Unchained - DEX in the City: Class Actions in Crypto Are on the Rise. Are They More Dangerous Than SEC Enforcement?- Ep. 968

Episode Date: December 3, 2025

Thank you to our sponsor, Uniswap! Class action lawsuits targeting crypto firms are on the rise. While observers often brush off the cases as opportunistic, they may be more of an existential threat than many think. In this episode of DEX in the City, hosts Jessi Brooks of Ribbit Capital, Katherine Kirkpatrick Bos of StarkWare, and Vy Le of Veda unpack what class action suits are and why they may be more of a threat to crypto than enforcement actions. Katherine breaks down the derivative case against Coinbase while Jessi explains why Binance has “bad facts” in the Hamas case. Meanwhile, Vy explains why the tussle over prediction markets like Kalshi by state gambling regulators could make it to the Supreme Court. Plus, China's crypto crackdown and the CME's outage. Hosts: Jessi Brooks, General Counsel at Ribbit Capital Katherine Kirkpatrick Bos, General Counsel at StarkWare TuongVy Le, General Counsel at Veda Links: Unchained: DEX in the City: Insider Trading and Crypto: What the Law Actually Says DEX in the City: Are Prediction Markets Gambling, and Who Should Regulate Them? Why Crypto Market Structure May Not Pass Until 2027: DEX in the City Mistrial Declared After ‘MEV Brothers’ Accused of $25 Million Exploit Timestamps: 🚀 00:00 Introduction  🤔 3:21 What is a class action? 💥 7:23 Why class action suits may be more dangerous for crypto than enforcement actions 💡 10:27 How the courts are trying to prevent class action abuse 🚦 11:57 The policy aspect to class action lawsuits 👀 14:05 What’s interesting about the Coinbase derivative lawsuit 📝 16:27 Why Binance has "bad facts" in the Hamas suit, per Jessi 👀 21:45 Why Kalshi's Nevada case could make it to the Supreme Court 💡 27:18 Vy highlights Kalshi's strongest argument in the Nevada case 🫠 28:34 Why crypto cases are difficult to try in front of juries 🤔 33:10 What does it mean to ban crypto? ❕️34:42 What is driving the crypto crackdown in India and China 🧏 42:38 How the CME's recent outage highlights the need for decentralization  💥 45:54 Good news pieces for the week Learn more about your ad choices. Visit megaphone.fm/adchoices

I think too, like for many years, SEC, CFTC, enforcement actions, DOJ actions were sort of existential for the industry, but class actions in some ways can be even more dangerous. It just seems like crypto is just rediscovering all the problems like gambling regulators dealt with 80 years ago. Decades ago, yeah. It's like, let's smush every issue like odds manipulation, house first player conflict, Dilliction risk, deceptive marketing. It's like every sample issue that's been brought in gambling cases over the past.

I don't know how many years, 80, 100 years. Like, in this complaint. And it really gets down to the question that you identified earlier is like, is this sports gambling or not? Crypto cases are actually really, really hard to try in front of juries. But when you have a jury involved, you need to break all of this down into English, that the jury will understand. And I mean, juries, most average people are not going to understand prediction markets or crypto or the kind of things that we're talking about on a day-to-day basis.

Hi, all, and welcome to Dex in the city where the wallets are cold and the takes are hot. First, we have Jesse, Web3 prosecutor turned Web3, Web3 protector at Ribbett Capital. Hi, everyone. And then we have V from the SEC to Web3. Hey. And I'm your host. Catherine or KKB or KK fluent in Tradfai and conversing in deep tech over at Starkware. We are going to dig in, but before we get started, here's a word from our sponsors that make

this show possible. Are you a builder who needs to add on-chain trading to your product? The Uniswap Trading API from Uniswap Labs offers plug-in-play access to some of the deepest liquidity in crypto. It's on-chain execution at an enterprise level. More liquidity, less complexity. Visit hub.uniswap.org to learn more. Before we get going, remember we're lawyers, but we're not your lawyers. Nothing you hear on decks in the city is legal or financial advice, and it doesn't create a legal attorney-client relationship. And for the fine print, as always, check unchainedcrypto.com.

So let's dig into the good stuff. So this is a topic that if you're a lawyer, you know way too much about. For many years in crypto, the main thing. fear was regulators, like regulatory lawsuits, SEC enforcement, DOJ indictments, CFTC actions. Now that's all quieted down. We are happy about that for the most part. But new troubling players have stepped in to fill the void and these players in many ways are more annoying than regulators. So what do we mean by that? We're talking plaintiff's lawyers. So these are lawyers that represent the plaintiffs, the party that is doing the suing in.

civil litigation. So not government litigation, not, not, you know, lawsuits with the government. Sometimes in a derogatory sense, people call plaintiffs lawyers ambulance chasers. And on the other side of the fence, I did note that the National Plaintiffs Law Association calls plaintiffs law, a legal practice dedicated to representing people that have been wronged or injured. So there's a spectrum. Both can be true. Yeah. Both can be true. The truth is probably somewhere in the middle. we're seeing a ton of lawsuits in crypto and we're probably actually going to see a lot more as prices go down, you know, with volatility. And we're seeing dozens of class actions, terrorism lawsuits. Like, this is basically all turning sexes and prediction markets into the next legal third rail.

