ROLLUP: SEC Announces "Project Crypto." This Changes Everything.

We’re joined by Haseeb Qureshi from Dragonfly Capital to discusses the SEC's Project Crypto and its impact on the crypto landscape. We celebrate Ethereum's 10th birthday, reflect on its growth, and analyze the ongoing trial of Roman Storm linked to Tornado Cash. The episode also covers the launch of Ethereum treasury company ETH Zilla and advancements in crypto ETF regulations. Haseeb: https://x.com/hosseeb —- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle —- TIMESTAMPS 0:00 Ethereum's 10th Birthday https://www.cnbc.com/2025/07/30/at-10-years-old-ethereums-future-is-brighter-than-ever-despite-recent-setbacks.html?taid=688a2118974852000113ad9a https://x.com/TimBeiko/status/1950578090108993904 https://x.com/ethereumfndn/status/1950179673872510997 7:47 Analyzing SEC's Project Crypto https://www.sec.gov/newsroom/press-releases/2025-101-sec-permits-kind-creations-redemptions-crypto-etps https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125 26:56 Exploring Token Launchpad Wars https://x.com/smyyguy/status/1949657674003431788 https://x.com/smyyguy/status/1949790587877515697 https://x.com/0xMert_/status/1950324576204050752 48:41 The Roman Storm Verdict Discussion https://x.com/innercitypress/status/1950586483955626129 1:03:39 Closing Thoughts and Reflections --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04David Hoffman?

  Bangles Nation, it's the Friday Weekly Rollup and I'm tapping in Haseeb Qureshi from Dragonfly. Ryan is out and about having a vacation this week. Haseeb, how you doing, my man?

• 0:13Speaker 01

  Doing okay. It's been a long week, but happy to spend it with you.

• 0:16David Hoffman?

  It's been, it has been a long week. It was starting decently quiet, but I think today specifically, it got pretty loud with this SEC speech. The SEC is introducing Project Crypto.

• 0:27Speaker 01

  I thought it was just absolutely incredible. Definitely a capstone for everything that's been going on in this administration.

• 0:33David Hoffman?

  Yeah. Before we get into the Project Crypto, we're going to talk about Ethereum's birthday. We'll talk about some of the ETH Treasury companies that are coming online, the Roman Storm case as well. We are all weighted with bating breath, but we just learned that the verdict is not going to be heard until at least Monday at the earliest. There's Pump versus Zora things to talk about, but let's go ahead and start with Ethereum's birthday. Happy 10th birthday to Ethereum. There was just a flurry of activity going around Ethereum Twitter, just all these different people talking about their lore with Ethereum. Because now that Ethereum is 10 years old, all these different Ethereum community members have different walks of life, different stories to tell. I say like how Ethereum has impacted their life. Something I thought was pretty cool was this Believe

• 1:16David Hoffman?

  in Something campaign, which was a marketing campaign, which I thought was organized by the Ethereum Foundation. I was like, sick, this is the first ever Ethereum Foundation marketing push. Turns out it was actually just an engaged community member who just thought of like, hey, let's get a few companies to do this Believe in Something, but the ETH in something is replaced by the ETH logo. Everyone can brand it as their respective company. And on the 10th birthday, we'll just get people to tweet this out. And I think maybe like 10 organizations were in there like with it in the quarter or in order to kickstart this thing. But the the brand itself, the graphic itself was simple enough that, you know, the designers of respective companies could all kind of get together. And it turned

• 1:58David Hoffman?

  out, it turned out to be like, I think Ethereum's best marketing push ever. Anyways, happy 10th birthday to Ethereum, Haseeb. What were your thoughts? Anything you did that was special? What'd you think?

• 2:08Speaker 01

  It was it was really heartwarming to see all the stories about Ethereum early days and looking at some of the some of the core devs who are reflecting on the the journey that Ethereum has been on. I gotta be honest, though, like, one, I hate these like anniversary type things. I think it's just kind of the way that I'm built.

• 2:22David Hoffman?

  Anniversary of the Bitcoin white paper, anniversary of the block.

• 2:25Speaker 01

  Yeah, these kinds of things. Like, you always get journalists hitting you up, be like, what's your, do you have comments on the fact that X has just turned X many years old? And I'm kind of, no, I don't have any comments. I didn't have any last year. I don't have any this year. So I, you know, I got like an LM to write something that somebody asked me to like, give a statement. But I, to be honest, like, I think the the fact that, I don't mean to be a buzzkill, but the fact that the Roman Storm case was was going into closing arguments yesterday, made it hard for me to feel very celebratory. There was actually a tweet that David Morris highlighted yesterday, that he just learned that the the beacon chain for Ethereum was

• 3:06Speaker 01

  actually deployed from the tornado cash contracts. And so tornado cash itself is kind of forever enshrined in the history of Ethereum. And so there's a lot that rise on this on this this trial. And that was, I was, I was thinking like, it's hard to celebrate when there's such a big question kind of weighing over the industry, because the cypherpunk movement that led to Ethereum, the encapsulation of that really is the case of Roman Storm.

• 3:31David Hoffman?

  Yeah, here's a here's said tweet. Y'all, I was just notified of something mind boggling. In the current context, the beacon chain contract for all stake ETH was deployed by an address funded by tornado cash. And like, Roman, Roman was just like one, one of the many developers who, you know, would otherwise be celebrating ETH's 10th birthday with a story of his own about how Ethereum, you know, changed his life and how he decided to become an open source contract developer. I remember there was a recent tweet from Vitalik Buterin, who like donated a bunch of money to Roman Storm's case and said something to the effect of, oh, I actually like encouraged you to go create this application, this privacy application. And so I would, it would be dishonorable if I did not support you in your time of need,

• 4:13David Hoffman?

  and then came with like a a weighty donation to to Roman Storm. So yeah, like there's a bunch of mixed feelings, I would say, going around. We're going to be bullish in a second, talking about the SEC's project crypto. We're reminiscent and nostalgic of talking about Ethereum's 10th birthday, but like, I would agree with you, there is this big cloud overhanging us. As Roman's, Roman Storm's jury goes home for the weekend, they're going to take Friday off, which means, which means Roman doesn't know the outcome of his case for the next three days, 72 hours. So I can't imagine just the pressure that is, that is weighing on him right now.

• 4:47Speaker 01

  Yeah, there's a, there's a storm in New York. I hope everybody who's in New York is going to be staying safe. But it was in a way, almost poetic that at the same time that, you know, Roman Storm's trial is undergoing, there's a storm that's battering New York.

• 5:02David Hoffman?

  In different words, well, I guess it's part of, part of the birthday. It was pretty cool to see Ethereum being celebrated at the NASDAQ. So Joseph Lubin and S. Bet and Consensus and a bunch of other people, I was there included. We're all, we were all down there at the NASDAQ ringing the closing bell. And so it was pretty cool to see 10 years of Ethereum being broadcasted in the center of Times Square. And so if the sentiment was in crypto, how it was two years ago, three years ago, with the Gary Gensler administration. I don't think the 10 years of Ethereum would have been that powerful for TradFi, but it is now a story that TradFi can like kind of lean into. Right after the Coinbase has done particularly well, Robin, who's issuing a layer two on Ethereum.

• 5:45David Hoffman?

  The Circle IPO has gone gangbusters and, and you know, Wall Street is just into Ethereum right now and into crypto. The 10 year anniversary of Ethereum just is, has a better halo around it in TradFi terms. And I'm grateful for that at the very least.

