The Wolf Of All Streets - SEC's Attack On Binance | What Does It Mean For Bitcoin & Crypto | Lawyer David Silver

Episode Date: June 6, 2023

David Silver is a founding Partner of Silver Miller and is focused exclusively on representing aggrieved investors and cryptocurrency users worldwide who seek to recover their financial losses. We are going to discuss the SEC's case against Binance.  Follow David Silver: https://twitter.com/dcsilver ►►OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000!  👉 https://www.okx.com/join/SCOTTMELKER ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Binance The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

The SEC is on an absolute warpath. The amount of new information that we have since I live streamed yesterday morning with Mike McGlone and Dave Weisberger is absolutely astounding. I barely slept last night writing a newsletter to summarize the Binance case, and I set up this entire stream today to discuss that and dig into it. And right before I launched, the SEC announces their action against Coinbase. They're not the same, but there's a lot of similar things there. And I've been attempting to dig in with a full research team from Mario Nafo and Randuner to get to the bottom of all of this. And I've got to tell

you guys, nobody's going to be able to do that for a long time, but I'm going to do my best right now. Also have David Silver, crypto lawyer here to try to help me parse some of this and understand what's going on. Guys, we went on Crypto Town Hall yesterday. We had 245,000 people listening to give you an idea of just how big of news this is, how important it is even outside of the crypto industry. And now we've piled Coinbase on. I'm going to do my best right now to give you the hot takes and then head back, of course, over to Twitter Spaces where I assume will be another epic marathon of Crypto Town Hall. Guys, we're going to do our best here. I've got a lot of information to share.

Let's go what is up everybody i'm scott melker also known as the wolf of all streets before we get started please subscribe to the channel and hit the like button there's not much time for niceties and jokes today the sec going on a full warpath against the United States for the shock and awe campaign, effectively alleging between Coinbase and Binance that the crypto industry is doing everything that any industry could possibly do wrong ever, period. When you dig into what's happening with Binance, they basically just threw the entire book at them, alleging everything possible. And my feeling is that they'll probably just let the court system sort it out over the

next few years. Remember, guys, the market is reacting today to what's happening with this news, but it's going to take years to sort all of this out. Also, very important to remember that SEC enforcement actions are civil suits and are by no means law until the legal system says so. There's still no criminal action against CZ or anyone at Binance. Listen, guys, I have this like epic lineup of tabs and links and all these things, but I also have David Silver here. I i'm gonna go ahead and bring him on because he can probably give us a hell of a lot of clarity so that we don't get more bad takes david man how are you morning sky and i think we're gonna be uh on spaces together later as well so listen i i have a

lot brought up here so maybe i can just start going through it and you can give us the takes from a legal perspective to try to give us some clarity on what the hell's happening here. Okay. Sounds good, man. I'm just waking up to this. I'm in Alaska. Just saw the Coinbase stuff. This is crazy this morning. Yeah, it's absolutely nuts. Okay. So guys, here is the actual Coinbase filing, right? We're not going to obviously dig completely into that because I haven't even looked, but it's likely 101 pages. The Binance action was 136 pages. I've read that three times and it still blows my mind. But here's a very quick summary of the Coinbase one, David, for you as well. The Coinbase platform merges three functions that are typically separated in traditional securities markets. Those are brokers, exchanges, and clearing agencies.

Yet Coinbase has never registered with the SEC as a broker, national securities exchange, or clearing agency, thus evading the disclosure regime that Congress has established for our securities market. So listen, there's a lot to parse here. They listed a whole lot of coins again as securities, which we saw in Binance. As of yesterday, I have the article here somewhere. As of yesterday, they, here, let's see if I can find it. I don't have it right here. But as of yesterday, in all of these enforcement actions, the SEC has now listed 61 different coins as securities without actually going after any of those projects. Now we've added more of them, obviously, in the SEC complaint. But the core of the complaint here is that basically they're operating as a broker exchange clearing agency without SEC approval

and without registration, which I find to be a major head scratcher considering Coinbase is a publicly traded company that registered with this very agency. What do you make of that? Sorry. So essentially, this is mimicking a lawsuit we did about five years ago. We literally had a chart that said all of this. I think the head scratcher from this perspective is that the SEC waited so long. This isn't a shocking revelation. There's nothing new in either of these suits. Nothing new at all. Nothing new whatsoever. So the fact the SEC let this play out for so long is the only shocking, depressing thing. I started going on knocking crypto exchanges in about 2014. I did the Coinbase class action in 2017,

making these allegations. So the only thing that's disappointing is that it's taken at this point somewhere between eight and almost eight years to do this. What the SEC is doing is saying people don't understand statute of limitations and we can take as long as we want and let people do things as wrong as we want for years. And we can still come back and say, you guys were wrong. The only thing I would quibble with what you said is that they're registered with the SEC. They didn't register with the SEC to do the cryptocurrency exchange

work. They registered for the listing. Right. And by the way, they did a listing that everyone got crushed on. Yeah, well, for now. I think, Jesse, which was curious, Coinbase stock was down more than BNB token yesterday on the Binance news, right?

