Coinbase and Kraken Facing Regulatory Actions – Crypto Critics' Corner
In this episode Bennett Tomlin and Cas Piancey discuss the recent indictment of a Coinbase manager for insider trading, and reports that the SEC is investigating Coinbase for listing unregistered securities and Kraken for helping people evade sanctions.
This episode was recorded on July 28th, 2022.
Other episodes mentioned in this episode:
- Episode 6 – Crypto Capital Corp: the quiet billion dollar cryptocurrency scam
- Episode 84 – Cryptocurrency Criticism in a Down Market (feat. Molly White)
- Episode 28 – Liberty Reserve: The First Stablecoin
- Episode 44 – Poker’s Black Friday (Feat. Jason Bral)
- Episode 2 – Tether: A Stable Discussion Continued
- Episode 83 – Contagion and Cascading Liquidations in Cryptocurrency
- Episode 71 – Terra, Luna, and Algorithmic Stablecoins
- Episode 72 – We Never Want to Discuss Terra and Luna Again…and yet
- Episode 12 – Regulatory Capture and Regulatory Arbitrage: Sleeping with your Enemy
- Episode 14 – Behold the Brash Bunk from Bitfinex and Binance
- Episode 74 – Finding Finex
- Episode 88 – Sex, Lies, and Ponzinomics (feat. Adam Singer)
- Episode 8 – Coinbase Media and Why Venture Capitalism Hates Journalism
- Episode 77 – Disclosures, Conflicts of Interest, and Diplomacy
- Episode 54 – Web3 is Wonky (Feat. Molly White)
- Episode 56 – This Man Murders Scams (Feat. ZachXBT)
- Episode 87 – Tether Update
Other resources mentioned in this episode:
- Coinbase manager insider trading indictment
- SEC complaint Coinbase manager insider trading
- Bloomberg reporting that Coinbase is under investigation for listing unregistered securities
- Crypto securities market is waiting to be unlocked
- Coinbase does not list securities. End of story.
- Bennett’s blog post on Alchemix
- Coinbase blog post about improved clarity
- Jesse Powell tweet on renting PayPal accounts
- New York Times reporting on Kraken evading sanctions
- Patrick McKenzie tweet about needing to rebuy securities at cost
- Reuters reporting on Binance serving sanctioned countries
- Cobie finding Coinbase insider trading
Where to find Crypto Critics’ Corner:
- Bennett’s Twitter
- Cas’ Twitter
- Bennett’s Newsletter
- Cas’ Blog
- Bennett’s Blog
- Asher’s Twitter
This episode was produced and edited by Asher Hirsh.
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00:00:05:12 - 00:00:12:27 Cas Piancey Welcome back, everyone. I am Cas Piancey and I'm joined, as usual, by my partner in crime, Mr. Bennett Tomlin. How are you today? 00:00:12:29 - 00:00:14:17 Bennett Tomlin I'm doing pretty good. How are you Cas? 00:00:15:12 - 00:00:36:05 Cas Piancey I'm tired, but I'm good as usual. Kind of a hectic few days. A lot of press releases from Tether lately, but we already went over tether and their Big 12 auditing. It's funny to me that they're doubling down on that, I guess is the only thing I want to say about that. But we're here to talk about something else today. 00:00:36:06 - 00:01:04:25 Cas Piancey Today we were talking about newly found or not newly found. It's the right word here. Perhaps finally realized regulatory risk that is there and seems to be permeating the cryptocurrency industry in regard to exchanges specifically. So I think the first one we should probably talk about is Coinbase because they're they have a large we have a big American audience. 00:01:05:09 - 00:01:13:04 Cas Piancey They have a huge American user ship. So let's let's start with Coinbase and talk about what seems to be relevant from them. 00:01:13:16 - 00:01:38:00 Bennett Tomlin Yeah. So I think there's a couple of things going on with Coinbase right now. The first is that the Department of Justice just indicted one of their former managers and several of their associates for being involved in an insider trading scheme. And what was interesting is that the SEC came out as part of this case and ended up saying that nine of the assets that this individual had insider traded were securities. 00:01:38:15 - 00:01:57:28 Bennett Tomlin At the time, there was a bunch of people upset that the S.E.C. was using this as their opportunity to try to label these things as securities instead of going after the appropriate target like Coinbase. Luckily, a few days later, Bloomberg reported that Coinbase was under investigation for listing unregistered securities. 00:01:59:14 - 00:02:30:20 Cas Piancey Yeah, so I'm going to I'm going to go ahead and refer to Coinbase's blog, which as of recording, they released two press releases on the same day and one the day before. So three press releases in a two day period. One is the crypto securities market is waiting to be unlocked, but first we need workable rules. The second is institutional insights, our approach to crypto financing. 