• 6:01Speaker 01

  Getting into double digits, I think is special. One thing that I often tell people when I'm telling them why crypto is now kind of inevitable for the next generation of people thinking about their, their capital allocations is that people who are entering into college today. You know, if you're, you know, 19, 20, 21, you don't remember a time before Bitcoin existed. Bitcoin was created 18 years ago. Ethereum now is 10 years old. That means in five years, Ethereum is going to be 15 years old and Bitcoin is going to be, you know, I guess that would be 23. And really what that means is that there's going to be generation. That doesn't remember time before Ethereum was created. And the, the way in which we think about, wow, you know, Bitcoin was this immaculate conception.

• 6:44Speaker 01

  It's the first, you know, it's never going to have, everything is always going to be less Lindy than Bitcoin. And I think that to some extent, obviously that's true. But it's also true that the, the delta between these assets gets smaller and smaller the older they are. Right. And so right now we think of like, oh, you know, Solana is like this new thing and Ethereum is the old thing. And, you know, can the new thing ever displace the old thing because the old thing is more Lindy? You know, right now Solana is what, five years old? Ethereum is 10 years old. So Ethereum is twice as old as Solana. And that feels right now like, wow, that's so much more history and it's so much more august by the fact that it's been around for 10 years. But at the same time, like, you know, give it another 10 years and Solana will be 15 years old.

• 7:25Speaker 01

  Ethereum will be 20 years old and they're not going to feel so different in enough time.

• 7:31David Hoffman?

  So in addition to it being Ethereum's 10 year birthday, it's 10 years old. It's also got 10 years of consecutive uptime. And when you contrast that with Solana's 1.5 years of consecutive uptime, that feels a little bit of a different story. And so I will.

• 7:48Speaker 01

  Brought to you by Bankless.

• 7:50David Hoffman?

  Brought to you by Bankless. That's right.

• 7:51Speaker 01

  That's right. Nice.

• 7:54David Hoffman?

  It's not, not entirely equivalent. All right, let's get into the project crypto. Here's a, a tweet out of Haseeb saying, the SEC's new project crypto is the most bullish thing I've seen in a long time from a regulator. Read the speech. It's incredible. Almost all tokens are not securities. They want to discourage decentralization and Kubaki theater. I don't know that word, Haseeb.

• 8:14Speaker 01

  Kabuki, Kabuki theater.

• 8:15David Hoffman?

  Excuse me, excuse me. Americans should not get excluded by IP and VPN blocks. Actually, let me just get into some of the, some of the details here. So this is a speech from Paul Atkins. It's on the website. There's a link in the show notes so you can go read it. And there are five things, five main points that the SEC that Paul specifically wants to lay down. And I want to take some time actually with you, Haseeb, and go one by one through those things. Before he gets to those five things, he lays up the context and a little bit of the history of the SEC and he really just does a very good job going through a little bit of the history. I actually enjoy this kind of as just a history lesson. He talks about before the electronification of the American stock market, these paper certificates had

• 8:58David Hoffman?

  to be physically shipped up and down Wall Street and that's how they were being traded. They were buying and selling them and they had to be shipped around physically by people with little like baskets running around Wall Street. And apparently, I didn't know this, but on Wednesday, the stock market would close so that these like paper pushers could catch up with the trades being made. And so the stock market on Monday and Tuesday would trade and there was enough volume that all of a sudden there's a lag of all of these stocks certificates being traded. And so they had to shut down the stock market on a Wednesday so they could catch up. And Paul, Paul Atkins, highlights this. Here's a quote. "The breakdown over an antiquated system was described by the SEC chairman at the

• 9:38David Hoffman?

  time as 'the most prolonged and severe crisis in the securities industry in 40 years. Firms failed, investor confidence plummeted.'" Uses this metaphor to demonstrate why America's financial markets need to move on-chain proactively rather than retroactively. At least that's my interpretation. Here's another quote from Paul. "So today, I would like the world to go on notice that under my leadership, the SEC will not stand by idly and watch innovations develop overseas while our capital markets remain stagnant. To achieve President Trump's vision of making America the crypto capital of the world, the SEC must holistically consider the potential benefits and risks of moving our markets

• 10:20David Hoffman?

  from an off-chain environment to an on-chain one. We are at the threshold of a new era in the history of our markets. As I mentioned earlier today..." Do you hear that storm? Do you hear that lightning, Haseeb?

• 10:30Speaker 01

  Yeah, that's crazy.

• 10:31David Hoffman?

  Coming through my microphone? Yeah, there's a storm you're talking about. Finishing the quote. "As I mentioned earlier today, I'm announcing the launch of Project Crypto, a commission-wide initiative to modernize the securities rules and regulations to enable America's financial markets to move on-chain." Okay, so like I said, before we get into the five things, vibe check about the setup and the speech as a whole.

• 10:52Speaker 01

  I mean, it's, it's pretty dramatic. It's very clear that Paul Atkins, like he's, he's, he's been brought in to the SEC. And his whole job is to do this massive overhaul from the Genzer era. And he immediately opens with giving some historical context, but also distancing himself from his predecessor and making very clear, this is a new day for the SEC. I thought it was a very, very powerful setup for what is really, I think, probably the first really substantial policy setting speech that Atkins has given for the new SEC since he's come in.

• 11:26David Hoffman?

  Let's get into the first big highlight that he said, so quote, "First, we will bring crypto asset distributions back to America." My interpretation of this is when crypto assets are created, when they're minted, when they're, you know, airdropped or whatever, we want to do that onshore in a way that makes everyone feel good and the capital, you know, stays onshore. So this is trying to remove away from like the foundation model, allowing startups themselves to be the asset issuers and those startups be inside the United States. That's my takeaway from this section. What's your big takeaway here?

• 11:58Speaker 01

  Yeah, I agree with that. I think, you know, when I say the decentralization Kabuki theater, that's what I'm referring to is like people setting up a labs locally and then getting a Singapore or a Swiss foundation that has a separate board that has a this or that. And he's like, look, why are we wasting so much time and energy on that stuff? Remember, Paul Atkins is an advisor to reserve protocol, which is a stablecoin. So he's seen this firsthand. He knows what that's like. He sees the amount of just kind of stupid wheel turning that people have to do in order to have some nominal compliance with the law. He's like, well, to hell with that law then. Let's just like make sure that entrepreneurs are doing the right thing. So he gets it.

• 12:37David Hoffman?

  The second one, second, "To achieve the president's goals, it is incumbent on the SEC to ensure the market participants have maximum choice when and where to, to custody and trade crypto assets." I've said before, "The right to self custody of one's private property is a core American value." I think this one is just a nail, a further nail in the coffin of Operation Choke Point 2.0. Is that kind of the main, the main reasoning here?

• 12:59Speaker 01

  That's a part of it. It's also the president has stated many times that he wants to protect the rights of self custody. So there was some guidance, if you remember, from the SEC, SAB 121, which, you know, got very famously litigated last year about allowing banks to custody crypto. And basically, what I think what he's saying here is that, look, custody, we're not going to get in the way of custody, whether it's self custody or whether it's custody on behalf of banks. Like, let's just get the right answers. Let's not be prescriptive about it.

• 13:29David Hoffman?

  Yeah, so we're getting rid of the whole hosted versus unhosted wallet like issue. And we're just saying, hey, like, individuals can host crypto assets. Stop talking about it. And that's just going to be the way that it is.

• 13:41Speaker 01

  Exactly.

• 13:42David Hoffman?

  I'm a huge fan, obviously, as somebody with a podcast called Bankless. Third, a key priority of my chairmanship is to allow market participants to innovate with, quote, "super apps." I am often asked, "What do you mean by a super app?" Plain and simple, securities intermediaries should be able to go to offer a broad range of products and services under one roof with a single license. A broker dealer with an alternative trading system should be able to offer trading in a, in non-security crypto assets alongside crypto asset securities, traditional securities, and other services like crypto asset staking and lending without requiring 50-plus state licenses and multiple federal licenses. Reading between the lines, I'm guessing this is, whatever Coinbase is doing is like a big benefit to them because they want to do securities.

