another coin-ed chat here, breaking news to get to today as everyone has been watching. Less than 24 hours after the SEC sued Binance the world's largest crypto exchange. It's now going after Coinbase. Gary Gensler going after Coinbase in a 100
And one page lawsuit alleging Coinbase has willfully operated as an unregistered security exchange broker and clearing agency. It's also charging Coinbase for failing to register. It's offer when it went public as far as what it is as a crypto exchange in the sale of its crypto assets, staking as a
service program, which we've already been covering over the last few months in that public back and forth between Coinbase, CEO Brian Armstrong and Gary Gensler. I'm the host of Coinage Zach Uzman coming to you live from our Brooklyn studios and we've got a coinage head writer here Zach Abrams who's also been digging through the 100 in page complaint purpose of the space
those to have a bunch of people in the ecosystem here with us jumping up, asking questions, throwing what they've seen, and tag teaming this really as a team effort as a community on show trying to dig through this 100 page complaint, and tying up and connecting the dots that we got out of the SEC
case against Binance yesterday, a lot going on. A lot going on Abrams, a lot of stuff happening and a lot of questions to answer.
I don't know. I don't know if that's on our end Abrams or on your end right now, but you sound a little distorted over there. We figured it out, but I'll run through what we saw out of this.
You sound much better now, but I do want to highlight some of the highlights that we've seen in this case because again a lot of people are being connecting the dots between what's the finance case brought and what the coin base case brings and there are similarities I think the backdrop for everyone to appreciate what's going on right now is you also have
of the house hearing concurrently running as we're talking on this space in the Republican push in the house to put pressure on the SEC to figure out what to do with digital assets. We were talking with Eleanor, Tarrat, Fox Business yesterday about why all of this is happening now. And you got to connect the dots that the SEC and what Gary Gensler has been trying to do to put his agency
had some overlap Abrams as you flagged. 13 coins considered securities in this particular lawsuit against Binance. And there was some overlap with some of those quote unquote unregistered securities that were listed in the Binance suit, including Salona Cardano, Polygon, Filecoin, Sandbox, and Axi Infinity.
Right. Sorry about those issues. Do I sound better? Yes, you do. All right. Great. What I was trying to say before is we have not heard from Brian Armstrong, which I think is interesting because yesterday CZ was quick to tweet saying we're standing by. We'll have our response soon. Binance published a long response on the website saying that they intend
to defend their platform. Biggerously, I still have not heard from Brian Armstrong, so it will be interesting to see how he responds. But just again, to restate my initial impressions upon reading this lawsuit is the Binance one had lots of juicy details, things we didn't know about the CEOs of Binance.usbac.
forced out because they wanted more independence from CZ, including one after, you know, just three months after being started. That was all interesting. What really struck me about this lawsuit was the lack of anything spicy, the lack of anything under the hood, the lack of anything sketchy. Really the SEC is just going after
Coinbase's business as it's detailed in its filings. It's a publicly traded company. If there were any big secrets to learn, I feel like they would have come out in this lawsuit. But really what Gary is just saying is the entire business that Coinbase operates is not lawful under its current registration.
Yeah, and obviously Gary Gensler is currently making the rounds. He spoke on CMBC this morning and there were a couple interesting takeaways. Obviously you don't need to read the full complaint and necessarily know what's going on here. And if you're entrenched in your views that the SEC is an agency that's not unnecessary, then you already kind of know how this is going to go.
and I just want to play a little bit of what we heard from Gary Gensel this morning on CNBC because mostly he's continued to make the point that all of crypto is a field that is built on noncompliance. You've heard some of those struggles from Brian Armstrong and other operators in the space who have begged they've paid for
for any rules and clarity around what they should do to register to go about this in a compliant way and you have Gary Gensler essentially tripling down this morning saying that it's not an issue of noncompliance, it's an issue of all of these crypto companies not wanting to follow the rules. Take a listen. What we find is this is a
field it's built. The whole business model is built on non-compliance with the US securities laws. And we're asking them to come into compliance so they're going a bit of catches if you can. So there you go, a bit of catches if you can Abrams and in this go around, I believe they've caught now two
that benefited CZ in terms of manipulation and boosting trading volumes on finance. Those are the allegations versus this one around Coinbase, really not being about enriching Brian Armstrong by any means. Of course Coinbase shares are down what, close to 90% since that company went
But mostly around look in no financial system thus far do you have the exchange also being the market maker also, you know, executing the trades for its customers. There are rules in place to protect people getting the best price in the old way of doing things that do not exist in crypto and that I think
think is mostly the juiciest bit that's coming out in this coin-based lawsuit. Brian Armstrong has mentioned only once in the lawsuit just stating that he's the CEO of the company whereas CZ was all over the Binance lawsuit. So definitely a difference in approach here. The other thing
flag from this interview we heard from Gary Gensel this morning is a larger issue of what's going on. What is the end game here? And of course, as I said, the house hearing still just getting kicked off a bit of an awkward moment there when they have to talk about digital assets and a pathway in the US when you have the SEC going on an all
rampage on closing that pathway in the US. I don't know how we're functioning right now as an industry in the US when you have that going on. But you do have, I think, a lot of people realizing myself included that some of this might be locking off any potential counterpoint and alternative to a US
CBDC and that's mostly something that we've been highlighting here at Coinnage is the idea of surveillance and what happens if the US forces everyone to only use a digital dollar and Gary Gensner spoke a little bit about that as well in his interview on CNBC. Take a listen. We don't need more digital currency
we already have digital currencies called the US dollar, it's called the euro, it's called the yen. They're all digital right now. We already have digital investments and you have digital, you have entrepreneurs representing digital investments on this program all day long. And it's whether it's the big tech companies, the automotive
real companies you name it. It's all digital right now the investing world. So what is the real underlying value of these tokens? And that's why you need full fair and truthful disclosure. A full fair and truthful disclosure Abrams is basically again what he's pushing for that. Gary, I
How fast do those digital dollars settle? How long do ACH transfers take? This feels like last century technology. If you really want the digital dollar to be better, show me the money. And when you were talking about the CVDC, part of what I thought was funny was part of the framework that House Republicans are laying out in the House.