Which I think tells you everything you need to know about investor sentiment and fear of what's happening in the United States, right? You would say, well, shouldn't Coinbase go up if Binance gets charged, right? Because everybody's going to rush to Coinbase. I think there's just this now massive sort of wave of fear that anything United States-based and crypto is effectively going to get crushed by the regulator.

Now, listen, we're going to talk more about Coinbase, but neither of us or anyone on the planet, by the way, who's talking about it has had time to dig into this. Right. There's not even a reaction from Coinbase yet. Focus a bit more on what happened with Binance. So that was 136 page suit. Once again, civil, not criminal. I wrote about it. God, guys, I have not slept. But I wrote about it last night and this morning in the newsletter. I just want to give you the greatest hits, right? These are the things that are effectively the biggest ones. There's a lot in there. Unlawfully solicited US investors to

buy, sell, and trade crypto asset securities, right? We've seen that, probably true, in the past. I also want to make it very clear, almost everything being alleged against Binance is in the past. And I think that Binance is under such a heavy spotlight right now, they're probably not doing any of these things presently. But unlawfully offered three essential securities market functions, exchange broker dealer, clearing agency. There's the SEC's Coinbase case right there against Binance, right? So that was foreshadowing. Unlawfully engaged in unregistered offers and sales of crypto asset securities. No surprise. Designed and implemented a multi-step plan to surreptitiously evade US laws. They have a guy from Binance basically saying, hey, we're operating a fucking unregistered exchange in the United States. Bro, I'll show you that tweet in a minute, but that's where that's coming from. CZ and Binance were intimately involved in directing BAM Trading's U.S. business operations and providing and maintaining the crypto asset services of Binance U.S. platform.

That's why a lot of people are saying that Brian Brooks left, because he's come out and said basically, listen, guys, I came over from the OCC. I realized I wasn't in charge. I left very quickly. Put the safety of billions of dollars to U.S. investor capital risk and at Binance, Sal's mercy. But here's the kicker, guys, and here's the one that's going to freak everyone out, probably unnecessarily. Billions of U.S. dollars of customer funds from both Binance platforms were commingled in an account held by Zao-controlled entity Merit Peak Limited. Funds were subsequently transferred to a third party, apparently in connection with the purchase

and sale of crypto assets. This is where everybody starts screaming FTX, right? Commingling. This is everyone screaming FTX all over again, and it's wildly different, yet wildly consistent. Yeah.

But I mean, this one kind of makes me want to puke. Of course, I did bring up this chart right here for anyone who's saying that this is only crypto. Lots of times people outside of crypto, including Merrill Lynch, Wells Fargo, JP Morgan, we got all the greatest hits of the biggest banks in the world who we know do all these things have had suits against them for commingling customer funds. But I guess that's neither here nor there but here it is guys this is this is the tweet that the sec clown show decided

to share when they announced the suit against binance was the quote we are operating as a fucking unlicensed securities exchange in the usa bro from But this is reminiscent of Gary Gensler doing his little Kim Kardashian animated video about security. This is all PR. And now you'll see Gensler's going on Squawk Live today and going on Bloomberg. He's doing his roadshow. But man, what do you make of this Binance suit? Give me the overarching idea. Like I said, it feels like they're throwing the kitchen sink and let the judicial system sort it out. Well, I think the most important thing of the things you just mentioned was the Brian Brooks piece, because they have CEO A and CEO B. My guest is CEO, one is Brooks and one is Catherine Cooley, who everyone's talked about has disappeared off the

face of the earth. God, I loved her. She was my first podcast on the Wolf of Wall Street's podcast. She was my first interview ever. She was my favorite person in crypto. Go ahead. I mean, I think both of them are the two CEOs from Binance US, if I had to take a guess. Look, at the end of the day, Binance did all of these things. And I keep saying, first of all, if you remember 2018, they were allowed to trade in the US. This is pre them going, kicking out and making US citizens use a VPN. They weren't allowed.

They were getting the whole VPN. They allowed it, but they weren't allowed, to be clear. Right? But you didn't even need a VPN to trade on finance in those days as an American if you were under the threshold of KYC and didn't mind that you only had like a one Bitcoin a day withdrawal or whatever it was. Exactly. So this is actually them admitting something that is actually true.