So I want to give one more basic definition before we dive in because I think a lot of people don't understand this. You know, what is a class action? What are we talking about when the lawyers talk about class actions and they're, whenever they refer to a class action, usually they're trying to scare people or they're scared of class actions. This is a lawsuit where a small number of people represent an entire group, all who have usually shared the same injury or where their circumstances have similar questions of law and facts. So you may have gotten notifications. Like, do you want to join this class action because you used Facebook when they were using facial recognition? Or do you want to

opt in to this class action because you took this medicine in 2000? and six. So you as an individual person can choose to opt out or share the rewards. Class actions are huge. Historically, they've become more and more and more prevalent and they've also grown in size. And they're usually a U.S. thing, which is no surprise because we are an extremely litigious country, but other countries have actually somewhat followed our lead to allow consumer organizations to bring claims on behalf of customers. And the broader concept of group litigious, litigation actually came from medieval England. So it is England's fault. I'm just going to say that for a minute. I think we're going to dig into a few examples of ongoing crypto class actions and how you can learn from those in a minute.

But before I do that, I want to pass it off to Jesse to add some more kind of context about civil litigation, especially given her background as a government prosecutor. Jesse, what's your thoughts on the civil environment right now? I love legal history and the fact that this did start in England. And we have. actually took it over pretty quickly in colonial America. I remember this from my legal history class in law school. And the English got rid of it for a while. But we kept it throughout and has become like a real American thing. And I mean, there's there's a reason that people look at it as like a really emotional way to take big, bad companies to court. I mean, we've all hopefully seen Aaron Brockovich. And it has helped a lot of people. You can think tobacco and Santo, big pharma.

Anytime you're seeing a big giant corporation be held with his feet, their feet to the fire, with a big, big billion dollar payout, it's likely a class action. So there is really important aspects of it. Like if you were cheated $5, $10 by a bank, you might not want to bring a big case. But if the bank did that to millions of people, that obviously is unfair. And this gives the opportunity to real individual people to say, we're going to work together and go after. after this. And in many ways, companies aren't fully against it because if you create a class and the company like sort of, it gets to the class level and the company goes forward to litigation, they're sort of saying to the class, like, look, unless someone opts out, they're going to have to like go with what happens here in the class action. And so there won't be a bazillion different lawsuits brought. So there's definitely good and bad, but it also can be abused, which we are seeing very, very much in the crypto space. In fact, there's been like dozens and dozens cases just while this year, Stanford has a pretty good tracking system here. So I think it's important

to understand there's a lot of benefits here, but also plaintiffs lawyers are very creative. And, you know, you can say what you want about plaintiffs representing the desires and needs of victims that, you know, can't bring the cases themselves. And there's something to that. But plaintiff lawyers also get big payouts here. So there's a balance in how we think about what the opportunity is here and how it's going to impact crypto. Yeah. And I think, too, like for many years, like, you know, SEC, CFTC, enforcement actions, DOJ actions were sort of existential for the industry.

But, like, class actions in some ways can be even more dangerous because, like, if you think about it, there's no Wells process, right? Like, I think the settlement framework is typically not as available. A lot of times it's contingency fee based with. potentially like massive statutory damages. And I would say like more novel legal theories than you would typically see from like, you know, a regulator. So so I definitely think it's something like, you know, to keep an eye on. To translate what what we just said in the plaintiff's attorneys take the big bowl of spaghetti and they throw it on the wall to see what six. And government.

You know, that's the best way I can describe it. Okay. And government, you know, regulators, they're often more strategic when they bring lawsuits. You know, they're not going to bring a claim that can't be proven full stop. Like, it's a waste of their time. Yeah, they'll add to have, like, political considerations, right? You don't want to spend their political capital on just like any case that, like, walks through the door. And I like you can't say that about some plaintiff's lawyers.

Exactly. Unfortunately, and I don't mean to put all plaintiffs lawyers in the same bucket because they're not all alike. You know, they definitely have a different moral compass across the spectrum, as do crypto lawyers, of course. But really, they are less strategic and they will sue at the drop of a hat, especially because there's a motivating factor here that we've alluded to. And it's the fact that sometimes this is kind of settlement bait. Like some companies will pay to make lawsuits go away. So there's a sense of kind of we're going to make your life painful unless you settle. And, you know, there's a mathematical calculus here when you're looking at strategy with plaintiffs attorneys.

