Will the SEC Win the Ripple XRP & Coinbase Lawsuits? Gary Gensler & Ethereum Spot ETF

James Murphy aka MetaLawMan joins me to discuss:
– SECs different approach to Crypto vs TradFi
– SEC vs Ripple XRP lawsuit outcome
– SEC vs Coinbase lawsuit outcome
– Gary Gensler’s attack on Crypto
– How will the 2024 election impact Gary Gensler’s role and agenda
– Bitcoin Spot ETF launches
– Will the SEC approve an Ethereum Spot ETF
– US Crypto regulations
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⏰ Time Stamps ⏰
00:00 Intro
01:38 James Background
05:23 Difference between SEC vs TradFi & Crypto
13:48 Why the attack on Crypto?
17:38 SEC vs Ripple XRP lawsuit outcome
24:40 Gary Gensler’s Role at the SEC
27:30 Crypto a political force
31:20 NYC Delisting XRP from GreenList
36:41 SEC vs Coinbase lawsuit outcome
42:13 Crypto Regulations
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The SEC is one of the reasons one of the key reasons that the capital markets of the United States have Primacy all over the world is because of the integrity and and history of the SEC and now they won’t tell us what’s okay and what’s not okay until they sue You this content is brought to you by uphold which is a great crypto platform that I’ve been using since 2018 uphold has all the top cryptocurrencies Bitcoin and all the altcoins in fact they have 260 Plus cryptocurrencies on their platform you can also trade precious metals stable coins and 37 Fiat

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Crypto podcast with me today is James Murphy who’s the founder and principal of metal law man LLC James great to have you on thanks Tony uh love your show and uh really looking forward to the conversation yeah James I’ve been following you for a while on Twitter or

What Elon would call X now and you share a lot of great perspective and information on what’s happening in the crypto Market as it relates to regulations Securities Law and much more so I have a ton of questions for you but uh let’s get started with your background tell us about where you’re

From and uh you know your professional background absolutely well I’m from a lot of places uh I moved around quite a bit as a kid uh the last three years in high school I was in 10th grade in Southern California 11th grade in Li Rock Arkansas and 12th grade in a little

Tiny town in in Mississippi where I graduated uh from high school so uh got to meet a lot of people moved around quite a bit and saw saw a lot of the country which which was good um my father uh was a lawyer and a law professor and uh really

Inspired me and my sister who’s also a lawyer and a law professor I’m just a lawyer not a law professor um my mother uh immigrated to the United States when she was 19 years old and it is the stereotypical uh story of um a 19-year-old young woman coming from uh

Germany with a $100 in her in her pocket and uh and uh you know dreams of coming to America and on my father’s side uh the Irish side I’m a Murphy uh his father came across from Ireland through Ellis Island and and landed with the Immigrant community of New York uh and

So uh you know my sister and I are the product of of immigrants and we kind of fit The Stereotype which is a real focus on education now my sister did take it to heart more than I did so she was a uh Superstar kind of like U like VC

Ramaswami you know she was uh graduated from the University of Virginia F Beta Kappa she was on the l view at law school worked at the United States Supreme Court you know the whole the whole thing uh really brilliant person now she’s a law professor um and uh I

You know I practiced law for 35 years M mainly in the Securities industry I started off in in Los Angeles uh representing what we now refer to as trafi traditional finance companies JP Morgan Morgan Stanley Goldman Sachs Etc in and then I moved back to the um to the east coast and

Continued um Securities uh regulation and litigation uh as my primary focus and then 2010 I decided I was going to take a risk and start my my own law firm uh really focused on representing um the big players in trafi including stock exchanges like the New York Stock

Exchange and NASDAQ CME and sibo and others um and so I started in 2010 right after the financial crisis and hired a bunch of people who had worked at the SEC who had worked at the cftc who were Federal prosecutors in the southern district of New York also people who

Worked at finra so we really covered the Waterfront and things were going great opening office in Washington DC in New York City and and in Richmond Virginia and then 2017 uh um I pivoted personally and then pivoted the entire law firm and that’s when I discovered you know Bitcoin

And and crypto and it really had a significant impact uh on my life and and in the career and the trajectory of that longw firm wow uh what a journey and I a question for you because you’ve seen trafi Securities and and the dealings between the agencies as

And cfdc and so forth how does that compare to what we’re experiencing now with how the SEC is handling crypto are there any major differences or is it kind of the same you know you’re getting a lot of push back from these agencies maybe uh they don’t have things in order

There’s confusion or is crypto something new with new Dynamics it’s very different very different because when you’re talking about a Goldman Sachs or um or a big Commercial Bank that is a public company you know they are in constant communication with the SEC whether it’s the division of corporate finance you

Know involving their their their periodic disclosures or they’re coming out with a new product that needs to go through perhaps trade the division of trading and markets um and often these large institutions have hired people who worked at the SEC and so they can pick up the phone and call somebody that they

Were in the next office to for years you know and say hey we’ve got an issue over here we’d like to come in and talk to you about it and it’s and it’s really in my experience is a very Cooperative uh kind of uh relationship