a proposed bill to provide a pathway for these assets to be considered commodities and not securities. One of the main requirements is that they're sufficiently decentralized. I think that's really funny because it's hard to imagine something more centralized than the U.S. government launching its own digital currency. So a complete, you know, a chain,
Complete divergence in philosophy between the two camps here. It's a good point and also, you know, I mean, I think it's something that Caitlin Long has come out and talked about too and the idea of how do you get a working banking on ramp from what's happening in crypto and plugging into the traditional banking system? I see
We got Jackie from TechCrunch up here as well, which is great to have you included in the conversation. Jackie, this has been wild as far as a 24 hour period in crypto goes. I don't think I've seen two lawsuits against the two biggest names back to back ever in the industry. Yeah, I have other stories planned for this week.
but of course, you know how this goes in the crypto world. Sometimes being news decides itself and it's definitely been pretty crazy. I mean, the situation with finance yesterday, I think, assure they're both massive crypto exchanges and they're both being charged by the SEC, but they are different circumstances. I don't know if you've already
I mean, there's definitely different sentiments going on between the two.
I, uh, I also feel like the other thing to note in these and I may have just, did I just bump us off the space? No, you bumped your own account. Oh, all right. Well, that'll happen. That'll happen. You're trying to drive and do everything at the same time. But no, Jackie, I do think we were talking about this before you joined as a speaker, the bite between this case and the finance case.#
is huge because Abrams pointed out he didn't go after Brian Armstrong. I didn't name him in this lawsuit against Coinbase in the same way that he goes after CZ and a lot less bite. It seems not only the fact that there's fewer pages in this lawsuit against Coinbase, but also the fact that I think it's a lot of
what we've already heard it's Gary's greatest hits he's dishin out right now on this one I think and says it's just not the same it doesn't hit the same but obviously the stock is off considerably over the last few days I don't know if if some of this to you Jackie is almost like everyone else catching up to where crypto DGENs have been watching this play out I think in terms of
I listened to his interview with CNBC this morning and a lot of the interview was geared towards finance and it was seemingly way more severe. He referred to CZ as Mr. Zau. He did not bring up Ryan Armstrong once as you mentioned in the lawsuit with Coinbase too. It wasn't really about the
It wasn't about Brian Armstrong. It was about Coinbase. And then with the Binance one, it was about Binance, it was about CZ, it was about damn all these different parts to it. And I think going off of that, there are two separate categories under the same Bigger Umbrella, which is just crypto regulation.
Yeah, absolutely. Yeah, we were talking about how, I mean, the sense I got from reading this lawsuit was that there's no element of Coinbase's business that the SEC is super thrilled about. They're not saying, you know, we love that Coinbase wants to educate people about crypto, but we don't like that there
offering staking. It seems like a pretty broad attack at the three main parts of the business as it describes it as an unregistered broker and unregistered exchange and registered clearing agency. Jackie, is that also the impression that you got? Yeah, and it's also like we've seen in the past that Coinbase has been very vocal about wanting
to approach regulation in a compromising way or work with these agencies to come to a conclusion. It seems like there's just been no response. I remember, I think it was late April, Coinbase filed a petition to get the SEC to respond to a monsoiled petition.