• 14:27David Hoffman?

  I'm suing Robinhood is also, what's the vibe of this particular thing?

• 14:32Speaker 01

  To me, that's simplifying licenses. So everybody in crypto has always been very worried about, do I have the right licenses to do, to offer the product I'm offering? And the answer from the SEC historically has been,

• 14:44Speaker 01

  don't ask us. We'll tell you later when we sue you whether or not you got the right licenses. So this has also caused a lot of financial institutions and a lot of fintechs to be very careful about offering crypto. And we know why, you know, Robinhood got sued, Coinbase got sued. What they're saying here very clearly is that we're going to make it really easy to understand what licenses you need, and we're going to make it as few as possible. And we are going to make it difficult for individual states to bring suits against you. Because of course, like, one of the difficulties of building the next Coinbase and competing with Coinbase is that how are you going to get licenses in all the states that Coinbase has licensed to operate in? That's a really hard of doing business in America. When you want federal-wide licensing, it's really easy to just say, look, I got the one license, now I can operate in America, end of story.

• 15:28David Hoffman?

  Amazing. Okay. Yeah. So there's, I live in New York. There's a number of crypto like services that I just don't have access to because New York is apparently really hard to get a license to. So that would be gone, I would assume. And then

• 15:40Speaker 01

  I mean, the SEC can't do that in one fell swoop, but they can certainly try and start pushing in that direction.

• 15:46David Hoffman?

  Okay. And then the, the fourth one. Fourth, I have directed the commission staff to update and created agency rules and regulations to unleash the potential of on-chain software systems in our securities markets. On-chain software comes in many shapes and sizes. Some of these systems are truly decentralized and not operated by any intermediary. Their on-chain software systems have an operator. Both types of on-chain software should have a place within our financial markets. What's the impact of this one?

• 16:14Speaker 01

  So this is all about the idea that, you know, you, you do not need to pretend to be running a decentralized system in order to be able to operate in crypto. If it's centralized or if it has points of centralization, that's okay. You can operate on equal footing. There might be different regulatory requirements, but it's not a no. It's a, okay, here are the rules for this side. Here are the rules for that side. But we want to make very clear is that, you know, under the previous administration, it was very unclear if Uniswap is allowed to exist. And everything the previous SEC was doing was looking at something like Uniswap, which is fully on-chain, fully decentralized and said, either one, this is breaking the rules. Or two, we're going to find individual vectors of centralization and say, oh, you run a website.

• 16:57Speaker 01

  You run a, you know, a VPN, you run a this thing, you run a that thing, you have, you have, uh, you know, indexers. This is a point of centralization and that's how we're going to got to you. Okay. Here he's saying very clearly, we're done with that. You tell us clearly what you're doing, we'll tell you what rules you have to follow, but both get to exist.

• 17:16David Hoffman?

  And I would imagine that this is particularly relevant to like layer, for example, just one example is layer twos with a centralized sequencer. Like there, there's been conversations of a layer two of the centralized sequencer is never going to be Wall Street ready. Well, Robinhood is definitely going to have a centralized sequencer and Robinhood is trying to use their chain to benefit their own products, probably just straight in the Robinhood app. Same thing with Coinbase, uh, using Morpho on base, which again, Coinbase has a centralized sequencer. And they're using it on the Coinbase front end, something like this, where the existence of a centralized sequencer is just as an irrelevant detail for whether it's compliant or not for integration into some front end somewhere.

• 17:53Speaker 01

  Well, so it's not an irrelevant detail. And this, and at the end of the day, this is a policy speech. So we don't have a lot of detail here about what exactly he means. But it does mean that there's probably going to be some framework into which something like Base fits. One could have imagined, you know, a couple of years ago, that maybe what Base is doing is just illegal. And why is it just illegal? Like, well, you know, Base is running, Coinbase is running the sequencer. They could decide to stop the transactions if they wanted. Therefore, this is a broker dealer or a money transmitter or something. It's doing all sorts of things that are somehow falling under, you know, other financial laws. I think what he's signaling here is that that's not our intention. We want to allow for there to be these kind of mixed levels of centralization that are not going to make you under some extremely onerous regime. We're going to figure it out.

• 18:38Speaker 01

  Give us some time, but we're going to figure it out. But this is the spirit of what we're moving towards.

• 18:42David Hoffman?

  And then the fifth, the last one. Finally, innovation and entrepreneurialism are the engines of the American economy. President Trump has described America as a nation of builders. Under my leadership, the commission will encourage our nation's builders rather than constrain them with red tape and one size fits all rules. While the commission is actively considering industry requests that could jumpstart innovation actively, we are also contemplating an innovation exemption that would allow registrants and non-registered to quickly go to market with new businesses, business models and services that do not neatly fit within our existing rules and regulations. What does this mean?

• 19:17Speaker 01

  So this is huge.

• 19:19David Hoffman?

  Yeah, this is like very pro startup.

• 19:20Speaker 01

  I don't think, I don't think anyone knows what it means. It sounds like some kind of sandbox. It sounds like you built a startup. So you remember Hester Peirce had this proposal for like a, you know, sandbox of sort of pre-decentralization. You're building a new crypto product. It's not, you know, progressive decentralization. They get it. They know these terms. It's not ready to be decentralized. It doesn't make sense for the devs to really take a step back or to lose admin key control. That's okay. We're going to give you two years or three years to, to show that you can build this into decentralized product. If you can't, or if it doesn't make sense to make it decentralized, there will be a regime under which you can get licensed or follow certain rules or make certain disclosures and operate in this semi-centralized fashion that's still, is still permissionless and still open. Or if you can be fully decentralized.

• 20:06Speaker 01

  You don't get to do anything. You can be in this much, much lighter touch regime. But either path is open to you. But we're not going to make it such that, you know, you have to wait a year and like get licenses and pay millions of dollars in order to go build a proof of concept as a crypto startup, right? The idea that you had to be pseudonymous, or you had to hide, or you had to go to overseas and block Americans in order to go try out a new startup idea, that is over. That is what Paul Atkins is signaling here.

• 20:32David Hoffman?

  So each of these five things that we went through, I'm going to call them the trees. I want to zoom out and talk about the forest. There are some early ideas in crypto, like even on Bitcoin talk forums, you could go and find ideas about, you know, tokenized securities, you know, securities becoming tokens on a blockchain one day, or blockchains using blockchain technology to settle securities transactions. And that's always been the grand vision, you know? Shout out to Anthony Pompliano in like 2017, talking about tokenizing everything. Like this is, this is that kind of stuff. And the, the initial bit of the, the speech from Paul Atkins, he really talks about what happened when the financial technology lagged the financial needs of the industry in, you know, in the pre-electronification era of, of American stock market.

• 21:17David Hoffman?

  What I'm seeing here is these five, five things, these five trees, when you zoom out and look at the forest, he's trying to push American capital markets on chain. That's my big takeaway. Would you agree?

• 21:28Speaker 01

  I think that's absolutely right. He also makes very clear the, the break from his predecessor. He says early on in the speech, most tokens are not securities. Basically saying that this idea that we all have to constantly live under fear and like recite the Howie test under our breath, that's over. And so that means if, if he's saying that most tokens are not securities, of course, there are many tokens that have revenue. There are many tokens that have earnings, right? We have done so much as an industry to try to just, you know, contort these protocols and hide the ways in which they are economically valuable. And he's saying, look, you don't need to do that anymore. It's over, right? The idea that you need to hide the team, you need to hide the economics, you need to hide like

• 22:11Speaker 01

  the way in which obviously things that go on chain are valuable and value accruing. I think that to me is one of the biggest takeaways that really changes the way you should be thinking about tokens is that we don't need to play pretend anymore.

