Suing The SEC | Jonathan Mann & Brian Frye

Jonathan Mann has been writing a song a day for 16 years and 211 days. Today, he and Brian Frye are suing the SEC. In today’s episode, Jonathan, better known as ‘Song a Day Man’ is joined by Brian Frye, a law professor at the University of Kentucky and NFT/security law expert. Hear why Jonathan and Brian are suing the SEC, why this lawsuit is so important to the crypto industry as a whole, and what winning would mean for the future of our space. ------ 📣 SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ⚡️ FUEL | EARN FUEL POINTS https://bankless.cc/fuel 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/40 ------ TIMESTAMPS 0:00 Intro 4:58 Background on Suing 7:34 Jonathan Mann’s Backstory 9:58 Why Brian Got Involved 13:28 The 101 of the Lawsuit 17:22 What Does Winning Do? 22:14 Game Theory 25:14 Fear & Songs a Day 27:18 Logistics of the Suit 32:31 How to Support 34:41 Closing ------ RESOURCES Jonathan Mann https://x.com/songadaymann https://x.com/songadaymann/status/1817959431206023653 Brian Frye https://x.com/brianlfrye https://youtube.com/live/jo1ZuhuCVZE ------ 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?

  Bankless Nation, it's not every day that some of our own sue the SEC, but that is what's happening today. Jonathan Mann, otherwise known as Songadayman, and previous podcast guest Brian Fry, are suing the SEC preemptively in order to protect their livelihood and their passions. They want to make sure that their ability to produce art and sell them as cryptographic tokens on Ethereum is a legal thing to do without triggering the ire of Gary Gensler and the securities law of 1933. Because as of now, as a result of the SEC lawsuit and settlement against Stoner Cats,

• 0:44David Hoffman?

  the 2021 animated TV show, the precedent stands as art sold as tokens are unregistered securities and therefore illegal, making the SEC the de facto regulator of digital art so long as it has a digital token to go along with it. Is the SEC supposed to regulate art? Does it even want that for itself? How did we end up in a place where artists and their art are colliding with the securities regulators? What timeline are we even on? Today on the show, Jonathan Mann and Brian Fry discuss their lawsuit that they are serving the SEC, the game theory behind it, and what its impact will be for our industry when they eventually bring home the dub.

• 1:27David Hoffman?

  So, let's go ahead and get right into the episode with Brian and Songadayman, but first, a message from these fantastic sponsors that make this show possible. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Kraken, one of the longest-standing and most secure crypto platforms in the world. Kraken is on a journey to build a more accessible, inclusive, and fair financial system, making it simple and secure for everyone, everywhere, to trade crypto. Kraken's intuitive trading tools are designed to grow with you, empowering you to make your first or your 100th trade in just a few clicks. And there's an award-winning client support team available 24/7 to help you along the way, along with a whole range of educational guides, articles, and videos. With products and features like Kraken Pro and Kraken NFT Market Place and a seamless app to bring it all together.

• 2:12David Hoffman?

  It's really the perfect place to get your complete crypto experience. So check out the simple, secure and powerful way for everyone to trade crypto, whether you're a complete beginner or a seasoned pro. Go to kraken.com slash bankless to see what crypto can be. Not investment advice, crypto trading involves risk of loss. Arbitrum is the leading Ethereum scaling solution that is home to hundreds of decentralized applications. Arbitrum's technology allows you to interact with Ethereum at scale with low fees and faster transactions. Arbitrum has the leading DeFi ecosystem, strong infrastructure options, flourishing NFTs, and is quickly becoming the web three gaming hub. Explore the ecosystem at portal.arbitrum.io. Are you looking to permissionlessly launch your own Arbitrum Orbit chain? Arbitrum Orbit allows anyone to utilize Arbitrum's secure scaling technology

• 2:55David Hoffman?

  to build your own orbit chain, giving you access to interoperable, customizable permissions with dedicated throughput. Whether you're a developer, an enterprise or a user, Arbitrum Orbit lets you take your project to new heights. All of these technologies leverage the security and decentralization of Ethereum. Experience web three development the way it was always meant to be. Secure, fast, cheap and friction free. Visit arbitrum.io and get your journey started in one of the largest Ethereum communities. Launching a token? Don't let complex legal and tax issues slow you down. Toku provides specialized support to optimize your launch and ensure that you as a founder and your team and your investors get the most tax efficient outcomes. The Toku team understands the crypto space inside and out and will ensure your token launch is fully compliant while maximizing tax efficiency.