And asking whether the regulator would allow the industry to be regulated using existing agency frameworks, which now we're seeing is yes, but at the time, SEC never responded to the petition. So I mean, I get both sides that I see the frustration from crypto community members saying they want, you know, they want something they want to
work with them. They want to do this together. And then all of a sudden the SEC is like, "Ha ha, surprise. Here's a charge." Or whatever. They're kind of giving you. Here you go. Here's a charge for you. I was going to go on for you and go on for you. I was going to go on for you and go on for you. I was going to go on for you and go on for you.#
I'm getting attacked. I can see why that's very problematic. Yeah, I guess, you know, that was one of the things too. When we're looking at the grand scope of things and what happens to crypto now, I feel like that's also a question that almost everybody's asking is, all right, you know, when it was just the Binance lawsuit, everyone was wondering, well, what happens to Binance now? What could happen if we see#
That was also an interesting piece from Jim Kramer this morning on CNBC who's interviewing Gary Gensler. Well, that's exactly what I want to call out because I think that's key to what we saw in almost all these other collapses. I mean with the FTX collapse obviously there's some big differences to flag in terms of left
leverage using FTT on your balance sheet if you're at FTX versus what CZ has said he has not done himself. He does not use BUSD or BNB on their balance sheet. That's what he said publicly. But yes, Jackie, let's dig into it. Let's talk about it. Let's address the elephant in the room and if people haven't listened to it, here's the clips from Jim Kramer talking
Gary Gensel this morning about getting funds off of finance. Take a listen. Here this is no different mess be at that if you have your money with finance you should get it right now. Look I've already read the article in the last day you know drawing parallels to the we've also alleged fraud and manipulation
FTX and with regard to stand back and free. Let me just say the business model of crypto intermediaries, intermingles, co-mingles funds trades against their customers. In this case,
in the Biden's case, yes, we have alleged that sister organizations, Sigma Chang and Merit Peak, we're being controlled by Mr. Zau and used on the platform. So there you go, Jackie. I don't know if it's fear-mongering, but I think anytime you have an
and anchor saying, "You're money off of finance right now." It certainly classifies as fearmongering. Yeah, I mean, that's my take on it. I guess my question here is like, I don't really think they're similar at all. The finance and FDX situation. So I think that's inappropriate of Jim Kramer to say that in my opinion.
And obviously, Chair Gensler ignored it and just kind of responded in whatever way he wanted to continue a conversation, which I think was a good move on his part. Well, I think there may be similarities to get into Abrams. I don't know if you feel the same way. I mean, look, everything can be if you're a man, until you look back on it, right? There are people who are saying, get your money off of F#
And that could have been fear mongering until it collapsed. So, okay, I think obviously as the lawsuit states, finance has done some deceptive things. They have kind of circumnavigated around the law, etc. But I think the way finance operates compared to FTX is not the same as kind of what I was getting at.
I would agree with that most. Yeah, and I think the markets would agree with that because we saw the price of BNB Binance's exchange token drop about 10% from 300 to 280 yesterday, but even in the midst of this coinbase news, it seems to be finding support around there. So people are not as quick to abandon Binance as they were to abandon
up to once the reporting and the FTT and all the drama started coming out. Well, I, since I have no life last night at 10 PM, I was putting a thread together on exactly this point and Jackie, I'd be curious to hear your thoughts on it because I do think we're kind of in this weird quasi scenario where everything, right, we always talk about crypto being a trustless system, you can, you can
Basically, put your money on exchange because they're not going to go down and people thought that about FTX and then you see what happened. But you've also had CZ basically in the aftermath of all that saying, "Look, we do things differently. We do not use B&B as a balance sheet asset. We do not trade with leverage with people's deposits. We do not fake volume."
on our exchanges. And basically, if you look at the SEC complaint, they point out that, yes, in fact, finance did or CZ did through his other entities trying and flatrating volumes at finance US. And I just pin this thread, but essentially CZ himself said, "Why would you ever trust an exchange with your funds if they're lying about
trading volumes. And he said that in response to a lot of other exchanges. But now when you flip that quote on its head and maybe potentially apply it to finance, look, no one knows what's going on technically within the walls of finance except for CZ. And if there are similarities between these situations, you do have a lot of power. You can look at Terry, you can look at SBF, you have a lot of power.
centralized in one person's hands. And it does require a lot of trust on the part of customers to say, you know, I trust that CZ is not going to do this to me. And that's kind of the one scary bit. Is it challenges a bunch of notions to where yes, our gut can tell us, this sounds like fear-mongering because if you do have a
of people pulling out assets at the same time as we saw with Silicon Valley Bank and Silvergate, those weren't fraud. Silicon Valley Bank was not a fraud. It just was because a bunch of people panicked and withdrew their money at the same time that you then had to collapse. And the same thing could happen potentially with Binance if some of this fear mongering catches on, which I think is why you and I both share the same
view that it's not good to be doing if you're in an interview with the SEC chair and you say in front of everybody, get your money off of finance right now. That being said, I think with Dreamcreamers reputation in the crypto community, you might actually be strengthening finance. People are saying, if you suddenly mean to take it off, I'm going to keep it on. Abram said it, not me.
