WEBVTT 1 00:00:00.520 --> 00:00:04.360 I can't guarantee they won't continue to try to make 2 00:00:04.440 --> 00:00:09.400 that case that the token somehow embodies an investment contract, 3 00:00:09.400 --> 00:00:16.960 which is ridiculous. With respect to candidates to replace Gary Gensler, 4 00:00:17.000 --> 00:00:20.320 I think just about anybody you know who has a 5 00:00:20.399 --> 00:00:24.280 background in the crypto industry. Dan Gallagher is mentioned, he's 6 00:00:24.320 --> 00:00:27.879 the GC at Robin Hood. It would be a vast, 7 00:00:28.280 --> 00:00:29.800 vast improvement. 8 00:00:35.159 --> 00:00:37.560 This episode is brought to you by Gemini, which is 9 00:00:37.640 --> 00:00:40.560 one of the top crypto exchanges in the industry. I've 10 00:00:40.560 --> 00:00:42.920 been a user of Gemini for many years. They make 11 00:00:42.960 --> 00:00:45.399 it easy for you to buy, sell, and trade crypto. 12 00:00:45.759 --> 00:00:48.280 Gemini has a lot of unique features. 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Welcome into the Thinking Crypto Podcast. 22 00:01:17.840 --> 00:01:20.159 I'm your host, Tony Edward, and with me is attorney 23 00:01:20.200 --> 00:01:24.519 James Murphy, who's the founder and principal at met Lawman. James. 24 00:01:24.519 --> 00:01:25.239 Great to have you on. 25 00:01:25.400 --> 00:01:27.640 Great to be with you, Tony. I've been watching your 26 00:01:27.680 --> 00:01:31.239 show and wow have you been getting some really a 27 00:01:31.439 --> 00:01:37.480 list guests. I'm grateful to be on with you today, 28 00:01:37.640 --> 00:01:41.560 given you know Hester Perse and Tim Draper. I mean, 29 00:01:41.640 --> 00:01:45.680 it's a real testament to what you've been accomplishing. 30 00:01:46.439 --> 00:01:48.640 Thank you, man, and I had to get you back on. 31 00:01:49.000 --> 00:01:51.040 You've been on, I believe a couple of times and 32 00:01:51.079 --> 00:01:54.680 I always appreciate your insights and knowledge. And boy, the 33 00:01:54.760 --> 00:01:58.319 timing is perfect because as we're recording this, just about 34 00:01:58.319 --> 00:02:01.000 an hour ago, we got news Ripple has filed a 35 00:02:01.079 --> 00:02:04.840 cross appeal against the SEC. But let's back up a bit. 36 00:02:05.879 --> 00:02:09.000 The SEC file an appeal. What are they trying to 37 00:02:09.039 --> 00:02:11.159 achieve here? Are they trying to get more money or 38 00:02:11.159 --> 00:02:13.759 are they really trying to go after Judge Towards is ruling. 39 00:02:14.639 --> 00:02:17.400 Well, we don't know for sure just yet. So it's 40 00:02:17.439 --> 00:02:20.800 going to be fourteen days from when they filed that 41 00:02:21.000 --> 00:02:24.759 simple one sentence notice of appeal where they explained to 42 00:02:24.800 --> 00:02:28.800 the world exactly what issues they are appealing, but I 43 00:02:28.840 --> 00:02:32.759 think we can make pretty good guesses on that. I mean, 44 00:02:32.840 --> 00:02:37.319 first of all, they are going to appeal the ruling 45 00:02:37.560 --> 00:02:40.960 that sales by Ripple and by Garland House and Larsen 46 00:02:41.080 --> 00:02:47.240 on exchanges. The ruling was those are not securities transactions, 47 00:02:47.879 --> 00:02:52.439 and they were. They the sec were horrified by that decision, 48 00:02:52.520 --> 00:02:56.599 and you will recall they tried to get an interlocatory 49 00:02:56.719 --> 00:03:01.400 appeal immediately, which was denied, and so I think it 50 00:03:01.479 --> 00:03:05.199 is extremely likely that that will be brought up as 51 00:03:05.319 --> 00:03:08.360 issue number one. And then issue number two is they 52 00:03:08.479 --> 00:03:14.280 got zeroed out on disgorgement because of a Second Circuit 53 00:03:14.319 --> 00:03:17.840 case that holds that you have to have losses. You 54 00:03:17.919 --> 00:03:22.719 have to prove that somebody's lost money a pecuniary loss 55 00:03:22.759 --> 00:03:26.479 as a consequence of the securities violations. They had no 56 00:03:26.560 --> 00:03:30.840 evidence of that, and so they got zeroed out. Now 57 00:03:31.280 --> 00:03:34.599 that rule in the second Circuit is at odds with 58 00:03:34.680 --> 00:03:37.719 the rule in the Fifth Circuit Court of Appeals, and 