There would be times where a big bank or or Investment Bank broker dealer would do something wrong and then there would be a negotiated settlement be very very rare to fight because it’s your primary regulator and so do you really want to beat them you know and how’s that going to impact your

Relationship uh going forward and so what I experienced uh in the course of my career of over 30 years is different from what I’m seeing in in the nature of the interaction between uh the SEC and some of these new players that really want to disrupt what

Has been working well in in the view of many for me for decades they want to disrupt it and so they’re they’re looked at with some suspicion that won’t surprise you um and so no it’s it’s it’s pretty different and you know what are your thoughts on how Gary giner as the chair

Of the SEC has been running the show and given his pass where he was teaching Mi at MIT crypto and blockchain absolutely gets it he’s very knowledgeable about it but has seemingly done a 180 under uh his role as the chair and and reporting to Elizabeth

Warren um it’s it’s very unusual uh some of the stuff that we’ve seen um now some of the people that I hired at my firm worked for Gary uh at the cftc and um so we sponsored kind of lunch and learns with our clients to explain to

Them what to expect with Gary at the SEC and that is he really likes to move fast uh and and make changes and he’s really kind of focused and determined on what he wants to achieve whereas the SEC is really designed to be quite process oriented where new rules take time and

You get input from the industry and then those rules are put out for comment and the Comets are supposed to actually be taken into consideration in the development of the final rules um and so you see instances where um uh chairman Gensler has kind of gone around that entire process and just brought

Enforcement actions to make a point and establish Authority that the SEC does not have explicitly from from Congress and so that’s a little bit uh unusual and that’s where that F the phrases come from of Regulation by enforcement is not really how it’s supposed to work um at the

SEC um and so you know it’s it’s I’ve never seen anything quite like this where the courts have had to tell the chairman you must do this you must follow the law no that decision was arbitrary and capricious and you’re hearing that so much now that people think well that’s

Like a normal thing well no arbitrary and capricious is a serious breach uh of process it’s not you got the decision wrong it’s more than that it is your process and the decision ision making was arbitrary and not backed by reason and not backed by the law it’s arbitrary

And capricious and I I’ve said this uh many times this concept goes way way way back to the Magna Carta of 1215 it goes back 800 years wow the the the royalty kings and queens were allowed to act in any way they wanted arbitrarily and capriciously that’s what they did and

They could arrest someone and that and one of their subjects will say well what have I been arrested for you’ve been arrested because the king says you need to be arrested and put in jail that’s it well what’s the law there is there’s no

Law the law is the king and so the Magna Carta was supposed to establish a rule of law that the that the um royalty there was supposed to comply with the rule of law and that rule of law was supposed to be something that everyone even people who couldn’t read would be

Able to understand here’s what’s permitted and here’s what’s not permitted so that they could order their lives in a way that they comply with the law that’s how it’s supposed to be and there’s 800 years of common law saying this is how it’s supposed to be our constitution our Declaration of

Independence were were built on that premise and here what we have are hey we you’ll find out if there’s a problem with your token when Gary sues you for violating the law in connection with your token it violates the whole premise of a rule of law law to govern not men

You know and and I know I’m going on too long but you look at that the whole background thing with Hinman and so you get you’re getting input to the Henman spee saying hey hold on Henman we may want to change our minds about whether something’s a security or not so maybe

Don’t give this Clarity because then people might rely on it and then we’ll just change their minds and say yeah that that’s now a security also turns out so anyway I I could go on at length what we’re seeing to me is is is different in kind um you know we’ve seen

Chairman make mistakes often on conflict of interest issues a couple chairman in the last 30 years kind of got in trouble for conflict situations but Gary’s not a not a lawyer and so some of the stuff he has pushed I’m I’m actually gone along with

It now do you think and and I don’t want to get conspiratorial here that’s the right word um but we know of government revolving doors with trafi and campaign donations these are real things and influence that happens right um we’ve seen people from Goldman Sachs go work

At the government and we see government officials go work at Goldman Sachs you alluded to it right um and Gary genser is an example he was a Goldman Sachs guy went to work for the government now exactly this technology is so disruptive because it’s changing the movement of money and value and it’s

Taking away power the governments have had for what I know beginning of civilization right uh or whenever the first civilization was established or Society whatever it is um and that’s why you’re seeing this unreasonable take or approach that it’s I don’t care if I’m breaking the law or

I’m not following the rules I know as an establishment in the government we’re worried about stable coins we’re worried about crypto that you can move money and it’s not our fiat currency we don’t like that so you can kick and scream all you want yes you you can win some court

Cases but until we’re ready and we’re caught up that’s how it’s going to be um do you think there’s any Credence to that well I do because um Gary gentler has said that you know he’s he’s given interviews where he said you know where this blockchain technology leads and and um

Cryptocurrency um you’re going to have to share this market with the incumbents you know he’s he’s on video saying that and boy oh boy that’s kind of how it’s playing out isn’t it uh he said that before he was with the SEC that and and you know you’re right it’s coming from

This background of Goldman Sachs we’re g to be a player at every table you know and so uh and that’s that’s how it’s played out and and with respect to regul you know it’s really really comfortable for the U Elizabeth Warren of the world to deal with the big Banks because