So as Jesse said, there's some huge benefits. I'm not saying these should go away entirely. Like it creates huge efficiencies. It protects individual people that have small amounts of harm that may not have, that might have really been harmed and wouldn't sue over like $5,000. but that is meaningful to them. But as V mentioned, a lot of these lawyers work on contingency, which means they take like 30% of the settlement,

which waters down the rewards for the individual, you know, holders. So oftentimes the actual rewards that they get are immaterial at the end of the day. And some people even use the term judicially sanctioned extortion when it comes to class actions, which is a little strong. But the point is they're a big threat to companies. And there's this environment where we're particularly seeing it in crypto where plaintiff's attorneys have every incentive to basically sue everyone to see. Yeah.

If I could just throw in one more note here. I mean, courts generally and the Supreme Court generally over the past 15 years has been recognizing that potentially this has been abused. And in order to get a class action sort of moving forward in a system, it has to overcome a barrier that other cases don't have to overcome, which is essentially the class needs to be what they say certified. And that means it needs to hit like a number of conditions that we don't need to go through here. If you're interested, you could read federal rules a civil procedure. But you need to prove a number of things. And the Supreme Court in particular has made this harder over the

past like 15, 20 years. I'm sure every lawyer here has heard of the case, Walmart v. Dukes, which essentially was going to be like the biggest class in the history of America. suing Walmart for discrimination. And the Supreme Court made it a lot harder to certify that class. And generally, that has impacted the number of class actions. There's also a case that came out over the past few years that says you can write into arbitration clauses, certain things that prevent class actions. So they're actually reducing. But as we've been saying and alluding to, like plaintiff's lawyers have had to become extremely creative and will continue to be so. And we'll look for which industry is right for cases. And right now, that creativity is coming to crypto.

Yeah. Especially as as not to be Debbie Downer here, but especially as prices drop, as there's volatility. Well, that just means more people like potentially like with losses or being harmed, right? So that makes a lot of sense. I think there's also like a really interesting policy aspect, at least when it comes to both the securities laws and the commodities laws. So unlike a lot of other federal statutes, when Congress passed the securities laws and the commodities laws, they specifically created a private right of action for certain types of securities and commodities laws violations, right? Like most federal statutes do not allow for that. These statutes do because Congress basically wanted private citizens to like essentially help the regulators enforce the

securities laws. Like that that is the function that these private rights of action serve. And I just think it's interesting to see that play out in crypto because it makes a lot of sense that when you see like regulatory enforcement action kind of take a step back, right, that the private actions would sort of step in to fill that void. And you could say that that is arguably how Congress designed the system. So I think that's kind of an interesting policy aspect too. I want to in and explain really quickly what B means when she says private right of action. That's the legal right for an ordinary person to sue when a law is violated. So it means that you as, you know, John Doe on the street can go to court to enforce a law rather than having to wait and rely on the

government to do it for you. So some laws give you, give anybody that right. Other laws, just the government can bring the lawsuit if the law is violated. So that private right of action, if it exists, it opens up exactly what we're talking about, civil litigation, class actions. And, you know, this is your PSA as a crypto market participant. Like, listen to your lawyers when they're talking about the threat of civil litigation. It is just as important as regulatory litigation. It can be just as expensive to fight. I can tell you that and sometimes more annoying.

So on that point, I want to move to a couple examples that we can touch on really quickly of like what we're seeing real time in crypto with the civil litigation environment. The most recent one that springs to mind for me is Coinbase got hit again the other day by what is called a derivative lawsuit. So this is actually the second time they've been sued for basically the same thing. And a derivative lawsuit is a lawsuit brought by shareholders on behalf of the company when the people in control of the company, the leadership, like, you know, board members, etc.

Like, do bad things or fail to do their job or act illegally. In this case, this is the second suit where the shareholders or people have alleged that Coinbase insiders are trading. Refresh yourself on last week's episode. So these plaintiffs are saying, look, like insiders basically prioritized their own wallets over the company's future. And this is similar to a previous lawsuit where, They were alleging similar things in that the executives were basically enriching themselves by kind of using inside information to offload their stock when they knew it was a better environment.

So obviously that's arguably illegal depending on the facts at issue. This is all alleged by the plaintiffs. We're definitely not weighing in on the facts. I don't know if this is true or not. And I will also mention a company like Coinbase, it's a public company, the size. of Coinbase, they have an army of highly talented lawyers. Special shout out to Ryan Van Grak who handles litigation. He's brilliant. They get sued all the time, all the time. Like every day, you know, okay, maybe not every day. But if you look at a large, thriving, visible public

company, they're going to be dealing with an onslaught of lawsuits. This is all part of their strategy. But this one is notable because they keep getting hit by these allegations. And they're at a higher risk of getting sued because they're a crypto company. So let's move on to a couple more examples. And let's be, Jesse, you want to chime in on Coinbase. There's kind of a pretty spicy one, Jesse. Why don't you talk to us about that, about the Binance Hamas case that we've seen over the years, some focus there?

