Unchained - Kristin Smith on Why Crypto Legislation Could Be Passed by Year's End - Ep. 404

Starting point is 00:00:00 Hi everyone. Welcome to Unchained. You're no hype resource for all things Crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto seven years ago and as a senior editor of Forbes was the first mainstream meteor porter to cover cryptocurrency full-time. This is the October 7th, 2022 episode of Unchained. In case he didn't know, every episode of Unchained is also available on YouTube. Go to YouTube.com slash C slash Unchained podcast. podcast to subscribe. One inch is a top dex aggregator that finds the best rates across multiple networks. Why use a single decks when you can use them all? Get one inch on your phone now or swap on one inch.io. With the crypto.com app, you can buy, earn, and spend crypto in one place. Download and get $25 with the code Laura.

Starting point is 00:00:55 Link in the description. Today's guest is Kristen Smith, executive director of the blog. Exchange Association. Welcome, Kristen. It's great to be here, Laura. The last several months in in crypto have been pretty dramatic. There's been an epic number of collapses. There's also been some unprecedented enforcement actions. And we'll start time at one of them, tornado cash. From your conversations in Washington, do you think, as many people in the crypto industry believe that regulators didn't understand the repercussions of what they were doing when they sanctioned a series of smart contracts, or as some people might say, do you think that they just plain messed up?

Starting point is 00:01:37 I, you know, that's an interesting question. I think that there are a handful of people with an OFAC that understood what was going on. But I think that this was a decision that was really driven by other actors in Washington, namely like the State Department and Maine Treasury, that wanted to do something about North Korea, and this seemed like a logical thing. So I don't think it was a question of, hey, we have this, you know, sort of complex policy that we want to create. How can we go about doing that with, and, you know, with some sort of sanctions? I really think it was a broader sort of national security issue. However, it has obviously tapped into something that, you know, is, we think, you know, pretty problematic what they've done.

Starting point is 00:02:26 and is going to require quite a bit of work to undo it. Oh, and when you say undo, like, what exactly does that mean? Well, I mean, I don't know if it can be undone, but I think, you know, with Coinbase, you know, sort of challenging the action, I think that that is a really important step. And it's great to see, again, they're not actually bringing the challenge, but they're funding it. The fact that they're backing that, I think, is really important. And at the blockchain association, we have a general license request in with OFAC so that lawful users of Trenato Cash can, you know, if granted, go in and get their tokens back. But, you know, it's just a lot of work to work through the administrative options that are available.

Starting point is 00:03:14 And then obviously the court option as well. essentially, like, parts of this can be undone, but maybe this idea of the notion that you could sanction a series of smart contracts will not be reversed. Yeah, well, we'll have to see, I mean, we'll have to see how the litigation goes, right? I mean, I think that's the challenge that we're at. I do think that we need to be having a broader conversation around financial privacy in Washington. And that is something that I think Congress will want to get involved with at some point. But the challenge is when you have, you know, sort of these national security arguments coming in where they're worried about North Korea. North Korea is a big enemy.

Starting point is 00:03:58 It becomes a lot, a lot harder to have sort of a dispassionate discussion about it. And so, so yeah, this is something I think we're going to be dealing with the consequences of for for a while. And yeah, we'll certainly, you know, do everything we can. to support the litigation effort. You know, we will be filing an amicus brief on that front. But, but yeah, it's a real unfortunate turn of event. Just obviously this week with the news about North Korea launching some missile over Japan or something like, clearly there is cause for concern.

Starting point is 00:04:39 So, yeah, I guess we'll have to see how all this plays out. Because obviously in this scenario, it does seem that in a way the crypto industry has been sort of like collateral damage. One question I had for you is you've probably seen that there's some consternation now in the Ethereum community over how one of the relays under proof of stake flashbots is complying with sanctions at the base layer. And about 40% of the blocks now are being validated using the flashbots relays. So that's kind of a huge percentage of blocks that are being censored.