They’re going to come to their to the Senate Banking Committee and and genuflect and and say yes you’re absolutely right we’re going to get better at that and we’re going to contribute to your campaign as well and we’re gonna help you you know the recently it came out that this a bill

That she proposed had been written by the American Bankers Association and she likes to position herself as kind of uh you know defending the little people against the big Banks but in in reality um what is happening up there is is uh defending the prerogatives of of

The big Banks and you know I’m saying this I represented them you know I’m retired now but but that’s kind of what’s happening and the other thing I would say about you know I think you mentioned being fearful of of stable coins and you know Bitcoin whatever it

Might be well it’s not an unfounded fear I mean with what is happening to the monetary policy of this country and and the dollar and as you look out um forward from here and its status as a resered currency it is worrisome to the people in Treasury and in the government

Generally that there would be an option out you know that’s scary because they’re not actually stupid people um they know that if you have an option to something that is going to devalue either slowly or rapidly but as sure as heck is going to devalue over time then

That’s a threat to the authority because if you don’t control people’s money you don’t control them like government would like to do so anyway uh it’s it’s it’s going to be interesting from here now let’s dive into some of the cases and we can start maybe with the SEC versus Ripple law

Because yesterday uh the SEC did win a motion to compel to have Ripple deliver 2022 to 2023 statements around institutional sales um let’s start maybe with judge Torres ruling what were your thoughts uh around that and what do you see happening next um you know who do

You think comes out a winner here or is it split as it was with judge Taurus’s ruling hi everyone pardon the interruption I’m Tony Edward the founder and host of The Thinking crypto podcast I have a huge favor to ask you if you haven’t subscribed as yet on YouTube or

The podcast platforms hit that subscribe button hit the Thumbs Up Button hit the notification Bell on the YouTube platform and on Spotify or apple or wherever you get your podcast please leave a festar rating and review it supports the podcast it allows me to bring great qu quity content to you

Thank you for your support and I’ll let you get back to the content well I thought judge tor’s ruling was very good uh she’s very clear that uh xrp is not a security in and of itself which is absolutely right because it has to be an investment contract and

That involves promises between people um and when you’re trading on a coinbase for instance there is no contract being established moreover when you’re buying xrp you’re not investing in Ripple um and this is why it’s different from Equity when I buy Amazon stock I am investing in Amazon but when I buy

Ripple I’m not in by xrp I’m not investing in Ripple um because I have no rights of any kind uh with respect to Ripple to their profits their income whatever assets I have no it what I’m doing is um aligning my interests to an extent as an

Xrp holder with the fortunes of Ripple and as the use cases grow with ripple it’s probably good for me as an xrp holder this is like in my view you take the Dallas Cowboys you can invest you know if Jerry Jones is willing to sell 1% of the Dallas Cowboys you could

Invest in the Dallas Cowboys you have an ownership interest and you would be making an investment in that Enterprise that’s a Securities transaction but if I bet on the Cowboys I’m simply aligning my interests with the performance of that Enterprise and if they win I win

But in a security because I don’t own the Cowboys I’m simply aligned with the best interest of the Cowboys and so I feel like that that distinction has not always been well understood with every every judge but in any event so I think uh th Torres did a very good

Ruling M it makes sense that she would rule that the initial sales directly from Ripple to institutions where they sit down across the table from each other and draft up a contract that says I’ll do as the investor I’m going to do this and you as

Ripple you’re going to do that and I’m agreeing to hold um the xrp for a period of time a holding period and we exchange indemnities and whatever and I’m gonna give you the money Ripple and you’re gonna spend it and build something with it that starts looking like an

Investment contract right and it looks nothing like a trade on coinbase so it to me it makes it makes good sense now here on the on the U damages portion here first of all winning a motion to compel something happens every day motions to compel in in uh cases are

Very very common and so the easiest thing to do is to Grant the motion to compel allow the discovery and by the way this is a decision of of the magistrates they a net burn not uh judge Torres where you kind of lean in favor of allowing Discovery and then judge

Torres is going to decide what really is relevant and and what the decision is going to be and this is going to play out over the next two months where the SEC for the first time in my view is going to explain in detail their theory

Of what the damages are going to be and then and then Ripple gets to respond and and then the judge will make a decision um thereafter um so if it were me uh I would not settle I would appeal whatever it is you know in the opinion it said

$728 million is the amount of transactions with these institutions that are investment contracts uh so the SEC is going to come up with some number higher for sure and then then Ripple’s going to come back and say wait a minute you know a lot of these sales were

Overseas and not covered by you know SEC jurisdiction and make other arguments to get the number lower but in the end I believe both of them are gonna appeal and one of the things I find really really interesting Tony is this is an election year and things could change

Dramatically and so you could have a scenario where the judge orders some amount of damages and uh Ripple appeals and the SEC appeals the part of the case that they lost and so we’re up at the second circuit and there’s an election and that election could change the

Direction of the SEC right and as a result we could see not just in Ripple but in other cases a very different counterparty in the in this litigation where they might be very much more repr uh um uh interested in a reasonable settlment and in some