It's the great Washington DC sense. You get in trouble for saying something that's actually true years later in retrospect. So ultimately, when I take a look at these things, what I'm seeing is Binance has all these issues. It's within the statute of limitations. They are hiring and paying the legal dream team in the United States from the defense lawyer's perspective because they are guilty of sin. I got in a lot of trouble yesterday because I said this really reminds me of the Shawshank Redemption quote that Andrew DeFray had to swim through a pile of shit to come out clean on the other side. This is fantastic for

crypto. I mean, this is fantastic. Coinbase, by the way, everybody, I am the world's worst investor. Take no investment advice from me. I sue people who provide investment advice. If I invest in you, chances are going down. I bought Coinbase when it opened. I bought Coinbase the first day, not at the top, but at the bottom of the first day. And I've bought it all the way down. And I will continue to do so, by the way. Me too. Because I said, this is the greatest thing for crypto.

This is great for people who are legitimizing in the space. Everyone's going to come out clean from this that believes in the technology and the technology going forward. This is really good, actually. Coinbase is going to pay a hefty fine. Binance has other problems but you know the rumors that CZ is sitting on a beach somewhere with a militia protecting him in a non-extradition country probably true

I don't know I've seen the guy I mean I saw him I've hung out with him more than once in the last six months to be honest he's not hiding from anyone yeah but he's not he's not landing in dc anytime soon no but he's not showing up in the u.s anytime today but he's taking shots on twitter at gary gensler and brian you know brian armstrong's gonna be sitting there with his legal team saying all the right things today cz saying all the wrong things today uh i i have now i'm looking for it guys i can't tell you the

velocity of news that i'm getting like i'm in four whatsapp groups for all of our twitter spaces and stuff we have literally 20 researchers so it's very hard for me to keep up but let me i do have this one cz just responded i believe uh here it is if you have to pick a fight with everyone maybe you're the one at fault. Like you said, he's not mincing words here at all. If you scroll down from the one last night, like the big one that came out last night, he's not.

He's the one. He's taking the fight to them, and normally, the person in the United States who says too much ends up being in trouble. I'm betting on Brian Armstrong this morning with how they're going to handle it for South cz uh yeah brian armstrong is going to officially probably say something similar at the beginning say that you know we we did not receive the claim before the media did we're taking our time to review this and we will fight it with everything that we have

because you know obviously he's going to say all the right things and he's going to shut up. I don't think like, you know, listen, I like, of course, my first instinct this morning, I'm calling Brian Armstrong, dude. We're getting him on the show. That's not happening, right? We're all trying, you know, and maybe Paul, their head of legal, but I don't think that's going to happen. Here's that CZ tweet that you said, right? And it's kind of this was the same tone. He uses his four.

He says it's FUD, right? Our team is all standing by, but they did issue an official statement eventually, right? And it's everything you would expect. We were surprised. We've been working with the regulator. We did not know that this case was coming, even though we suspected there might be action. Listen, I mean, the CFTC did this, let's call 75% of these allegations two and a half months ago. Yep. Right? So this is just piling on here.

Well, but if I did the spaces with Rand, when the New York prosecutors announced that Russian crypto exchange and we were all thinking we all laughed, but there was your con, there was your predecessor precursor. And all I said on that space is when we were all giving our guesses what the announcement was, my announcement, my guess was this was the Binance indictment

coming from the SEC. I mean, this was the least surprising, you know, charge from the SEC ever. The Coinbase one, everyone knew was out there. This has been percolating for a while. It's ironic that all the people who thought the Democrats were going to take it easier on crypto, I think FTX really just embarrassed everybody from every perspective. And this is just ramifications from FTX embarrassing everybody that they went to an old pot of news.

And like you said, this is all old news. Nothing shocking, no revelations here. This is all things that were public, known that the SEC tolerated for years. Yeah, it makes perfect sense. And let's talk about this aspect of it that I brought up. So these are the coins that they listed in the Binance suit. Now we have a new list of Coinbase. It's hard for me to do all these things at once. I can't bring them

up right now. Solana, first BNB and BUSD. I'm a little surprised they called a stable coin a security here. Solana, ADA, Matic, Filecoin, Atom, San, Mana, Algo, Axie, Infinity, and Coti. Like I said, this brings the grand total now to 61 assets before the Coinbase soothed today that the SEC has effectively just in passing deemed as securities, right? And what's funny is everybody remembers when this happened with XRP, when the SEC first said, listen, XRP is a security, everybody delisted them, including Coinbase, right? Now, it's become so like, like, second nature to see these things in the SEC that nobody's even reacting. Right? I mean, like, and it leads more sort of credence to my idea that I keep sharing