Starting point is 00:05:11 Do you get the sense that the government wants compliance to go that deep, meaning that needs to be enforced at the base layer? Yeah, no, I think there are some in government that do want to see it go that deep, right? And I think it's a conversation that is emerging. It's not one that's been sort of fully vetted yet. But yeah, I think that, you know, when you're dealing with sanctions, when you're dealing with anti-money laundering efforts, like the people who are working on those take that responsibility incredibly seriously and, you know, to the extent that those can be, you know, built in, I think they would like to see that. Now, whether or not that should be the case, I think is more of a policy question. But yeah, I certainly think there are those in government

Starting point is 00:05:59 that want to see it go as deep as possible. And so Treasury has now issued some guidance on how to get your coins out of tornado cash, but why have they not issued kind of details around how far the compliance needs to go, like, you know, whether these base layer participants need to enforce them. Yeah, no, I mean, I think, I think a lot of that has paused with the lawsuit that has been filed. I think that on one hand, I think it's great to see that that is moving and, you know, that it's being challenged, but it does make it more difficult to have dialogue with them when there's active litigation going on. And so, you know, I do think some additional, guidance and some additional frequently asked questions would be very helpful. I'm just not optimistic

Starting point is 00:06:47 that we're going to get that now that the litigation is out there. All right. So now let's turn to Uki Dow, which was another case where the industry had that sort of similar reaction, where they sort of felt like that what the government had done suing this Dow didn't make sense since it wasn't a centralized entity. And I wondered, do you think that the CFTC did that because they wanted to make this point that decentralization is not a defense? Yeah, I mean, I think, you know, the facts of this case aren't great, right? Because if you take B0X, the sort of centralized entity, you know, if you are trading leveraged products, allowing retail customers to trade leverage, leverage,

Starting point is 00:07:36 leverage derivatives products in the U.S., like you have to register, right? Like that is, and also just leverage retail commodities, I should say, you have to register with the CFTC. Like that is very clear under the law. And so what I think Uki-Dal, you know, was sort of touted as a way to get around that requirement. And so I think that that made this a particularly like strong target for the CFTC. Obviously it poses massive questions, though, right? because you have individual governance token holders who are, you know, who are now liable for the action, the Dow, where there was, you know, I don't think that's anybody who, you know, engaged in voting and governance, like, thought that that was going to be the case. And so, you know, it's going to be interesting to see how this one plays out. You know, in, I guess, defense of the CFTC, they don't only have a lot of tools to go about doing this, right? like this regulation by enforcement is really the biggest tool that they have. And so I think this is

Starting point is 00:08:43 going to be a very important case. But what we do need, though, is to come up with some sort of solution to provide limited liability to Dow's and some sort of legal status. And so it's unfortunate that this is all being done, again, through sort of this enforcement action. But I do think there will be litigation around it. I think there's a couple different organizations that have, you know, stepped up and said that they're willing to help fund this and fight this. And so I think it's going to be a very, a very interesting question. But yeah, this was certainly the most aggressive move we've, we've seen in terms of regulation by enforcement from the CFTC. We're very used to seeing this come out of the SEC. But I think everybody was really caught off guard with the CFTC. But I think it goes to

Starting point is 00:09:27 like sort of this broader point that I want to make is that, you know, if there was really clear guidance that agencies could give already, whether it be the CFTC or OFAC or FEC or FN or others, like they've done that already, right? Like that guidance is out the door. What we're seeing now is agencies are sort of testing and playing around the limits of the authority that they have. And so whether it be with Tornado Cash or with Kuki Gao or even with some of the cases over at the SEC, the Grayscale lawsuit or Ripple, we're starting to fight these battles. out in the courtroom. It's really not the ideal place to be doing this. Like, in theory, you'd rather have a more sort of organized open process. But I think it's really great that the community