00:02:31:05 - 00:03:01:20 Cas Piancey And last, Coinbase does not list securities. End of story. Now this is obviously the most interesting one. It's the shortest. Also also it is by their chief legal officer, Paul Grewal, who was at one point sitting on, I believe, the California appellate court, the seventh circuit was is it seventh District, ninth District, something like that. One of the districts as a judge, he was a big he was a judge. 00:03:02:24 - 00:03:18:04 Cas Piancey He's now their chief legal officer. He's been so for a while. This two minute blog post, um, just says that they don't list securities. There's no real argument about it. 00:03:19:18 - 00:03:35:29 Bennett Tomlin You know, there is an argument. The argument is that Coinbase has a process that decides whether or not things are securities. In all of these cases, Coinbase is process. These are not securities. And so these are not securities. Regardless of what the Securities Enforcement Commission might think. 00:03:37:15 - 00:03:39:29 Cas Piancey Right. And do we know what their process consists of? 00:03:41:18 - 00:04:05:21 Bennett Tomlin Well, I think it consists of calling up Coinbase Ventures, seeing what the biggest has been. I'm I'm being somewhat glib, but I mean, we're talking about an exchange that has listed tether. while, Gary Gensler is saying he thinks all stablecoins are securities listed EOS despite them agreeing to a consent order that their initial sale of the U.S. token was a securities sale. 00:04:05:29 - 00:04:16:08 Bennett Tomlin And like Litecoin. Right. Like, this is a this is an exchange with a long history of curious listing practices. 00:04:16:14 - 00:04:32:16 Cas Piancey I previously have talked about Charlie Lee not on this podcast, but I remember mentioning that day that all of this came out that they were looking at, do we have the names of the tokens that were mentioned by the SEC? Can you can you give us those names? 00:04:33:20 - 00:04:44:19 Bennett Tomlin Yes. Well, at least several of them. Tribe, Alchemix, XYO, whatever that is. Gala, ENS, and POWR, among others. 00:04:47:03 - 00:04:48:00 Bennett Tomlin I'm sure you can find. 00:04:48:00 - 00:04:49:01 Cas Piancey They listed Alchemix? 00:04:49:23 - 00:05:01:15 Bennett Tomlin Well, no, this person insider traded Alchemix apparently. I don't see. Because this was the thing. There was nine mentioned in at the time. Coinbase only had seven of them listed. 00:05:03:02 - 00:05:32:11 Cas Piancey Oh. Oh, that's interesting. I do think it's funny that Alchemix was mentioned because that is another thing that we have not talked about on here, but did not. We're not big fans of otherwise. So yeah, I, I wonder I wonder what they're. I wonder what their process is for taking care of all this stuff. I have a feeling it is not very thorough, but they should share that anyway. 00:05:32:12 - 00:05:46:19 Cas Piancey If they have some process to determine whether these things are securities or not. And it's actual, you know, they're actually able to determine it better than apparently better than the S.E.C. then they should probably share that with the SEC and with the public at large, right? 00:05:47:02 - 00:06:10:21 Bennett Tomlin Yes. Well, I mean, we do know a while ago that Coinbase published this blog post entitled Improved Clarity and Guardrails for New Assets, and Coinbase that talked about some of the additional steps they were taking to help make sure there was no conflict of interest. And oh, my God, it was written by the person who got indicted. Well, like Coinbase, Coinbase either. 00:06:10:24 - 00:06:14:29 Cas Piancey Didn't scrub his name. They did scrub his name from the article, though, to be fair. So that's good. 00:06:15:27 - 00:06:16:18 Bennett Tomlin So, yeah, a. 00:06:16:18 - 00:06:19:19 Cas Piancey Lot of transparency from these companies is what we're is what we're noticing. 00:06:20:05 - 00:06:37:15 Bennett Tomlin They're very open and they want regulatory clarity, but only at the regulatory clarity says, my God, you're doing great. Look at these tokens. How could they ever be securities? It's just a bunch of people investing money in a small team who control the entire thing. And you hope that by making your investment, you'll end up earning more money. 00:06:37:24 - 00:06:41:24 Bennett Tomlin How could that possibly be a security? Yeah, end of the story. 00:06:42:12 - 00:07:10:00 Cas Piancey So that that that seems like big trust that, huh? Yeah. We do not list securities. Period. I love that. Bitfinex and Coinbase and stuff. Like and. And blog posts like full stop period. They're like a fucking 14 year old girl. Like, blogging and saying, like, I just can't deal with this anymore. I'm over it. Period. End of paragraph. 