But Jackie, does that all make sense? I feel like, I don't know. That's generally what I've been thinking about in terms of how panic plays a role when you have no back up as much as everyone in crypto hates the Fed. I mean, if you're sitting there, as we saw with Doke Juan, and you only got $2 billion, everyone knows exactly how much he got. Panic can spiral out of control. No, of course#
And I think the comparison between both CEOs or founders or whatever you want to call CZ and SBF, they both have extreme control over both entities. And I guess you could argue rightfully so, but at the same time, like Binance.US is supposed to be an
independent company and Binance.com was also allegedly operating in the US. So the argument here is like who was kind of pulling the strings? You could decide for yourself or read the filing, you know? And I think those have similar parallels that on the FTR
ship it was sbf running the show and on Binance it's CZ running the show. I mean I think in the filing he even said he approves like sweatshirts that were to be bought by Binance you know so it's just like ridiculous how like intertwined he is like don't you have better things to deal with than a first sweatshirt? I don't know. Yeah my favorite detail from the original theme
FTC suit against Binance was that he personally approved like a $60 expense for office furniture at a time and I know the lawyer writing this was laughing to themselves but at a time when Binance was making hundreds of million dollars of revenue every month. So he's always had an intricate level of control and part of me is just thinking like in
the alternate timeline where the users of FTX rallied around SBF and said we're not pulling our funds out, we're betting on FTT seemingly as people are doing with Binance now and maybe in that alternate timeline people flee Binance for many of these same reasons. Like would we still be looking at SBF and CC the same way?
It's a tough question and obviously impossible to know for sure, but with this many parallels, I think it's worth thinking about. Jackie, the other question too now is where we go from here as an industry, right? Because if you think about the dominoes and trading volumes and where exactly people might come into the crypto ecosystem, it's always mostly finance or coinbase.
know, some of that was brought out when FTX tried to challenge the monopoly. You could call it maybe perhaps around the globe. Binance is the huge exchange controls what more, I think volume necessarily than like the next eight exchanges combined. So I mean, a lot of this is, you know, maybe you have some people saying, Binance is the end all be all in how the SEC's been going after these two companies.
And then you got other people saying Coinbase matters more because it's more like the DC insiders and where this battle will be won and lost. But I don't know for you. I mean, how are you thinking about the wider crypto ecosystem as a whole when you see this back-to-back lawsuit pollusa in the last 24 hours? So I think the response here is pretty USB.
I'm not going to be able to do that. I'm not going to be able to do that. I'm not going to be able to do that. I'm not going to be able to do that. I'm not going to be able to do that. I'm not going to be able to do that. I'm not going to be able to do that. I'm not going to be able to do that. I'm not going to be able to#
The conversation of impeding innovation in the states There's a lot of concern that people will literally just take things abroad to continue their companies or continue what they're creating because they don't want to face this when they feel like it's all What is it enforcement by action? I always mess up the site
But what we're just saying is, you know what I'm talking about? Or yeah, it's like regulation by enforcement. That's the saying. But I think to go back to the point is like where do we go from here? It's kind of up in the air, unfortunately. And the ripple effects of this will be far
reaching. And I'm not trying to like start any fear of mongering there, but it's true because when you think about it, these are the two biggest exchanges globally and to have them being charged back to back is a monumental moment for the crypto industry and not in like the best way possible, but at the same time, maybe it will bring about regulatory clarity
Maybe the charges will force Coinbase to conform into whatever pocket the SEC wants them to fit into. I don't know how they'll do that, but maybe they're going to have to work internally on it. I'm not sure. But I think it's just a lot of headaches to come. And it's also a little unfortunate because
I do see innovation kind of going offshore as a result. I'm hearing that. So. Yeah, and you have a front receipt for it with your coverage of tech crunch. And I do think, you know, that is one of the things, right? We have so much attention, you know, by virtue of all of us. And if you're in this space and you're not based in the US, we'd love to hear from you from around the world#
because it feels like the sky is falling down on crypto here in the US, while you still have Hong Kong and maybe other jurisdictions stepping up. Right before all this stuff hit, you had that kind of weird timed report Abrams, you called it that, when you had finance basically saying, "Look, here might be the guy."