Starting point is 00:10:11 is pushing back and is willing to fund the litigation to challenge when we think agencies step too far, because it's our right to do that. And I think it's great to see companies in particular that are stepping up to fund these efforts. But what we really need is legislation. That would be the real to get things done. And we may see some progress on that this year as well. Yeah, so in a moment, we are going to talk a little bit more about potential for legislation, but also about the SEC. The first, a quick word from the sponsors who make this show possible. To swap crypto, a user has to choose among hundreds of dexes on multiple networks, all offering different rates and fees. Do you want to avoid that hassle? Swap on one inch, a top dex aggregator,

Starting point is 00:11:00 built to get you better rates than any single decks. Enjoy unlimited liquidity across multiple networks and top-level security. Get one-inch on your phone now or swap on one-inch.io. Back to my conversation with Kristen. So the SEC made a splash this week, especially in the mainstream media, with a settlement against Kim Kardashian for promoting what the SEC said was a cryptosecurity without giving proper disclosures. And you've probably seen people in the crypto industry

Starting point is 00:11:33 have been criticizing the settlement saying that it was really more of a publicity stunt, whereas the SEC's sort of missed major things that have brought harm to everyday consumers like Celsius and some of these other recent collapses that we've seen. And so I was curious for your opinion, why do you think the SEC pursued the settlement with Kim Kardashian, but didn't really do much about Celsius? Yeah, I mean, I agree that the Kim Kardashian situation was obviously a press play, right? I mean, that was something that was picked up across news outlets, across, you know, mainstream news, big on social media. I mean, that was obviously, like, I think a publicity stat. I mean, Gary Gunzer was on squawk box within minutes of the announcement of the action. But yeah, this leads to this troubling trend, right? So basically what they're saying is Ethereum Max is a security. It's like, okay, well, at least they're alleging that, right?

Starting point is 00:12:36 And now that we have this settlement, we don't know if a court would agree with the fact that Ethereum Max is a security or not, right? And so I think that this continues to kind of put more uncertainty out there. And this isn't the right way to make policy. I think if we had clarity on what was a security or not, then I think the advertising team that works with Kim Kardashian probably would have complied with the laws, right? And said, you know, not only like hashtag ad, but all the disclosures that are required for her to do something like that. Or maybe she just wouldn't have touted it at all.

Starting point is 00:13:14 So, yeah, I think, you know, if it is indeed a security, then, yes, she was clearly like in violation of the anti-touting provisions because she didn't have the proper disclosure. But the bigger problem is this settlement doesn't give us any sense as to whether or not it is a security and what the legal reasoning behind that is. So it just puts more uncertainty out into the marketplace. So but yeah, I mean, Gary Gunsler had a video. He was on Squawk. This was clearly a publicity. As we were just discussing, there has been this huge question over the last several years over which tokens are securities and which are commodities. And there are a number of bills that have been introduced in Congress that attempt to answer this question. I think most of them propose the CFTC will be the default regulator. But I was curious, like, which of these bills do you see as having the greatest chance of making it into law and why?

Starting point is 00:14:06 Yeah, no. So this is what we're spending most of our time on right now at the Blockchain Association. There have been several bills, all of which point to the CFTC to be the regulator for digital commodity spot. markets. The one that's getting the most traction right now is the Digital Commodities Consumer Protection Act, the DCCPA. And this is legislation that was introduced by the chair and ranking member of the Senate Agriculture Committee. There was a hearing in September on this legislation. And I think there is a very good chance that this is enacted into law before the end of the year. There are some issues with the bill that were working through

Starting point is 00:14:51 right now that we would definitely want to see fixed prior to anything being signed into law. But I think that we expect this bill to go to markup and committee right after the election in the middle of November. And the leadership offices have thought about potentially attaching this bill to either the National Defense Authorization Act or the omnibus or whatever sort of year-end packages are going. And so the timeline has greatly sped up for this legislation getting done. And what this legislation would do is it defines, you know, digital commodity platforms and digital commodity trading facilities, brokers, dealers, custodians, and requires these entities to register with the CFTC. And with registering, you would have, you know, sort of all of the sort of anti-abusive treaties. practices, disclosures of conflicts, you'd have the cybersecurity programs, like all of the things that you would want to have for regulation. I think that the big issue that's outstanding there right