Cases I would not be shocked with an outright dismissal of Penny cases where in my view Gary gentler may be pursuing a theory that is that is uh inconsistent uh with the Securities laws wow yeah I’ve been thinking a lot about that lately and and how the election

Will affect a few things um I was speaking to Kathy would in a recent interview and and she said that even if let’s say Biden is to win she thinks genser is going to be out um I’m not sure that’s going to happen but that’s a possibility because he’s got these black

Stains on him uh from these losses it’s a kind of a PR nightmare for the SEC um the way they handled even like the Bitcoin ETF launch there’re just just so much uh you know bad Optics if I can put it that way yeah you know this is

This is where people disagree with me in uh uh in the in the crypto Twitter Community or on on shows and that is as far as I can tell there are a significant number of um uh politicians like Elizabeth Warren and Joe Biden who believe that the anti-

Crypto vote is larger than the pro crypto vote or they wouldn’t be doing what they’re doing and so while we see this this not just losses in litigation but really pretty bad language of of Judges many of them appointed by you know um President Obama or you know whatever Clinton what whatever no

Political acts to grind just saying that you know no faithful adherance to the law it’s arbitr and capricious and uh doesn’t make sense you know the DC circuit on the grayscale case um the reasoning just doesn’t hold up um so we think that he’s got all these black

Marks against him where there are a lot of people that are cheering him on to like crack down more on crypto and so for some reason and I guess we’ll find out in a few months uh you know it’s for a sitting Senator when she declares I am running

For reelection to the senate in that speech to say I’m building an anti- crypto Army when the headlines went out of she’s running for reelection that was the headline yeah Elizabeth Warren is building an anti-crypto army oh and she’s running for re-election as well that doesn’t happen by accident that’s

On purpose and they believe there are votes there with respect to you know Gary’s intent everybody says this dream job is to be the Secretary of the Treasury right um so if Biden is reelected it’s it’s possible you know it depends what happens on the in the Senate the Republicans take over the

Senate it starts getting hard to pass through some of some of these uh nominations that that may be problematic yeah so many things hang the balance with this election uh not just crypto but there’s other issues but crypto is going to be a big one and um you know what’s

Fascinating is that over the past year we saw a lot of presidential candidates whether they were uh left leaning or right leaning uh started pandering to the crypto industry or recognizing there’s a large amount of people here and this is a big issue it’s not the top

Issue on the ballot for many folks but it is up there and uh would could be a big political force uh especially with the amount of money the industry’s been raising um to Lobby Pro crypto and pro blockchain can uh members of Congress and so forth absolutely there is that that’s

Kind of a hopeful sign really that it feels like there’s a little bit of a generational divide so you see really young you know smart guys like Richie Torres from the Bronx just nail Gary Gensler in hearings I mean it’s like you know it gives you Goosebumps how right

On the money he is and I have said this to everybody that I talk to please make Richie Tor as the keynote speaker at your conference we need people from this other side you know of the political Spectrum to be heard um and bring their perspective because it’s so so important

Um and he recognizes it kind of as as a generational divide so if there’s a reason to be hopeful um that that would be that that would be one and the second thing on the amount of money um being put into campaigns by by um crypto aligned companies and individuals

To me it’s really low right now now I mean that big the big pack that people are talking about came out with 75 million it ought to be a billion you know when you think about I mean think about what ha you know 2023 is pretty good year Beyond Bitcoin there are

People with a lot of money um who should try to shape this debate appropriately you know not just for as they say their own bags but because we believe collectively in um Financial Freedom of Choice you know um I never promote a token or anything um you know all I do

Is the beginning of every year and beginning of January I say I am going to hold Bitcoin another year and here are the three reasons I’m going to do that and I and I do own own other tokens but I don’t recomend anything to anybody what I recommend is that we have a

Policy in the United States that we individually get to decide rather than Elizabeth Warren decide you know what let’s strike that one off the list of available Investments and that one and you know somebody somebody did money laundering of $70,000 let’s strike that one off as

Well that to me is inconsistent with the Constitution what this country’s been all about and so that’s why people like you are really important to get the message out we’re really talking about Financial Freedom because if you don’t get to make your own decisions about what you’re going to do with the money

That you have earned then you’re really not quite as free as you might think you are and I don’t think the people in Washington DC ought to make those decisions for us absolutely and since we’re talking about that you I believe filed a Foye request regarding the nydfs

Removing xrp from the green list uh kind of a cliar example of what you’re talking about right that bias and making decisions for people versus let the free market play out what do you think is happening there and and any updates around your requests well I would start by saying I have been

A fan of Adrien Harris services and the whole kind of regulatory ethos there they started they were the first to to adopt this bit license you know you’ve seen it in the in those documentaries with the Winkle Vos guys in there and they’re having these big hearings that

Resulted in um a bit license which says if you meet all of these requirements stringent requirements then you can offer uh digital assets to New York residents hey that’s great wish we had that in the United States generally um and as part of that they adopted something called the green list