• 22:24David Hoffman?

  Yeah, that which is just, I think bullish for all of our like sanity, our peace of mind. We can talk, we can talk about these things as they are and not, like you said, not having to contort, contort our ways of just like operating as an industry. So we can just be more transparent and maybe a little bit less confusing to, you know, investors in capital markets. What happens next? So we got this speech. So what? It's just a speech. What happens next? How does this become, you know, real?

• 22:51Speaker 01

  Well, so in order for this speech to become real, there's two things we either one, we need rulemaking. And two, there's obviously enforcement is the other avenue through which policy becomes instantiated. And we've already seen them dropping a lot of cases. So most of the big cases that the industry wanted dropped have already been dropped by the SEC. So there's nothing really more for them to do other than to show through enforcement actions what they like and what they don't like. Right? So we're going to see when they go after bad actors, uh, that that shows like, hey, these are the things that we're still punishing. And when they, you know, they have something that happens in broad daylight of, you know, let's say hyper liquid doing buybacks. If they don't go after hyper liquid for doing buybacks, they're saying, it's fine. You can do buybacks.

• 23:32Speaker 01

  Like it's okay for a token to be valuable. Like that does not in and of itself, uh, hit all the prongs of the Howey test and thus make this thing an unregistered security. The other thing, of course, is that we need to see rulemaking. Rulemaking has not taken place yet. A lot of that rulemaking is informal. So a lot of that is just vibes, right? Like a speech is vibes. You see some, you know, SEC commissioner says something in a speech, you can say like, look, he said this in a speech, therefore, you know, you can't, you know, that's a kind of defense. If you actually are in a lawsuit with the SEC, um, but it is not actually a formal defense. The formal defense is there was a rule the SEC made. It was a formal rule. Here's the rule. I followed the rule. So the SEC's job is to create those rules and to of course, get, get feedback from the industry as they do so.

• 24:16Speaker 01

  And that's when we're going to have real clarity, short of the clarity act itself getting passed and making these laws that the SEC then has to enforce.

• 24:26David Hoffman?

  Do you worry that there's going to be some timidness about people being bold and starting to actually live by this, the vibe? Because, you know, in, in three years, there could be, you know, a Elizabeth Warren-coded Democrat administration in, in power. And then all of a sudden, all of these vibes are just gone. So maybe it's a little bit, it looks like, you know, companies are kind of like waiting for other companies to go first. It would take a while for this to kind of become the rules of the road, or like literally the rules of the road, but just really instilled as a culture in the crypto industry.

• 24:57Speaker 01

  I, I think it depends on the particulars. So if you're talking about foundations, right? The reason why people do these overseas foundations is not just for the SEC. There are a lot of agencies involved in the way that you think about your exposure if you're building a crypto protocol. And if not every, you know, if the IRS is not saying the same thing that the SEC is saying, you might not be so quick to decide, hey, I'm just going to launch a token out of a USC corp, right? At the same time, the, the other thing I think you, you want to take into consideration is that crypto projects historically are very, very risk-taking in general. So I think mostly the answer is yes, they will. For most of these things, if it's like, hey, you can just start talking about your token

• 25:40Speaker 01

  and accruing value, or you can start, you know, just launching projects with less progressive decentralization and, and worrying not so much about whether or not you have admin key control in order to protect your users. Yeah, people will start doing that right now. People started doing that yesterday. So I think in general, one of the big questions I've always asked myself is, why is it that even before Paul Atkins came in, even before Trump got elected, even in the, in the Genzer era, why were there so many crypto projects in New York, in America, right? Why were they even here to get sued in the first place? And the answer, I think, comes from a very deep part of entrepreneurship and of crypto itself. Is that entrepreneurs are just optimistic.

• 26:25Speaker 01

  They're kind of irrationally optimistic, right? They just sort of think like, yeah, you know, Genzer's going after all these guys. But when I get, when Genzer talks to me, he's going to realize that like my thing is actually okay. And Genzer never saw a project he thought was okay. Everything he thought deserved a lawsuit. But people like, they sort of believe like, okay, even if Genzer doesn't get it, the judge will get it. The judge is going to see that I, I'm in the right, I'm doing the right thing.

• 26:45David Hoffman?

  Somebody in New York will believe my case.

• 26:48Speaker 01

  Exactly, exactly. So I actually think that, yeah, entrepreneurs were in a, on a dime. They are going to start just taking a lot more risk and being a lot more aggressive on seeing this.

• 26:56David Hoffman?

  Hey, I'm kind of into it. I've got another Bankless take to, to get you to check, check me on Hizib. So again, another, another take brought to you by Bankless. All of this stuff that Paul Atkins has talked about is uniquely bullish Ethereum. Because of all the things that we've seen over the last six months, again, like I'll make some claims here. The Circle IPO Ethereum coded because Ethereum's a stablecoin chain. This is Tom Lee's line. Circle got born on Ethereum. Coinbase, the world's largest crypto company that's public in the American stock market, really Ethereum coded. Like has that Circle partnership, has a base layer two. Robinhood launching its Ethereum layer two, just explicitly Ethereum coded.

• 27:37David Hoffman?

  And so when Paul Atkins is like, yes, without saying any particular name of any blockchain in particular, we're going to move Americans' financial markets from being off-chain to being on-chain. Yeah, like which ecosystem, which blockchain ecosystem is going to be the main beneficiary of this speech? I claim it's Ethereum. Do you believe with my claim? Would you like to check me on that claim? What do you think about that?

• 27:58Speaker 01

  Look, you're not wrong in the sense that like, yes, Wall Street mostly is, thinks of Ethereum as the chain where they're going to do their shit. At the same time, I'm remembering as you're telling me this, the debate that we had in New York.

• 28:10David Hoffman?

  Yeah.

• 28:11Speaker 01

  Where I think you took the anti Ethereum position, I took the pro Ethereum.

• 28:14David Hoffman?

  For the sake of the exercise, for the sake of the exercise.

• 28:16Speaker 01

  Yeah, yeah, yeah, for the sake of, of course, for the sake of the exercise. I think this was, what was this, like January or something?

• 28:21David Hoffman?

  That long ago already.

• 28:23Speaker 01

  Maybe, maybe not. Maybe it was like March. But I think that was when I was saying I thought Ethereum had bottomed. And that like the the turnover in Ethereum, I think the EF had just turned over. And my my view is that like this is the beginning of the this is the bottom. This is the beginning of the change and Ethereum is is, you know, basically architecting their rebound now. And you were bearish. You thought it was too late. You thought they had they'd given up too much.

• 28:47David Hoffman?

  Again, for the sake of the exercise.

• 28:49Speaker 01

  For the sake of the exercise, obviously. But I I honestly, when you were reading the beginning of that, like the history of the SEC and how they took Wednesdays off in order to catch up on the records, I thought that was going to be your jab against Solana. So I'm glad to see that you pulled your punch there. I I think I think the I think, look, I think here's what I think. I think the fight is on. I think Ethereum does have an advantage because they're 10 years old. They've hit the double digits and that's really special. And Wall Street cares about that. Wall Street absolutely cares about that. They care about uptime. They care about consistency and they care about I want to be where the money is, right? It's that old joke about the bank robber. You know, why do you rob the bank? That's where the money is. Today Ethereum is where the money is. It's where the majority of stablecoins are, majority of TVL, majority of other institutions have issued their assets there, majority of RWAs.

• 29:33Speaker 01

  So I think that it's Ethereum's game to lose. But look, you and I have known Ethereum for a long time. Ethereum is very capable of losing a lead. So let's see what happens.

• 29:43David Hoffman?

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• 30:21David Hoffman?

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• 31:06David Hoffman?

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• 31:50David Hoffman?

