Unchained - Rep. Emmer on Why He Believes Gary Gensler Is a ‘Bad-Faith Regulator’ - Ep. 478

Episode Date: April 7, 2023

Amidst a wide-ranging crackdown on all kinds of crypto players, Representative Tom Emmer talks about recent enforcement actions, the classification of cryptocurrencies as securities or commodities, the potential impact of US regulatory actions on the country’s global economic power, and the Federal Reserve's upcoming payment system. He touches on the importance of innovation and entrepreneurship in the crypto industry and the role of government in fostering these developments. Show highlights: why Rep. Emmer thinks there's an operation to cut crypto off from the banking system how, as he puts it, Sen. Elizabeth Warren has been 'dancing on the grave' of the recent banking failures how the interest in crypto in Congress has changed over time, especially after the Infrastructure bill in 2021 whether the CFTC lawsuit against Binance represents an "appropriate" use of enforcement actions why Rep. Emmer says that bureaucrats are trying to polarize blockchain technology how the US’s attitudes toward crypto could affect the country’s global power why he is against FedNow, the new Federal Reserve's payment system Thank you to our sponsors! Crypto.com Railgun DAO  Guest Congressman and House Majority Whip Tom Emmer Previous appearances on Unchained: Rep. Tom Emmer, One of the Most Active Crypto Congress Members, on Taxes and DeFi Links Operation Choke Point 2.0: Coverage of Unchained Podcast on the topic: Is the Government Trying to Kill Off Crypto in the US? Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs Enforcement actions Unchained: CFTC Sues Binance and CZ Over US Regulatory Violations SEC Issues Coinbase a Wells Notice Coverage of Unchained Podcast on the recent regulatory crackdown:  Why the CFTC Case Against Binance Will Have Very Important Consequences for Crypto Coinbase’s Top Lawyer Calls SEC Wells Notice a ‘Massive Overreach’  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone. Welcome to Unchained, your 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 at Forbes was the first Main Tree Meteorporter take up a cryptocurrency full-time. This is the April 7th, 20203 episode of Unchained. With the Crypto.com app, you can buy, earn, and spend crypto in one place. Download and get $25 with the code, Laura, link in the description. Ever wanted to use Defi without being tracked? Railgun is a leading defy privacy solution on Ethereum, BSC, Arbitrum, and Polygon. Shield your funds and use them privately in your favorite Defy apps, while Railgun's cutting-edge zero-knowledge system encrypts your data from public view. Yes, that includes dextrating. Visitrailgun.org or use the Railway app at Railway.xyZ.

Today's guest is Congressman and House Majority Whip Tom Emmer. Welcome, Representative Emmer. Good to see you, Laura. Great to be with you. You said on the bankless podcast recently that you believe the government is trying to enact an Operation choke point 2.0 to cut crypto off from the banking system. What do you, as a congressperson, plan to do about it? Well, we've got to continue to raise awareness, Laura. If you look, literally, we had people telling us that they've been running into problems trying to bank crypto. This has been an ongoing problem.

especially under this administration, but let's not kid ourselves. It's been there for a while. But it really was ramped up. And then you had the three largest crypto banks in the country, Silvergate, Silicon Valley, and signature, all, for lack of a better term, go down within a short period of time. Silvergate first and then Silicon Valley and signature right after that. Look, nobody lost anything in Silvergate. but the Silvergate owners decided to simply unwind and give everything, return all deposits to their customers. Why is that, Laura?

Well, because they decided it was better to do that than to be fighting with regulators over the next several years and incurring all the legal costs that the government is going to require, if you're going to take on the government. Again, that's Tom Emmer's interpretation. You'd have to ask them. But it seemed interesting that that certain senator from Massachusetts seemed to be dancing on the grave of Silvergate, even though there were no losses. You're talking about Elizabeth Warren? I might be. I usually say the senator who shall not be named from Massachusetts. But yes, I think the owner of Twitter refers to her something else too. But when you go to Silicon Valley, clearly there was a mismanagement issue, but there also was an oversight issue. Again, it is a large tech

startup banking firm. Signature, I believe 30% of the assets, its signature were crypto assets. I think back to the initial press, Laura, that came out, and this is your business, so you can correct me if I miss it. But with signature, the first thing we heard over the weekend when they were declaring it insolvent, our government was, was former chair of the Financial Services Committee in the House, Barney Frank, co-author of Dodd-Frank, by the way. He is, was, is, I don't know what his status is today, but on the board, its signature. And I believe Barney Frank said something to the effect when this was first happening. I don't know how my government declares a solvent bank in solvent. Shortly after that, it's some type of rumor or press statement that crypto was one of the