that just because the SEC says it does not make it true. But do you think that we're going to see actions against any of these projects? I mean, it's so patently absurd. I love the Kim Kardashian example, right? Because they went after her for shilling Ethereum Max, even though she was transparent about it. She didn't share the amount she was paid, which was an unregistered security, but never went after Ethereum Max for launching an unregistered security. Exactly. And, you know, I always remember the Winklevoss twins, they were pitching Filecoin, Avalanche, and I can't remember the third one, that they were hardcore saying these

three tokens are the wave of the future. And what we're looking at today, I do think that we're going to see some delistings from Coinbase. I do think that's going to happen. They have to. Because Coinbase- Some of these things are unregistered securities. I know that Coinbase has taken the tack that we've done our research and some of these things are unregistered securities. But I think that you're going

to see... The one company that's just behind the curtain right now that's really having the last laugh is Kraken. I mean, Jesse Powell must be sitting there laughing his ass off because what did they do? They were doing everything and they're the ones who are somehow staying above the fray. And God bless, I can't explain it because at the end of the day, what's going to end up happening here is that you know coinbase is gonna coinbase

is gonna have trouble binance is gonna have trouble and kraken was the one who's trading all of these coins first in the u.s yeah and kraken settled right and kind of get and jesse powell got his lol tweet in where he said haha yeah we should have just come and clicked a link on your website and registered all of this right and and kraken ended up settling for the staking as a service side of things which i think a lot of people actually agree is potentially a security staking as a service coinbase offering the same thing right it's do we think then i gotta ask you david can we see a second round against kraken uh the list of things that they're

offering? I mean, would anybody even be surprised, by the way, if like tomorrow we see action against Gemini and Kraken and Binance US and literally anyone who's left in the United States operating? I mean, we can't be surprised by it. I don't think we can say surprised, but Kraken was the last one to offer margin. They were the last one to offer margin they were the last one to offer you know selling every single shit coin out there um i don't see how they're avoiding this we obviously know that i just think that and i think with jesse leaving when he left and what kraken was doing look i've sued i've sued every exchange in the u.s i've tried cases against cracking coinbase uh i haven't tried the case against Binance.

But I've got, I'm 0 for 4 on jurisdictional issues in federal court against Binance. I guarantee the lawsuit filed, the class action filed yesterday, we're not losing exposes. Every lie we told, I couldn't prove it. But ultimately, I do think we're going to see some follow-up actions against the smaller exchanges um look either you they either the either the SEC believes what they're filing or they don't but they believe what they're filing they have to apply it evenly throughout I do believe that we are going to see some follow-up actions or people who just pay a fine like maybe Kraken look we all thought Coinbase was going to pay the fine and walk away from this scot-free. They could have easily paid a billion dollars and paid the largest fine in history and walked away and been golden. Clearly, the SEC, and this goes back to FTX, I think.

Clearly, the SEC, example of what's happening. I'm going to try and say this without exposing my political beliefs. There's a consortium of people who very much want the democrats have been huge fucking assholes david you don't need to like it is what it is listen people know i i speak very clearly that i view myself after a very long life of being an idiot as being apolitical i'm unaffiliated i will vote for whatever candidates i have you are uh but i was a lifelong democrat right and there's a reason i'm unaffiliated now right um and and so i'm the same i'm in the same boat strong opinions the same way a lifelong yeah who now i the last i live in

florida i wrote it for roxanne thisanne. I do believe this is the overreach. Problem is, I do believe that they're 100% right in what they're accusing Coinbase and Binance of. And I can separate those two things. They have been operating, they've been doing, and they've been blessed for what they've been doing for years. But let's not mistake that with, they are operating on licensed exchanges.

I mean, there's no doubt about it. Yeah. Mike Alfred was on Twitter Spaces yesterday and he made a, I don't know if you know him, but he made a very compelling sort of point. He said, I can both think that Binance is wrong and that the SEC is effectively like a criminal mafia at this point.