going to take over for CZ, he might be next in line. And that came out before all this. And he was a former regulator in Abu in Dubai, if I'm not mistaken, or at least clearly maybe a push to look at other jurisdictions beyond just the US. So I don't know, maybe there is a piece of that that look, yes, we're
all in agreement that the US is clearly stabbing itself in the thigh right here if that's an expression. Is that an expression? Listen, it's Jackie and I haven't gotten any sleep. No one's sleeping. No one's sleeping in the last 24 hours so no one knows what expressions are which. But no, I mean Abrams, I feel like that's kind of the
piece and of course all of this is happening right now in the backdrop of a house hearing trying to figure things out in the US. Yeah and here's a little story I came upon yesterday that obviously got buried in the news but Bloomberg was reporting that GP Morgan which has a blockchain based settlement system called Onyx is partnering with six Indian banks
to introduce a blockchain-based platform to settle into bank dollar transactions. And they say that under the existing settlement system, it takes a few hours for the settlements to complete. They don't complete on weekends or on public holidays. Now there's going to be a real-time blockchain-based system that will be available around the clock. Transactions will settle in
like blockchain can obviously still provide immense services not only to ordinary consumers like the rest of us but to big financial lenders and we see JP Morgan obviously one of the biggest banks in this country teaming up with India around the world. If it's time to make bold predictions about crypto
I would just say that we're going to see a lot of companies leverage the technology without necessarily branding themselves as crypto projects without having ICOs and being listed on marketplaces and having meme competitions. I think the technology will continue to develop because, you know, again, Gary was talking about
the US dollar is digital, but ACH transactions, international wire transfers, these things are not as easy as they should be given the technology we have. No, it's very true. And I do want to really sent to because we have a little over 400 people in this space with us. And if you're just joining us, it's less than 24 hours. And we've gotten to lawsuits against to the biggest
and exchanges in the crypto ecosystem first the SEC going after Binance on Monday, less than 24 hours later, a 101 page lawsuit filed against Coinbase. A little bit, as we've been discussing here, a little bit less spicy in terms of the actions and allegations against Coinbase relative to what happened at Binance.
when you dig into CZ being the one named along with Binance, the CEO at Binance, because of what he was doing behind the scenes to gain some of the volumes and trading activity at Binance US. Brian Armstrong, the CEO of Coinbase, not listed in the lawsuit against Coinbase. And with us today, we have
TechCrunch Senior Crypto Reporter. I should be pointing out Jackie Melanick here on the space with us. And Jackie, your reaction, you've been watching all this play out. We've been listening to Gary Gensler. We've been digging into these lawsuits. You say you've been hearing from a lot of companies themselves watching this all play out. I don't know about you, but basically all the meetings I had scheduled were wiped off. The map#
ones kind of reacting to this, but it does seem like there's a bit of a freeze across the ecosystem right now, especially the actual projects and blockchains themselves when you got 13 tokens and big ones, including polygon and Salana listed as potential securities here. I don't know if that's also big enough to dig into. Yeah, 100%.
And I think the conversation of securities as a massive one that has been talked about for months, if not years, are they securities or the commodities, etc. And I think yesterday and today, finances one yesterday had 12 cryptocurrencies marked as securities. And then the one today with Coinbase had
13, although the SEC did claim that it was "not limited to the ones listed." So even though they said only 13 in the one today, it could mean hundreds. And between the two suits mentioned Salana, Cardano, Polygon, Filecoin,
in sandbox and axiomfinities were on both of the lawsuits. But it's worth mentioning as well, Bitcoin and Ethereum were not mentioned, and in the past, Chair Gemsler has said that Bitcoin is a commodity. So it's kind of interesting why they picked out those specific ones. I'm not sure, maybe because they
are pretty big and prominent, but I know there was one yesterday I think was like COTI Cody. I personally have never heard of that in my life. Yeah, Abrams flagged that because it was so attached to finances activity right? Yeah, so further down in the lawsuit I was also wondering that same thing, but
they talked about how in the 11 days after being listed on Binance, he would see their merit peak or stigma chain, which are two CZ-controlled trading firms. You heard Gunsler in the clip before I mentioned them. They accounted for over 35% of the volume of this Cody token in the first 11 days. So I think that the SEC
that coin and its complaint to kind of point the finger and say look when ordinary users are trading this coin they have no idea how much of the volume is being manipulated. That being said of the coins mentioned in this suit the one that isn't there is very interesting to me especially as a couple of months ago in the house
hearing representative Pat McHenry, the chair of the House Financial Services Committee, his first question to Gary Gensler, he really tried to pin him down asking him a few times. Is the theory of a security Gensler did not answer? And we still have yet to hear a definitive ruling on Ethereum from either of these lawsuits. Yeah, I'm not trying to say like a
gives them better protection in going out and filing these enforcement actions as you flags, Jackie, that's giving up their secret sauce and weapon in trying to rein in this industry. The only thing that stood out to me, we haven't talked about this yet, but sticking as a service, that's a huge piece of where Kraken got into issue
as well. Certainly other exchanges and other crypto companies trying to issue, staking as a service, being something where, look, you might not know the complexities of staking your own Ethereum. So let us kind of handle this for you and we will give you the rewards. And that's one where, you know, I can see if you're advertising a promised return
which is usually the case. State with us and we'll give you X amount, usually like what, 6% right now I think is what's being advertised. It's gotten cracking in trouble. Obviously Coinbase has been in trouble and battling with the SEC. That's another thing where I was seeing some reports that state level regulators now have given Coinbase basically 28 days to show
cause as to why they shouldn't be directed to cease and desist from their staking as a service product in some of these states. And that's a key. I mean, I don't know. Jackie, is that as big to you as it seems because, you know, if we think about what crypto is built and meant to do, how many people actually run nodes themselves? How many people know how to
stake themselves and we're talking about a theorem by the way not even the other thing so I don't know what kind of threat there is to the entire ecosystem when you're targeting staking as a service as a huge piece of this lawsuit against Coinbase I personally do not stake anything I just being honest
I mean, you could see it in my bio. I own Bitcoin Ethereum and I don't pay trade, but I just want to make that clear. Anyways, to answer your question, I think the staking industry, while it brings in a lot of volume in it,
has like a lot of merit, I think it's a very niche space, but that doesn't undermine the fact that it's significant to many people in the industry, whether or not it's significant to like my mom who I got to download Coinbase, so she could buy her first piece of crypto, probably not.