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• 32:32David Hoffman?

  Touch on our last Ethereum subject. This is another ETH treasury company that got announced this week. ETH Zilla, the company formerly known as 180 Life Sciences, I think technically it still is. It's a shell company that got purchased effectively through, this is a combination of Electric Capital, a VC firm, along with people from Ethereum, so then a bunch of other Ethereum community members as well, Ethereum leaders. Robert Lechner and Tarun are in this one as well. $425 million is the starting place for ETH Zilla. Now, when I, see, when I stuck my nose to the winds on crypto Twitter to catch a sense, this was the first time an ETH treasury company got launched, and there was a little

• 33:15David Hoffman?

  bit of fatigue that I felt that I noticed on Discord. People were like, okay, like, I'm tired of this, these announcements, like, what, show me something new. I don't know if you also got that sense of fatigue in the air, but what was your reaction to this announcement?

• 33:32Speaker 01

  So I think the team behind this is very credible. So obviously, you know, Electric Capital, you saw a bunch of Ethereum entrepreneurs who are on the board and who are going to be assisting with

• 33:43David Hoffman?

  From the

• 33:45Speaker 01

  That's right, that's right. So a lot of the who's who of Ethereum are on this. If you compare that to, you know, S-Bet is basically just consensus and Joe Lubin behind it. And then, you know, the other one is kind of more of a, you know, Peter Thiel and then Tom Lee. It's kind of a finance put together cohort. So I thought this was interesting to see a very different kind of team behind this. I thought that was compelling. And the way in which they're positioning this, right? So the storytelling around each of these vehicles is always a little bit different. And the storytelling here is that, okay, it's not just about staking. They're telling you, okay, we want to beat the staking rate. The staking rate is like the bogey that we're trying to get above. And the answer, okay, how are you going to do that? You're going to go on chain, you're going to do yield

• 34:30Speaker 01

  farming, you're going to do restaking, you're going to do all this other stuff. And it's like, okay, now it's not only that there's going to be more staking demand, right? So a lot of these vehicles is like, okay, everything in it's going to be staked. Now there's going to be DeFi demand. And DeFi yields are going to get competed down from all the capital that goes into this vehicle. That's really interesting. It now means that like you are going to be competed with on-chain through public markets vehicles for your yield. It's going to drive yields down across the board on-chain. I don't know what the knock-on effects of that are going to be. I think that in a way is kind of be one of the most interesting things is like this is basically going to be a giga-sized like yearn type thing, just competing down yields and making them more competitive. So I thought that was interesting. Now, is

• 35:14Speaker 01

  it fundamentally new? No, it's another treasury company. But is it bullish Ethereum that there's more of these? Absolutely.

• 35:21David Hoffman?

  Yeah. Yeah. They're not the only ones leveraging DeFi yields and whatever on-chain arbitrage they can acquire to increase, increase your yield. I know Andrew Keyes is, the Ether Machine is explicitly trying to do this as well. My understanding is there, there's just going to be just a wealth effect of, of, maybe not wealth effect, but there's just going to be an influx of capital into DeFi and DeFi TVLs are going to go up. And, you know, maybe that pushes people out onto the risk curve because, you know, I have my ether in Ave and maybe if I just get a little bit less of rates, of strong rates, I'll start to be a little bit more aggressive with my yield search. So maybe that pushes people like me out in order, in search of more aggressive returns. But I don't know. Well, it remains to be seen. We haven't really seen that DeFi TVL numbers expand. It's

• 36:04David Hoffman?

  coming in theory and I think it's kind of, I think maybe, maybe VCs will like re-prioritize layer one Ethereum, layer one DeFi deals as a knock-on effect of this. I think it's cool. I think it's bullish for, you know, what I think is the kind of the core story of crypto, which is DeFi. But I think a lot of these details kind of remain to be seen.

• 36:25Speaker 01

  Right. Yeah.

• 36:26David Hoffman?

  Yeah. Let's get into this. I might need some help on this one. SEC permits in-kind creation and redemptions for crypto ETPs. This is a technical thing. I think all of this means like if you have Bitcoin or Ether, you can contribute it directly to an ETF and retain your tax status, like the, the tax level. I don't know if you can explain this better than I can, but this is something that people are saying very bullish on.

• 36:50Speaker 01

  Yeah, I don't know that this is that big of a deal. It's kind of an easy win. It's very obvious that this should have been possible from the beginning. But previously, when the ETFs were initially approved, they did not allow in-kind creation redemption. You had to create in cash and redeem in cash. So the authorized participants, which is like, you know, Jane Street and these hedge funds that are allowed to be participants in these markets. If you created or redeemed out of the ETF, you had to do it in cash and pay the slippage on Coinbase or wherever you're buying or selling your Bitcoin. So basically, what this means is that simply there's going to be tighter spreads and less just like kind of slippage that people are paying when they're buying or selling these ETFs. That's kind of it. It was, the reason why this was such a big fight

• 37:35Speaker 01

  is that it was so obvious that this should have been how it was structured from the beginning. And it just wasn't. The SEC was just like, no, no, no, no. Who knows what would happen if you were allowed to contribute in kinds to a crypto ETF? Like, maybe that pandemonium would set loose. And so this is just one of the obvious things. The industry was like, why the fuck did you set it up this way? Clearly, every other ETF, like a bond ETF, you don't just subscribe to a bond ETF in dollars. You can subscribe to it in bonds. You just put the bonds in a basket. That's the ETF, right? So if you have a Bitcoin ETF, it's just Bitcoin in a basket. Why can't I put another Bitcoin in the basket and say, great, now I've created a new instance of the ETF? SEC said no. Now they're saying yes.

• 38:12David Hoffman?

  So there's no like large unlock of access to additional capital? That no, it's okay. It's a procedural thing?

• 38:19Speaker 01

  It's a procedural thing and a market efficiency thing. It's good. Thank you for doing this, SEC. The previous SEC was crazy. That's what this is.

• 38:27David Hoffman?

  All right. Let's get into some Zora pump conversations. Are you paying attention to the token launchpad wars?

• 38:33Speaker 01

  Not as much. I mean, I see the, you know, barbs going back and forth, but yeah, you know, I'm more of an ETP guy than I am a Zora.

• 38:41David Hoffman?

  More of an ETP guy. All right. So let me, let me fill you in because this is, I've been kind of playing around in the neck of the wood. This is from Dan Smith. Blockworks Research has some pretty good stats on Zora specifically. So just to tweet that, this happened earlier this last week. New Zora all-time highs for new posts. Coin trading volume, active account trading fees, aggregate coin, FTV, and the number of coins above $10,000 market cap, $100,000 market cap, and $1 million market cap. Overall, there's been just like a focus on the Launchpad wars, generally speaking, I would say, especially since the launch of the Pump token. And people are kind of, you know, positioning Zora as the pump equivalent on the base chain. You take Coinbase's like culture and consumer crypto brand and you, and then you take Pump Fund, then you get Zora, right?

• 39:26David Hoffman?

  It's kind of, it's kind of like what you get. Zora issues out a bunch of tokens, you can speculate on them. And then, of course, on the Solana side of things, you have actual Pump Fund along with Bonk. Now, Bonk has actually surpassed Pump Fund in terms of on-chain revenues, token deployments as well. So Bonk has meaningfully entered the fray. And then also, like we were talking about last week with me and Ryan, the Pump token has dropped down to almost 50% below its ICO price. So it's coming in just a little bit above $2 billion. So meanwhile, while Pump is going down, its local competitor on Solana is doing, Bonk is doing great, and also Zora is doing great. Zora itself has actually passed Pump Fund in revenue, which is, it would be unheard of if you told anyone that. Really? Not realize that?

• 40:11David Hoffman?