00:07:10:06 - 00:07:18:04 Cas Piancey Nothing else to say. And you're like, I think there's a lot more to be said here. You can't just say that I'm sorry. 00:07:18:04 - 00:07:27:17 Bennett Tomlin It's not Katz, they're just the degen builders. And this is just how degen builders who get out there and make things. Make things. Period. End of story. 00:07:27:24 - 00:07:51:16 Cas Piancey Yeah, maybe if we didn't criticize these things, they wouldn't be securities, you know, the other exchange that we wanted to discuss was another one that's been that's been a topic of discussion for us previously. So we talked about it in our crypto, in our crypto capital core worked directly with crack and crack and noticed red flags with them and dropped them. 00:07:51:16 - 00:08:27:16 Cas Piancey So we previously had mentioned that before. I think we also have seen that Jesse Powell has talked openly on Twitter and other platforms about how they use PayPal and other kind of third party payment processors as ways to pay out in customers, which obviously I think you just it doesn't seem like that's acceptable. But I don't know. Anyway, what's what's the deal with them and why are they getting brought up suddenly as well? 00:08:28:18 - 00:08:55:27 Bennett Tomlin Well, they're being brought up because The New York Times reported that the Treasury Department is investigating them and is likely to find them for serving sanctioned company or countries. Excuse me. And in The New York Times reporting, they mentioned how at one point Jesse Powell shared a spreadsheet that had listed where all the customers were that were verified customers of Kraken. 00:08:56:03 - 00:09:18:17 Bennett Tomlin And on it, they just openly listed a bunch of people in sanctioned countries. Excuse me. And so they they sent that in the company Slack. And that's what Jesse Powell was doing when he wasn't arguing whether or not he should be able to say the N-word. They should take slack away from Jesse just as an aside. And so it seems the Treasury Department is investigating Kraken for sanctions violations. 00:09:19:03 - 00:10:07:13 Cas Piancey Right. So we've got sanctions violations and possible kind of what appears to be listing listing securities that probably shouldn't have been listed. I posed the question on Twitter about a hypothetical. And so I want to make sure that everybody is clear. We aren't not asking this question because I think it's a definite or even likely I'm posing this question as a hypothetical because I think this is what's on everyone's mind is this idea that what's the worst case scenario for Coinbase if if the SEC does indeed find that they've listed perhaps some unregistered securities and what seem to be the scariest response to that was, I believe it was by this is like the third 00:10:07:13 - 00:10:34:17 Cas Piancey episode in a row I mentioned Patrick McKenzie. I think @patio11 on Twitter who said something along the lines of, well, anyone who bought these tokens at the price they purchased them at can then request that Coinbase pay them back at purchase price, give them the money back at purchase price, which would probably be pretty devastating for Coinbase in a number of different ways. 00:10:34:17 - 00:11:00:13 Cas Piancey First off, that's going to end up being quite a bit of money if people take advantage of it. And obviously the market is down. So they probably would. But additionally, it's troubling because if that is proven and they do have to do delist all these tokens, I would presume that they are going to have to delist many more tokens and that that could pretty much fuck up their entire business model. 00:11:01:24 - 00:11:42:19 Bennett Tomlin Yes. Yes, you are absolutely right that if Coinbase is no longer allowed to list whatever shitcoins they want, their business model is fucked. Their entire business model has become charging exorbitant fees to retail and trying to attract ever more retail investors by listing an increasing list of shit right. So yeah, if they get told that can't list most of these anymore, that fundamentally alters their business model, but also that has massive ramifications across the entire industry because if all of these things are securities in all the places listing them are doing are securities exchanges now and are either going to need to register delist these and delist a bunch other preemptively like you're talking about 00:11:42:28 - 00:11:54:20 Bennett Tomlin any of the lending places are now doing like lending against securities and need to make sure they're doing that appropriately and like the fundamental structure of everything alters in a way that no one is ready for. 00:11:56:03 - 00:12:28:12 Cas Piancey I guess I guess I'm wondering what we're seeing with Kraken is a far different issue, and I'm wondering how common you think that is as an issue for cryptocurrency exchanges. I also am wondering, I know I've written about this and I and I think you probably have too, but I'm wondering about jurisdiction here. Right? So how much will these will these securities issues or whatever alter, let's say, Binance, from doing business or from doing business? 