I think you could say that about a lot of things and a lot of different industries, whether we're speaking crypto or we're talking about somewhere in the traditional finance industry like futures trading. That's something that's important to people in that space, but may not be important to the everyday person.
It's all circumstantial and the way people look at staking it like I said is just another factor in the industry. I think you're right to bring out your mom's point of view here and everyone in the crypto ecosystem that is watching this all play out because again the crypto narrative
partially on us, you know, as an independent community on outlet to be, you know, telling the truths and appreciate you coming on here with us. But when you look at that, there is, I think this might make this might get me canceled Jackie, but there is maybe something to look at when it comes to, are you at all surprised that you can have 10
in a $40 billion in the same way.
North of 1800 to me. I don't know if that raises questions about maybe some of the allegations of some of this being more shenanigans than not, but I'm a little surprised by the muted price action. And maybe that just goes to show we've hit potential rock bottom or maybe that's completely wrong and something else is about to drop.
I mean, they're still down on the week. I'm looking at it now. Yeah, but it's really not that extreme, I guess. But yeah, right? Is that not surprising? It's crazy. Like it was 1250, when Terra collapsed, it was Ethereum's trading price. 1250. And then you were to tell me all that stuff would happen and we'd be at 1850? Yeah. Okay.
A two year credit or two the whole credit of all of this is like the terrorist situation was like a Get your mental that was really really bad getting sued by the SEC is kind of like a common occurrence at this point and yes, by my point for massive exchanges So I'm not saying it's like oh just another
they're like drop in the water. But like it's kind of just like, oh, there goes the SEC again. So like, I think the market is holding up pretty strongly for what it's worth in comparison to how bad this news could be, you know, or how bad the news could be interpreted, I should say.
Yeah, yeah, I don't know what signal. I don't know what signal that sends and maybe again, maybe it's a piece of you know, this is what's happening in the US, but outside the US if you're over there and you're like, oh, what's the SEC? You know, none of this really matters to your point. It's huge for us covering news as you know crypto journalists in the US, but to everyone else around the#
Right. I mean, it's very different than the idea of a collapse of a token that was kind of systemic to everything else as a stable coin. And that's also something I think has been interesting in terms of BUSD being something that's issued by Paxos, but already basically come down from a market cap of 20 billion to 5 billion. It's not as huge
huge, you know, the Binance stable coin. And that one was dollar back. So I mean, yeah, there's there's a lot of differences that I feel like it's now, I don't know if you've seen this, but your discussions with people outside of crypto, it's like, here's why it's different. Well, I'm glad you brought up BUSD because it's it was mentioned in Binance's last
yesterday by the SEC as a security, but today in the one with coinbase there was no mention of tether or usdc for the coinbase filing. So I don't know if that means that those stable coins are not included because like they said it's
"not limited to the ones they listed, but it's interesting that they included BUSD yesterday as a stablecoin and did not touch note on any of them today." That is interesting and I wonder if part of that is because if I'm not mistaken using BUSD got you certain discounts on the Binance platform so maybe they found that.
Yeah, I'll give you a hundred on that one. That's a good point to flag. That's a good, that's a good point. I mean, if anyone out there, which by the way, if you're trying to do this yourself as a trader, welcome to the world of being a founder or builder in crypto. Let's just recap what exactly happened if you're here in the US because on
Friday. You had this huge wave of optimism when you got that house bill from Patrick McHenry saying, "Here's the pathway to finally not being seen as unregistered security. You basically need to have no more than 20% of a token in one person's control. You need to show that it's decentralized enough to become a commodity.
how that would look. And that bill came out on a late Friday, by the way, and was kind of swept under the rug. No one really paid too much attention to it. But I think a lot of people were celebrating over the weekend being like, okay, there might be a path here in the US. Crypto's not dead. And then what do you get on Monday and Tuesday? You get two lawsuits back to back from the SEC saying everything's a#
No, I don't know hats off to anyone building in the US because that's a hell of a whiplash to try and figure out what the hell is going on. What's up? You're building in the US. I am building in the US, but that is why we do not have a coin. That's why I don't want to put one of those out. We don't have one of those.