59 00:03:37.800 --> 00:03:41.560 so the sec would really really like to undo that 60 00:03:41.759 --> 00:03:47.319 limitation on disgorgement. So I think that will be part 61 00:03:47.319 --> 00:03:51.599 of the appeal. And then the open question really is, thirdly, 62 00:03:52.039 --> 00:03:55.520 will they appeal the one hundred and twenty five million 63 00:03:55.599 --> 00:04:00.319 dollar penalty and argue that it should be higher. They 64 00:04:00.360 --> 00:04:03.439 certainly argued that it should be hired to Judge Torres, 65 00:04:04.199 --> 00:04:08.840 But the judge has a lot of discretion based on 66 00:04:08.960 --> 00:04:13.280 all of the facts that she observed to decide what 67 00:04:13.319 --> 00:04:17.759 the appropriate penalty is. So it's unlikely that that would 68 00:04:17.759 --> 00:04:21.360 be disturbed on appeal. But that would be the third 69 00:04:21.519 --> 00:04:25.480 thing that might conceivably be appealed by the SEC. 70 00:04:27.399 --> 00:04:31.360 James, what's your best guess how strong of a case 71 00:04:31.480 --> 00:04:34.079 or a percentage does the SEC have here of winning 72 00:04:34.600 --> 00:04:35.800 these respective appeals. 73 00:04:36.720 --> 00:04:41.639 Well, that's what everybody wants to know. I'm pretty much 74 00:04:41.639 --> 00:04:45.199 an expert on the process and how it works at 75 00:04:45.240 --> 00:04:49.800 the Second Circuit, but predicting what a three judge panel 76 00:04:50.560 --> 00:04:54.079 on the Second Circuit will do is difficult. And so 77 00:04:54.240 --> 00:04:59.680 now I'm sounding like a lawyer again and caveating everything. 78 00:05:00.160 --> 00:05:05.040 And they're about twenty judges on the Second Circuit and 79 00:05:05.120 --> 00:05:09.800 you get three, and you know they are people that 80 00:05:09.920 --> 00:05:13.319 immediately once you know the panel, you go and you 81 00:05:13.360 --> 00:05:17.639 look at the decisions they've made previously and see if 82 00:05:17.639 --> 00:05:21.560 there are any hints, and sometimes you see issues that 83 00:05:21.600 --> 00:05:25.839 you really want to push with one particular judge that 84 00:05:25.959 --> 00:05:29.279 they seem to be receptive to. And of course that's 85 00:05:29.360 --> 00:05:32.959 done a lot at the US Supreme Court, where you know, 86 00:05:33.040 --> 00:05:36.959 particular arguments will be pitched at one particular judge because 87 00:05:37.000 --> 00:05:41.720 they could make the difference in a five to four decision. Anyway, 88 00:05:42.160 --> 00:05:45.959 if we review the bidding Tony, remember when that summary 89 00:05:46.079 --> 00:05:49.240 judgment decision came out. There are a lot of people 90 00:05:49.240 --> 00:05:54.000 that said this is crazy. You know. Charlie Gasparino wrote that, 91 00:05:54.240 --> 00:05:57.879 you know, scathing article saying this is crazy. You know, 92 00:05:58.000 --> 00:06:01.439 this is a dangerous ruling, and he said, I have 93 00:06:01.600 --> 00:06:05.959 spoken to prominent people in the securities bar who all 94 00:06:06.000 --> 00:06:11.600 say this will be reversed. So the people that come 95 00:06:11.720 --> 00:06:18.319 from the tradifi tradition, including the lawyers, I think, believe 96 00:06:18.560 --> 00:06:22.480 that there's a good chance that the case will be reversed. 97 00:06:22.519 --> 00:06:27.199 The determination that those trades on the secondary market were 98 00:06:27.240 --> 00:06:32.000 not securities, that that will be reversed. I don't believe that. 99 00:06:32.240 --> 00:06:36.399 I believe that Judge Tours will be affirmed on that, 100 00:06:37.160 --> 00:06:42.000 but it's not a sure thing by any stretch of 101 00:06:42.040 --> 00:06:46.199 the imagination. It's been my view from the beginning that 102 00:06:46.319 --> 00:06:52.319 Ripple's chances improve on appeal as you have judges that 103 00:06:52.399 --> 00:06:56.639 can focus on the big picture and look at what 104 00:06:56.759 --> 00:07:02.720 the Supreme Court has been signaling about agencies kind of 105 00:07:02.800 --> 00:07:08.079 getting too far over their skis in asserting jurisdiction in 106 00:07:08.160 --> 00:07:16.399 various places and really questioning agencies. And so my guess, 107 00:07:16.439 --> 00:07:18.279 and it's only a guess, and nobody in the right 108 00:07:18.319 --> 00:07:22.120 mind should make any financial decisions or trades based on 109 00:07:22.759 --> 00:07:26.680 some guy on TV guessing, is that she will be 110 00:07:26.759 --> 00:07:30.399 affirmed on that determination that we've been talking about. 