00:12:28:27 - 00:13:00:02 Bennett Tomlin Well, I was going to bring up Binance next when you asked about Kraken because I feel like this has gone under noticed. Is that a couple of weeks ago Reuters had the reporting that Binance had served a bunch of Iranians right in that violated sanctions. And so this reporting coming from Bloomberg so close and that suggests to me that the investigation into Kraken to which Jesse responded, were always under investigation. 00:13:00:05 - 00:13:01:11 Cas Piancey It was New York Times, wasn't it? 00:13:01:11 - 00:13:07:26 Bennett Tomlin Yes, yes. But not for Binance or Binance. It was a Reuters investigation for this one. It was New York Times. But in both cases. 00:13:07:26 - 00:13:09:04 Cas Piancey But you said Bloomberg just now. 00:13:09:05 - 00:13:12:08 Bennett Tomlin Oh, so you're right. No, it's New York Times. I mean. Yeah, New York Times. 00:13:13:01 - 00:13:13:26 Cas Piancey Okay, cool. I'm just. 00:13:14:17 - 00:13:37:28 Bennett Tomlin Bloomberg. Bloomberg had the scoop on Coinbase being under investigation by the SEC. You're right, New York Times. But I think that I think it hints at the possibility that there is a much larger federal investigation going on. And we've seen basically a whole bunch of federal agencies have ongoing investigations into Bitfinex, Tether, Binance, and apparently Kraken all the time. 00:13:37:28 - 00:13:57:09 Bennett Tomlin If you listen to Jesse now, we know Coinbase is under the SEC investigation. I think that it is plausible that there is a much broader federal regulatory shakeup going on than I previously assumed, and that I might have previously misjudged its size. 00:13:57:09 - 00:14:21:27 Cas Piancey Yeah, I mean, it could very well be that we have another Liberty Reserve on our hands, but we're Black Friday. You know, I don't I also I think it's our responsibility to not wear Black Friday. But but look, I want I want to saying saying dramatic statements like that. I want to equalize this and make sure that we are not fomenting panic or, you know, causing people to immediately go out and sell whatever they hold. 00:14:22:05 - 00:14:49:29 Cas Piancey That is not what we're trying to do. We're talking about a real risk. And the fact that it's a risk does not mean that it's going to happen, does not mean that anything ultimately bad will happen to any of these exchanges. We have no idea what's going to happen. And in the past five years, nothing has happened. So I think it's fair to say that, like if you look at the past five years of history, it hasn't been a big issue. 00:14:50:10 - 00:15:17:26 Cas Piancey Right. So, I mean, there's been little things. There's been like the CFTC filing against Bitfinex, there's been the New York attorney general office going after Bitfinex and tether. Wonderful things that happened and I'm glad they happened. But that is a very small numerical set when you think about how many cryptocurrency exchanges have existed and fallen apart or still exist to this day. 00:15:18:24 - 00:15:53:08 Cas Piancey So yeah, those numbers are very tiny and even the ones we're talking about real regulatory risk. I mean, I don't have I don't really know. I don't know. They obviously they're able to get Liberty Reserve that's in Costa Rica. So I think that's a pretty amiable country to American law. But I think a lot of these individuals had like three AC and and we already saw I mean Arthur didn't Arthur Hayes of BitMEX fame, which is if anyone is unfamiliar, is a essentially a derivatives. 00:15:53:08 - 00:16:01:03 Cas Piancey It's not it's not it's not physical, physically settled bitcoin exchange. It's like spot, right? 00:16:01:13 - 00:16:03:16 Bennett Tomlin No, it's not spot. It's derivatives trading. 00:16:03:27 - 00:16:08:07 Cas Piancey So they just it's not spot. It's a it's what's the other one? 00:16:08:08 - 00:16:12:12 Bennett Tomlin Futures. Derivatives leverage. 00:16:12:12 - 00:16:39:03 Cas Piancey It's futures contracts. Yeah, it's futures contracts. It's futures contracts. It's futures contracts. And they famously, I think the even the company is something like 100 acts or whatever it's called. It's a they famously let you 100 X your leverage and immediately get liquidated if you wanted to do that. But he ultimately Arthur Hayes, who was the CEO, got in trouble with with I believe it was the it was at the SEC or the DOJ. 00:16:39:03 - 00:16:43:26 Bennett Tomlin Is the DOJ under BSA? Is she's making secrecy act. 00:16:44:19 - 00:17:03:21 Cas Piancey Write banks bank secrecy act. So yeah Arthur Hayes got in trouble but he was in Singapore kind of on the run eventually turned himself in. It seems like he's going to get off with a slap on the wrist and be fine. I don't I don't see much happening there. If any of these work out that way, I would presume it would also be similar. 