Starting point is 00:16:03 now is that defy kind of gets wrapped up in this regulation. And so we've been working to try to figure out some sort of process around how to apply some of the core principles in the regulation to different actors in the defy ecosystem. in a way that makes sense. And so that's kind of where the discussions land right now. But yeah, there is a very real possibility that this gets signed in to law by the end of the year. And so this is what we're spending most of our time on right now. Well, I'm just a little floored, actually, that you're saying this. I guess I hadn't heard it before. I don't know if that had been known before. But I feel like what I'd been hearing for a

Starting point is 00:16:44 long time was that stable coin legislation was the kind of crypto legislation that would be likely to be passed first. So what's the status on that? Yeah. So, so, so yeah, no, things have been moving incredibly quickly this fall in Washington and think if we had had this conversation two months ago, I would have had the exact opposite. The staple coin legislation, this is an effort that Chairwoman Waters and Patrick McHenry, who's a ranking member of the House Financial Services Committee, as well as the Treasury Department, have been engaged in discussions for months now. There have been a lot of hearings on stable planes. And what we're hearing right now is that those talks have essentially sort of stalled

Starting point is 00:17:27 and that we don't anticipate that becoming law. You can talk to different people. They might give you different opinions. But yeah, our latest information is that that's probably something that's going to be picked up again in 2023. That being said, I do think there is a window if the Digital Commodity Consumer Protection Act gets a test. it may make sense to do something on stable coins at the same time. I think from our perspective at the blockchain association, the language of the stable coin bill that at least our understanding of how it's written,

Starting point is 00:18:02 it is actually pretty good. I think it provides a really good framework for, you know, dollar-backed stable coins and their regulation. There had been an issue around decentralized stable coins, but we largely have that in a place that's workable going forward. So, yeah, much less optimistic on Staplecoin this year. But again, that could change if the DCCPA does continue to gain momentum and get attached. I could see the conversations reopening.

Starting point is 00:18:33 I would say in general, you know, the end of Congress, like this lame duck session, is an incredibly special time for Congress. Like this is when the deals happen, right? because you have this time pressure of the Congress is ending. You've got, you know, the election is over. You've got people that are going to be cycling out. And, you know, everything kicks off anew in 2023. And so with that sort of deadline, that time pressure, people are able to make deals. And I think this is one of those issues, you know, crypto policy in general, that would be a pretty big bipartisan win, especially with all the market events that we've had this year, you know, Congress would

Starting point is 00:19:16 be able to say, hey, there were these issues, and now we did something to address it, even if like the record, even if it's a little bit like apples and oranges, like, you know, the high level messaging is that, you know, we brought regulation to crypto. And I think it's something that they really want to get done. But yeah, there's certainly some issues that are outstanding with the bill. I'm a little bit on the fence is this is a good plan or a bad plan, but the reality is this is the this is where we're at. And so we're working right now to try to make as many improvements as, you know, with the committee staff as possible. So that when the next draft is released, it'll hopefully be better than the one that was introduced. And when you say that there are still

Starting point is 00:19:56 some questions about defy, what are those questions? Well, the question is right now it's not clear that the regulation for defy would be any different than for C-Fi, right? And if you have, just sort of one regulatory regime for those two worlds, right? If decentralized exchanges need to comply with the same regulations as centralized exchanges, then there is going to be elements of those that will be impossible to comply, right, because it is decentralized. And so we have to figure out, like, what are the appropriate core principles that should apply to defy that, you know, might be different than you would have in a centralized context. The, I think in an ideal world, we would be doing what Europe is doing, right? Where they did Mika and then they're coming back

Starting point is 00:20:46 and doing D5 later. This committee, the Senate Agriculture Committee, does not want to save D5 for later, but they have been open to making sure we find the right process so that any regulation of different actors in this community is tailored and inappropriate, right? I mean, like what we saw with Uki-Dow is if If you're a governance token holder, you're supposed to be registered with the CFTC as an individual and you're supposed to have like a BSA plan. Like that doesn't make sense, right? And so we need to make sure that the CFTC, if a law has passed, is given the flexibility to say, all right, this applies, this doesn't apply. And to study it first, right? Like there hasn't been a single federal study on defy.