111 00:07:31.480 --> 00:07:34.199 And of course, if Congress is able to do their 112 00:07:34.319 --> 00:07:37.879 job and get regulations through and let's say a new 113 00:07:37.879 --> 00:07:40.399 president comes in. Let's say is Trump and it's fit 114 00:07:40.439 --> 00:07:42.439 twenty one bill makes it out of the House signed 115 00:07:42.439 --> 00:07:44.480 into law, that could play a factor in all of 116 00:07:44.519 --> 00:07:46.040 this being put to bed, right. 117 00:07:46.480 --> 00:07:51.720 Could be a very big factor, very big factor. So 118 00:07:52.399 --> 00:07:57.079 the way the timeline works, my best guess is it 119 00:07:57.279 --> 00:08:00.839 ends up with a decision in the first quarter of 120 00:08:00.879 --> 00:08:05.879 twenty twenty six, and so that means we have the 121 00:08:06.120 --> 00:08:10.439 entire legislative year of twenty twenty five, and I think 122 00:08:10.480 --> 00:08:16.720 it is very possible that will either have legislation establishing 123 00:08:17.000 --> 00:08:21.560 the trades of crypto tokens on exchanges are not covered 124 00:08:21.600 --> 00:08:26.759 by the securities laws, or we have very different leadership 125 00:08:26.839 --> 00:08:32.360 at the SEC where this you know, regulation by enforcement 126 00:08:34.200 --> 00:08:40.840 tactic will be rained in significantly, which could result in 127 00:08:41.919 --> 00:08:47.399 you know, a favorable settlement or even dismissal potentially of 128 00:08:47.440 --> 00:08:52.519 the case and other cases like it, exchange cases. And 129 00:08:52.559 --> 00:08:57.559 so I think that political dynamic is being under considered 130 00:08:57.720 --> 00:08:59.960 in this whole thing, and everybody's saying, oh my gosh, 131 00:09:00.000 --> 00:09:02.799 that's gonna have the way until twenty twenty six and then, 132 00:09:02.799 --> 00:09:06.159 oh my gosh, on to the Supreme Court. Possibly. I 133 00:09:06.200 --> 00:09:09.799 really think there's a better than fifty to fifty chance 134 00:09:09.919 --> 00:09:14.759 that something's going to happen in Congress with legislation signed 135 00:09:14.879 --> 00:09:18.320 by one of the you know, by the president, or 136 00:09:19.080 --> 00:09:24.440 significant direction change and pivot at the SEC, which would 137 00:09:24.559 --> 00:09:26.720 change the entire dynamic of this case. 138 00:09:27.360 --> 00:09:31.799 Yeah. Absolutely, because I saw Chuck Schumer, a top Democrat. 139 00:09:32.000 --> 00:09:34.759 I've saw Patrick McHenry and some of the other Republicans 140 00:09:35.039 --> 00:09:36.759 talk about they want to get something done in the 141 00:09:36.840 --> 00:09:39.159 lame duck session by the end of the year. And 142 00:09:39.440 --> 00:09:41.159 I don't know that that's going to happen. But to 143 00:09:41.200 --> 00:09:43.480 your point, we at least have all of twenty twenty 144 00:09:43.480 --> 00:09:45.759 five to get this sorted out. And I think I 145 00:09:45.840 --> 00:09:48.600 think there's a high probability because no one saw the 146 00:09:48.600 --> 00:09:50.960 FIT twenty one getting passed this year through the House 147 00:09:51.039 --> 00:09:55.039 and seventy one Democrats joining Republicans, and not to mention, 148 00:09:55.120 --> 00:09:57.679 Crypto's the biggest spender in this election. So I think 149 00:09:57.720 --> 00:09:59.759 a lot of Democrats are like, yeah, we're not dying 150 00:09:59.759 --> 00:10:02.679 on hill with Elizabeth Warren and Gary Ginzer and they're 151 00:10:02.720 --> 00:10:04.919 partnering with their colleagues to get things done at least. 