Again I’ve said brilliant there should be a list you can automatically list these tokens because they’ve been vetted we’re good they’re not Securities when traded on the secondary Market which is what we’re talking about here and they’re good to go the more the more esoteric the more

Questionable ones if you want to add that to your platform if you’re gemini or coinbase and those companies that have the bit license in New York well then there’s a process you come to us of the new New York Department of Financial Services you explain to us how you’ve

Done your analysis to conclude that it’s not a security and should be um uh allowed to be listed makes perfect sense you know so anyway xrp’s on the green list judge Torres rules in July of last year that xrp is not in and of itself as security then two months later the New

York Department Financial Services removes xrp from the green list with other tokens it wasn’t just xrp to be clear there were there were other tokens that were delisted but to me when you have this Clarity from a federal judge in the town where you work the New York Department of Financial

Services saying it’s not a security to me if xrp had not been on the green list it should be added to the green list for that reason alone instead it was removed and the timing was wild and and so um so I wanted to know why I mean that’s kind

Of part of how our government’s supposed to work you’re supposed to understand why the government make government makes the decisions it makes and so I filed this Freedom of Information law request in New York it’s an L instead of an A and uh asking why you know I want all of

The documents explaining how you arrived at the decision to d-list uh xrp and who did you talk to about it or were there any other agencies involved in arriving at this decision they extended their deadline unilaterally twice um and then just last week they told me we’re not

Going to give you any documents and so um there is a internal uh appeal process to the New York Department of Financial Service which I will follow and I assume that it will be rejected again and then at that point you have to go to court um to ask

A judge to compel um the agency to reveal um the documents and so it’s going to take a while but I’m not gonna stop I mean I feel like it’s kind of such an odd thing to do you know uh that they should have spontaneously explained it because it’s so obviously weird that

The judge down the street says it’s not a security and boom it’s gone from the approved list um doesn’t make sense to me and and as I said in another show maybe there’s a perfectly logical explanation for this I would just be delighted to to understand what that is

Yeah and when they’re not forthcoming and they’re saying no we’re not going to give you anything it’s like right well it makes you think okay something else is going on here right so I appreciate you doing that and look by no means are you obligated to do

This but are are you willing to take it to the courts uh if if they keep deny yes yes yes I’ve retained a lawyer I’m I’m licensed to practice law in New York I’ve practiced law in New York for many many years um but I’ve retained a

Guy who is an expert in foil law which I’m not and uh yeah we’re gonna we’re going to uh to pursue it and uh see what happens awesome uh let’s talk SEC versus coinbase because this one really gets my gears going and grinding my gears I should say uh where the SEC approved

Coinbase to go public they knew their business modeling knew tokens uh coinbase had one of the strictest listing processes over the years now right I’m going to sue you and here are a whole bunch of random tokens I’m going to throw into this lawsuit um what do

You think about this lawsuit do you think coinbase comes out with a victory well you know I just got on Twitter in October uh uh engaging in Twitter in October of 2022 and as a lawyer what I really didn’t want to do is be that guy who’s predicting this is what’s going to

Happen in this case you know and maybe I bad 60 70% or or whatever really didn’t want to do that but to me the case against coinbase was was far out of bounds yeah um in contending that these uh tokens straight on a secondary Market are investment contracts my view not

Legal advice in my view they are not they’re clearly not um and so my pinned tweet you know on my page there says it I said this before they were sued when they were threatening to Sue I’m sure you remember there’s a Wells notice process that goes before the lawsuit

When the wells notice was disclosed by coinbase I said if the SEC follows through and brings this lawsuit they’re going to lose and here’s why and I G G have given a long list of reasons but one of the reasons is what is what you said when when Gary Gensler testified on

May 6th of 2021 this was I believe roughly 20 days after they had just permitted coinbase to go public 20 days later he’s testifying in front of Congress and he says to um the uh the house Financial Services committee um hey if you would like a recommendation from me I would

Strongly recommend that you pass some law giving the SEC the authority to regulate these crypto exchanges because we don’t have the authority to regulate crypto exchanges and neither does our sister agency the cftc where he used to work he’s an authority on the on on that

And and he was absolutely right May 2021 it’s on film and then two years later he pivots and sues coinbase for not registering as a as a um as an Securities Exchange broker deal and clearing agency under existing SEC law for Nasdaq New York Stock Exchange and

And that ilk when he said correctly they didn’t have the authority and Congress did nothing in the interim and so it’s you know that’s really bad you know because when he’s saying it he’s not just saying it to Congress he’s saying it to the public yeah we don’t have the authority to

Regulate this exchange but we should we need Congress to do that and then there and then it’s like well you know what forget that we’re just GNA go ahead and do it anyway and so uh I I really think that’s bad you know that violates the Magna Carta the

Constitution and everything else uh to just change the law because you say so without Congress having us say so um so anyway I think coinbase will win I think people I think people underestimate how hard it is to win on a motion to dismiss it’s easy to forget rip you know Garling

House and Larsson didn’t win on a motion to dismiss it had to go um to sumary judgment I attended the hearing um on coinbase in New York and the judge was tough it’s really really good judge I I’m highly confident she’s gonna come out the right way eventually uh you know