00:17:03:28 - 00:17:26:01 Cas Piancey But like the actions of 3AC or Do Kwon, make one wonder if these individual is or is amenable to U.S. law and coming in and talking to U.S. regulators and lawyers after getting in trouble. So I have my doubts. Yeah. 00:17:26:08 - 00:17:47:22 Bennett Tomlin Yeah. I mean, there's certainly reasons to have doubts for several of the reasons you brought up here. One, there hasn't been a ton of regulatory action. There hasn't been a ton of law enforcement actions have been against. It has been a very safe bet. And then, as you mentioned, cryptocurrency companies very intentionally play a game where they try to position themselves out of jurisdictions and in places where it's going to be expensive or politically difficult for the U.S. to enforce its laws. 00:17:47:22 - 00:18:16:07 Bennett Tomlin Right. That's part of the tactic. And we've talked about a dozen, half a dozen of these episodes. But like, that doesn't apply to Coinbase. That doesn't apply to crack and that doesn't apply to anyone who's in a place with a pretty comfortable extradition treaty. Like there's still a lot of people who are still potentially in play and a lot of other people who can have their life made immeasurably more difficult if that is the tactic that U.S. law enforcement and regulators are actually intending to go with. 00:18:16:18 - 00:18:35:29 Bennett Tomlin But like you said, there's reason to bet against that. And I think that like part of the regulator inaction we've seen over the last few years is what is kind of really driving the manufactured outrage we've seen in the cryptocurrency ecosystem in response to this. Right. Is that, oh, now you're going to say these are securities. I've been doing this for years and now it's a problem. 00:18:35:29 - 00:18:57:04 Bennett Tomlin Cool. Let's see. I've been even trying to talk to you about my process, where I rubber stamp any token that comes into my office and you wouldn't even listen like. And so like the fact that there has been nothing means when there is something in such jarring contrast that you get these we don't list securities period and the story could never happen. 00:18:57:04 - 00:19:18:06 Bennett Tomlin We're way too careful about these tokens, including one token that as soon as it was listed, published a press release that said Power Ledger's Power Token skyrockets and Coinbase, the Coinbase debut, clearly decentralized, clearly not a security industry period. It's it's it's manufactured, it's fake. 00:19:18:06 - 00:19:44:25 Cas Piancey It's a yeah, it's up to the point where I, I recall a specific lawyer who I won't name on cryptocurrency Twitter doing a little mini thread about how this was outrageous that this insider trading guy was getting was getting charged with obvious insider trading. It's not outrageous. I think everybody is looking at this and going, hmm. Wow. Yep. 00:19:45:09 - 00:20:25:14 Cas Piancey That looks like insider trading. And those sure as shit look like securities. That's been everyone's response. Who has a working brain and to to see this lawyer genuinely trying to it's what you need somebody to defend every criminal and I'm glad there are people there to do it. But the arguments were so silly and they amounted to like I basically what I've heard the best arguments for for this not being insider trading and people who suggest a do you remember there was someone who said to us like, what if what if you gave maybe these people wouldn't be insider trading if they got more equity or they got more if they got better terms on 00:20:25:14 - 00:20:50:18 Cas Piancey their employment. And it's like so bribe people to not do the worst possible thing financially. I don't know. It's, it's, it's insane to me these takes at all. If you want to defend the guy, you know, cool that he needs defenders. That's great. Everybody needs someone to defend them. When this kind of thing is happening. That's part of the American system, thankfully. 00:20:51:09 - 00:21:01:17 Cas Piancey But yeah, weak, weak, weak arguments from these people, at least on line. Hopefully his lawyer does a better job than these people were doing. Well, anyway. 