152 00:10:05.960 --> 00:10:10.120 Yeah, I think that's right. And you know, TV matters, 153 00:10:11.000 --> 00:10:15.879 and so the way Richie Torres, you know, the very 154 00:10:16.519 --> 00:10:22.000 liberal congressman from the Bronx in New York, is able 155 00:10:22.039 --> 00:10:26.000 to just you know, skewer and really make fun of 156 00:10:26.519 --> 00:10:31.960 of Gary Gensler and his approach to Crypto, that hurts because, 157 00:10:32.000 --> 00:10:35.279 you know, Richie Torres is a star in the in 158 00:10:35.399 --> 00:10:38.440 the Democratic Party, and he's an up and coming star. 159 00:10:39.039 --> 00:10:43.919 I was looking at his his website, uh, and he's 160 00:10:43.919 --> 00:10:47.720 got nine million dollars in a campaign war chest. I 161 00:10:47.720 --> 00:10:51.360 don't think anybody's running against him, you know. So this 162 00:10:51.440 --> 00:10:56.360 is this is a guy to watch, and it's just 163 00:10:56.600 --> 00:11:00.480 not good for the administration to be putting up at 164 00:11:01.080 --> 00:11:05.159 ahead of an important agency like this to get humiliated, 165 00:11:05.320 --> 00:11:10.320 you know, with some regularity. So even if you know 166 00:11:11.240 --> 00:11:17.039 Kamala Harris wins, I just don't think Gary Gensler is 167 00:11:17.080 --> 00:11:20.159 going to serve out his term. I could be wrong. 168 00:11:21.039 --> 00:11:26.279 Yeah, And it's the SEC has become so politicized, and 169 00:11:26.639 --> 00:11:31.440 it's embarrassing because now the industry is suing them. It's wild, 170 00:11:32.759 --> 00:11:33.799 which I love, by the way. 171 00:11:34.320 --> 00:11:42.200 Yeah. Yeah, you know, there's no choice really with Congress 172 00:11:42.320 --> 00:11:47.919 kind of stuck in neutral. You can either take just 173 00:11:48.440 --> 00:11:51.360 cover up and take a beating, or you can fight back. 174 00:11:51.559 --> 00:11:55.600 And so the industry is fighting back in two ways. 175 00:11:55.639 --> 00:12:01.200 It's fighting back in the political realm very effectively. You know, 176 00:12:01.320 --> 00:12:06.559 a message is being sent. Regardless of how these races 177 00:12:07.639 --> 00:12:11.480 across the country come out, the message is being set. 178 00:12:11.879 --> 00:12:16.399 If you are anti innovation and you're going to oppose 179 00:12:16.519 --> 00:12:21.039 any kind of innovation that has cryptography involved with it, 180 00:12:21.480 --> 00:12:23.840 then you're going to pay a price. You're going to 181 00:12:24.000 --> 00:12:28.960 find a wall of money coming for you. And they 182 00:12:28.960 --> 00:12:31.240 don't like that. What they like is being re elected, 183 00:12:31.480 --> 00:12:35.240 you know, And so that message is being sent. And 184 00:12:35.279 --> 00:12:41.279 then finally the industry has decided that they are going 185 00:12:41.320 --> 00:12:44.159 to you know, take the initiative and go to court 186 00:12:44.200 --> 00:12:46.720 and sue the SEC and put them on their heels. 187 00:12:47.320 --> 00:12:50.519 And it's about time. And you know, they don't have 188 00:12:50.639 --> 00:12:55.879 unlimited resources there, so that's also an effective strategy. And 189 00:12:55.919 --> 00:13:01.519 they've seen how effective Ripple has been in really fighting 190 00:13:01.559 --> 00:13:05.200 back aggressively for four years now. Yeah. 191 00:13:05.240 --> 00:13:08.559 Absolutely. Now, speaking of Ripple, the news that broke about 192 00:13:08.559 --> 00:13:10.480 an hour ago is that Ripple is going to file 193 00:13:10.559 --> 00:13:13.039 across appeal. I don't know if you get a chance 194 00:13:13.080 --> 00:13:14.960 to look at the details, but I would love to 195 00:13:14.960 --> 00:13:15.840 get your take on that. 196 00:13:16.720 --> 00:13:20.159 Yeah, well, there really aren't much in the way of details. 197 00:13:20.240 --> 00:13:23.639 It like the original notice of appeal by the SEC 198 00:13:23.759 --> 00:13:27.480 is kind of one sentence saying we're appealing in this case, 199 00:13:27.519 --> 00:13:29.600 and then they've got a couple of weeks to say 200 00:13:29.840 --> 00:13:33.799 what issues they are going to be bringing up on 201 00:13:33.840 --> 00:13:38.360 the cross appeal. And so my guess would be that 202 00:13:38.440 --> 00:13:41.480 they're going to cross appeal the determination that the sales 203 00:13:41.559 --> 00:13:48.679 to institutional investors were investment contracts. That finding, including the 204 00:13:48.720 --> 00:13:52.519 sales to Odel, which I think is on really weak ground. 