Yes. Speaking of companies that are getting sued pretty much every day or frequently, finance is another one. And there's a big case that came out in the last week or so that I think is interesting and worth talking about. And it speaks to the private right of action that V was talking about as well because that exists in the terrorism context as well. So essentially what this case is is that families of victims from October 7th when Hamas like brutally murdered many, many people in Israel are suing finance saying that the company helped fund terrorism. that day and that funding killed my family member. So this is like a very personal thing.

It's not another securities claim or an unregistered token fight. This is like emotional and this gets to people trying to hold someone accountable for what happened to them. And it asked the very uncomfortable question for centralized platforms that I think we should devote a different episode to, but essentially like at what point does being the financial on-ramp make you legally responsible for what happens on your platform? You know, quickly on what the plaintiffs are claiming, it's just the allegation phase, but it's that finance knowingly provided substantial assistance to Hamas by running a really

bad AML KYC program, knowingly letting nested accounts that are used by Hamas link brokers on the platform, which we can talk about, and a number of them are public, you know, internal chats that were on finance, compliance staff sort of knowing that this happened, quote unquote. And what's interesting is that a lot of this relies on the DOJ case that already happened and the allegations that were admitted to by CZ and others in the course of that investigation. So they're essentially saying finance's very business model created an ecosystem where Hamas could reliably move money. And look, this kind of class action is not new to crypto, like financial institutions, banks, they have faced this in the terrorism and related context before.

It's actually very, very hard. Countries. The best example is actually the ongoing September 11th litigation where for years and years plaintiffs have been trying to hold Saudi Arabia liable. So very similar kind of theory of alleged assistance. So you're right. This has been done many, many, many times. Yes.

And it's usually hard to hold a financial institution, responsible if they have the prior checks in place. So if they're following, whatever you think about BSA, like if you're following everything in BSA to the letter of the law, you probably won't get in trouble. But finance, to put it somewhat politely, has very, very bad facts. They have the DOJ case that we talked about. They have a letter from crypto-friendly Lummison Hill that connects finance to October 7th around the time of the attacks. That letter was written. They have Binance folks in their own words, calling the platform an international circumvention of KYC, joking about saying, like, bad actors come here, the MLRO saying something like, we see the bad, but we close our eyes,

you know, there's so many. And like, we could go through it all. This issue has been talked about over and over again, but this class action is not alone. They're spinning up all over the place. And a lot of victims of very, very bad things are trying to find people who are responsible. And right now they're going after platforms like finance. And the outcome of some of these are requesting universal injunctions, which essentially means like the ruling from one court could have an impact on the entire country and how the, how the exchange operates over the entire country, which is a huge remedy, which actually is only really common in class actions, although it does exist in other ones.

So it's like another way that class actions can be really, really, really. dangerous if we don't understand what the implications are here. And look, there are a bazillion things we can say about who is responsible for what happened and the funding associated with Hamas, which I think we should leave for another episode. But really, like, just to get back to what you said at the beginning, KK, is like crypto has spent a decade rightfully obsessing over regulators. But right now it seems like the existential threat, the third rail, whatever we want to call it, is the plaintiff's far and these class actions. And they're going to come at every angle, whether be terrorism or unregistered securities or insider trading. And they're backed by statutes that allow

massive remedies like terrorism. This terrorism statute allows for treble damages at a minimum. And I don't think it's going to go away quickly because this class could easily be certified. It's just whether it can be connected to finance. Yeah, exactly. It's like Game of Thrones and they're fighting the other family and they win and then the white walkers come. Like, you know. So. Okay, maybe I'm not sure who's ruined that one, but yeah. I miss that show. Moving on. This is a great point.

Another good example is something that Calci has been dealing with recently. V, tell us more about that. Yeah, so this lawsuit is so interesting. So a class action was just filed in Manhattan federal court against Calci. So this comes just after a federal judge ruled last month that, the Nevada state casino regulators could block Kelsey from offering its sports-related contracts to Nevadans. So that case was about federal preemption, right? Something Jesse and KK explained really well in, I think it was like our second episode maybe. So, you know, Kalsi had argued that federal law gives the CFTC exclusive jurisdiction over its contracts because they're considered swaps, therefore preempting state gaming laws.

But in this Nevada case, the judge disagreed. And this same issue was playing out in other states across the country with respect to prediction markets involving both states and tribal entities. You know, we go into more detail in that in the second episode, if you guys want to, like, want more legal background on that. But I could see like this and similar cases actually ending up in the Supreme Court just because courts have been ruling in different ways in a lot of these courts. And if it gets to the appellate level and the appeals courts disagree, on these issues, like that's like the number one way for the Supreme Court to take something up. So anyway, back to this class action that was just filed. So on the heels of that, the plaintiff's bar has stepped in, like you were saying, right? So on November 26, CalShe got hit with a federal

class action in the Southern District of New York. And the entire theory is basically, this isn't actually a prediction market. It's actually an illegal sports book with like better branding and like a better app. So the plaintiff's saying, that Kalshi has been selling this as a peer-to-peer betting platform, but that behind the scenes, users are actually betting against, they're not betting against each other at all. They're actually betting against the house. And according to the complaint, the house is actually Kalshi. So the lawsuit says Kalshi's own subsidiaries are secretly acting as market makers. They're stepping in to take the other side whenever consumer odds sort of drift from whatever Kelshi wants.