00:21:02:00 - 00:21:02:13 Bennett Tomlin One of. 00:21:02:24 - 00:21:02:28 Cas Piancey The. 00:21:02:28 - 00:21:33:19 Bennett Tomlin Last. So one of the interesting things about that is so this insider trading was not detected by Brian Armstrong's monitoring system he was trying to brag about on Twitter. It was actually a at Cobie and Twitter who originally pointed out to these wallets. And he also tweeted that he was asked by several people to stop tweeting about this because it was going to be bad for the industry to draw attention to it, because regulators would want to get involved if they thought that was happening. 00:21:33:29 - 00:21:48:24 Bennett Tomlin And like it's it's CZ responding to the block going recommend no more stories like these for the good of you in our industry right it's the same fucking thing it's if you talk about the if you talk about the problems then they're real. If you don't, we can ignore him. 00:21:49:00 - 00:22:15:07 Cas Piancey Yeah, this is. And this is another thing we saw. There's a this is not a regulatory risk, but there was a big thread about Helium by @Liron and he did a thread about this essentially this thing called helium. Honestly, I don't want to get deep into the weeds on this one, but basically they were offering like a system for people to get paid to offer Wi-Fi hotspots. 00:22:15:07 - 00:22:44:10 Cas Piancey Right. And that was essentially that's the essentially that's the elevator pitch. Liron did the math and it basically amounts to would take like 200 years or people on Reddit were doing the math. But it amounts to like it would take 220 years to recoup the cost of your investment for buying the hardware to do this thing. And I actually had someone reach out to me a week before that thread or something like five days before that thread and say, Hey, what do you think about helium? 00:22:44:10 - 00:23:02:09 Cas Piancey Like, do you think helium is you must think helium is pretty interesting. And I was like, No, no, of course. Like, I was like, this is this is somebody trying to solve the last mile problem, but not even considering the last mile. And all I had to do was think about the people who were going to be most heavily invested in this dumb idea. 00:23:02:16 - 00:23:25:24 Cas Piancey And it's going to be people in a city who, one, don't really need hotspots already they have Internet. But to if you were to do this all over a city, you would have people competing all over the same places to be offering hotspots in the exact same exact, exact same place that is unnecessary, repetitive and bad. Meanwhile, people in rural areas wouldn't would still would not be able to get very good Internet. 00:23:25:24 - 00:23:48:07 Cas Piancey And so they would need to have wired or cabled or, you know, fiber, you know, whatever, like they need. So they need something to connect to an Internet. And generally people who live in a rural area want a tech like service. They want somebody to be able to come out and fix it when it goes down. And I don't think I don't even know if helium offers that. 00:23:48:07 - 00:24:22:29 Cas Piancey I doubt it. But anyway, I guess what I'm saying here is that there's been a lot of promises and conjecture, a lot of nothing bad can possibly happen. And I think we're realizing now that it it it can. It can and it does. And not all of these things are winners. And if you're going to list all this stuff, if you're going to just go for it, there probably going to be some level of consequence, I suspect eventually who knows how big or terrifying those consequences are. 00:24:23:00 - 00:24:42:11 Cas Piancey Maybe there, maybe it's I think I asked the question originally and thinking that the ultimately the worst thing that could happen to Coinbase would be a fine. And it sounds like it could be much worse. But that's still I still think it would ultimately probably be like a slap on the wrist. But please don't do this again, you know? 00:24:43:15 - 00:24:43:28 Bennett Tomlin Yes. 00:24:44:24 - 00:24:54:05 Cas Piancey So again, we're not trying to stir fucking fear, I guess, is what? We're not trying to stir fear, but there are real risks and they're descending on cryptocurrency. 00:24:54:08 - 00:25:17:12 Bennett Tomlin Well, and I thought the most interesting thing about Warren's thread was not the thread itself. I mean, yeah, helium has basically no revenue. It was all overinflated and tokens and stuff during the hype phase without any real substantial there, there. You know, my thought, the much more interesting thing was the reaction to the threat, right? Where you had like the writer of the piece and an a16z partner coming out and being like, Oh, this is so mean. 00:25:17:12 - 00:25:35:07 Bennett Tomlin This criticism isn't fair. This is so, oh, so hard for us. It doesn't even talk about all the great build out that helium has accomplished, despite the fact that no one seems to want it. And it doesn't talk about how innovative this is. And so it's just totally not fair to these experimenters who just want to innovate, man. 00:25:35:15 - 00:25:40:11 Cas Piancey And yeah, there we go again with experimenting and art, but whatever. 