205 00:13:54.080 --> 00:13:58.159 That's my thought that they'll appeal that if the SEC 206 00:13:59.159 --> 00:14:05.480 appeals the amount of the penalty. Then Ripple will cross 207 00:14:05.519 --> 00:14:10.159 appeal simply because they want the flexibility to argue no, 208 00:14:10.320 --> 00:14:13.639 it should be lower. If they don't file across appeal, 209 00:14:13.639 --> 00:14:16.919 then all they can argue is one twenty five is right. 210 00:14:17.399 --> 00:14:19.240 If they cross appeal, I could say no, it should 211 00:14:19.240 --> 00:14:22.759 be much lower, you know which you want that flexibility, 212 00:14:22.799 --> 00:14:27.279 So that will depend on what the SEC includes in 213 00:14:27.519 --> 00:14:29.720 their statement of issues on appeal. 214 00:14:31.919 --> 00:14:35.240 Do you think when Ripples moved across appeal, this may 215 00:14:37.120 --> 00:14:39.039 you know, maybe forced the sea. I don't know if 216 00:14:39.039 --> 00:14:41.039 that's a great word to say. You know what, let's 217 00:14:41.080 --> 00:14:42.639 just take the one hundred and twenty five million and 218 00:14:42.679 --> 00:14:45.639 get the hell out of here. Or Ginzer he's he 219 00:14:45.679 --> 00:14:48.159 doesn't care, and he's just going to cause as much 220 00:14:48.279 --> 00:14:50.879 chaos because he's an agent of chaos. But maybe the 221 00:14:50.919 --> 00:14:54.639 election changes things, but until he's kicked out, he's just 222 00:14:54.639 --> 00:14:56.200 going to create chaos. 223 00:14:57.320 --> 00:15:01.600 I think that what we see from him is as 224 00:15:02.080 --> 00:15:09.639 the political landscape turns against him, he doubles down on aggression. 225 00:15:09.919 --> 00:15:14.159 So I don't believe he's interested in settling. There is 226 00:15:14.200 --> 00:15:17.320 a process at the second circuit that all the litigants 227 00:15:17.360 --> 00:15:21.440 have to go through, where you meet and have a 228 00:15:21.720 --> 00:15:27.320 settlement discussion, but I think it's at this point unlikely 229 00:15:29.080 --> 00:15:34.960 because there's there's not a great spot to find common ground, 230 00:15:35.080 --> 00:15:38.799 because it is really the underlying issues that are more 231 00:15:38.840 --> 00:15:41.840 important than the one hundred and twenty five million dollars. 232 00:15:41.879 --> 00:15:43.919 Believe it or not, it's a lot of money. But 233 00:15:44.480 --> 00:15:47.960 you know, our trades on the secondary market where the 234 00:15:48.120 --> 00:15:52.600 seller is the company or the senior executives at the company, 235 00:15:53.039 --> 00:15:59.000 if those are not securities transactions, and that certainly impacts 236 00:15:59.080 --> 00:16:02.519 all of the exchange cases where you've got even a 237 00:16:02.600 --> 00:16:09.120 more remote scenario where it's just some miscellaneous person unrelated 238 00:16:09.279 --> 00:16:15.080 to the issue, who's deciding to sell their salona, you know, 239 00:16:15.159 --> 00:16:17.159 to somebody else who wants to buy the salon. I 240 00:16:17.200 --> 00:16:21.240 hope it goes up. That's once removed from what we 241 00:16:21.320 --> 00:16:26.399 have here in Ripple, and so you know, it undermines 242 00:16:26.480 --> 00:16:29.000 It's not a binding precedent. You and I have talked 243 00:16:29.039 --> 00:16:32.720 about that before. It's not a binding on other judges, 244 00:16:32.759 --> 00:16:37.080 but it is out there as persuasive President. We've seen 245 00:16:37.120 --> 00:16:41.120 a couple judges explicitly say I think Judge Torres was right. 246 00:16:41.440 --> 00:16:45.919 I'm adopting her reasoning. You know, so they want to 247 00:16:47.080 --> 00:16:49.759 change that and they think, you know, probably like the 248 00:16:49.879 --> 00:16:53.039 experts who talk to Charlie Gasparino, they think they have 249 00:16:53.080 --> 00:16:56.480 a good a good chance at getting that reversed. 250 00:16:57.879 --> 00:17:02.879 Now, Coinbase, speaking of exchanges, they asked the judge in 251 00:17:03.000 --> 00:17:07.400 their case to certify their interlocatory appeal so that they 252 00:17:07.400 --> 00:17:10.359 may present their case at a second circuit alongside Ripple. 