  I'm, I think I'm not bullshitting. Let me, well, let me go open to the Blockworks, I have researched and actually see. Maybe, maybe I'll have to check myself after that, but that was, that was at least a tweet that I saw this week. Okay. Oh, here, here we go. Zora, 356,000 flipped Pump in daily revenue yesterday, over a one-day period at the very least, still trailing the category leader by $1 million, which is, which is Bonk. I want to go over to a take from Kyle Samani. He put out a, what I thought was a pretty good take. He's basically saying, "Web 2 apps like Instagram, Snapchat, Twitter are these kind of like carefree dopamine brain rot apps that don't really require you having a lot of attention."

• 40:53David Hoffman?

  And then web 3 apps like Pump Fund, Zora, Bonk are these adversarial dark forests of thin liquidity speculation, and mixing these things don't work. Like, when I open up Instagram, I don't want to be thinking about like an adversarial environment where if I buy this token, am I going to get dumped on? And so mixing entertainment and tokens in this fashion is just not where product market fit is. And he says both Zora, nor Pump Fund, nor I'm assuming Bonk as well, have really fixed this problem. Zooming out, I just get through a bunch of stats at you, some of the drama, and then Samani's take. What's your reaction?

• 41:25Speaker 01

  I don't know that I have much of a reaction. I remember seeing the thread between,

• 41:31Speaker 01

  uh, I think it was Jesse and Anatoly, where they were arguing about. The one that caused Solana to have a bunch of drama. Yes, yes. Are content coins fundamentally different from meme coins? Yeah. And I, I, I think in a way like the, um, the hermeneutics of meme coins are very interesting to me. Hermeneutic, I'm gonna need you to define that word. The, the, basically like the, the, the philosophy, let's just say, the whole, the philosophy of meme coins. Like the, the way in which when it's the other guys, like the, when it's the other chain's stuff. Oh, sure. They're shitty meme coins and they're valueless and they're extracting from retail. And when they're yours, they're in innovation and value creation. It's a new form of financial entertainment.

• 42:14Speaker 01

  It's, you know, it's, uh, it's, it's, it's empowering creators. I, I, I just find it that, look, um, I think Kyle is being a little bit too, self-confident in his claim that, uh, that these things are not fundamentally going to, like, these things are broken in some deep way. It's very clear, both of these are operating as casinos. They're this kind of fun speculative game. Everybody at this point understands that. There was once upon a time, I remember, what was it, 2023? When we were like peak financial nihilism, maybe, maybe 24 was more when the financial nihilism meme was getting really strong. And people were talking about, like, why are people trading these meme coins? It's just like the same thing as meme stocks. And it's like, it's all connected to this financial malaise and like,

• 43:00Speaker 01

  the, the reality that nobody can get ahead in life and millennials are making less money. There was all this, there was all this like narrative, um, you know, window dressing we were putting on that, like, why are people trading meme coins? Okay. Today, nobody talks about that anymore. Right. We don't talk about like, oh, you know, millennials aren't making enough money and people can't move their homes. They're not getting married. That's not why people are trading meme coins. They're trading meme coins because they're just DJs. They're just gambling. Like, it's fine. It's like, it's fine that you're gambling. There's no big meta narrative. You're gambling here, you're gambling over there, you're gambling on Zora. And I, I think that's kind of the right answer. And I think you sort of, if you over-intellectualize it, you're just gonna continually get the wrong answer, which is that either one, this is connected to some secular trend, which means that, okay, well, the secular trend's not gone. People are still, you know, if there was wealth inequality or people can't afford houses,

• 43:44Speaker 01

  that's still true. And, you know, Pump dot Fun volumes have materially declined from where they were at the top. I think a much better answer is that there are different speculative vehicles now that you can just go buy, you know, you can go get levered on Robinhood and go buy some, you know, strategy or some, you know, S bet. And you don't need to go buy a Pump dot Fun token if you want volatility. And volatility has returned to crypto again. So, once crypto itself is volatile, I think these assets just become less attractive on a relative basis. I think that's a big part of the answer. And, uh, but I don't know. You tell me.

• 44:16David Hoffman?

  The, the conversation that you were talking about between Jesse and Anatoly got spawned from this one individual who tweeted out something to the effect of, you know, both Pump Fun and Bonk and Zora, they are all tokens being issued on a bonding curve with the picture attached. And mechanistically, the, uh, behind, once you pull back the curtain, you see the same thing. You see a token on an illiquid bonding curve that the price goes up when more people buy, uh, cause that's how bonding curves work. And so it doesn't matter if your front end is Zora or it's Bonk or it's Pump. So long as it's an illiquid token on a bonding curve at, you know, behind the scenes, we're all, we're ultimately doing the same thing and we're just trying to like, you know, brand this as a creator coin. And I, I accept that point. I think that's a valid point.

• 44:58David Hoffman?

  If it's, if it's all the same token logic and then smart contract at the end of the day, then like, really, that's what we are just kind of like reproducing in, in the front end. However, the front end really matters. If you go to Pump Fun, you see a four Chaney website that looks like a slot machine. It like vibrates like a slot machine. It's got different colors like a slot machine. It looks and feels like a slot machine. If you go to Zora, you get something like Instagram. And I, I do think the front end also matters because you are attracting a specific person. You're encouraging a specific behavior. And so, yes, even though it's an illiquid AMM in the back, the actual app that you use does dictate who is going to use it and the nature of their behavior of how they use it as well. And so I'm kind of of, of two minds.

• 45:43Speaker 01

  I remember we did, we did a podcast together on stage where I think, um, I think it was Tom, who said that Zora is basically Pump dot Fun for millennials. Where it's like, okay, if you're Gen Z and you're like on 4chan all day. Yeah, exactly. It's like, if you're, if you're Gen Z, you're on 4chan all day. You're just kind of messed up in the head, then yeah, okay, you're gonna be all pumped up fun. But if you're like, oh, I kind of like Instagram and I like my, you know, lattes or whatever. And I like nice, clean design and this sort of Silicon Valley approach. But fundamentally, to your point, it's, it's pictures on a bonding curve. And pictures on a bonding curve, it's like, okay, you know, that was the same thing for Entech was. Was instead of pictures on a bonding curve, it was pictures of a PFP on a bonding curve. And at the end of the day, it's the same game with a different skin. And that's what, you know, when you go into a casino and you look at the menagerie of different casino games,

• 46:29Speaker 01

  what you will see is that they're all basically the same game with a different skin. Every slot machine, like there's an Indiana Jones one and there's a Terminator one. And there's a Ninja Turtles one, and it doesn't really matter which one you play. They're all the same damn thing.

• 46:41David Hoffman?

  Mm hmm. All right. But I think the big question though is Pump raised like 800 million, million dollars to go make a Twitch competitor. And Zora and Jesse from Base are really trying to take Zora mainstream and have the Base app, which hooks into Zora, to be an Instagram competitor. And so, well, yes, we can be kind of like, I don't know if nihilist is the right word. We can be reductionist and say, oh, it's just a picture on a bonding curve. So therefore it's the same thing. We don't really need too large, too well. Well, they're both, both people are trying to make these things mainstream and make them, and break out of crypto degen trenches and make them be a part of like regular mainstream culture.

• 47:22David Hoffman?

  And so I think it, it does kind of matter how, the path dependency does matter. Like, is this a Pump Fun livestream platform that is taking like, you know, streamers trying to pump their, their coin mainstream? Or is it a more of an Instagram lookalike for creators who just want to get paid for creating? And they aren't paid on Instagram to create? I think like whether or not mainstream society is interested in adopting this behavior at all is the ultimate question that we do not know is answered.