And then Cal she tells users it's all just a neutral marketplace peer to peer, but the plaintiffs claim that nope, these peers that you're trading against are literally owned by Calci. So the complaint actually gets even spicier. So they allege that Calci also brings in outside muscle in the form of hedge funds like Susquehanna to sit on the other side of consumer bets. So in other words, retail users think they're trading in a fair market with their peers, with everyday betters like me and you, but in reality, they're facing off against basically like quant teams with models and data and zero fees and higher limits and maybe other kinds of like insider access. So the market makers set the lines. They coordinate directly with Kalshi and they profit when users are wrong, just like a classic sports book. So these are all of the allegations in the complaint. So basically the punchline is that customers think they're betting against each other, but the complaint says they're actually betting against Kalshi and their hedgehog. fun friends, and they never knew that. So one of the co-founders addressed the allegations on social

media after the lawsuit was filed, and she said that like any financial exchange, there are market makers who compete against each other and help bootstrap liquidity, right? Like, this is nothing like abnormal. And anyone can sign up to become a market maker. And yes, one of the market makers is a Kalshi affiliate, but that that affiliate doesn't receive like any preferential access or insider advantage or any special treatment or anything like that. So I think what is really legally interesting about this case is that it's sort of like mixes issues of gambling law and commodity derivatives and market making and other things. And so like it's basically like Taylor made to confuse, like all three of us have tried cases

against juries. It's like Taylor made to confuse a judge and especially a jury. because it presents like really novel legal questions, right? So is a market maker the same thing as the house in this context, right? So if Kalshi or its affiliates take the other side of the trade, does that legally transform what is actually a CFTC regulated prediction market, which is what Kalshi is, into an unlicensed sports book? It just seems like.

Crypto is just rediscovering all the problems like gambling regulators dealt with 80 years ago. Decades ago. It's like, let's smush every issue like odds manipulation, house first player conflict, addiction risk, deceptive marketing. It's like every single issue that's been brought in gambling cases over the past. I don't know how many years, 80, 100 years. Like, it's been this complaint. And it really gets down to the question that you identified earlier.

is like, is this sports gambling or not? And like, if it is and it needs to be regulated similarly, which like obviously sports gambling is all about betting against the house, right? But it's regulated to the teeth. So how do we balance this? And like one of the answers needs to come first. Yeah. And I, and I think, I mean, I think that's Kelsey's strongest defense, right? Is that they are regulated by the CFTC. Like, they are a registered DCM or designated contract maker. And I think that's going to be like a make market, sorry. And that's going to be, I think, a powerful defense for them because they have CFTC oversight, right? You can make the federal preemption argument. And then, you know, like if you're talking about that sort of platform in that context, market makers are literally how like all U.S. exchanges function, right?

Like CBO and CBO where you used to work, KK. CME, all ice. Like every exchange uses market makers. And I think the plaintiff's strongest argument is what you just alluded to, Jesse, which is the misrepresentation or like consumer protection argument. Right. So like, if the plaintiffs can credibly argue that Kalshi was misrepresenting that this was peer to peer, right? And they didn't properly disclose that like there was a Kalshi affiliate that was doing market making or that there were market makers involved at all. Like if that wasn't properly disclosed, I think that they could have a strong claim with. with respect to like the consumer protection and misrepresentation claims.

But I think the fact that they are federally regulated is a really strong defense. Everything comes back to disclosure, as we've said before. And it's a really good point. This is going to be an interesting one to watch. I'll also note you mentioned something important v about confusing a jury. Like crypto cases are actually really, really hard to try in front of juries. And fun fact, most civil cases uniquely, this is a unique, you have. thing. Like most, most of the time, globally, you don't have juries for civil cases. Like,

it's very uncommon. But in the U.S., most civil cases can have a jury. And like, we're talking contract disputes and all kinds of lawsuits. Like, either side can request a jury, depending on the jurisdiction at issue. They're not available in like family law, probate, et cetera. But when you have a jury involved, you need to break all of this down into English in that the jury will understand. And I mean, juries, most average people are not going to understand prediction markets or crypto or the kind of things that we're talking about on a day-to-day basis. Well, think about the M-EV case when the jury was like crying. It's very confusing. This stuff is confusing. But I actually think that works. That helps the plaintiffs here because they're just going

to hear gambling, right? And so the jury just gets to a jury. Who knows? The class still needs be certified as we talked about, et cetera. But, like, they're going to hear, like, this is gambling. What are you talking about? CFTC? And, like, yeah. And everyone, I think thinks that, like, casinos are totally rigged, right? So, like, that is what is going to appeal to them, like, emotionally.