253 00:17:10.880 --> 00:17:12.599 Break that down for us, what are you trying to 254 00:17:12.640 --> 00:17:13.000 do there? 255 00:17:14.039 --> 00:17:21.599 Well, when the judge denied Coinbase's motion to dismiss, I 256 00:17:22.160 --> 00:17:27.319 was at that hearing and it was pretty clear to me, 257 00:17:27.519 --> 00:17:30.960 and I was sitting right next to John Deaton that 258 00:17:31.279 --> 00:17:34.880 this was not going to go Coinbases way. And when 259 00:17:34.920 --> 00:17:39.720 that happened, Coinbase immediately requested that the judge certified her 260 00:17:39.839 --> 00:17:45.319 decision for interlocatory appeal to address the fundamental question of 261 00:17:45.440 --> 00:17:48.640 are these tokens traded on the secondary market? Securities? 262 00:17:48.640 --> 00:17:48.759 Are? 263 00:17:48.799 --> 00:17:53.599 Aren't they? And she never ruled on it, which is 264 00:17:53.720 --> 00:17:58.039 really weird because an interlocatory appeal should get going quickly. 265 00:17:58.519 --> 00:18:00.839 So the whole point is to like say time, by 266 00:18:00.839 --> 00:18:04.559 getting the appellate court to decide a critical issue in 267 00:18:04.640 --> 00:18:09.200 the case that will bring everything or virtually everything you know, 268 00:18:09.359 --> 00:18:11.720 to a head and bring the case to an end, 269 00:18:11.799 --> 00:18:14.599 and she never ruled on it. They filed it in April, 270 00:18:16.519 --> 00:18:22.960 and so when when the SEC appealed Ripple the Ripple decision, 271 00:18:23.720 --> 00:18:29.440 Coinbase logically said, hey, here's another chance to ask the judge, Look, 272 00:18:29.759 --> 00:18:33.400 this issue is going up and the second Circuit should 273 00:18:33.400 --> 00:18:37.000 have the perspective of your ruling and the broad and 274 00:18:37.079 --> 00:18:42.759 address the broader question of tokens in general, because remember, Ripple, 275 00:18:43.200 --> 00:18:46.279 the Ripple case is only going to be about the 276 00:18:46.319 --> 00:18:52.079 facts and circumstances around the sale of XRP, and it 277 00:18:52.319 --> 00:18:58.480 probably will not announce a new rule of general applicability 278 00:18:58.799 --> 00:19:03.480 to all the tokens. And so that's what Coinbase wants 279 00:19:03.599 --> 00:19:06.839 to kind of short circuit all of this and bring 280 00:19:06.880 --> 00:19:09.880 it to a head. And it makes sense, and that 281 00:19:10.000 --> 00:19:14.279 was a really good move by them. And interestingly, I 282 00:19:14.319 --> 00:19:17.480 was just looking at the docket earlier today. The judge 283 00:19:17.920 --> 00:19:22.680 got all the lawyers on a telephone conference yesterday after 284 00:19:25.200 --> 00:19:28.400 Coinbase sent their letter in and it doesn't say what 285 00:19:28.680 --> 00:19:32.799 they talked about, but it wouldn't surprise me if they 286 00:19:32.839 --> 00:19:37.680 were talking about interlocatory appeal, and the judge could have 287 00:19:37.720 --> 00:19:44.000 asked the SEC, hey, look, your appealing and Ripple related issues. 288 00:19:44.640 --> 00:19:49.839 Aren't you in favor of interlocutory appeal too? But they 289 00:19:49.880 --> 00:19:53.240 probably won't be, and so she hopefully will make a 290 00:19:53.279 --> 00:19:55.279 decision one way or another about that. But I think 291 00:19:55.279 --> 00:19:59.799 it would be great for Coinbase to be in on 292 00:19:59.839 --> 00:20:04.680 the same track as the Ripple case and heard by 293 00:20:04.680 --> 00:20:07.960 the same panel at the second circuit, so that they 294 00:20:08.039 --> 00:20:11.680 get the full you know, impact of the entire crypto 295 00:20:11.839 --> 00:20:16.839 industry explaining the significance of this determination. I think it'd 296 00:20:16.839 --> 00:20:21.279 be really good if they're not allowed in interlactory appeal. Nevertheless, 297 00:20:21.319 --> 00:20:25.359 I expect a wave of amekas briefs from the industry 298 00:20:25.400 --> 00:20:29.240 and hopefully from some key politicians coming in on the 299 00:20:29.319 --> 00:20:30.119 side of Ripple. 300 00:20:31.720 --> 00:20:37.920 Rookie questions, James, why didn't the judge complete the work 301 00:20:37.960 --> 00:20:41.279 there in that Coinbase case? Is that some sort of malpractice? 