• 47:51Speaker 01

  I'm open to that possibility. It remains to be proven that the form factor is the dominant thing that's going to create a totally different unlocker behavior pattern. So far, as far as I can see, and I'm not a user of Zora or Pumped Out Fun. As far as I can see, the games look pretty similar to me. The way in which people are playing them, the way in which people are talking about them, like not the way in which the creators are talking about them, but if you listen to Elon versus listening to Jesse or listen to Jacob, the way they talk about their products is very different, right? But what's the way their users talk about their products? They seem pretty similar to me, but you tell me.

• 48:28David Hoffman?

  No, no, I think that's right. As I was going to close out the section, I would say, Haseeb, if you were to ever get on to Zora, I would, I would probably buy your, your coin under a particular price.

• 48:37Speaker 01

  That's a good reason for me not to, yeah, it's a good reason not to get on Zora.

• 48:41David Hoffman?

  All right, let's, uh, we'll, we'll wrap things up with a more serious subject, as we kind of alluded to, uh, in the beginning, turning back to, to Roman Storm. Uh, this, this got, uh, was breaking right as Haseeb and I started recording. No verdict today in the United States versus Storm case. The jury is being sent home and deliberations will continue, not Friday, but Monday. I mean, we are not going to hear the outcome of the Roman Storm case until perhaps not even Monday. Deliberations will continue on Monday. And then if they conclude deliberating on Monday, then we can hear a verdict on Monday. But in theory, it could go into the next day as well. Uh, from Jake Shervinsky, he said, uh, you know, optimistically, trying to be optimistic

• 49:22David Hoffman?

  about the, the situation is that long deliberations are believed to benefit the defense because there needs to be a unanimous, uh, agreement with, uh, the prosecution in order for the prosecution's charges to actually be successful. The, in order for prosecution to win, they need all 12 members of the jury to unanimously agree with the prosecution. So if there's any, if anyone doubts, we can get ourselves into a hung jury, which would result in the whole storm, the whole case starting over again, if the United States attorney wanted to even do that in the first place. So I think there's like reasons to be optimistic about the outcome here, although we just don't know. Uh, and it's going to take us until Monday at the earliest, uh, to, to actually find out. Haseeb, what's your reaction?

• 50:07Speaker 01

  Yeah, so people may know that I'm very close to this case for a few reasons. So we were actually the seed investors into tornado cash. And Dragonfly ended up ourselves getting pulled into the whole situation because, you know, we were subpoenaed in the process of the DOJ investigating this case. And then on Friday, last Friday, the DOJ in open court claimed that they were planning to charge Dragonfly for being investors into tornado cash. Now, this ended up kicking off a whole firestorm. And by Monday, they backtracked in open court, stated that, oh, no, hold on, that's not what we meant. You know, we're not, we're not planning to charge anybody at Dragonfly. They're not targets in our investigation.

• 50:48David Hoffman?

  In open court, you mean in Roman's case, they said.

• 50:51Speaker 01

  So in open court means that the, basically, it was open to the public at the time that they made the statement. I mean, the media was in the room. This is a high-profile case. So there were media coverage, you know, most cases, nobody's, nobody cares, no one's watching. You are never, ever allowed, according to DOJ rules, to mention any investigations into a third party in open court. It is absolutely not allowed. You are supposed to clear the court and have a private colloquy with the judge if you want to talk about anything that is relevant to anybody besides the parties in the case. So the DOJ knew, knew they messed up. You could see it because they sealed the transcript. And they basically mean that the, the public normally is allowed to read transcripts from what happened that day in court.

• 51:35Speaker 01

  They sealed the transcript for that day, meaning that nobody from the public is allowed to read it because of the fact that they read this into open court, which they weren't supposed to. So, anyway, this was kind of a crazy week for me personally.

• 51:47David Hoffman?

  Right.

• 51:48Speaker 01

  Of course, you know, I, I know Roman very well, known for years. And like last, yesterday were the closing arguments in the case. And I read the entire transcript. It's like 230 pages. I read all the closing arguments. Unfortunately, I couldn't be there because I'm not in New York. I'm on the West Coast right now. But it was really difficult to read. I think right now, the jury today, they asked a few questions. So the jury, the jury goes away and deliberates, and they can deliberate for as long as they want. And they're allowed to ask the judge questions, which they, you know, they write into note and then they hand the note to the judge. And the judge can answer a question to clarify something that the jury wants to understand about the law.

• 52:29Speaker 01

  The jury today asked the judge a question about whether or not Roman Storm had arguments presented before the indictment for the prosecution to bring charges based on venue. So venue means when you bring charges against a defendant, you have to bring it in the right venue. You have to bring it in the right place. You can't just charge them anywhere you want. So if somebody did some activity in state X, but you charge them in state Y, your case is going to get thrown out for venue. It's going to say, you're the wrong venue. Go try it over there if you want to try it. So one of the weakest parts of this case has been venue. So if you remember, actually, the Mango Markets case, the Mango Markets case got thrown out post the verdict because of venue problems.

• 53:13Speaker 01

  Because basically, they tried in Southern District of New York, but the Mango Markets guy, Avi, he was in Puerto Rico. And there was no activity in New York. Their, their claim of like, why is this case being tried in New York? The answer was like, well, there are some users who use Mango Markets were in New York. It's like, no, no, that's not enough to establish venue. That's not where the crime took place. Crime took place in Puerto Rico. No, screw off, get out of here. So Roman Storm, he was in Seattle for the entire period of him working on tornado cash. And the arguments that they brought of why this case was being tried in New York was we found some victims who used tornado cash who were in New York.

• 53:50Speaker 01

  Those are the venue arguments, is that there are some people who used tornado cash who were in New York. North Korea was obviously not in New York. And any of the sanctions violations obviously did not, had nothing to do in New York. And the other claim they had was that Tom, who's that Dragonfly, who's one of the people who was part of the investment in tornado cash, he was in New York for a couple of weeks while Roman talked to him about some random messages. Nothing to do with tornado cash, nothing to do with sanctions, nothing to do with money laundering, nothing, you know, nothing to do with any of the actual substance of the charges. So these were their arguments for venue. The fact that the jury is asking the court, did they prove something else about venue that we don't know about? And the judge replied, you're not allowed to consider that. Go back and keep deliberating. To me, and I think Jake also pointed this out,

• 54:32Speaker 01

  that may be a very good sign that the jury is seriously considering whether or not to throw out these charges just on the basis of venue.

• 54:38David Hoffman?

  I mean, so we're all trying to read the minds of 12 people in a deliberation room. So we don't really know. I think there, what I'm reading is there's reasons to be optimistic, but we are making assumptions as we do become optimistic based on those things.

• 54:54Speaker 01

  To be honest, I think Roman's best chance. So one thing we know from the trial is that the jury is very non-technical. Before the jury was seated, you do jury selection. So the prosecution and the defense can both like cross out jurors. Everybody who knew stuff about crypto was eliminated in jury selection by the prosecution. So nobody who's on this jury knows anything about crypto. So they're all learning all these concepts for the first time. The closing arguments from the prosecution were very strong. If you don't know anything about crypto and you don't understand what a DAO is, you don't understand what decentralization is, you don't know any of these concepts, right? The argument from the prosecutors was, look, don't, you got, use your common sense. These guys made money. Money was laundered.

• 55:39Speaker 01

  It's a money laundering business. The end. You know, look at these guys, look at, look at, just look at them. You know, you know, in your heart of hearts that these guys are money launderers. That argument, I think it's very likely that a jury is going to be swayed by that. Now, when this case goes on appeal, everybody I know who's a lawyer has said that Roman's odds to win this case on appeal are very high. There were a lot of decisions that the judge made that are very likely to be over, very likely to be looked at with suspicion by an appellate court. But the district court ultimately comes down to these 12 jurors. And if they don't get a finding on venue, my fear is that they're very likely to convict on at least one of these charges.