problems with this bank because it was 30% of the deposits. Laura, within 24 to 48 hours, I believe the head of the New York Financial Department came out and acknowledged that those holdings were not. They didn't have anything to do with the alleged failing of signature bank because they weren't leveraged. They weren't using them as part of their loan portfolio, et cetera. And then we hear, we hear that some reporters are told that anyone who buys signature, any bank that wants to buy signature has to agree not to bank crypto. Long story, there are other warning signs along the way. But when we got to that one, it was really interesting that the FDIC was apparently telling

prospective buyers at signature that if you're going to buy the bank, you have to agree that you will not deal in crypto. Really interesting, too, they have CigNet, I believe it's called the technology. It's 24-7 real-time closing of payments. Kind of funny that I asked the head of the FDIC last week, Groomberg, what you've done with Cignet. And he said, oh, I believe we sold it. Guess what, Laura? they hadn't sold it. He either was ignorant or he was not telling me the truth on purpose. And I just wonder, you got fed now that our federal government has announced they're going to be rolling out sometime this summer as a 24-7, you know, real-time payment system. I don't know. We got to wait and see what these people are doing. But I do believe there's been a real attempt. you can call it choke point 2.0, whatever you want, by our federal government to close out

crypto at least recently in our country. I was curious because you have a very deep knowledge, especially from the crypto perspective about the industry and about these kinds of issues. And I was curious, when you look at other members of Congress, your colleagues, what are the general perceptions that they tend to have about crypto? Well, it's changed, obviously. As you know, I've been doing this now for a little bit more than seven years. When I started with, for instance, the blockchain caucus, which was a new thing, it was two of its original founders were Jared Pullis, the current governor of Colorado, Democrat from Colorado, and Mick Mulvaney, a Republican from South Carolina who worked in the Trump administration. Back then, Laura, there were probably four or five people that I would see the same ones when I'd go to those meetings. In addition to those two, you'd see someone like David Schweiger.

Today, completely changed. And maybe there's one more intervening example I can give you. Republicans were in the majority, so this has got to be about five years ago. There was a hearing in the Financial Services Committee, which then was chaired by Republican Jeb Henslerling out of Texas. And I was amazed back then to listen to Republicans and Democrats sound almost exactly the same. Back then they were talking about crypto in the context of Silk Road. And this is where all the drug dealers hang out. This is where all the nefarious individuals are.

Clearly, they hadn't gotten up to speed with what was going on. And I would say since August of 2022, when the infrastructure bill was moving through the Senate, the U.S. Senate, and they put a tax provision in, which would apply to digital assets. I think that was 2021. Ah, thank you. You know, when you get to my age, you tend to, you know. But it was, you're right, August of 2021. And because I'm going back to the election year, which isn't right.

In 2021, that infrastructure bill really, what, put the jets on people's interest in getting up to speed. And I would say that now, especially in the House, I've got a whole bunch of Republicans on the committee that, you know, they've got their skepticism, but they're very open to understanding what the digital asset space is all about, what crypto is all about, how it works, why it's important, what are the pros, what are the cons. And it's not just Republicans. You look over on the other side of our committee. You get past the former chair, the ranking member who seems to want to have nothing to do with this. you've got some very thoughtful Democrats who are exploring the same things with digital assets in the crypto community. So I think there's been a huge growth in the knowledge base within, especially the House. I've seen it over on the Senate side too, you know, with Lummis and Gillenbrand and, you know, Booker and, you know, give Ted Cruz some credit because, boy, that guy's worked hard to get up to speed. And crypto is a big deal.

mining is a big deal in Texas. So I do think we're moving in the right direction. But unfortunately, we've got a federal government right now, Laura, that I literally believe they have weaponized market chaos to kill crypto. It's exactly why I sent the investigative letter to FDIC Chairman Grunberg requesting more information. And I asked him again last week if he could please respond to my letter. You've said that crypto is nonpartisan. And yet at the moment, it feels like it's becoming more partisan, you just did name a number of Democrats that are pro-Crypto, and I would add Rokana and Ritchie Torres to that list. However, it seems like the louder Democratic voices on crypto, for instance, those of, for instance, Senator Elizabeth Warren or even Sherrod Brown,