302 00:20:43.880 --> 00:20:49.720 Well, this happens, and this is one of the most 303 00:20:49.759 --> 00:20:53.640 frustrating things for clients. So I was just thinking about 304 00:20:53.640 --> 00:20:58.440 this the other day. You know, I'm retired, but this 305 00:20:58.559 --> 00:21:03.279 happened all the time. Client would say, James, it's been 306 00:21:03.400 --> 00:21:08.039 three months since the argument. Why is there no decision? 307 00:21:09.119 --> 00:21:12.519 I don't know. She's you know, judge's busy clerks are busy. 308 00:21:12.720 --> 00:21:15.839 She's got two hundred cases to deal with, you know, 309 00:21:15.880 --> 00:21:18.960 and then it's six months. James, We're trying to run 310 00:21:19.000 --> 00:21:22.240 a business here. We don't know if what you know, 311 00:21:22.319 --> 00:21:24.319 the thing that is an issue in the case is 312 00:21:24.359 --> 00:21:27.440 critical to our business. We want to know yes or no, 313 00:21:27.599 --> 00:21:31.200 is this good or bad? And they want you know, 314 00:21:31.240 --> 00:21:34.799 they're always asking, hey, could you just call the judge 315 00:21:35.359 --> 00:21:38.000 reminder And the answer to that is, of course, no, 316 00:21:38.240 --> 00:21:40.799 you can never do that. Hey, could we send in 317 00:21:40.839 --> 00:21:44.079 a letter prompting the judge to rule. No. They take 318 00:21:44.119 --> 00:21:48.640 offense at that by saying, hey, you're not doing your job. 319 00:21:48.759 --> 00:21:52.559 You're awfully slow. What's up with that? So the beauty 320 00:21:52.599 --> 00:21:55.920 of the scenario for coinbase is they were given a 321 00:21:55.960 --> 00:22:00.519 reason to send in this letter with the appeal in ripball, 322 00:22:00.759 --> 00:22:04.359 so that they had cover for and you could see 323 00:22:04.359 --> 00:22:06.720 in the letter they don't say, you know, it's been 324 00:22:06.759 --> 00:22:10.519 a lot of several months, your honor, you haven't done anything. 325 00:22:10.759 --> 00:22:13.839 They kind of didn't say that, but put it back 326 00:22:13.880 --> 00:22:16.319 on the front burner for her, And so that was 327 00:22:16.319 --> 00:22:19.480 a good move by them, and I think it would 328 00:22:19.519 --> 00:22:24.279 be good for the entire industry if that interlocatory appeal 329 00:22:24.400 --> 00:22:26.440 was granted, for sure. 330 00:22:26.680 --> 00:22:29.400 Yeah, so many exchanges right now locked up in battle. 331 00:22:29.440 --> 00:22:32.960 I mean Robin hood unis even though they got just 332 00:22:33.000 --> 00:22:37.319 Wells notices. But usually Wells notice is a precursor to 333 00:22:37.319 --> 00:22:39.559 what is going to come with a you know, a lawsuit. 334 00:22:39.880 --> 00:22:43.200 But you got cranking and so forth. Let's talk about 335 00:22:43.279 --> 00:22:46.359 XRP ets. You got a lot of filers, well, I 336 00:22:46.359 --> 00:22:48.400 should say not a lot, but two, and then Gray 337 00:22:48.440 --> 00:22:53.079 scarably launched their XRP trust. However, these things have to 338 00:22:53.079 --> 00:22:56.559 be approved by the SEC. Do you think this appeal 339 00:22:56.599 --> 00:22:59.359 by the SEC is kind of the It will be 340 00:22:59.400 --> 00:23:01.039 a roadblock. They're going to say, you know, we're not 341 00:23:01.039 --> 00:23:03.000 gonna we're not going to prove this because hey, we're 342 00:23:03.000 --> 00:23:04.519 not sure what's going to be the outcome here. 343 00:23:07.240 --> 00:23:09.799 Do I think that they would use that as a 344 00:23:09.960 --> 00:23:15.400 rationale to deny. I think they would, And they could say, look, 345 00:23:15.440 --> 00:23:20.359 there is uh uncertainty here, which would make the disclosures 346 00:23:20.440 --> 00:23:25.759 really tricky in launching an e t F because in 347 00:23:25.920 --> 00:23:28.640 order for the for there to be an e t F, 348 00:23:29.160 --> 00:23:33.119 the asset has got to be a commodity because these 349 00:23:33.119 --> 00:23:38.319 are called commodity based trusts, these e t ps and 350 00:23:38.480 --> 00:23:44.559 so I don't think they want to grant uh the 351 00:23:44.759 --> 00:23:50.799 x RP E t P. That's that's their inclination. I 352 00:23:50.799 --> 00:23:53.599 