But on this motion to dismiss normally you know if I’m representing a client which I did many times in the same court building bringing motions dismiss you tell them let less than 10% chance single digits so people need to understand you know I’m at like I think

Maybe a 40% chance a lot of people are saying 70 80% chance that they’ll win and I hope they’re right I hope they’re right because this should come to an end sooner rather than later and there’s no reason for this black cloud uh to exist right now um but bottom line I believe

Coinbase will win eventually and it’s going to be a close call on this first move U the motion to dismiss now one of the scaras we discussed and you mentioned that you know with the upcoming election could bring in a new chair and some of these things could be

Dismissed however it is also Congress where they have two bills in the house two in the Senate uh Patrick McKenry leading the house wants to push through uh his bills um you think we see these bills make it all the way up uh I know it’s an election year so it’s going to

Tough or is this a 2025 thing I believe it’s a 2025 thing I would be shocked uh if we had any sort of comprehensive crypto uh regulation at all and so the thing that’s hanging out there is is it possible that we could have a stable coin uh bill um it you

Know it’s very close in the last Congress and Patrick McKenry thought he had a deal and um you know the the word on the street is the White House called Maxine Waters and said no stop it we’re not doing this and that was the end of

It uh so it it’s kind of an easy win for everybody everybody wants you know um 100% backed with liquid assets stable coins audits you know transparency and and and trading that that you can see and track um who wouldn’t want that you know I guess the

Answer is those who view stable coins as a threat to the dollar and to the dollar as a reserve currency and those who respond to that argument say you’re missing the point here this enhances the status of the dollar because it’s based on a dollar and it makes the dollar you

More usable more easy to use cross border instantaneous settlement of all sorts of different assets and so it’s a good thing but you know what a lot of our leaders and positions of authority are pretty old you know and there’s this saying about old dogs and New Tricks

They’re just suspicious you know of it and um and so that’s that’s where we are but uh it would be nice if we could get that one first step achieved this year um we got the Bitcoin spot TFS approv obviously Big Wall Street firms have issued them the marketing has started um

You know and the reason why it wasn’t because garans and wanted to do it as we mentioned before the courts essentially forced them to do it however there are applications for ethereum spot ETF and you know in context with all the things we’ve talked about where Gary genser uh

Suing all these exchanges uh he refuses to say if eth is a security or not before con Congress do you think an ethereum spot ETF gets approved um on the fact that Gary knows he’s going to get challenged in court again and he might lose well it’s you a lot of people

Are wondering about that and your focus on Gary Gensler is exactly right and it maybe even more so than people understand because there are five people on the commission two of them are Republican are probably going to vote in favor of uh an ethereum ETF probably and the Democrats will not they voted

Against the Bitcoin ETF so it’s only Gary this is all about Gary and when he was forced to approve that Bitcoin ETF you know he was excoriated by the anti- crypto forces uh in the government and he issued that log statement saying hey I’m not endorsing Bitcoin or whatever and he admitted the

Courts made me do it you know and so I believe he’s going to fight again and make the court tell him again uh it doesn’t make a lot of sense but Pol he’s a he’s a political animal um you know he was the head of the the the treasurer

For the Clinton campaign he’s a very connected guy politically and there’s a lot of political figures you know mainly not exclusively on the Democratic side are very influential who want this thing to stop and don’t want this train to start picking up speed because God knows where it might go and so

Um if you ask me I don’t think he’s going to approve the ethereum ETF unless a court tells him hey dude remember when I we told you it was arbitrary and capricious well here we go again you know and he’ll come up with some new argument and he might say yeah ethereum

Is a unregistered security and so you can’t do a ETF based on a spot trading in an unregistered you might try something like that um but um I don’t think it’ll work and So eventually I believe there will be one but but I think Gary is going to put it off as

Long as he can and and and pass the election if he can get away with it but James do you think though look we saw the impact de Hinman documents and speech and emails and so forth had in the Ripple case that it if he was to

Block the ethereum uh ETF folks are going to say hey I’m gonna bring up all the Hinman stuff and it is going to be a greater Spotlight just showing the incompetence of the SEC and and you know all the things that happened there and there’s talks of um conflicts of

Interests right uh around what Bill Hinman did because why eat specifically and the law firm he was getting paid from and so forth these are facts so right you think he’s he’s gonna say you know what I’m gonna prove it because I don’t want this stuff to be magnified

Further possibly um but you know it’s it’s crazy this ethereum thing is so crazy they went into court you know Freddy Rasoi he sued for a declaratory judgment the SEC saying hey I he’s saying I use ethereum in my law practice and for various reasons my clients use

It I need to know that I’m complying with the law again Tony it goes back to the Magna Carta I’m entitled to know is what I’m doing legal or illegal and you know what the the SEC moved to dismiss successfully moved to dismiss that case because they said we have not yet

Decided whether we think ethereum is a security or not which is false because Bill Henman decided you know and got a lot of input from the other divisions when he said what he said and so this was the year year and a half ago whenever we haven’t decided then Gary goes to