Warren has tweeted that she's building an anti-crypto army. Sherrod Brown did at least at one point float the idea of a crypto ban. And I wondered what you thought you could do to prevent crypto from becoming a partisan issue. You know, I don't think. it is yet. I mean, I think you're talking about a couple of central banking loving. You know, and Elizabeth Warren, she may not love central banks, but she does love the design. I believe she ultimately wants banks to be a utility, a government utility and not privately owned. But that part aside, she desperately wants to hold on to the centralization, the control that comes with central banking. And while I'm not opposed to central banking, I think it does serve an important

function. And we're always going to have the traditional, in my mind, two-tier banking system that we've become accustomed to. It's going to have to evolve into the 21st century. And when you talk about digital assets and crypto, they can't stop it. If China can't stop it, you know, when they outlawed all mining, which they haven't been able to completely accomplish, what do you think the country that still practices freedom is going to do. This is not a Republican Democrat thing. This is literally control freak senators who do not want to lose their power over this. It's her people that occupy the White House primarily and her people that sit in these different cabinet positions. I mean, let's just talk about Gary Gensler at the SEC. He's a Warren disciple. This guy, in my mind,

is a bad faith regulator. He's been blinded. sprained the crypto community with enforcement actions while completely missing the true bad actors. And, you know, people ask, what are we doing? We're going to continue to raise the siren of hypocrisy to show how hypocritical their behavior is. We're going to rely on some of our colleagues on the other side of the aisle. You mentioned Rokana. you left out Soto, who I do work with, Richie Torres. There are a whole bunch of nonpartisan.

I mean, they definitely have their political perspective, Laura, but it's not a partisan issue for them. And that is alive and well. Those of us that are interested in seeing this digital asset crypto community, if I can talk that broadly, continue to grow in this country, will continue to push against what these guys are doing. I believe they're just trying to protect their control over this entire system. And the idea that they want to push forward a central bank digital currency, that exposes

them further, Laura, because a CBDC is nothing more than a potential surveillance tool for a large, oversized central government run by a few. In a moment, we're going to talk about other regulatory actions in the crypto space and the geopolitical implications of what's happening. But first a quick word from the sponsors who make this show possible. With Amex Platinum, almost every purchase made with your card can be covered with points, including new tastes, new fits, and virtually everything in between. That's the powerful backing of Amex.

Conditions apply. Ever wanted to use DFI without being tracked? Railgun is the leading DFI privacy solution on Ethereum. It's available on BSC arbitrable. and Polygon 2. Shield your funds and use them privately in your favorite defy apps, while Railgun's cutting-edge zero-knowledge system encrypts your data from public view, all without leaving your preferred chain. Yes, that includes Dex trading. Coming soon are integrations with leading yield, lending, and perp trading platforms on multiple chains. Defy and privacy, together at last.

Visitrailgun.org or use the Railway app at Railway.xyZ to find out more. Back to my conversation with Representative Emmer. So you just brought up Gary Gensler, and he has said that Ether and other cryptos besides Bitcoin are securities. And as I'm sure you know, the CFTC said in its lawsuit against finance that Ether and a few of the other cryptos are commodities. What can you do in Congress to create clarity about this? Well, I mean, we can start moving some legislation through the House Financial Services Committee, which I think Patrick McKenry is committed to do. But it's interesting.

We don't argue that enforcement is a bad thing, as you probably are aware, Laura. Enforcement when it's appropriate is actually a good thing. And the CFTC's recent enforcement action that you referred to against Binance seems to, on its face, look like an appropriate use of the enforcement authority of that agency. As you know, within the last week, CFTC sued Binance for knowingly offering registered crypto derivatives products in the U.S. to U.S. customers despite not being registered to do so and saying publicly that it registered Americans from using the platform. So the enforcement action alleges that Binance did some shady things to conceal their customers' locations with VPNs

in the like. This is different from what Gary Gensler has been doing over at the SEC, where he says he's got an open door, Laura, but a company like Coinbase, right, which accessed that open door and started working with Gary Gensler's SEC. By the way, Coinbase, I would argue, is one of the most regulatory compliant crypto companies out there. Well, guess what? Gary Gensler might have an open door,

but it is an enter at your own risk door, because what he does is, despite several meetings over several months, Gary Gensler's SEC refused to provide feedback on a product. It was called the Earned product that Coinbase was looking to list. And instead, after all these meetings and nothing happening, the SEC slapped Coinbase with a Wells notice regarding the very issues on which Coinbase was asking for their feedback.