And I, you know, yeah, but you operate as a Dow. How do you feel about all of this? Well, I, uh, I will give myself some credit here in terms of maybe seeing where this whole entire industry was headed when it comes to regulation and potentially what the SEC has been signaling for years in going after some of these tokens. And again,
I think there are some true points. This is always painful for people in crypto to realize, but like it's not against your interest to want to have some protections or at least some transparency around, hey, wouldn't it be great if I know I'm getting the best price in buying a token on these exchanges? That's good for you. So if the SEC is saying like that should
happen, just remove Gary Genser from the conversation, maybe see past your anchor and hatred of the agency itself and realize that some of those things would be good for you and in your own self interest to have. And so for us, I don't know, it was basically seeing, all right, what's going to need to be done for this to be legal? And that's why coinage as a doubt.
So, as a community-owned media organization, Jackie, a set-up shop in Colorado as a cooperative, because I think a lot of people who wanted to build these things legally in the US realized there was a pathway if you just kind of plug yourself into the existing laws. Gary Gensöbers talking about that in his interview, too, a special purpose
broker dealer filing as a registered securities exchange in the US, at least successfully, that was something he was happy with. And I think just trying to go about these things in a way where you realize what the laws are is important when you're trying to build these things. That's the way we went.
Yeah, no, I was I was genuinely interested although this is your show I wasn't trying to give you the opportunity to chill I think it's also important to you know talk to founders in the space see you included on what this really means for you guys and how it affects you as I mentioned before
for like innovation is obviously a major metric and something that US shouldn't take lightly if they're losing talent. And there was a developer report that came out by electric capital earlier this year that showed like the number of US based developers was decreasing every year since I think
2017 like 2% roughly on average and 2% sounds like nothing but when you add that up it is a lot It is it is a lot and I mean like I don't know so for us right like what we're doing admittedly I don't think anyone here at coinages ever gonna get shot by the the police right
right? Like it's not like we can say something. Well, I mean, there's an interesting, I'm being pitched right now, a Venezuelan journalism project that's basically trying to do what we're doing, but they're in Venezuela and Nicholas Maduro is throwing journalists in jail. There's like a, there's a reason to do the things that crypto is trying to do.
right? And it's lost, I think, on a lot of people who are here in the US because we have the luxuries that a lot of people around the globe don't have. And so, like, yes, is it a thought experiment for us as a media organization covering crypto to want to become a Dow and do it legally in the US to push maybe the SEC to realize there is a pathway and make
to show the rest of crypto that there is a pathway to do these things legally. Yes, but I do think, again, it's like times like these where it's important for everyone in the industry to realize, and maybe the reporters too, to say what exactly are we trying to do here? Because if it's all just number go up, I don't think it's that interesting. But if it is like, you know,
a revolution, yeah, revolutions are way more interesting, way more fun from what I've seen as long as no one's getting shot. So that is one of the things that I think is important to highlight and give props to you. A lot of people who are doing it in far more dire circumstances than we are who might not have some of the luxuries we have here
in the US. And you know, that's one of the things that keeps me watching and Jack Allen about you, but keeps me interested in moving past the sleepiness nice when you have these these huge things back to back to back that really does test everybody's endurance, shall we say, in covering this stuff.
Yeah, I mean, as Jackie said, I think that the US is at its best when it's a fertile breeding ground for innovation. I mean, I was watching the Apple event yesterday and I just felt like, wow, the company that's building the future is operating in the US. And, you know, I love new tech.
OpenAI is here, you know, all the companies that are developing are here. Meanwhile, Gary Gensler appears to be driving crypto out of the US. Six days ago, the EU formally signed its new crypto licensing rules into law. They're moving through the process to become the first major jurisdiction in the world that understands
And to me, the best way to police these assets is to understand them, is to not make it so that the laws are so hard to follow. But in a sense, I think there's a big difference in the Coinbase lawsuit versus the Binance lawsuit where Coinbase was a
publicly operated, you know, publicly listed company in the US. It filed regular statements. And so in the lawsuit, we didn't have leaked text messages talking about internal drama, or they didn't have to map out a web of holding companies in order to discover who owns what. They're just saying that
Coinbase's core business is illegal. Despite as many people on Twitter pointing out, they claim that they've been operating in the lawsuit that Coinbase has been operating as an unlicensed exchange since 2019, but in 2021 the SEC signed off on Coinbase's S1 to go public.