Starting point is 00:21:33 There hasn't been a single congressional hearing on defy. The CFTC hasn't held any meetings or round tables on defy. And so we don't want to rush super quickly to regulate this space when nobody's actually thought about what the problems are, what the risks are, and what the best solutions could be. So, yeah, we want to make sure we get that fixed and we're actively working to try to do that. There's some other problems, I think, with the bill too. It's sort of a missed opportunity to answer the securities clarity question that we were talking about. earlier, you know, that might be a battle we have to save for another day. Oh, oh, I thought,

Starting point is 00:22:11 though, if it were going to make the CFTC the default regulator, then that sort of settles, or largely settles it, but you're saying it doesn't. No, well, the way the definition is defined right now, it does call out Bitcoin and Ethereum, or Ether, I should say, as being included in the definition of digital commodity. And so that would pretty clearly put those two at the CFTC, but for everything else, there would still be sort of this open question. And their, their securities are sort of carved out of the definition of digital commodity. So Gary Gensler could still assert that something is a security. And then therefore, it would need to, you know, be regulated by the SEC. So yeah, this does not solve really what is like the core question

Starting point is 00:22:59 of this industry. But I do think it does help in that right now, question of whether something is a security or a commodity has very high stakes, because if it is a security has to be registered at the SEC and there's all these disclosures, et cetera, right? Lots of regulations. It's a commodity. There's no market regulation, no disclosures of any kind. And so I think by having a strong role for the CFTC, then, you know, the question of, is it a security or not, is a little bit less high stakes. It's more what is the type of, you know, regulation, that we need, what is the type of information that investors need in order to make informed decisions? And I think that conversation gets a little bit easier to have if the CFTC has a strong role

Starting point is 00:23:51 to play. All right. Well, we managed to cover a lot of meaty topics in a very short period of time. So I really, really appreciate that you took the time to hang out with us. Yeah, great. Great to be here, Laura. Yeah, we'll have to come back and we can go, we could do a whole show on any one of these questions. Oh my God, seriously.

Starting point is 00:24:12 Yeah. All right. Well, thanks again for coming on Unchained. All right. Thanks. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break.

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Starting point is 00:25:43 UkiDow's serving sparks controversy. Apart from the topics we discussed with Kristen, there were other developments around UkiDow this week. A federal court ruled that it was legal for the CFTC to serve UkiDau through a website help bot. However, the Crypto Group DFI Education Fund argued that the CFTC should properly serve Uki Dow's actual members, not just the Dow at large. Additional, the Lex-Punk Army, a community of Web3 lawyers and developers, filed a motion for

Starting point is 00:26:13 amicus status in the case. They wrote, if our motion is granted, our amicus brief will aim to educate the court on Dow's purposes, nature of coordination mechanisms, and to help craft fairer methods of serving legal notice to Dow participants. Do Kwan's passport could be invalidated. On Wednesday night, the South Korean government gave Tara founder Doe Kwan notice that his passport was in danger of being voided, according to a notice published on the government website. The South Korean Ministry of Foreign Affairs announced that Kwan will have 14 days to return his passport before it is canceled. The notice also warned that if he refuses to give it back, he likely would not be able to obtain another passport, which would make it very hard for him to leave

Starting point is 00:26:57 the country or, since he isn't currently there, travel. Additionally, the Korean founder denied a media report from a Korean news outlet, News One, that prosecutors have frozen almost $40 million worth of his crypto assets. Juan wrote on Twitter, I don't know whose funds they've frozen, but good for them. Hope they use it for good. He also insinuated that his case is being used for political gain, in accordance with the Terraform Lab spokesperson who said the case was highly politicized.