Clearly not the way the government should be served. Americans. And it sends a clear message, I believe, to the broader crypto community. And that directly is Gary Gensler is not regulating in good faith. So you got the CFTC example, but then you've got this ongoing stuff with the SEC, which is not good for innovation and entrepreneurial activity right here in the U.S. As the U.S. appears to becoming less friendly to crypto and even driving the industry offshore, we are, on the other hand, seeing that China is going full steam ahead on a number of blockchain projects as well as its digital yuan. And China and Russia recently agreed to use the Chinese yuan for settlements between Russia and the countries of Asia, Africa, and Latin America.

So when you take those facts into account with what seems to be happening now in the U.S. around crypto, where do you think this could end up in terms of the effects on the U.S.'s economic power globally. Look, we're under attack right now. I mean, you probably have seen the rupee, you know, there are offers by other nations to replace the dollar with their currency because of the potential problems that they're alleging with our banking system and obviously some challenges that we are creating with our inability to govern ourselves at the federal level. Going back, because it's interesting, I'm not so worried about the digital yuan. Russia can do that at their risk.

The Chinese, you do not want to deal with a, kind of like when they held, when they were hosting the Olympics, they were going to give every Olympian some digital yuan. That's like telling them that here's this great new technology called TikTok. Don't mind us. We're just going to harvest all of your data and we're going to track you on our, our stuff doesn't end well, typically. For us, it's disturbing because you know, you didn't ask directly about it. But the Biden administration's recent economic report, if you took a look at that, they talk about, well, we know crypto technology is in its infancy. And the White House in this

report concluded that crypto has no real value to our society. Well, They conclude that crypto doesn't offer any value to our society, but then they turn around and say that Fed now, their real-time payment settlement system and central bank digital currencies will. Look, Laura, crypto will thrive with or without the United States. It's unfortunate to see this administration and unelected bureaucrats try so hard to polarize a technology and pursue regulatory actions that are only going to limit the U.S. economic development and opportunities for Americans, which goes directly to your question. That does not put us in the lead. It puts us in the back of the line. And do you feel that your colleagues agree with that? Or like I, just from what's happening, and it seems like they're trying to push crypto offshore,

it feels like they don't recognize that. Some. I mean, I think you've got three different kinds. And you've got members that I've described, Republicans, Democrats, take away the partisan jersey, they understand how important this is, right? It's funny. I had someone high up in our government tell us, tell me last week, which you might have heard me talking about in a different interview, that crypto is wampum. And I said, really, well, describe that to me. And he went through describing how it's not real and then got to the end and said, well, you know, gold, well, you can make the argument. And then he stopped. He said, look, we've had gold for a long time

and everybody accepts that. You've got to break out of the way you've looked at finance in the past. We are moving into a completely different era of finance. The old, as I've talked about, in some fashion, we will always have intermediaries, in my belief. You will always have some form of the two-tier traditional banking system that we've become accustomed to because there will be value that you want to derive from that, somebody to watch over the transaction, to verify the transaction. But the future is you and myself, Laura, doing business directly with one another. We don't need the central authority because we have a blockchain that is open, permissionless, and transparent.

Everyone can see what's happening on it. Self-policing. This is where we're headed. And it should happen in the United States. There is a group that believes this. There's another group that I just think they're still sketched. I had somebody tell me that the problem with crypto is it's the wild, wild west of finance. And as I'm talking to him, trying to explain to them, you know, the regulations all apply.

Yes, there are some updating things that some of us have proposed, but you have the regulations in place. And it's not the wild, wild west. And then there's a third group to answer your question. The third group, unfortunately, is very partisan. And I mean, we've had the problem on the Republican side, but we don't have a problem. have the White House right now when we did have the White House. We had people in the White House that were adamantly opposed. There were people in the White House that were actually trying to help us move this forward. Now we've got a new administration and they have their soldiers in the

in the House and the Senate that they're willing to take whatever marching orders the White House gives them without regard for what is in the best interest in my humble opinion and just march with those orders. I prefer to work with my colleagues on the other side of the aisle and Republicans who have an open mind and understand that this is not only going to happen with or without us, but we want this to happen right here on the shores of the United States where Americans can derive the benefits that would be associated with it. Last quick question, Fed Now, the upcoming Federal Reserve Payment System is going to launch this summer. You've been quite critical of it. Why? would you prefer to see? Let the private sector do this stuff. This is our government once again