Congress and is just cross-examined look it’s the second largest token people need to know you know McKenry is saying my constituents need to know what’s legal what’s illegal is ethereum in your view of security and he would say surely you’ll understand that I can’t address the status of any

One token and the response was no I don’t understand that at all I’m asking you on half of Americans who are entitled to know what’s legal and what’s illegal in in in the realm of Securities laws and you’re saying you refuse to tell them you’ll tell them when you sue

Them that’s crazy and and and then I don’t know Tony if this was a coincidence but Leticia James in New York files a lawsuit against this um uh exchange out of the sell islands where she tasked and investigator in her office to try to open an account and

This this exchange should not have been available to New York residence but somehow this guy was able to open an account and she told them what to do and what she they listed I looked it up one time over 200 tokens she told them what

To do she told them go buy ethereum and then sell ethereum and then we’re going to file a lawsuit saying ethereum is a security and so there is a State Authority an attorney general of an important state saying ethereum is a security we’ve got an SEC chairman

Refusing to say whether it is or isn’t and then in court the enforcement decision says we haven’t decided yet um so it’s ridiculous that we that we live in the these circumstances and it’s not normal it’s not what I experienced you know when I was practicing law and dealing with the SE C

You know they generally uh played it straight and all of the lawyers that I hired from the SEC and and I have to emphasize this I have tremendous respect for the SEC Tony the SEC is one of the reasons one of the key reasons that the capital markets of the

United States have Primacy all over the world is because of the integrity and and history of the SEC and now they won’t tell us what’s okay and what’s not okay until they sue you and it’s it’s uh it’s not right and it’s not consistent with how that agency has has operated

Honorably for decades since 1934 yeah agreed and you know it’s it’s become so politicized and I’m curious if you are aware of Congressman Warren Davidson’s Bill about restructuring the SEC where you have uh I think it’s six Commissioners and they report to an executive director if I’m not mistaken

Uh have you seen that and any thoughts on that i’ I’ve seen um Davidson tweeting about it uh and it’s you know portrayed as the get rid of Gary Bill uh but I I really don’t know um the details you know and and you got to ask yourself

Well what is the problem actually you know and and what you see in organizations of any kind not just uh agencies of the government is poor leadership can do a lot of damage in a hurry and so I’m not sure I’m not for or against the bill I’m not an expert in

The bill I’m not sure the structure is the problem I think the leadership uh is the problem and so if there was a new leader with a new philosophy you could imagine that there’s there’d be tremendous reform um at the SEC um that might get it back on track

With respect to to what it was originally uh charged to do and what it did so well for for many decades well my hope is Esther Pur becomes chair I’ve interviewed her a couple times and she smart levelheaded and uh you know she’s put for some great

Ideas like the I think it’s called a regulatory sandbox if I’m not mistaken you know ideas you suggested over the years which are common sense uh work with the industry instead of attacking it but we know there’s other motives for attacking it so I hope she can be put

Into the chair seat but we’ll have to wait and see yeah I think she would be terrific and you know one thing uh I like about her is when she’s traveling somewhere to a conference or whatever it days in advance she will say I’m coming

To Denver for these three days um if you would like to speak with me send me an email about what you’d like to talk about so that we can make a time to sit down and talk about it and to me it’s like wow what a breath of fresh air this

Is what good government looks like I may not agree with you but I will sit down with you and hear your concerns hear your thoughts and answer your questions ask me anything can you imagine imagine Gary Gensler doing that no you can’t imagine him doing that because that’s

Not how he works he wants to do what he wants to do and and you know what really uh uh bothered many many of us in the Securities bar is for decades at least 50 years there was a conference called the SEC speaks in Washington DC where

The chairman and the heads of of various uh divisions and some of their deputies would be on panels addressing the current issues before the SEC and they would take hard questions from people like me and other Securities lawyers you know and they were hard questions and

They were you know put on the spot and they would answer them and there was this this exchange so that we better understood where the SEC was coming from the SEC as we’re representing industry players understand you know and as a it was like a two two-day thing great you

Know to to to get to know people build build some relationships a little bit he’s decided that that that was over that tradition was terminated for the first time in 50 years by Gary gentler and that really tells us in the Securities bar a lot about how he feels

About transparency I didn’t know that and that is very telling to to your point uh and do you think this is something of big government you know would these agencies get out of control or to your point going back to just bad leadership or a combination of

Both um so I think we’re seeing um a a little bit of a trend of agencies executive agencies going beyond their Congressional mandate and so we’ve seen the Supreme Court reigning that in in with respect to the EPA the student loan uh case is a great example you know

Anybody who was surprised by the outcome of that case wasn’t paying attention the reason I say that is the Speaker of the House of Representatives was Nancy Pelosi and she said people seem to believe that the president has the right to forgive student loan debt that is not true only

Congress can forgive student loan debt the president did it anyway you know the Supreme Court says you know what this is this is uh justice Roberts saying Nancy Pelosi was exactly right Congress has to decide if you’re gonna forgive billions and billions of dollars in student loan

Debt and so we’re seeing that in various agencies where they’re kind of pushing the envelope to achieve stuff that could not be achieved through our legisl process and than thankfully we have a Judiciary to to re that in and we might see that um Tony in