• 3:38David Hoffman?

  Toku can connect you with the best attorneys if you need them to make sure that you have the best advice. And Toku can help to optimize your taxes so you pay the least possible amount of taxes while still maintaining legal compliance. With Toku's guidance, you can concentrate on building your company while Toku handles the logistics. Token launches don't have to be complicated. Talk to Toku today to get a free initial token valuation. Bankless Nation, I'm here with Jonathan Mann, otherwise known as Song A Day Man, and Brian Fry, previous podcast guest and lawyer. Actually, both of you have been on the podcast if you count all of the times that we have added Jonathan Mann's songs to the end of our weekly roll up. But in other words, Jonathan, welcome to the Bankless Podcast in live and present form.

• 4:19Speaker 01

  Thank you so much. I am very excited. As you know, a big fan.

• 4:23David Hoffman?

  And Brian, we had you on to talk about our NFTs securities, which was one of my more interesting episodes. And it was really not trying to actually ascribe a legal assertion as to whether they are or not, but more of a thought experiment as to the question of securities and the idea of NFTs. And you're kind of back for round two. So gentlemen, who wants to kind of drop the hammer on what we are actually doing here today? What you guys have already done here today in the legal process of the United States, but also here on the podcast episode today? Who wants to take the lead here?

• 4:59Speaker 01

  Let me, let me give some background. Let me set the stage and then I'm gonna, and then we'll let Brian do his brilliant lawyer lawyering to take us deeper.

• 5:12Speaker 01

  The SEC brought a case against Stoner Cats back in 2023. If folks will remember what Stoner Cats was, it was a big project that launched in 2021, sort of in the height of the frenzy of that time. It involved Ashton Kutcher and Mila Kunis, although as I sort of like found out later on, and as I dug into it, it was really made actually by just some like working Hollywood animators, just like people who I actually really identify with as just like artists who are just trying to get by making their work. And they just happened to like hook up with Mila Kunis and her whole thing. And then she brought in the NFTs. And then they get slapped with this SEC lawsuit claiming

• 5:57Speaker 01

  that they were selling unregistered securities.

• 6:00David Hoffman?

  The NFTs aspect of this cartoon animation were unregistered securities.

• 6:04Speaker 01

  The cat JPEGs that they sold, according to the SEC, were investment contracts that they were doing with the people that bought them. If you read the complaint, if you read the sort of action that the SEC took against them, and what ended up happening was that they ended up settling for a million dollars, which is like, What I learned later is like a million dollars is like a really good deal in this case, actually. And it would have cost them many times that to fight. So they settled a bunch of things, but like, they had to like, one weird thing was that they had to destroy, they had some stoner cats left over that they were going to use for contests and stuff.

• 6:50Speaker 01

  One of the pieces of the SEC thing was that like, they had to destroy any stoner cats that they had in their possession. They had to like, burn their artwork. Anyway, when this happened, I got really angry because as I read through the complaint, as I read through the action that they took, I realized that it sort of implicated everybody in the NFT space. It implicates me, it implicates Brian, it implicates you, David, if you've ever, so I think you've sold an NFT at some like, you guys have bankless NFTs, like, we are all implicated because it's so broad and there's no kind of like, it doesn't make sense. And yeah, so I got really angry by this case. I wrote a song.

• 7:35David Hoffman?

  Jonathan, explain a little bit of your backstory. Jonathan Songadayman, why are you so angry? How is this relevant to you?

• 7:41Speaker 01

  Yeah, well, since 2022, I've been basically making my living selling my songs as NFTs. Every day I make a song, I put it on my website to go up for auction. You know, we're in this kind of fallow period for NFTs. But, you know, I have like a small and hearty band of people that want to buy the songs and they do. And, you know, sometimes they go viral and they get more money. And that's how I've been making my living. So I took this sort of as a, as a, you know, direct affront to my livelihood in a lot of ways. And just like, you know, everybody that I know who's making NFTs, there's so much creativity here. There's so much just brilliant artists doing their thing.