trying to compete with the private sector. This is our government, once again, I believe, controlling the all finance. You know, you control the money and you control the water and you control the people, right? This is literally what defines our freedom is our ability, our financial system in this country, our ability to be able to create an idea and then go out and solicit startup capital. By the way, I don't need my government's permission or I should not need my government's permission or oversight to go out and seek that. That's the definition of freedom in this country. That's how we create tomorrow's small business that turns into, I'm sorry, today's small business that turns into tomorrow's big business in this country.

That's why we have been so successful. And literally, whether it's Fed now, which I, you know, I've never seen the federal government do anything as advanced in technology as the private sector. But FedNow and CBDCs are nothing more to me than the government trying to consolidate its authority over the financial system. And quite frankly, that means over the individuals that access that system. And I would like to see it be decentralized. I think that's the whole purpose is to put people back in charge of their own decisions with, out regard to what their government may want them to do or not do. Give us back our freedom. All right. Well, it has been such a pleasure having you on the show. Thank you so much for coming on Unchained.

It's always good to be with you, Laura. Thank you. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break. Join over 50 million people using crypto.com, one of the easiest places to buy, earn and spend over 250 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card. Get up to 5% cash back instantly. Plus

100% rebates for your Netflix and Spotify subscriptions and zero annual fees. Download the crypto.com app now and get $25 with the code Laura. Link in the description. The ScoreBet app here with trusted stats

in real-time sports news. Yeah, hey, Who should I take in the Boston game? Well, statistically speaking. Nah, no more statistically speaking. I want hot takes. I want knee-jerk reactions. That's not really what I do. Is that because you don't have any knees?

Or... The score bet. Trusted sports content, seamless sports betting. Download today. 19 plus, Ontario only. If you have questions or concerns about your gambling or the gambling of someone close to you, please go to conicsonterio.ca.

Thanks for tuning in to this week's news recap. Arbitrum governance proposal sparks controversy. This past week, the Arbitrum team tried but failed to pass a controversial proposal. Arbitrum Improvement Proposal, or AIP1, aimed to allocate 750 million ARB tokens valued at around $1 billion to the Arbitrum Foundation for funding special grants without undergoing a full on-chain governance process. However, over 78% of token holders voted against the proposal. Then Arbitrum employees, employee Patrick McCory revealed that the proposal served as a formality to inform the community of decisions that had already been implemented. On-chain data shows that the Arbitram Foundation had

already used 50.5 million of the proposed 750 million ARB tokens. The Foundation clarified that 10 million ARP tokens was converted to Fiat, while 40 million was loaned to a sophisticated actor in the space, which appears to be Wintermute, according to Look on Chain. After facing significant and community backlash, the team decided to break down this contentious first proposal into separate ones. In a new announcement on Wednesday, the Arbitrum Foundation said it would keep the remaining 700 million ARP tokens in its wallet until the decentralized autonomous organization or Dow approves a budget and lockup schedule. The Arbitrum debacle was discussed at length in this week's episode of The Chopping Block. Haseeb Qureshi, host of the chopping block and managing partner at

Dragonfly, suggested that this event will forever change. the governance in arbitram. He said it's a precedent that tends not to go away. Crypto influencer Kobe's tweet kickstarts $50 million in liquidations. An encrypted message containing the text Interpol red notice for CZ sparked a frenzy on social media on Monday, leading to more than $50 million in Bitcoin liquidations. The message was first shared by crypto Twitter influencer Jordan Fish, aka Kobe, and was encrypted using the Shaw 256 cryptographic hash function. Though it is theoretically impossible to decrypt the hash function in a few hours, the meaning behind the message was revealed, igniting rumors of an international arrest warrant

for Binance CEO Chang Peng Zhao or CZ. Bitcoin's value subsequently dropped to an intraday low of $27,414, and over $50 million in Bitcoin liquidations occurred. Finance dismissed the rumor as false, and Kobe later addressed the situation, stating that someone with who, whom he had discussed the rumor likely leaked the hidden message causing the chaos. Kobe apologized for the incident and plans to reduce his tweeting in the future. Despite facing a lawsuit from the U.S. Commodity Futures Trading Commission, on-chain data reveals no sign of investors fleeing Binance, according to a Glassnode report. Although the exchange recorded the largest net outflows in history with negative $295 million

in stablecoin outflows per day, its Bitcoin and Ethereum balances remain unharmed. Glass node analysts commented, Despite net outflows of stable coins, the market does not yet appear to be expressing widespread concern about Binance's standing. Moreover, CoinDest reported that Binance declined an offer from Tron founder Justin's son to purchase his stake in competitor Huobi, due to its alleged links to China, which Binance wants to distance itself from, according to an anonymous source.