think they felt a little trap. They certainly felt trap 353 00:23:53.680 --> 00:23:58.519 with the Bitcoin, and then with the Bitcoin precedent, they 354 00:23:58.519 --> 00:24:03.480 went ahead with the with the ether, and so I 355 00:24:03.599 --> 00:24:06.880 my this pure guess work. I don't know. My guess 356 00:24:06.920 --> 00:24:09.240 is they're going to drag it out. They might force 357 00:24:09.319 --> 00:24:13.400 somebody to sue them again like what happened with the 358 00:24:13.440 --> 00:24:20.680 Bitcoin thing, and you know, ultimately probably lose and be 359 00:24:20.880 --> 00:24:24.400 forced to approve at some point. But again, this is 360 00:24:24.400 --> 00:24:27.000 another one of those instances, as you pointed out, where 361 00:24:27.000 --> 00:24:30.720 there's this whole political dynamic, and so if the leadership 362 00:24:30.799 --> 00:24:38.160 of the SEC were to change, then you'd have certainly 363 00:24:38.240 --> 00:24:41.119 a lot more openness to these kinds of products. 364 00:24:41.640 --> 00:24:44.599 Yeah, and you know what I thought about as you're 365 00:24:44.599 --> 00:24:46.839 saying that the hearing, We had just a couple of 366 00:24:46.839 --> 00:24:49.400 weeks ago where all five commissioners were before the House 367 00:24:49.440 --> 00:24:52.759 Financial Committee and the question was asked to each commissioner, 368 00:24:53.240 --> 00:24:56.799 yes or no, would you be open to Congress providing 369 00:24:57.119 --> 00:24:59.920 updated legislation and so forth. You got yeses from you 370 00:25:00.079 --> 00:25:03.319 in the Democrat commissions, like Crenshaw and so forth, and 371 00:25:03.359 --> 00:25:06.960 obviously hesseburst Mark, Youada begins her couldn't even answer that, 372 00:25:07.319 --> 00:25:09.400 and he's just like, you know, trying to answer a 373 00:25:09.480 --> 00:25:13.000 question with a question and stalling and you know, deflecting. 374 00:25:13.359 --> 00:25:16.240 It's pathetic. And boy, I can't wait for this guy 375 00:25:16.240 --> 00:25:18.519 to get out of there. And I know, just this 376 00:25:19.240 --> 00:25:22.200 was it this week. Yet we got some candidates who 377 00:25:22.240 --> 00:25:25.519 could potentially replacing or replace him that came out from 378 00:25:25.519 --> 00:25:27.720 the Trump camp. What are your thoughts on some of 379 00:25:27.720 --> 00:25:28.720 those guys. 380 00:25:30.480 --> 00:25:33.680 Well, a couple of things. One, as I watched that hearing, 381 00:25:34.880 --> 00:25:39.680 I really felt like this whole discussion of fair notice 382 00:25:40.720 --> 00:25:43.640 was really helped a lot. I mean, there have been 383 00:25:43.839 --> 00:25:48.400 many many statements by hester person dissentse and Uda, but 384 00:25:49.160 --> 00:25:52.240 this one it seemed like it was dialed up. You know, 385 00:25:53.039 --> 00:25:56.759 on the stereo up to eleven that there's no way 386 00:25:56.799 --> 00:26:00.200 of knowing what the guy at the end of the 387 00:26:00.240 --> 00:26:03.640 table here Gary might be up to next. You know, 388 00:26:03.920 --> 00:26:08.799 it's impossible to predict. And that's not the way our 389 00:26:08.839 --> 00:26:11.559 system is supposed to work. You're supposed to have a 390 00:26:11.680 --> 00:26:14.839 rule of law that is clear so that people can 391 00:26:15.160 --> 00:26:18.079 comply with that rule of law. And if they choose 392 00:26:18.119 --> 00:26:21.640 to violate that rule of law, great, they get prosecuted 393 00:26:21.680 --> 00:26:24.440 for that, but you've got to start with a rule 394 00:26:24.440 --> 00:26:27.480 of law. And now the thing is just morphing to 395 00:26:27.519 --> 00:26:34.480 where the SEC apologized for using the digital asset security 396 00:26:35.240 --> 00:26:40.319 term to imply that the token is itself a security. 397 00:26:40.359 --> 00:26:45.319 That they apologize the one judge, but I can't guarantee 398 00:26:45.359 --> 00:26:49.000 they won't continue to try to make that case that 399 00:26:49.039 --> 00:26:54.480 the token somehow embodies an investment contract, which is ridiculous. 400 00:26:55.599 --> 00:27:00.759 With respect to candidates to replace Gary against Ler, I 401 00:27:00.799 --> 00:27:04.519