He's right. And those two things are not necessarily misaligned. He's like, this is the worst SEC we've ever had but binance obviously has done something wrong and probably is going to have to clarify that so i guess then david since you're so deep down this rabbit hole with these lawsuits and stuff a i know you can't speculate do you think i don't think in coinbase but you think we'll see any criminal uh complaints action in the Binance case? Because I think that's when this turns really different, right? And so in your experience, even with cases this big, how does this end? Does it end with a massive fine against Binance? Does it end with them losing

their license? Also, let's remember, the SEC, although they believe they do, does not have jurisdiction all over the world. They can't shut down finance in South Korea, right? Okay, so I'm going to answer the first question first. You're frozen at the moment, David. I don't know if you can hear me, but yeah. How about that? It's again, rural Alaska right now. So, you know, Wi-Fi is doing the best it can

to keep me alive. What we're doing, what we're going to see is look at the lawyers rich people hire. He's hired the best criminal lawyer in the United States as part of his team. To me, that says criminal actions are coming for Binance. How does this end? It ends a little bit differently. It does end with a massive fine. I don't see CZ going to jail for

this because he's already ingrated himself with the establishment. And people asked me when FTX went down, I believe that that was actually the best thing for CZ and Binance because it was the last king standing. He has information on every crypto trader in the world, and most people will sell out for other people for themselves. And I do expect him to turn over all of the information to China, Russia, the United States, about every single person left trading crypto in the world. So it was probably his get out of jail free call. That's a good thing. The criminal side. Well, I'm just saying- That's a good thing. I wish you had better internet right now because I can't hear you at the moment but man i'm gonna i'm gonna jump for a second to

where the internet's better i'll give up warm yeah we've all done the we've all done the dance what you need to do is hold your phone up in the air really high uh and and slowly turn sideways and see if you can get the internet to work better there I do like your view out the window of rural Alaska though and it's making me super jealous so if you move maybe I'll feel a little better about it yeah I don't think

CZ's going to jail but like you said I don't think he's leaving the favorable jurisdictions at the moment oh man that's awesome where you are watch out for that bear trust me everyone else is walking around with guns oh yeah okay i got speaking of bears i have to shut the door yeah so listen did so we were just talking about obviously whether there would be a criminal you said that he has a criminal lawyer so that that leads to obviously the belief

that there is going to be something there that maybe they'll come after him. He could potentially flip on everyone. Listen, the best case scenario here is that the SEC is wrong. Binance, good actor. Okay, move on. But we know that this is going to play out for years and that's not going to necessarily be the case. There is some wrongdoing here, at least in the past. So is the best case scenario really at this point, like a very slow, if Binance was wrong, we would want to see a very slow unwind, right? Without a collapse like an FTX or something. They're solvent, so that's not really an issue.

Well, you say they're solvent. I don't believe they're solvent, but that's just me. I believe Binance is solvent only because they've sustained such epic bank runs in the past year. On the FTX news, they had billions and billions in a day. When the BUSD news, and they've always been able to handle that much like Tether. Maybe I'm wrong, but I've seen regional banks do worse.

No, 100%. You're right on that. I'm just a pessimist. I think if there's a massive bank run, we saw about $6 to $8 billion, my recollection is, on the bank run with the FTX thing. They survived that. I don't think they can survive another massive one because of regulatory scrutiny. Okay. So let's walk through that though. So that's our worst case scenario, right? Is an insolvency and a bank run on Binance. That gives us an FTX type situation.

That ends with creditors. That ends up with people not getting their money, right? Listen, I don't see evidence of that. So I'm just discussing this as a theoretical for everyone out there, because someone will cut this and be like Scott Belker said, Binance didn't solve it, right? We all know how that works.

Not what I said. I don't, but you're saying it, not me. I'm much happier. Right, but you've obviously said that you have a belief that they might not be. So that ends like an FTX if that was the case. puts us into September, October. I think this resolves itself in September, October, November. What we'll see is this will actually become a political movement in the US. I don't think crypto is the movement, but I think what we're going to talk about is regulatory

approval. And we're going to see politicians start talking about overreach here. And I see the resolution be coming in, I might have guessed, October, November, December of 2023, with them paying a huge fine, admitting they did all these things wrong, and financing a U.S. arm that can actually operate. I think that's the most likely scenario. I have breaking news, because, fuck. Coinbase simultaneously receives show cause order from 10 states, Alabama, California, Illinois, Kentucky, Maryland, Vermont, New Jersey, South Carolina, Washington, and Wisconsin.

So on the same day, coincidentally, we're seeing cease and desist orders from states towards Coinbase. Now, I think this... Show cause order. Show cause order. This is a reaction to Coinbase. Now, I think this... Show cause order. Show cause order. This is a reaction to Coinbase playing the game.

If you remember, Coinbase did a filing against the SEC like a month ago that people like me all said was a joke. It was just a PR stunt. Grewal got on and said, you know, we're going to make the SEC say things. This is what happens when you poke the bear. And they poked the bear. And, you know, the SEC was always. This is what happens when you poke the bear and they poke the bear.