3AC founders' led exchange OpenX goes live. The founders of bankrupt crypto hedge fund Three Arrows Capital, or 3AC, Kyle Davies and Suju, launched a new venture called Open Exchange, which offers spot and futures trading of cryptocurrencies and plans to facilitate claims trading for users, affected by bankruptcies of crypto trading platforms such as FTX, Celsius, and even 3AC. OPNX's CEO Leslie Lamb stated, quote, there are over 20 million claimants worldwide for FTX, Celsius, and other platforms that are stuck waiting years just to access their funds. The exchange saw just $13.64 in trading volume in its

first 24 hours. The Lam said the firm plans to grow liquidity via an open and transparent market making program. Despite facing criticism over their past failed ventures, Davies and Zhu appear undeterred responding to critics on Twitter, even though the Opinx Twitter account was suspended. Meanwhile, Mark Lamb, co-founder of CoinFlex, offered Bitcoin Cash Promoter Roger Vair, an olive branch that includes two years of free trading on OPNX. Ethereum projects want to prevent MEV. Over 30 Ethereum projects have joined forces to launch MEV blocker, a tool designed to prevent maximal extractable value or MEV bots from front-running transactions.

Developed by Kowswap, Agnostic Relay, and Beaver Build, The initiative is supported by several popular Ethereum-based protocols such as NOSISDAO, balancer, shape shift and paraswap. MV blocker routes transactions through a network of searchers, structured to block front-running and sandwich attacks. Users will receive 90% of the profits that searchers bid to back-run transactions, while validators will receive 10% of the profits. MavBots have reportedly extracted more than $1.38 billion from users, impacting traders, liquidity providers and NFT mentors alike. By adding the customer remote call procedure or RPC endpoint to crypto wallets, users can shield their transactions from MVBots. However, according to NOS's CEO Martin

Koppelman, transactions may take 10% longer than usual with this RPC. This initiative comes after a recent incident in which an Ethereum validator successfully front ran MEV sandwich bots, making off with $25 million in a single block. The validator exploited a relayer bug to force a series of transactions, outpacing the MEV bots. Despite being slashed from the network, the validator's significant profit remains in three wallets. Polygon's chief information security officer, Muda Gupta, commented on the situation, stating that, quote, the economic incentives are broken here. Euler Finance, Exploiter gives back all the stolen funds.

Speaking of hacks, at least this. This one got a happy ending. Following weeks of drama, the hacker behind the largest defy hack of 2023 returned all the $200 million in crypto stolen from Euler Finance. Euler's team confirmed the recovery of the funds taken during the March 13th exploit. Initially, the hacker seemed unrepentant, but eventually had a change of heart and began returning small batches of the stolen funds through encrypted blockchain messages. The hacker's tone turned apologetic last week when they returned 7,000-eath to Euler with an attached message expressing regret. Identifying themselves as Jacob, the hacker wrote, I didn't want to,

but I messed with others' money, others' jobs, others' lives. I really fucked up. I'm sorry. After returning $120 million of the stolen funds, Jacob stated their intention to return the remaining funds ASAP while ensuring their own safety. U.S. Treasury Department issues a report on defy. The U.S. Treasury Department has turned its attention to the decentralized finance or defy sector, releasing its first ever report on illicit finance risks associated with the industry. The 42-page document highlights that defy services are being exploited by various bad actors, including cybercriminals, ransomware attackers, and the Democratic People's Republic of Korea to launder and transfer

illicit funds. Although defy services are subject to the Bank's Secrecy Act, many are not complying with anti-money laundering and combating terrorist financing, the report says. However, the report also acknowledges that when compared to government-issued or fiat currency transactions, elicit activities in defy and crypto remain relatively small in volume and value. Binance U.S. still can't acquire Voyager. A federal judge in New York, Jennifer Reardon, put the $1 billion deal between Binance U.S. and bankrupt crypto lender Voyager digital on hold this week, citing a substantial case on the merits from the U.S. government.