Anyone who's lost, like, too many scratch-off tickets, like, they're out for blood. You know, they don't have enough jurors because too many people turning voir dire have gambled themselves and lost money. Oh, my God. Yeah. Yeah. Yeah. Yeah.

Yeah. Yeah. Yeah. Yeah. Which a reminder of voir dire is the process that the, you know, defense and prosecution or plaintiff goes through to pick jury members. They get to ask them a bunch of questions. The other cool fun fact inside baseball is there's something called jury consultants where if you're preparing for trial and it's a big deal trial, you hire these, speaking, we're on a theme. Last

we got talked about prison consultants. There's a consultant for every. There's a whole whole potish industry. They're very, very well compensated. Some of them, like there could be a reality show about this or at least a sitcom. Maybe there already has been. But, They're like the top five jury consultants in the country. Like they are VIPs. Like they basically have a rider that they can demand. And these people charge very high rates to basically set up a fake jury and bet the jury strategy for selecting the jury communicating to the jury. It's absolutely fascinating.

Everyone has watched runaway jury. Oh, okay. So this is already a thing. John Cusack in the like prime of John Cusack. I love it. I've never even heard of this. A lot of it. My lessons are based out of Hawaii because why not?

Yeah. Can we find it like, is that my next career? No, we picked the wrong. I know. I was just going to say. So I worked with a jury consultant too on a criminal trial that I did. And I just thought they had. So first of all, like the coolest job ever.

And also like a lot of their insights were super fascinating. So like one thing I always tell people like when, you know, like we're waiting for a jury to return a verdict. or something. So something I learned from a jury consultant that I thought was really interesting is that the magic number is three, right? So like in a federal jury, you have 12 jurors and the verdict, whether it's acquittal or a conviction, it has to be unanimous. Every single person has to agree one way or the other for there to be a verdict, right? So yeah, for criminal cases. So the magic number is three, meaning if you have at least three holdouts, they can, stick to that. But if you have anything less than three holdouts, 99% of the time, they will be overcome by the majority. And so, like, you need at least three people. Sometimes you will have one. So we actually learned that that's what happened in our case. We had one person who held out. And that is really, really, that's really unusual. That almost never happens.

Have you ever went and talked to the jury after your trial? Yes. Defense teams do that a lot, actually. Oh, yeah. So prosecution rarely wants to because they don't want a case of return. But when you do, you learn that nothing you thought was true. Yeah. And like, we'll do.

You find a weird thing. A different pair of shoes. The shoes. Yeah. They don't like redheads. No, just kidding. Who doesn't like a redhead? Who doesn't love a redhead?

Nobody. Right. Anyway. Okay. So as fun as this conversation. is we have another slightly more depressing conversation to move to. And that is crypto bans. So I'm going to talk a little bit more about some news from China that popped up the other day. But before I talk about China, I want to pass this off to Jesse to kind of tee this up. What do we mean when we're talking about

crypto bans? What jurisdictions outside of China are we considering here? I mean, who knows what we mean by crypto bans because like what does it mean to ban crypto? And I say that somewhat facetiously, but truthfully, like there have been these terminologies of let's ban crypto and they've looked very, very different in different countries. If you all might remember, we once had a congressional hearing a few years ago where there was a conversation about should we just ban Bitcoin. So as we know and all the listeners on this show probably know banning crypto is not really possible. It's like cross-jurisdictional. It's not controlled by government, etc. That being said, governments do have the ability to rein it in and make it very, very difficult to use. So that

looks different in China than it does in other countries. But one that has been sort of percolating for a while is India, which is a country that, you know, I've engaged with a lot on my professional side because of this issue and related issues. But essentially RBI, which is like their CFC sort of and CFDC combined. They banned crypto in 2018. So we're ahead of the game there. And over the following number of years, the Supreme Court went back and forth on whether this ban was permitted.

And essentially it was overturned. So right now in India, for example, there's no ban, but there. And as we all know, India is one of the most prolific populations of crypto use. But crypto is highly taxed. I think it's something like 30%. And it's not regulated. So the government, when they sort of lost that on the ban, decided like, okay, well, we're just going to heavily tax it and not really give rules.

And it's created this vacuum there, like, people don't really know what to do. And part of the reason why the government... It's not like, Jessie. That must be very... Yeah, I mean. anting and scary. What is that? If I could just give them, like, a little bit of a check is like they have UPI,

which is real-time payments, like, without blockchain. And, you know, if you've ever been to India, please try UPI because just with your phone and a QR code, you can pretty much pay for so much stuff. And so it solves a lot of the problems, but not the problem of taking it away from government control. Because as we're seeing with these bands, governments are trying to step in and say, hey, we can't control crypto and we don't know what to do about it. And I think that is really the story in China because for China, they have historically been very, very concerned about capital controls. And that is the story that's playing out here with the ban, which I'm sure you'll talk a little bit more about.

