late 2018, right? So if you're looking at the market and you're asking yourself, does the market actually care what the US Securities and Exchange Commission is going to do? The answer is it probably doesn't, right? Because there's so little of it, which is actually based in the United States these days. That's the first question. The second one is, all right, well, now that we have a favorable ruling, what will that do?

People are going to take, whether I like it or not, whether I agree with it, people are going to take risks based on the ruling that was handed down by the Southern District of New York. People are going to update their structure. To be honest with you, it's sounder, a lot sounder to do that, even though I disagree with the court's ruling. It is a lot sounder to rely on a court judgment than what people were doing in 2017 and 2018, which was that they were just making stuff up, right? That's right. Eric Preston, to your point, isn't the very fact that we've said a few times here

that Coinbase, that XRP was immediately relisted, like within 24 hours, doesn't that tell you everything you need to know about how the market is reacting to the narrative regardless of the legal interpretation? Absolutely. But, and I think, remember, the legal interpretation, right, is the law as it is, right?

That's the job of the lawyer when you go hire one of us, is tell me what the law is right now, right? I think there are a couple of different legally related things that we have to consider as a result of this ruling. One of them is that it's going to put a lot of pressure on Congress to actually normalize crypto and do something like, for example, what the UK does. The UK doesn't treat crypto like a security, right? It's not a security in and of itself. They're really clear about that. But what they do is they've just enacted a new rule,

which says that if you want to sell it, you've got to be really, really, really careful about the representations that you're making. And there's a disclosure regime, which you're going to have to comply with. And there's a a disclosure regime, which you're going to have to comply with. And there's a financial promotions regime, which you're going to have to comply with if you're making communications, which are designed to induce people into entering contracts for the purchase and sale of cryptocurrency. So I think, ideally, I think the outcome is, we've got this decision. A lot of people think it's legally wrong, but it is what it is. The market's going to respond by taking maximum advantage of it. And then at that point, we can go to Congress and say, listen, Congress, there are two ways

you can do this. You can either play cat and mouse and wait. What I would do if I were the big crypto companies right now, I'd take this ruling to Congress and I'd say, listen, this is pretty awesome for us. What you should do instead, tell you what, we'll split the baby here. We'll split the dick. Totally. Why don't you give us a law which says that operating a cryptocurrency exchange

isn't the same thing as operating a national securities exchange and why don't you give us a law which that you will comply with our anti-money laundering bsa requirements we'll make sure that any token that's listed on the thing has a disclosure regime they publish it on our website and and you know they do maybe they do an annual filing or something like that, which is very light. But fundamentally, these things aren't securities, right? In the traditional understanding, people are buying them with no promises of any kind being made, right? In terms of actual enforceable contractual promises.

We don't need a third party custodian. We don't need a transfer agent. Transactions should not need to be effectuated by a broker dealer. We don't need a walledparty custodian. We don't need a transfer agent. Transactions should not need to be effectuated by a broker-dealer. We don't need a walled guard to do all these deals in. And we just run it, right? But we make sure that there's an enhanced disclosure. SEC's done massive harm to any of the, I'm not talking about the exchanges necessarily, but to any of the projects that were deemed of re-security and all these enforcement actions that saw price drop 30% overnight. That's market manipulation and harm to the SEC. Is that actually feasible?

I know it sounds cool, like, hey, let's all come together and sue the SEC. Is it feasible? Have we seen that in other industries? We see people sue the SEC all the time. Dave, go ahead. Hey, guys, I just want to jump in. I was going to say something and I have to run.

But, you know, the one thing I want to point out is we were talking about capitulation, where we are in the market cycle, altcoins pumping, comparisons to Bitcoin. What I want people to realize is that when the climate cools off, the quote smart money leaves and they are pivoting to AI, quote unquote. And when that changes and the smart money and the institutions who, funnily enough, the smart money always buys the top and sells the bottom, when they come back in, they cannot invest in things like, you know, Pepe 2.0. They need like business logic and reasons why they're going to invest in certain projects, quote fundamentals. And yes, you could just buy Bitcoin. But when you have these institutions, these funds that come back in,

they typically want a sophisticated approach to going further out on the risk spectrum and outperforming Bitcoin alone. And that's why you see this insane blossoming of the flowers of altcoin projects and other, youK within probably a span of days, the amount of liquidity and capital that will flow into altcoins, if you look at the last run, if we're going to repeat history here, none of this stuff matters yet. And so those are the moments that I'm preparing for because those sophisticated funds, quote unquote, I say that a little bit tongue in cheek, they're not sophisticated, because if they were, they would be preparing for this way earlier. But they're going to come in and they're going to say, well, we need, you know, all this business logic as to why this tech is disruptive, or this, this, that and the other thing. And then all of a sudden, all this big money flows into smaller stuff. And that's the way it happened last time. And I