The government's objections claim that the contract would effectively protect Voyager from breaches of tax or securities law. Voyager and its creditors face potential losses of $100 million if the legal disputes aren't resolved by April 13th. Delays could also cost $10 million per month and leave over 1 million Voyager customers unable to access their savings. The deal approved by U.S. bankruptcy judge Michael Wiles in March allows Binance U.S. to withdraw if the agreement isn't closed within four months. Despite the Securities and Exchange Commission's concern about the Voyager token VGX, potentially being an unregistered security, whilst dismissed the agency's arguments. P-to-P Bitcoin Marketplace, Paxville shuts down. Paxville, a peer-to-peer Bitcoin marketplace,

suspended operations, citing key staff departures in a lawsuit filed by co-founder Archer Shevac and against CEO Ray Yusuf and the company. Yusuf asked users to withdraw their funds and consider alternative payment applications like Nunes, a peer-to-peer Bitcoin Super app, He claimed that Shabbex litigation team drove away senior staff, leaving Paxville without engineers, compliance, or security personnel. Yousuff explained that, quote, all customer funds are accounted for and urged users to self-custody. Despite some users experiencing difficulties with drawing funds,

Yusuf promised that, quote, funds are safe and they will clear soon. With the platform's closure, Paxville's wallet remains operational for users to safely retrieve their funds. Coinbase insider trading case might reach a settlement. The SEC is reportedly close to settling an insider trading case with former Coinbase employee Ishaun Wahi and his brother, Nikil Wahi. A joint court filing revealed that the SEC has, quote, an agreement in principle with Ishaun Wahi to resolve all of the SEC's claims and is in, quote, good faith discussions with Nikil Wahi. Ishan had earlier sought to dismiss the civil charges, but pleaded guilty in February to related

criminal wire fraud charges. The case alleges that the Wahis and their friend Samir Romani made at least $1.1 million in illicit profits by training tokens before Coinbase announced their listings. The settlement requires approval by SEC Chair Gary Gensler and four other commissioners. Time for fun bits. Hidden in your Mac, the Bitcoin white paper. What's been hidden inside every MacOS version since 2017 from O'Havi to Ventura? Of course, it's the Bitcoin white paper. A user by the name of Burned 178 first discovered this back in April of 2021, buried within the Image Capture Utility's Virtual Scanner 2 function. Alongside a nondescript image of a San Francisco Bay lies a PDF copy of Satoshi Nakamoto's Bitcoin White Paper. Recently, blogger Andy

Bio rediscovered this crypto Easter egg and shared it on his blog, Waxy. Bio wrote, Of all the documents in the world, why was the Bitcoin white paper chosen? Is there a secret Bitcoin maxi working at Apple? What would you pay for crypto bankruptcy claims? Ginny Hogan of Unchained has her take on the launch of Open Exchange. And if they always say, if at first you don't succeed, be a rich dude in crypto. Sue Zhu and Kyle Davies, the founders of the bankrupt crypto hedge fund 3A are back. They're launching in exchange for insolvent crypto claims, which feels a little bit like giving

people paper cuts and then charging for overpriced band-aids. One of the premises of their company open exchange is to offer claimants for bankrupt funds like FTX and Celsius the chance to be made whole. Given that FTS claims right now are trading at 20 cents on the dollar, it's possible that their definition of whole is the same as SBFs. The venture successfully raised $25 million from investors, which does make me wonder if the vibe in VC right now is like, what's there to lose? CEO Leslie Lamb has said that the goal of the new fund is to help the crypto industry. And let me just say, we love a pivot. The 3A case is not settled, and U.S. authorities have actually issued a subpoena to Kyle Davies via Twitter.

You know that Twitter could be used to issue subpoenas? I didn't, but to me, it's no crazier than the idea that FTS claimants could be made whole. Thanks so much for joining us today. To learn more about Representative Emmer and the current state of crypto regulation in the U.S., check out the show notes for this episode. Unchained is produced by me, Laura Shin, without from Anthony Youne, Mark Murdoch, Matt Pilchard, Zach Seward, Juan Oranavich, Sam Shre Rum, Ginny Hogan, Ben Munster, Jeff Benson, Landre Cimino, Pamma Jim Dar, Shashonk, NCLK transcription. Thanks for listening.