Starting point is 00:27:26 Juan said, It's no surprise that crypto is most popular in countries, that weaponize state institutions against their own people for political gain. In a Twitter exchange I had with Kwan, he shared insights on some hot topics. He said he knows the legal risks of his tweets, and he also stated that the reason he hasn't returned to Korea yet doesn't necessarily have to do with the fact that the charges are violations of the Capital Markets Act, as Zach Guzman had implied on a recent episode of Unchained.

Starting point is 00:27:55 When I asked him why he hadn't returned to Korea, Kwan suggested he would provide an answer in an interview, for an upcoming episode of Unchained. Meanwhile, Korean prosecutors made the first arrest in the Tara case, though a court immediately dismissed it. According to a report from Korean news outlet JTBC, the sole Southern District Prosecutor's Office arrested a person with a surname U, the first name, was not revealed, head of general business operations at Terraform Labs, for allegedly violating Korea's Capital Markets Act. The office also requested a bench warrant for you, which would give prosecutors the ability to keep you detained during trial. However, hours after the arrest, it was reported that a

Starting point is 00:28:35 South Korean court dismissed the arrest warrant for you. At this time, a week after South Korea said Interpol issued a red notice for Kwan, and despite his active arrest warrant, his whereabouts are still unknown. Celsius executives withdrew $17 million before the collapse. Former Celsius CEO Alex Mishinsky and former chief strategy officer Daniel Leon, withdrew $17 million in crypto assets from the company weeks before it froze client withdrawals and declared bankruptcy. The Financial Times had previously reported Mishinsky's withdrawal of $10 million. This week, Leon announced he would step down as CSO,

Starting point is 00:29:13 only a week after Mishinsky's resignation. Amid its bankruptcy proceedings, Celsius has set a timeline for the auction of its assets according to a court filing. The company will have a final bid deadline of October 17th with an auction on the 20th. Sam Bankman-Fried is reportedly considering bidding for Celsius' assets following FTC's acquisition of Voyager's assets last month. Additionally, Martin Glenn, the judge overseeing the bankruptcy case, appointed an independent

Starting point is 00:29:43 examiner to produce a report on the company's financials. Meanwhile, Celsius mining claimed that hosting provider, Core Scientific, violated bankruptcy terms because it allegedly failed to deploy mining machines on time and try to pass on power charges against their agreement. Elon Musk to buy Twitter again. According to recent filings, Elon Musk, the richest person on Earth, has offered to move forward with the deal to buy Twitter for $44 billion, the originally agreed upon price. Twitter is where everything happens in crypto, so a change in the social media giant's ownership could have implications for the industry. In fact, In fact, text messages between Musk and Twitter founder Jack Dorsey revealed that Musk is interested in building a blockchain-based social media platform in which users would have to pay to register messages on the chain.

Starting point is 00:30:35 According to Musk, this would cut out the majority of spam and bots. Ether gets a blue-chip institutional vehicle. Fidelity investments, one of the world's largest asset managers with $4.5 trillion in assets under management, launched the Ethereum Index Fund to give its clients exposure to Ether. Since its first sale last month, the fund has already raised $5 million, according to a filing with the U.S. Securities and Exchange Commission. Fidelity already had a fund offering with exposure to Bitcoin. A Fidelity spokesperson told CoinDesk, as the marketplace for digital assets grows, Fidelity recognizes the need for a diverse set of products. We have continued to see client demand for exposure to digital assets beyond Bitcoin.

Starting point is 00:31:19 Fidelity has been showing an increasing interest in crypto lately. last month, news broke that the investment giant was planning to offer BTC trading to millions of retail customers on its platform, though that news has not yet been confirmed. Also, the company announced a partnership with Citadel Securities, Charles Schwab and others to launch a crypto exchange called EDX markets. Meanwhile, as traditional finance gets deeper into crypto, early DeFi protocol, MakerDAO, has decided to invest $500 million into treasuries and bonds. The goal is to diversify MakerDAO's balance sheet and generate more revenue, according to a statement issued by the Dow. Tornado cash developer Alexei Pritzv to remain in jail.