00:25:40:11 - 00:25:41:02 Bennett Tomlin Also also. 00:25:41:10 - 00:25:42:26 Cas Piancey I think just that one. 00:25:43:06 - 00:26:00:06 Bennett Tomlin Packy was the one responding, right? And he was the one on the podcast. And the really bad house is on the blockchain use case. And then later posted a different clip of him on a different podcast. Right. And wasn't his use case at that point? Helium. I think his second Web three use case after he bombed the first time was helium. 00:26:00:06 - 00:26:02:02 Bennett Tomlin I'd have to look it up to be sure, but. 00:26:02:11 - 00:26:05:04 Cas Piancey Right. Yes. And then he did it. Just just. Yeah, he did a seven. 00:26:05:23 - 00:26:06:18 Bennett Tomlin The writer wrote. 00:26:06:19 - 00:26:10:06 Cas Piancey Yeah. Response to no pac. He wrote that. 00:26:11:11 - 00:26:13:04 Bennett Tomlin No, no. The writer was upset that. 00:26:13:19 - 00:26:34:20 Cas Piancey Packy wrote a 7000 word novella novella response to that thing and someone noticed that it was clearly angsty towards the rant earlier on. But they, they were like, Yeah, he deserves this hate and, and, and PAC. He was like living in it and enjoying it and saying like, Yeah, I'm glad you noticed this because this guy is just a bad actor. 00:26:34:20 - 00:26:57:17 Cas Piancey And it's like, No, man, you just wrote a 7000 word response about a broken thing and you're not even acknowledging your own your own participation. There were more people being I honestly wish there was more people being held responsible in some way. I don't even mean in a regulatory sense, you know what I mean? Like, I don't want everybody to go to fucking jail. 00:26:57:17 - 00:27:06:20 Cas Piancey That's not my point. But like, I don't know. Time magazine should not be allowed to even write anything critical about Web3 like. 00:27:07:05 - 00:27:08:10 Bennett Tomlin After shilling Axie. 00:27:08:10 - 00:27:22:00 Cas Piancey You mean you guys should show that the whole way up from Axie Infinity, which they showed and talked about how great it was for Filipinos, and now they're like, Oh my God, it's a Ponzi scheme. And you're like, Are you guys just. 00:27:22:06 - 00:27:24:07 Bennett Tomlin Who could have ever figured this out. 00:27:24:19 - 00:27:47:09 Cas Piancey To their own NFT that they were shilling at that at the top? I'm sure that those time fucking those Time magazine nfts are doing just great. I'm sure the floor hasn't fallen out from those things. Right? I just give me a fucking break, dude, you're not allowed. Stop. Oh, but you can't say who's allowed to say what they what kind of what is it. 00:27:47:09 - 00:28:19:26 Cas Piancey A reliable narrator, I guess is the word I would want to use. Like they're not reliable narrators, you know, they they clearly had an M.O. They clearly went for it. And it's the same as that New York Times article about the Cubans. The Late Comers Guide to Crypto. Just a bunch of a bunch of fucking nonsense. And then the same people who go out and write these like highly praising a bunch of garbage, then later, right, and go like, I can't believe it was a scam. 00:28:19:26 - 00:28:41:29 Cas Piancey And you're like, maybe you can't believe it was a scam because you did zero fucking research at the beginning, you know, maybe that's why. I don't know. That's crazy. I guess crazy that journalists for respectable media operations should do their own research. And that's what I mean. It's just like someone should hold them responsible. They're the ones who should be held responsible as well. 00:28:42:06 - 00:28:51:09 Cas Piancey They're the ones who help people forget. But like Ponzi schemes work best when the media plays right into them and says, Oh my God, how. 00:28:51:09 - 00:28:51:19 Bennett Tomlin Does he. 00:28:51:19 - 00:28:54:20 Cas Piancey Do it? Making money? That's how the first Ponzi scheme made a bunch of money. 00:28:54:22 - 00:29:02:08 Bennett Tomlin How does he do it? It's incredible. Look at how much these people are benefiting. Everyone's getting rich and you want. 00:29:03:05 - 00:29:13:18 Cas Piancey But there's unfortunately, there's no regulatory risk for this. There is, you know, for these companies and these there should be, but none of them are going to get sued. 00:29:13:26 - 00:29:35:14 Bennett Tomlin And I don't know, I don't really think they should. But more I think like me either. I think that we've talked about before, a lot of these institutions are gradually eroding the trust that they have left and they're doing a poor job of maintaining and continuing to build that trust. 