And, you know, the SEC was always going to do this. But the states, this is how local politicians, local assistant attorney generals and states become politicians by copying stuff like this to say they're going to show the big crypto company how it's done. This is just a political stunt. It means absolutely nothing to anybody. Right. But do you have any clarity on the definition of show cause order, just so I don't speak out of line? So the show cause order is basically saying, we've identified the problem. You have 28 days to tell us whether or not the problem is. I can't really read this, but I'm guessing this goes to the Coinbase staking program, not the allegations of an unlicensed

exchange. Look, the staking program pays interest. You're getting money on... Yeah, you get money in the United States. You're not allowed to do that. Now, I will say this publicly. I have my Ethereum staked at Coinbase. It's a great fucking deal for someone

who's a holder. It pays more than a bank account at more than a savings account at Coinbase. It's a great fucking deal for someone who's a holder. It pays more than a bank account at more than a savings account at a bank. Why everyone in the world wouldn't do this if it was safe is beyond me. But again, what it is, is an illegal securities offering. Banks have to be fully licensed and

regulated to offer you the interest because they are taking government money and they're giving the individual depositors a return on their investment. I think it's important, though, to... This is what Kraken settled for, right? But there's a differentiation between staking and staking as a service, right? Staking as a service is the one that's effectively at least outright being deemed a security offering which i think to your point is correct and that's why kraken backed off and settled i think a person maybe not in the united states who's staking directly into the contract that's not probably

a security offering this is because there's a third party that's offering the staking service for you and even potentially taking a vig on that action um yeah i understand your question 100 that's act that's right. You know, there's nothing wrong doing this directly. It's the third party doing it. Now, Coinbase, I believe in their advertisement, says they are not taking a VIG and they are passing the rewards to you

less any fees charged on the chain. But they are claiming that they are not taking a pass-through, which to them, that's going to be their defense. That they are passing all the benefits on. They are not taking any financial reward for doing this. Now, the reverse argument from that, if you're a prosecutor, is you are taking the reward. You're taking the value of the deposit and expanding your user base. That's the argument the prosecutors are going to make. You weren't doing this out of the goodness of your heart. That's not the definition of capitalism. You're doing it for a reason, and there's a financial reward to you.

Oh man, when did being a security become such a four-letter word? I don't remember that being in the past before necessarily this SEC or before crypto existed. I think the problem here is that like to litigate that for most of these projects or to even attempt to register effectively means you're not going to exist, right? Nobody can afford to do it. Nobody can afford the lawsuit afterwards. And there's literally no way to register. So it means if you're launching anything that even could potentially be thought of as a security period, you got to leave the US. Well, I think if you go backwards for, you know, throughout history, it's never there's what makes crypto so unique is the function of people who believe it can replace the dollar. And I remember being on the stage about 2014 in New York, I got booed off the

stage at a crypto conference where I was like, the government's never going to allow this to become a trillion dollar business. Like most things in my life that my family says, I was wrong. You know, now that we're talking about trillions of dollars and transfers of wealth, governments are never going to allow the transfer of wealth in an untaxable, un-KYC, un-AML format because governments like China, Russia, the United States, they all have a vested interest in making sure this doesn't happen. Now, if you can do this without making it happen, you know, then it's and you go back to an unconfiscatable and a mechanism where you can just simply trade crypto in secrecy and with privacy. You know, that's what governments hate.

What we're seeing now is the Al Capone version of taking down the mafia. They can't stop the benefits of the blockchain and the privacy and the security. What they can go after is the legal and the IRS, the taxes. I think that's what we're seeing. We're seeing taking down Al Capone by taxes. You're watching the SEC take him down by the unlicensed exchange because that's all they can do right now. And that's the harshest sword they have. Oh, man, you're great, by the way. I like that you can take a measured approach on both. That's the beauty of having lawyers instead of pundits like myself who argue these things and probably get too emotional. I mean, where does this end? We talked about the fact that we have obviously a political initiative against the crypto industry that is very clear.

I mean, do literally these things settle because we eventually get regime change and it's just not Gary Gensler anymore and the SEC takes a different tack towards this industry? Or do these now just have to play out forever and nobody innovates in the United States? You would have to literally be an insane, insane, mad person to try to do anything crypto related in the United States right now or moving forward until things change. So I'm just I'm using a temporary response here. That's where I disagree with people. There's innovation, creativity, and wealth creation are staying in the United States. People are not going to move offshore or leave the United States. They're going to find a way to make this legal, which is, again, I go back to that Shawshank Redemption quote. This is all going to get cleaned up in the next version of this.