• 56:19David Hoffman?

  So the reason why we're throwing out all of the technical jurors is because if you have any sort of context about crypto, it's easier for the defense to explain some of these concepts. But if you don't, imagine teaching 12 people about the nuances of crypto and how this all works, that's just like not favorable to the defense whatsoever.

• 56:37Speaker 01

  I mean, to be clear, the defense also struck jurors and probably the jurors they struck were anybody who says, you know, I don't trust Russians or I don't like crypto. I think crypto is used for crime. Like they struck all those people, right? So everybody had their chance to strike at jurors, but what you're left with is ultimately a non-technical jury pool. And that's how our jury system works, unfortunately.

• 57:00David Hoffman?

  I don't know how much you can actually speak about this, Haseeb, but the idea that the Department of Justice might have a lawsuit against Dragonfly because you guys are-

• 57:11Speaker 01

  Criminal charges.

• 57:12David Hoffman?

  Criminal charges against members of Dragonfly for being an investor in Tornado Cash, in the company behind Tornado Cash. Talk about the implications of that, about like, why is that significant, obviously, beyond just face value and what the long-term impacts of that are?

• 57:30Speaker 01

  So, first thing to be clear, they did not file any charges and they made very clear that they're not intending to file any charges against us or any investors into Tornado Cash. There's also no precedent for it in American history. Never happened. So whether it's Enron or Theranos or any of these cases where the underlying company's been indicted for some criminal activity, the investors, unless the investors are actually co-conspirators in some way, you know, unless it's like a mob front or something, that just never happens, absolutely never happens. So there's no case law, there's no precedent for doing this ever. Now, that being said, even the threat- Of saying that you might get prosecuted if you invest into something that we later

• 58:12Speaker 01

  decide is engaging criminal activity would have such a massive chilling effect on the willingness of investors to invest into anything that is not clearly within the boundary of a regulated business, right? I mean, we just heard from this Paul Atkins case is that the goal of the Trump administration is to open up the avenues for innovation, to allow builders to continue to build and to innovate unperturbed by whether regulators or by law enforcement, right? Just make the rules clear of what you can and cannot do. 2019, FinCEN gave this guidance that said very clearly, if you are not custoding assets, that you are not a money transmission business and therefore you do not have BSA obligations. You don't have to AML, you don't have to KYC, you don't have to do any of these things, right?

• 58:57Speaker 01

  Self custody was the boundary that they defined. That was the rule that everybody in this industry followed, whether it's Monero or Zcash or Aztec or Tornado Cash. Everybody followed those same rules. For them to then go back on that and to say, no, no, no, guess what? If North Korea used your business, all bets are off. If your protocol was used by the wrong dude, doesn't matter what you, doesn't matter what rules you follow, doesn't matter what you thought at the time, doesn't matter if you thought what you were doing was legal. That precedent is a horrible, outrageous and chilling precedent. And that's why I think the DOJ backed off of it so quickly is they realized that like, hey, there are bigger consequences than just what happens in this case if we allow this to potentially stand.

• 59:38David Hoffman?

  My read on this case as a whole is the DOJ is just trying to use Tornado Cash specifically, Roman Storm specifically as like a, in order to do a, make a chilling effect upon anyone who wants to build a privacy app. They're really just using him as an example and going after him hard because of how Tornado Cash really just goes against their goals of the DOJ. And I think, I mean, I think anyone in crypto kind of understands that or at least thinks that, that to be the case, but I'm guessing the jury doesn't understand that or see that angle whatsoever. There's no assumption that we should make that the jury sees DOJ really in what would a crypto person's perspective be reaching in order to make this case against Roman Storm.

• 1:00:23David Hoffman?

  I'm guessing the jury doesn't really see that angle.

• 1:00:25Speaker 01

  Of course not. I mean, one of the most notable parts of this case was the, you know, Roman was indicted in 2022. At the same time, soon before that, Tornado Cash itself was sanctioned by OFAC, right? Last year, 2024, during Roman Storm's, after Roman Storm was already indicted, 2024, those sanctions against Tornado Cash got overturned in the Second Circuit.

• 1:00:51David Hoffman?

  Mm hmm.

• 1:00:52Speaker 01

  Those got canceled. It is now legal for Americans to use Tornado Cash as much as you want. Despite that, the prosecution went through. All they did was drop one of the charges, which was unlicensed money transmitter. Now, so the reason why they dropped that was actually not because of the OFAC sanctions. The reason why they dropped that was this Blanch memo, which I don't know if you, if you covered this at all at Bankless, but Todd Blanch wrote a memo. He was, I think, Deputy Attorney General. He wrote this memo, basically saying that there's, there's a new rule in town for the DOJ. The new rule is that we are no longer pursuing prosecutions for registration offenses. So if you did not register, or you have, you know, you failed to get a license, we're no longer prosecuting that.

• 1:01:35Speaker 01

  It's not a good use of our time. We are going to prosecute criminal actors, hackers, or people who are either attacking others or attacking crypto people. If you are actually going out, or, you know, cartels, or, or, you know, drug offenses, or things like this, right? Like, these kinds of people using crypto, we will absolutely continue going after. But registration offenses, we're done going after that criminally, right? This was the Blanch memo. Everybody thought after the Blanch memo, well, they're probably going to drop these cases, because this is, you know, what is the case here, other than to say that, well, they should have registered, they should have done AML, they should have done KYC. That's effectively a registration offense. But what they did instead is they simply dropped one of the three charges, which was the unlicensed money transmitter

• 1:02:13Speaker 01

  charge. But the conspiracy to, I believe, there's conspiracy to launder money, conspiracy to evade sanctions, and then there's, the last charge is like, conspiracy to transmit money illegally, or something like this. Those charges are still there. So I think this is one of the last cases that is, again, like a holdover of the Biden administration era, attack against crypto. And it's really painful to see.

• 1:02:42Speaker 01

  This kind of playing out in front of us at the same time that the rest of the industry is moving on.

• 1:02:46David Hoffman?

  Yeah, yeah, yeah, it's gonna be it's a it's a long weekend ahead of us that like I said, the jury doesn't come back on Friday, so they go all the way until Monday. I just can't imagine the just excruciating amount of pressure that Roman Storm just feels about doing, I don't know what, sitting in his hotel room, waiting for Monday to roll around. So he can hear the verdict and that's kind of how I feel as well.

• 1:03:07Speaker 01

  Likewise.

• 1:03:08David Hoffman?

  Well, Haseeb, to end on that note, I guess, thanks for joining me on the weekly roll up. And I think, you know, I'm keeping Roman in my thoughts over the weekend and I know you are as well. And we asked the listener and do that, do that, too.

• 1:03:21Speaker 01

  Yep, absolutely.

• 1:03:23David Hoffman?

  Thanks again for coming on, Haseeb, whenever Ryan needs to take a break. I really appreciate it. You're a giga brain and I appreciate you bringing on the show and talking about the weeks in the week in crypto for me.

• 1:03:32Speaker 01

  My pleasure, man. Thanks for having me.

• 1:03:33David Hoffman?

  I'm sure you're gonna go talk about some of these subjects on your own podcast as well. Where can people go to go find those takes?

• 1:03:39Speaker 01

  People can find me, just Google my name. I'm Haseeb, H A S E E B, and you can find my Twitter. We post a podcast roughly once a week on the Unchained feed, so can find us on the shopping block.

• 1:03:51David Hoffman?

  The shopping block's pretty good. It's one of my favorites. Haseeb, thank you so much. Bankless Nation, you guys know the deal. Crypto is risky. You can lose what you put in, but unless we are headed west, this is frontier. It's not for everyone, but we are glad you are with us on the bankless journey. Thanks a lot.