00:29:36:03 - 00:30:04:09 Cas Piancey Yeah, I want to thank them for doing such a piss poor job because without them doing such a piss poor job, we wouldn't be able to talk about this and people wouldn't seek us out to be like, Hey, what the hell is actually going on? Or for that matter, Molly White, who's been doing an excellent job of archiving all these Web3 scams, and Zack SBY, who's basically a full time journalist, expose ING scam after scam after scam, like he's doing the journalist's job though. 00:30:04:09 - 00:30:23:09 Cas Piancey I don't know, I in some sense I'm like, Well, there you go. Guess we know who's actually doing the hard work now. I think it was worth talking about. We're interested in seeing how this plays out. I thought that was interesting. They mentioned that Cuba was one of the countries and how many people? 73, although the one with the most was Iran. 00:30:24:22 - 00:30:28:16 Bennett Tomlin Which if you were going to pick one of the two to have the most, you would want it to be Cuba. 00:30:28:18 - 00:30:40:01 Cas Piancey Right now. Yeah, totally. Totally. I mean, what Cuba is not I know they're listed on the, you know, state state sponsors of terrorism, but but. 00:30:41:04 - 00:30:43:06 Bennett Tomlin What a fucking stupid list for them to do. 00:30:43:06 - 00:30:43:25 Cas Piancey It does not. 00:30:44:03 - 00:30:44:10 Bennett Tomlin See. 00:30:44:11 - 00:30:54:00 Cas Piancey The biggest the biggest threat to America. So I don't know, I I'm not suggesting either of us are big fans of Cuba, but I just don't think they're something. 00:30:54:05 - 00:30:54:17 Bennett Tomlin Listen. 00:30:55:00 - 00:30:56:21 Cas Piancey I don't ever worry about Cuba. 00:30:57:11 - 00:31:17:28 Bennett Tomlin There are tons of problems with the US sanctions regime, not the least of which is that many of the countries on it are not really a material threat and that many of the sanctions are implemented in a way where it's not really hurting, which you went to hurt. Plenty of reasons to criticize it. Bad idea to send an Excel file in your company Slack that says here's how we are violating them. 00:31:18:10 - 00:31:33:22 Cas Piancey Like, yeah, it's been a it's been an interesting week. I, I think a lot of people are kind of hoping that this is the end of the bear market, that we're approaching the end of this. And that was that was it. I just have no I. 00:31:33:22 - 00:31:35:20 Bennett Tomlin Don't feel that way. But my feeling. 00:31:35:26 - 00:31:38:05 Cas Piancey Feels like there's more. 00:31:38:05 - 00:31:40:07 Bennett Tomlin It feels like there's still some stuff. 00:31:40:07 - 00:32:02:21 Cas Piancey And my point being, maybe maybe number goes up, maybe number goes up. But I think the regulatory risks are so much more clear now than they ever have been before. And good luck to tether, by the way, with their new messaging service. You know, I think that's such a important thing for them to work on right now. I know that the audit is a it's been on its way for about five years. 00:32:02:21 - 00:32:18:07 Cas Piancey I know they're there. They're working on that. And it should be here probably in a week, maybe less even. So, I know they're they're working hard on that and getting this messaging app up and running that quick proves that they have their priorities straight. So I'm just proud of them. 00:32:18:07 - 00:32:20:29 Bennett Tomlin When you say tether, when you say tethers, new messaging. 00:32:21:03 - 00:32:22:15 Cas Piancey Regulatory risk, right now, you. 00:32:22:15 - 00:32:29:07 Bennett Tomlin Say tethers new messaging. You mean the video messaging? Not like the whole swarm of bots that have invaded every platform to talk about tether, right? 00:32:29:07 - 00:32:33:09 Cas Piancey No, no, I'm not I'm not talking about their beautiful PR campaigns that they run. 00:32:33:21 - 00:32:35:03 Bennett Tomlin Meant messaging, talking. 00:32:35:03 - 00:32:56:17 Cas Piancey I'm not talking about that or the idea that they just invented Big 12 auditors. They're they're they've they've now created a new auditing regime. I mean, I love it. Let's change the system. Make it the Big 12 auditors guys. We'll have to keep track of them because it'll shift constantly. But man, decentralize everything. I don't know. Yeah, tether's on top of it anyway. 00:32:56:17 - 00:33:03:03 Cas Piancey Like, subscribe, you know? I don't know. Hit that tether button. That's the thing. I hope you're right. And donate some tether. 00:33:04:00 - 00:33:07:17 Bennett Tomlin To our tether. Arthur Andersen audit again. 00:33:07:17 - 00:33:15:27 Cas Piancey Yeah. Make our make Arthur Andersen great again. Maga. Maga, make Arthur Andersen great again. Make Bitfinex great again. Let's do that. What could go. 00:33:15:27 - 00:33:16:07 Bennett Tomlin Wrong?