And I do believe Coinbase has been setting up this line for years now we're going to do this legitimately and even if they pay a huge fine for the back end of what they did years ago they're going to do this legitimately and shit i'd be buying shares if i was someone who was a speculator because the person who survives and has the biggest moat is going to win this battle because this isn't going away. Yeah, I mean, I agree with that. But does that leave us with a Coinbase where you can buy and sell strictly Bitcoin and potentially Ethereum and maybe a select few other assets? And Americans just lack the access to trade or invest in any of these assets, period? That sounds very land of the free, home of the brave to trade or invest in any of these assets period that sounds very uh home of the land

of the free home of the brave to me would that be the worst thing if we got rid of all the true shit coins and the next version of this where they had a thousand coins were a little bit more legitimate look you can go buy now we get a thousand coins a day by the way now it's not even there's a thousand coins now we get a thousand coins a day. Listen, there's a happy medium somewhere between legitimate assets and absolute shit coin casino. Yeah. But look at the stock market. There are plenty of fraudulent stocks that trade on the pink sheets. There's shit coins in stocks. The SEC hasn't cleaned that up. The SEC hasn't cleaned up the naked shorting problem. The SEC is far from a perfect institution. But when I go in and I buy a share of Apple stock,

I'm pretty confident I'm getting the share of Apple stock that I purchased, that I got best price point execution. People, the one thing that people, I'd say the number one issue that I think people don't understand about crypto from a mom and dad on Main Street perspective is that every single exchange that you trade crypto at is separate onto itself. There's no best price point execution. You're buying Bitcoin for whatever price Coinbase wants to sell you at. You're buying it on Gemini for whatever Gemini

wants to sell you at. Eventually, we have to interconnect and make this one unified process. Now, the people who are like you and not like me, they're going to say, that's a horrific idea. We're never going to centralize like that. We're decentralizations. I've always believed- No, I think that we will have our decentralized options. So I don't necessarily disagree with you.

I think that if you're going to be a massive centralized offering, then obviously you have to find a way to operate within the regulatory regime the problem is i don't think that there was or is any way right now for companies in crypto to do that right so like you said it's going to take now we're doing this by enforcement and we're doing this by litigation to solve what someone can do and that was never the right path. Right? If in 2017, and bear with me here, because this is an echo chamber thing. Nobody cared about crypto. There was no

reason for the SEC to give a shit about crypto in 2017. That's purely our own ego in this tiny little market. But at some point in the last cycle, when Bitcoin went to 69,000, and it was added to the ticker on CNBCBC and became a mainstream topic on Fox News and on Capitol Hill. They should have tried to come up with something, right? Some clarity. So I think at this point, literally like a lot of these exchanges would be like, fine, tell me what five things I can list and let me go on with my life. And now we're going to get five years of litigation for clarity. Yeah, but watch this. Do you think it's ironic that the crypto, that Bitcoin hit its price point,

highest price point right before Coinbase went public? No, or in 2017 before CME futures were launched, the day. The day before institutions could short this asset. But the thing is, to respond to what you said,

there's the debate between whether centralized exchanges should have the same functionality like you said as you know the new york stock exchange or nasdaq best pricing all those things and the free market man you know and so like i what i find is that there's this conflict between and within individuals of like this should be a free market and oh when shit goes bad i really want consumer protection right you know my my most famous line that's cut on video for me is everybody's an anarchist until they lose their money um i don't know if you know the cripsy case uh the cripsy you know was the one of the original shit exchanges it's how i cut my teeth in crypto in 2014 i mean there were taxi cab drivers who had like 100 bitcoin who should be wealthy as can be right now those guys all got blown out all lost their money look i am not a consumer

protection idealist but i believe in the united states we need basic consumer protection the laws you know what you're talking about by SEC, by enforcement decree. My issue with that is we wrote the internet laws in like mid-90s, early 2000s. They should have been written in the 80s. We are first going to see legislation catch up

in the next five years. It's not coming out tomorrow. It's not a pressing need. Litigation by enforcement was the only way to do this. And that's how it's been done throughout history of the SEC. So it's not coming out tomorrow. It's not a pressing need. Litigation by enforcement was the only way to do this. And that's how it's been done throughout the history of the SEC. So it's not shocking. Okay, so then, I mean, you said it before, so it's bullish, right?

It's bullish. It's forced clarity. I mean, I've always said, listen, I was happy when the SEC said the Coinbase, the Wells notice. Not because I thought that Coinbase did anything wrong. I think it sucked for Coinbase, certainly. But at some point, this had to come to a head and the industry had to find a party to galvanize behind to fight this and push for regulatory clarity. So if you're saying that the only way that happens is this case, then I'll sit here and

wait and watch. And I will be the asshole who uses chat GPT to contact every regulator and legislator every day like I already do. I harass politicians. I don't tell anyone about it, but I send like hundreds of messages to politicians a day. And look, that's the beauty of it. about it, but I send like hundreds of messages to politicians a day. Look, that's the beauty of it. If the right person listens to you and gets out, and normally how does this work? Some politician's grandmother loses their money in crypto and loses their house. I mean, BitConnect, which was, I think BitConnect, I can't remember, I'm losing my brain when BitConnect went down. I think BitConnect went down in like 2016-ish, you know, 2017.