But essentially, China is reinforcing over the past month or so. And I think that they said it again last week, that crypto is not legal there. And obviously, there's the complex sort of navigation of China law versus Hong Kong law and how that works with tokenized deposits, which actually are for men. but it really gets back to how China really wants to control its currency, which is always been a priority of the government there, particularly in the past 20 years. And crypto sort of allows people on the ground there to overcome these restrictions in a lot of ways. And China's fighting back into the nail to make sure that does not happen. Absolutely. And it's funny, my mother-in-law

asked me about CBDCs over Thanksgiving. And I was like, well, this is fantastic. All them CBDCs? Well, no, I was like, that would be impressive. That would be very sophisticated. But it was a fun conversation. I love it. We need to engage with everybody. So one of the things that's really important to note, as Jesse alluded to, is the context when you look at China specifically.

Like, at one point, if people were called, there was an enormous amount of minors in China. And like the crackdown first started, actually started really, really like years and years ago with notice on precautions against the risks of Bitcoin from China. Then a ban on ICOs, one of the earlier bans on ICOs. And then really a crackdown on mining, which sent a lot of the mining operations to different jurisdictions. So China has had a big impact on kind of global crypto flows. And then they have kept renewing and tightening various bans on, you know, ICOs, on

mining's on financial institutions engaging with crypto. And basically this all came to a head in 21, I believe, where they, you know, China's top regulators issued just a blanket ban on anything relating to crypto. And that comprehensive ban kind of took effect earlier in the year where they began targeting a lot of crypto activities in the country, including ownership. ship of crypto-related businesses. And the most recent news that we saw was just a few days ago where the central bank basically reasserted its very strict prohibition on crypto and a specific concern surrounding stable coins in particular.

And you're right. The context is they want a CBDC or a central bank digital currency because this has all coincided with development of the digital yuan. yen, sorry, which basically the government can regulate and control. So this varies a lot culturally based on an individual country. We've seen obviously some countries which are radically pro-crypto. Oftentimes there's a sense that being pro-crypto will bring economic development to the jurisdiction and certain jurisdictions like Cayman, Gibraltar, they've had a lot of success with that. It's been actually a really brilliant move. Other jurisdictions want a degree of control that they know

they will seed with crypto. And I love that because, look, the beauty of crypto is its decentralization. The value is its decentralization. And certain governments understand and acknowledge that, which is why they don't like it. I think that's such a good point. And the digital one is like such an interesting story, especially when the Olympics were there, I remember. It was like mandatory to use it.

And so there were all these inflated numbers about how many people like loved using it. when in fact, like after the Olympics, like it was barely utilized. So it's this technology that actually China is way ahead of a lot of other countries are in developing, like better or worse, they have figured out the tech and they are trying to enable it. But I think I looked this up right before this, but it's something like China still has about 14% of global Bitcoin mining hash rate because on the local level, the local governments are getting a lot of money from this. So, like, I think it gets back to the larger conversation of, can you really ban this? And a ban's going to be poorest regardless. And what does it mean to ban crypto? Is mining still allowed?

Are you just going to tax it like India is doing it? Or are you going to regulate it? And it does really speak to, like, this is exactly why crypto is so important because we don't want governments controlling our access to financial, like, tools or instruments or just controlling our financial lives. This leads perfectly into actually our last topic. But, you know, before we get there, this is something we talked about. Like the three of us have talked about years ago. But like this was, I think, the very visceral reaction people had during Trier Ginsburg's administration is that there was a sense that the regulators were effectively trying to ban crypto. I can't. I had almost forgotten about that legislative hearing work or joking. I was discussed. I mean, it feels so absurd and un-American to me to even consider that. And I think that was a very vocal point that crypto made and not just crypto, is that this is America. If we don't understand something and we don't like something, we don't ban it, guys.

Like, let's consider what kind of jurisdiction we want to be, what kind of place we want to be. And, you know, decentralization, like my favorite, favorite, favorite example to use with TradFi when I'm trying to give them some context on how to understand the value of Bitcoin is, you know, the Black Swan event in the FX markets with the Swiss Frank back in 2015. You know, a bunch of men in a room decided to pull the peg and they said that they weren't going to pull the peg. Bitcoin, that can't happen. Like, boom.

So decentralization has value. We are seeing that not just with Bitcoin and not just with the tech, but also very much with the kind of physical technology. So V, do you want to tell us very briefly what happened the other? day that is also a great indication of why decentralization matters. Poor CME got a little bit of a stressful day the other day. So I'm actually not up to speed on this. Have you guys? I saw the headline. Okay. Okay. I will step in. Sorry. You know, sometimes this happens to me because I feel like I'm in the derivative space all the time. So long story short, I'll give everyone the TLDR.