believe it'll happen again. And then the way that a lot of this, the way that a lot of the token offerings have happened, based on lawyers, quote, making it up, as I heard, I forgot who said that, they actually made it up around the securities laws that exist, trying to frame things like in the eventual sort of connection between tokens and securities. I don't know, I just I think yesterday is actually pretty significant. I think that once things get kicked off again, it is bullish for altcoins, obviously. I do hold a lot of Bitcoin. I'm very excited about Bitcoin. But I just wanted to point out that the altcoin sort of liquidity cycle doesn't really kick off until you get the Bitcoin price discovery and then all the utility,

quote unquote, the tech, quote unquote, starts to become heavily invested in because you have all these funds rushing in to try to take advantage of stuff a little further down the risk spectrum. And so that's what I believe will happen again. And, you know, I don't think there's any rush. I think we still have several months, you know, probably into next year before the party really starts. But legally, yeah, I mean, it's a really big deal to see these exchanges quickly relist, to see Coinbase quickly relist. I think the decision is more impactful than some people are leading on. And what Rand said is true, which is it'll take a long time to hash this out and actually reverse it or get

something negative to come of it. And that judge, that logic is it's going to be hard to poke holes in that. It's really good logic. And so anyway, I do have to run. Thank you so much for having me, guys. I'll see you very soon. I love how we all have to give a disclaimer immediately that we own a lot of Bitcoin and still favor it anytime we talk about altcoins. Yes, don't nail us to the cross. We love you all. Cheers. Bye, everybody. Hey, Dave, we're going to wrap pretty soon. So I want to give Dave Weisberg the opportunity to kind of give us your final thoughts on all this since you just left. Yeah. And while you're doing that, Dave, I'm just going to do pretty soon. So I want to give Dave Weisberg the opportunity to kind of give us your final thoughts on all this since you just. Yeah.

And while you're doing that, Dave, I'm just going to do one thing. I'm sure Scott and Ran forgot to do it. Just for anyone that wants to come on the show as a sponsor or work with us in any capacity, check the pinned tweets above. And there's an email there. Just hit us up via email or DM me and Ran. I think you've seen how we do sponsorships here. We do AMAs. We're going to start doing pitches like Shark Tank pitches soon.

So if you're interested, if you have a project or a sponsorships here. We do AMAs. We're going to start doing pitches like Shark Tank pitches soon. So if you're interested, if you have a project or a VC with a portfolio, hit us up. Go ahead, Dave. Final words, man. So the key word, the one that backs up your side of the argument, Mario and Rand, and know, in the latest upgrade, I was fairly vocal that it was going to be bullish for ETH because people would see less risk in staking ETH. And so, of course, all the doomsdayers were saying, oh, no, it's going to unlock and people will be able to sell it. And they were totally wrong. And I took a victory lap.

Cool. It was obvious economic. Same thing here. It is not true that this applies to everything, but certainly for layer one tokens. And I disagree with you, Mario, on staking mattering because it has new funding, the liquidity that happens. Remember, someone a few minutes ago said the U.S. doesn't matter. The listers to be there and make no mistake solana tanked and you know all those matic all those ones tanked on the coinbase news because they thought it was going to get delisted there is almost zero risk of any of those tokens getting delisted in the next year now and that is an enormous thing from a liquidity point of view not immediately but it means you de-risked it so people who might consider it are now doing their research and looking at it. It's a slow building thing. Now, at the same time, that has nothing to do with what I forgot Brad was talking about with

capitulation on projects, because this rule specifically said that if you're forming a project to fund yourself and sell your token, that actually was the part that's considered a security. So I don't believe this helps for projects funding. It's a question of ones that are secondarily listed. And that distinction, which is why I think a lot of people on here think Judge Torres got it absolutely right, despite it not having been argued that way. I think that's a big one. But liquidity matters and de-risking matters and whether or not we think it will ultimately legally whatever is going to happen and and i you know the sophistry that happens on the law on the law firm side is irrelevant the fact is gensler is not going to be the sec chairman

by the time this case gets resolved no effing way and i will take the other side of anybody's bet and thinks that he that this case is going to get resolved before 2024. And if he survives to 2024, that will be good. I think he probably will, because it means no turmoil. Who knows what they would put in, what this administration would put in. But we're going to end up with a new administration, even if it's a repeat. He's not going to run back all the same people. So it's really, really hard to make the argument that this didn't de-risk investing in layer ones and the tokens of the SEC specifically accused Coinbase of trading. And that has all sorts of implications. And I think that's why the markets reacted the way it was. That's why it's a more bullish scenario.

Perfect. Look, guys, Zach, we were just going to jump off because I know we went way over time. But I want to thank you, Zach and Gareth, Preston, Bruce, Dave and Eric. I think it was a great space. I loved yesterday how we covered the breaking news live and then today we were able to go a lot deeper. But I think this will continue being a topic of discussion over the next few days, weeks and months. And hopefully Ryan and Scott, especially Ryan is right. And this could be

altcoin season and the bull market is on its way. So, you know, only time will tell. We're in a raging bull, Mario. We're in a raging bull. We're in a raging bull. Alright guys, appreciate it all. Thank you very much and we'll see you again on

Monday morning. Thanks everyone.