I know, it's so absurd, so long. And that check, well, you lost it, but your money's not gone. Okay, your money's gone. But you're first getting checks back. You're first getting your money back for the 2016 value next month. If you were able to prove your damages. So now you're sitting there seven years later and first getting your money back. Unfortunately, the legal system benefits

criminals up front. And until the legal system works out to seeing who's there, who's legit, who's not, we're just in a waiting game. I've always preached we need clarity. Howery was never clarity for crypto. It was never designed for crypto. It was never designed to do this. It was never designed to show. It was never designed to do this. It was never designed to show what a security offering like this was for. It's simply now a waiting game. And I think this is good for the industry. I'm going to push back on one thing, which is who you said the winners are.

Because I don't want to offend you, but the winners are lawyers, man. Look, I'm the winners and the lawyers i'm just a strip mall lawyer in coral springs florida i may have made a good life of this when i left i was i was i was on the fast track to partner in washington dc one of the largest law firms in the world uh in my early 30s when i left people looked at me like I was nuts. When I started doing crypto in 2014, people thought I was insane. All I could say is my parents were ashamed of me. Nobody's laughing now. All those lawyers who, and these are the lawyers who I think are at fault here. And I'm not going to name them, but if you go back and watch my old videos, I used to name a

lot of them personally. Those guys should all get indicted. I thought the SEC was originally going to go after the gatekeepers, which is what they promised to do in 2017 and 2018. The Perkins Coos of the world, the coolies of the world, who were charging a quarter million, half a million dollars to these projects to tell them they were legitimate in the ICO days. Those guys were just stealing money and they were giving nothing of value. But that's my soapbox if we're going to go on it. Listen, the fact is, if there's bad actors, they need to be eliminated. I'm just not convinced that that's what's happening here. No question that as bad as FTX was,

first of all, the market retraced all those losses in two months. The market dipped, if you're looking at the crypto market from price action perspective, went down in November, was back in January right before it started. So you have to make the clear argument that better sooner than later, if there's bad acting and something does need to be eliminated. Because imagine a scenario where FTX was still doing that shit in 2025. 100%. And look, here's what I say about Binance. There's no doubt in my mind. This is my personal opinion. When this gets cut up and someone sues me for defamation, this is my personal opinion. There's no doubt in my mind that that Binance was the world's largest money launderer in crypto.

That Deutsche Bank and other banks throughout the world are the largest money launderers in the world. We're not, as much as CZ was laundering money for criminals, the banks are the largest money launderers. And they've been charged. They've been charged. It's like how many times have J.P. Morgan and Wells Fargo and Deutsche Bank been charged with these things, right? I don't know if they just showed you

where they commingled funds. They've been charged. Every single thing that we're seeing in crypto, the playbook came from the biggest banks and entities in the financial world. Listen, David, man, go enjoy Alaska at 6.45 in the morning. Actually, you're not going to

because I'm going to go see you on Twitter Spaces, right? I will see you on Twitter Spaces, right? I will see you on Twitter Spaces at 1015. So we intended to launch Twitter Spaces at 1015, but Mario also has a TradFi finance space at eight in the morning that I often co-host. This news broke. So I was there and came here. We're just going to keep running that one

because it's already got like tens of thousands of people listening and we don't want to reinvent the wheel. So David, we're going to send you an invite from there, but just so you guys know, like, so we were supposed to have Raul Paul today to talk about like AI and

innovation. He's still going to be there. I just feel bad that he's going to get murdered on this day. Not, you know, like where we have to talk about this stuff. I'm looking for their list of guests though. It's huge.

We also have, I know Scaramucci's coming. It's going to be epic, guys. Right. Yesterday, we had 250,000 people listening live before we got rugged, hopefully. And frankly, since I'm the one who's on Eastern Standard Time and those guys are abroad, I'm digging in

right now to be hosting this for the next five to ten hours. So see everybody over on Twitter Spaces. It's being hosted on Mario Knopfel's account. I would say goodbye to David, but it's going to be a see you in a few minutes. Sounds good, Scott. Thanks, man. It's a pleasure. Thanks, everybody. All right, everyone. Thank you.

Let's go.