Starting point is 00:31:58 Arrested Tornado Cash developer Alexi Pritzv will have to stay in jail after his appeal was rejected by a judge in the Netherlands. Perzib was arrested two days after the U.S. Treasury Office of Foreign Assets Control sanctioned Crypto Mixing Service Tornado Cash. He was arrested for allegedly facilitating money laundering through the platform. As per the judge, Pritzv will have to remain in custody for at least six more weeks. Cassania Mollick, Pritzv's wife, told the bloc that the ruling was absolutely not fair and that there is absolute lawlessness going on here. She went on to say that Dutch authorities are afraid that Alex will return to Russia, although if he returns there, he will be sent to war.

Starting point is 00:32:38 Russia invaded Ukraine in February. Is crypto a threat or not? The Financial Stability Oversight Council, chaired by Treasury Secretary Jenny Ellen, claimed crypto could threaten the stability of the financial system. In a report issued in response to President Biden's executive order to investigate crypto assets, a risk panel wrote, the financial stability risks of crypto assets would be substantial if those vulnerabilities were to remain in place, while the scale of crypto asset activities and interconnectedness with the traditional financial system were to grow rapidly. Yellen added, innovation without adequate regulation can result in significant disruptions and harm to the financial system and to individuals. The report seems to contradict

Starting point is 00:33:20 federal reserve chair Jerome Powell, who said last month that defy doesn't pose risks to financial stability. This week, Cryptoanalytic released a report stating that crypto has been used to launder $4 billion since 2020. Furthermore, TRM Labs reported that pro-Russia paramilitary groups have raised $400,000 in crypto. Salana goes offline. The Salana blockchain suffered yet another outage last weekend that left the network inoperative for several hours due to a node misconfiguration. The culprit was a rare consensus bug, explained Joe McCann, founder of CryptoFund Asymmetric. As validators couldn't reach a consensus on the state of the network, the Solana team decided to stop transactions to fix the issue.

Starting point is 00:34:07 According to the Salana status website, the outage lasted six hours and 19 minutes, but there were some who claimed that the surfer was down for a longer period of time. Anatoly Yacavanko, founder of Solana, tweeted, it's a sad state for the industry. when even on days that Skulami is down, is still handling more transactions from DABs than all the EVM chains and their roll-ups and L2s combined. This is the third time that the Salon of Blockchain has gone offline this year,

Starting point is 00:34:34 and this outage comes one year after the 18-hour outage suffered in September 2021. Speaking of outages, on Sunday, crypto-exchange Coinbase, famous for creating an easy on-and-off ramp into the Fiat system, was temporarily unable to process payments. and withdrawals from U.S.-based banks due to an issue with the ACH system. Time for fun, bits.

Starting point is 00:34:58 Can't steal Mr. Beasts' BTC. Popular YouTuber Jimmy Donaldson, also known as Mr. Beast, is not the best at crypto security, but he got very lucky. In an interview on the Andrew Schultz podcast, Mr. Beast told a story about how he almost lost $2 million in Bitcoin when someone broke into his house and stole his laptop, which had a post-it note on it that said Bitcoin private keys, along with the actual keys. However, the criminal did not seem to notice and didn't steal the crypto of the YouTuber

Starting point is 00:35:33 who managed to transfer these Bitcoins to a new wallet and called the robber of fucking moron. Thanks so much for joining us today. To learn more about Kristen, the Blockchain Association, and all these crypto-regulatory issues, Check of the show-as for this episode. Unchained is produced by me, Laura Shin, with help from Anthony Yun, Matt Pilchard, Juan Ovanovich, Pamma Jimdar, Shashonk, and CLK transcription.

Starting point is 00:36:00 Thanks for listening.

Unchained - Kristin Smith on Why Crypto Legislation Could Be Passed by Year's End - Ep. 404

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