HODLCast

This episode of the HODLCast was recorded on Wed, Nov 9, 2022.   The FTX exchange has imploded, it turned out they were gambling with user's funds while lobbying for industry regulation in DC. FTX global, US, and Alameda Research all filed bankruptcy on Friday, and then got hacked late in the evening, draining all accounts to zero.   Decentralized exchanges fix this intermediary risk. People can hold their own assets, and transactions are fully transparent and operate on code. Anyone in DC who actually cares about protecting people should promote self-custody. Sadly, this type of situation gives the takeaway that crypto is the wild west and needs policing. However, perhaps this situation can be an example of the industry settling its own issues. FTX’s insolvency was exposed by the market and maybe it will be solved by the market.

Bill Wise & I discuss the evolving crypto regulatory landscape with a focus on the SEC's investigation of Yuga Labs, Kanye's censorship by JP Morgan, and Chainalysis's Cybercrime report.   Follow Bill on LinkedIn https://www.linkedin.com/in/bill-wise...

Josh and I discussed the chilling future of Central Bank Digital Currencies.   Joshua Scigala is the founder of TheStandard.io & Vaultoro.com. http://TheStandard.io is a decentralized stablecoin protocol that enables users to lock up crypto and or physical gold to generate multiple fiat-pegged stablecoins.  FollowJosh on Twitter: @JScigala  Movie suggestions:  In Time, 1981 Early Warning, 1981 They Live, 1988  Sign up for the Weekly Newsletter here! https://lp.constantcontactpages.com/s... More information at www.hodder.law

Bobby Lee is the founder and CEO of Ballet, a startup that provides user-friendly physical wallets for storing cryptocurrency. His first startup was BTCChina, China's first Bitcoin exchange. He exited the business after its successful acquisition in January 2018. Mr. Lee also serves on the board of the Bitcoin foundation.   We discussed  Ballet Wallet, the future of Bitcoin, and how this asset will impact the global economy.   Make sure to follow Bobby on Twitter: @bobbyclee & @balletcrypto  “The Promise of Bitcoin”- now available for sale at http://Amazon.com and http://bobbylee.com

The Celsius Saga continues.   - Users were Doxxed & Scammed - Insiders like Mashinsky allegedly withdrew hundreds of millions - The Independent Examiner is conducting an investigation - Dates are being set for the sale of assets  - Restructuring plans need to be submitted fast  Check out my full blog here: https://www.hodder.law/blog

The CFTC filed a complaint against the Ooki DAO protocol as an “unincorporated association.''  

The Commission served the lawsuit through a post in an online discussion forum. A lazy and highly unconventional approach compared to an in person delivery by a process server.   The Commodities Exchange Act does not give them proper jurisdiction for this action so instead they relied on state case law involving a slip and fall case. Shameful regulation by enforcement.   

Read my full blog here. https://www.hodder.law/post/cftc-v-ooki-dao

Coinbase filed a complaint against OFAC due to the Tornado Cash Sanctions.   

Tornado Cash, including the purported entity, the website tornado.cash, 37 smart contracts, and an address that was used to accept donations to develop the project, were added to the OFAC SDN List on August 8, 2022. This was the first ever sanction against open source code. OFAC alleged that the mixer was used to launder money.   The lawsuit challenges the addition of Tornado Cash to the SDN List because it’s an unprecedented, overbroad action that exceed’s OFAC’s statutory authority and infringes on their constitutional rights and the ability of law-abiding Americans to engage freely and privately in financial transactions.   Appreciate Coinbase stepping up to the plate - even though it’s probably in their financial interest to do this, it’s also good for the overall industry. 

This sanction could lead to a slippery slope, and the best time to nip it in the bud is with the first.

Full blog here.

The Whitehouse released a new report on the climate and energy implications of crypto assets that suggested the Biden administration will seek to limit proof of work (PoW) mining.  The report was lazy, they didn't do any of their own research, and their citations weren't even good enough for the Bitcoin wiki page.   

PoW creates multiple layers of security for the bitcoin network, and it's being done largely with renewables.  

PoW incentivizes:  

On August 29, 2022, the federal reserve announced that by next summer, they will begin the FedNow pilot, with over 120 companies signed up to participate, including every major US bank.   This is the rails for a new and dangerous Central Bank Digital Currency (CBDC), They can be created out of thin air with no supply cap. It's a private ledger based system that will be linked to each person’s identity - maybe even via a microchip system.   It will allow the central bank to easily expand or restrict the monetary supply. With this programmable money, it can be added to people’s wallets easily in the form of universal basic income or other welfare checks, and it can also be deducted for any kind of parking ticket, or tax.   Every purchase you make will be recorded, if you buy a gun/bitcoin/a book in 2025, and that thing becomes illegal in 2026, your wallet could be turned off until you comply by turning in that certain asset to the government. Likewise, it will make forced medical procedures “in the name of public safety” a lot easier to enforce.   If climate change continues on its current trend, the CBDC will allow the government to cap its people’s spending on activities that it deems high ESG risks, like steak dinners, or traveling.   Leran more here: https://www.hodder.law/post/the-chill...

On August 8, 2022, OFAC sanctioned the Tornado.Cash protocol, which was used by the North Korea hackers to launder stolen funds.

Adding a protocol to the Specially Designated Nationals (SDN) list is a new and slippery slope.  Historically, the SDN list is composed of individuals or businesses that are cut-off from the American economy because they are suspected to be terrorists or drug king pins. By treating autonomous code as a “person” OFAC may have exceeded its statutory authority.