Like basically CME was hit by a data center problem one day. Okay. And I believe this happened. I want to say not Thanksgiving, but the day after Thanksgiving. It created a 10-hour outage. And it was all due to a data center in Chicago that overheated, like a physical, it physically overheated. And it hit CME, the Chicago Mercantile Exchange, obviously,

the huge source of all derivatives trading, including crypto, derivatives training, hit their bond market, their commodity futures, their equity. And this was all down to this one little data center in Aurora, Illinois. Okay. Problematic. And I think that the real point of us discussing this is, wait a minute, how can CME be impacted by a physical issue at one data center in Aurora, Illinois? And this is troubling. And obviously decentralization means that no one data center, electronic, physical, otherwise, can impact or create outages that the impact, you know, global markets. It reminds me of all our cloud flare issues of the past few months, like that day when I couldn't get into my non-custodial wallet, but I also couldn't order my

bills coffee, not sponsored. You know, so I think that decentralization is essential here and it's what we need. But like, what does that mean about relying on something like a cloud? bad player. Like, how do we find a way to actually not have over reliance on one platform, one cloud provider, one server? I think, like, that's the future. We're all sort of building towards, you know, maybe we're not quite there yet. But if we can figure out a way to do that, that's sort of the goal here. So before we continue, we're going to wrap on this really important decentralization issue. But we need to take one more pause. And we'll continue after a message from our sponsors.

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in total volume with zero hacks. So stop worrying about liquidity infrastructure and focus on building your product. Get access to the same liquidity that powers billions and swaps through one powerful API. Visit hub.uniswop.org to learn more. So we are back. And we just talked about decentralization, which we could talk about for eons, the value, the fact that we all love this decentralized world. But we want to start a new tradition here at Dex in the city.

So especially as we head into a bear, we need all of the good news that we possibly can, right? And there's a lot of good news. There's a lot of happy things. There's a lot of really exciting, compelling use cases in crypto. And sometimes it gets buried by the fud, fear, uncertainty, and doubt. So every week, what we're going to do at the end of each episode is we're going to try to feature kind of a good news piece from crypto. And that could be somebody doing something really cool or good, some sort of donation, some sort of charitable endeavor, some sort of amazing use case. So everyone, please engage with us.

Tweet at us, please, with suggestions. If you want your piece of good news, your piece of happy Mayberry moment in crypto featured at the end of the next episode. Give us some more ideas. we'll take all of them. So today we have actually two brief mentions. I'll pass it to Jesse for our first. Yeah, there's a lot of holidays that have happened that are continue to happen. But today is one of my favorites, which is Giving Tuesday. I think that's today. I think that's today. Well, whatever. Either what today, giving Tuesday. Every Tuesday I should be giving Tuesday. Yes. You're right. So I want to talk about one. There's something called Boys Club Dow, which probably many of you all have heard up because it's

been around a long time now. I throw the best parties, by the way. I don't have a crypto conference. No, it's so true. But essentially, it's an organization and it's a decentralized autonomous organization that is trying to make crypto, blockchain, similar topics, more inclusive for everybody so that people can go and just learn and think and discuss and not feel like they need to have every single answer to every question about the blockchain.

And so I've always been really impressed by what they do. And they have also historically been very charitable and they just donated another $200,000 to the Lower Eastside Girls Club, which helps build financial understanding, inclusion for lots of really underprivileged women and girls. So I just want to give them a shout out for showing how you can use crypto for good. And they didn't just write a check. They sent funds in Ethereum to something called the Giving Block, which helps nonprofits accept crypto. So you can look that one up too, also not as fun. just think that it's really, really special. And I want to always include some good news on this show. I love that so much. And I'm going to forget the fact that I, too, have never been invited to these parties.

So moving on, I guess B is cooler than both of us. We know. We know she'll spring. What is that about? I'm a little upset, but I'll overlook it, given that beautiful piece of news. So let's round this out with B. Give us another shout out that we have. Yeah. Yeah. So, okay. So I just wanted to. give Shifi and Maggie a little shout out. So the Shifi controversy, which I'm sure like none of us were able to avoid on X last week and this week is truly like one of the sillier things I've seen in crypto. Maggie is someone I've known for years and I really respect and admire her. And she's actually a neighbor so I get to run into her and her super adorable little baby at like the bar down my block. So she, you know, in that community have built something really organically that lots of people, lots of women find really valuable and useful.

They do a lot of education about crypto. Like they will literally teach you like how to use a dex, how to how to onboard to a dex. So educating them about all things crypto, helping them to find different roles in crypto. So I really don't get why some people are getting so mad and so emotional about this. Anyway, just a reminder that sometimes you sort of just have to ignore the haters and keep doing what you're doing. So shout out to Maggie and Shifi for helping to onboard more people onto crypto. That's something I think we should all be in favor of. Yes, the haters, Maggie.

Bring on the women to crypto. Come on. We are the future. Come on. I mean, dudes come too. We have a lot of you. More. Come on.

The water's warm. Come on in. Everybody to crypto. So on that note, thanks so much for joining us, and we will see you next week on Dex in the City.