So it's just hard to see any of these actions as promoting innovation in the US, which I think anybody can agree is what we should be doing here. I think Gary said, let me find it because I put it in the story. He said he actually thinks it's the opposite and that it does promote innovation.
He said that the enforcement, and this is his words, I don't know, I'm not saying I agree or disagree, but I'm just replying to you Zach, is that he said the enforcement is actually fostering innovation because the agency is trying to build trust and quote, the crypto markets are undermining that trust and quote,
So basically, he's saying it's in response to like all these years they've had a regulation like the hundreds, hundreds or hundred plus years of regulation that the US has had on capital markets should be implemented in the same way on crypto markets.
Look, we have so much innovation in capital markets so we could do the same with crypto, but I think to your point as well, it is kind of difficult to say because it is a new sector of innovation and talent and what have you. So it's like, I don't know if applying the same rules and
to the space can work the same.
inclined to maybe say, "Well, there might be something here." But you're absolutely right, Jack. I feel like emulating the old system isn't necessarily the best thing either. At least having an alternative is great. Caitlin Long, who's come on the show all the time, has completely nailed it when she points out all the inefficiencies and illegalities crimes in the old system.
The idea that it's operated under the SEC's control and yet you still have a bunch of the same issues. You can look at Citadel and MarketMaking and the idea of payment for order flow as we saw with Robinhood. Their system also doesn't necessarily ensure that you're getting the best price necessarily on any one of these trades.
And that's what got Robinhood in huge trouble. And so I don't think it's necessarily safe to say, yeah, trust the SEC, but I also would say maybe it's not safe to say trust CZ either. So I guess, and this is where I think I have my soul crushed every time I do a crypto story is Jackie that the almost all roads lead back to trust knows
one. And that's kind of sad sometimes to think about, but maybe that's what the crypto is all about. I feel like that's kind of a crypto mantra though, and it's also sad at the same time. I think the two could coexist for sure. Yeah, I guess it can be both ways. You can have your cake and eat it too, or whatever the essential metaphor of that in the sad version. You gotta get down our sand.
I guess to wrap this one up, there is one last opportunity, I guess, for each one of you to give your biggest takeaways from these cases and what you're most, I guess, excited to see play out because there are still, I think, more questions than answers after having both these lawsuits
to combine what more than 230 pages of legal ease from the SEC. And I feel like everyone now, especially again, how's hearing still going on? So we all got to go jump and digest what the hell we're hearing from Congress in terms of legal pathway here in the US. But I feel like I'm kind of more confused a little bit after both these things than I am in the right.
What's my takeaway you're asking? Yeah. I think in the short term, this is not the end. This is obviously just the beginning. I think we'll see responses from both finance and coinbase independently.
that hopefully there's some clarity there. I think in the long run you asked what do we want? I think clarity is the biggest thing. As a reporter that would be amazing. I could write different stories outside of the regulatory landscapes. And also just for industry players too, like
They've been kind of begging for clarity and maybe the regulators can argue that this is clarity, that what they're saying is kind of the guidelines and the frameworks that they want to make as rules and without actually putting rules in place. But I think going forward clarity is just the biggest key and that's
something that I think we'll see within hopefully the coming years. I want to see your dick fell long. Yeah, so it's a long-going saga. I also kind of want to see what the offense and the reaction will be from some of the other people that have been named in this polygons, a lot of all the other independent projects and what they say in response.
- Yeah, some of them have tweeted out a few things. I know Cosmos is founder. He tweeted something out. I haven't seen from other people. I know Ryan Wyatt from Polygon is speaking in DC today. I believe he tweeted something out about that too. So, you know, I think we're gonna see some feedback.
from these so-called "cricketers of quote-unquote securities."
on in the pathway to existing here in the US, I think is obviously shrinking, but we'll continue to cover it in Jackie Melonex Senior Crypto Reporter here at TechCrunch. I appreciate you coming on to chat with us today. You canceled on our Hang On Sunday, so we're gonna have to get another one of those on the books. So I'm gonna expose you on the space, but there you go.
people know we're friends but yeah. All right, let you get back to it. I also want to recommend and remind everybody that we have another space coming up at 3 p.m. Eastern, digging into the battle for Bitcoin's soul with founder of Taproot Wizards. Udi is going to come on. We're going to chat about what this all means with him as an OG in the
Bitcoin ecosystem as ordinals takes off. Maybe that matters more so. Who knows? We'll see. But thank you everybody for listening. Thank you, Jackie, for coming on. Abrams, thank you as well. That'll do it for us here on this space. You can check out all the latest coverage and also, Cohen, what we're building at coinage.media.com.
join the co-founder of Netflix, join John Wu from Avalanche and the rest of the smart intellectuals we have in our community for Zach and myself. Thanks again everybody for listening. Appreciate it. Have a great rest of your day. We'll see you at 3 p.m.