The coinbase case if that gets to to the SEC that principle of the SEC declaring for itself we now have right to regulate the entire crypto industry um you could see the Supreme Court saying no you don’t go to Congress see if you can get that through the legisl

Process uh James got some wrapup questions here for you first if you could create your own metaverse what would the theme be okay so I would not create a metaverse even though I met a law man and I thought when I came on to Twitter I was going to be talking about

Metaverse issues I didn’t tell you this story I started engaging in October and um back in 2017 I went all in on crypto bought started buying Bitcoin and I was wondering oh my God am I too late I’m buying this at $3,351 4,000 oh God I’m GNA regret this

And then I heard about all these other tokens so I knew I wasn’t gonna go figure out all the other tokens so I put some money with some guys who are forming a fund you know to figure it out and try to get some Alpha out of these

Uh these other tokens but in anyway so I start thinking I’m going to be talking about freedom in in the metaverse and kind of what what are organizational rules and structures that would make sense in the metaverse because crime is committed in the metaverse a lot of Commerce happens in the meterse and

Contracts are breached and people defraud people how’s that all going to play out I thought I’d talk about that then October 2022 uh comes around and I see Sam bankman freed and Caroline Ellison tweets out hey uh bz CZ binance we’re gonna We want to buy all your ftt

Tokens at this price and something struck in my mind of like this is not normal based on my experience as a lawyer something’s up here I think they have to maintain the floor on this ftt token because it’s probably out there as collateral for l to Alam it was my guess

Then you know the bankruptcy happens and I get a call I I told you that I uh put some money with the with this hedge fund I got a call and it said the call is we need to have an emergency meeting tomorrow about the hedge fund and so we

All the limited partners all get together on the phone and the and the statement was hey um we had some of our assets on the FTX platform now fortunately for us it was you know like 20% of the assets and not 100 or 80 or whatever but at that point I got really

Interested in s bank mcreed and FTX and all of this stuff and just left them met first stuff behind and focused on legal issues in crypto focused on that bankruptcy I even there was a meeting of creditors where I called in and started posing questions to the

Representative of uh you know John John Ray running running the bankruptcy because I was concerned about conflicts of interest with you know Sullivan and Cromwell and and other things that they they were doing and from there it just sort of snowballed for me so long answer

To I’m I all I was cared about was Freedom again in this developing metaverse concept I own these headsets they’re still in the box you know I’m not a gamer not a meta firste guy my wife’s like I can’t can’t believe these things are expensive you’ve ordered

Another one uh so in any event I morphed you know over over to focusing on on crypto don’t really spend a lot of time in the metaverse uh I got some rapid fire questions for you I’m a sushi guy I love I love uh Love Sushi favorite musician or

Ban well when I uh let’s see when I was in college I was obs obsessed with the doors and so I read everything about the doors had all the doors albums listen to The Doors constantly but in terms of what is my favorite alltime uh band it’s

Probably Pink Floyd oh yeah Pink Floyd uh favorite movie Good Fellas Good Fellas for sure yeah classic yeah favorite book favorite book um well uh so I did did some reading in 2023 2023 was such a great year uh for me got to spend a lot

Of quality time with my sons I don’t know if you knew this I was in Twitter jail for three months yeah I was uh suspended from Twitter for three months and so I just read and so I read Lyn alden’s book broken money I read uh Walter ISAC isaacson’s book on Elon Musk

But the best book I read in 2023 was food stamp Warrior by John Deon one of the most inspiring books I have ever read in my life and I would just say anybody who themselves or have a loved one or a family member who’s suffering you know from addiction or trauma or depression

Or whatever it might be I would really encourage them to pick up John’s book because what he overcame in his life is really really amazing and what he’s done now you know he’s a Marine he was once a marine always a marine there’s no such thing as a retired Marine he’s a fighter

You know for people who who have no voice and showed that in the Ripple case and in other ways um and so that’s the one I would recommend best book I read in 23 now if you’re kind of in the crypto and money you know monetary policy mindset one of the

Greatest alltime books I’ve ever read is called Dem mandibles by liol Shriver basically illustrating in novel form what would happen if the United States lose if the dollar loses its Reserve currency status and how rapidly things will unravel when that happens and it’s and it always happens it’s just a question

Of of when the mandibles by Lionel Shriver phenomenal book I have to check that out because that’s seems like so timely with everything that’s going on crypto as well as Nations moving in different directions settling trade and oil and whatever else and different currencies so very timely I I’ll have to check that

Out uh James absolute pleasure chatting with you always great information uh you know as I opened with the podcast I follow you and I get a lot of insight so I really appreciate it and you know this podcast was full of of a lot of insights

From you thank you so much for joining me hey Tony thanks for having me once you reached out to me to to talk about me coming on I signed up for all of your uh channels you’re fantastic you get really great great guests I don’t even know why

I got invited I mean you got scaramucci and and all these luminaries in the industry so uh it’s really been fun to to be on with you and to finally meet you and uh I look forward to meeting you in person at a conference uh uh in 2024

So uh thanks so much for inviting Me