• 8:23Speaker 01

  To feel like we are all implicated in whatever machinations the SEC has going on made me so angry that I wrote a song called "This Song Is A Security", which I believe you guys actually played that week at the end of the Bankless, at the end of the roll up. And as a result of that song, I started talking to some lawyers in the space and talking about, like, what would it actually take to take this fight to the SEC? How would that work? And, you know, the balls were rolling and they said, "Do you know anyone else who might be

• 9:04Speaker 01

  interested in suing the SEC in order to get some clarity on whether NFTs are actually securities or not?" And I said, "I know just the person." My friend Brian Fry, who I actually originally heard on Bankless. That's the first time I ever heard of Brian. Who, you know, he can introduce himself. He's a brilliant lawyer, but also an artist. He has this kind of conceptual artist-lawyer crossroads that I imagine he may be the-

• 9:38David Hoffman?

  A one of one intersection.

• 9:39Speaker 01

  A one of one intersection. So when, when these lawyers are talking to you and said, "Hey, we think it would be better if we have at least one other artist on this case. It sort of helps us cover more ground and we can..." I said, "Let's talk to Brian." And Brian said, "Let's do it."

• 9:58David Hoffman?

  All right, Brian, if you- Yeah, come on down and tell us your role in this whole story.

• 10:03Speaker 02

  Yeah, so I've been waiting for this lawsuit for 20 years, right? I started thinking about this problem when I was a baby lawyer at Sylvan and Cromwell, working on securities law. And the more I looked at securities, the more I thought to myself, "That looks an awful lot, or sounds an awful lot, like conceptual art." And everyone just kind of looked at me like I was crazy and, "What are you talking about? And that doesn't make any sense." So on and so forth. So in 2019-

• 10:30Speaker 02

  I actually wrote a, or other, I, I released a work of securities art titled SEC No Action Letter Request, which I styled in the form of prospectus that I wrote as a Law Review article, in which I described how I was sending a no action letter request to the SEC, proposing to sell a work of conceptual art titled SEC No Action Letter Request, consisting of sending a no action letter request to the SEC, right, and telling them, like, according to everything that you say, what I'm doing is issuing an unregistered security, so you really ought to tell me I'm not allowed to do this. And unsurprisingly, the SEC declined

• 11:11Speaker 02

  to respond to my no action letter request, although a young friend of mine did manage to eventually FOIA from them an almost entirely redacted set of emails that preserved nothing other than them calling my theories fanciful, right? Well, fast forward to 2021, NFT market explodes, and I'm like, wait a minute, this is just proving everything I said in my article. They said before, well, this isn't really a security, because people wouldn't really buy it, and therefore it's not a real market. And I'm like, hold my fucking beer, man, right? People are, people are gonna buy this. So I just took that article, I made it into

• 11:52Speaker 02

  an NFT project, dropped it on to OpenSea, and it sold out in like 20 minutes for like, you know, $30,000 worth of ETH or something. And I was like, this is an amazing proof of concept that literally what I'm doing here is, according to the SEC, illegal. So when Jonathan came to me with this proposal, I was like, this is, this is perfect, right? Because I'm, I'm already on record, literally going to the SEC and saying, what the hell is wrong with you? You got to explain what you're doing. This doesn't make any sense. Your theories are cockamamie nonsense, right? It can't be true that the SEC is authorized

• 12:34Speaker 02

  by statute to regulate the entire art market. That can't be true. Right? And any theory of what is a security that says the SEC can regulate the art market is bananas, right? Because the art market was around when the SEC was created, right? And 100-plus years later, still ain't regulating the art market, right? No one expected it to, no one wanted to. It doesn't know how, it doesn't have the capacity to do it, there's no reason for it to do it, it doesn't make any sense, right? And I think that, you know, the SEC really needs to kind of take stock of what its real purpose is, what its real institutional competencies are, and why it's regulating

• 13:19Speaker 02

  things in the first place. What is it trying to accomplish by doing this regulation? Because I just don't see that the SEC has anything to add to this market.

• 13:29David Hoffman?

  And so I think what's happening here is, as a result of the expansive interpretation of what a token is by the SEC, the SEC has run up against some edge cases which have started to push back against the SEC. I think we saw this when Richie Torres was challenging Gary Gensler on a congressional hearings.

• 13:50Speaker 01

  That's a great example, yeah.

• 13:52David Hoffman?

  Hey Gary Gensler, is this Pokemon card a security if it's a token on Ethereum? And Gary Gensler's like, "Well, it's facts and circumstances," is what his answer was. And now you guys are presenting a very similar argument of like, "Hey Gary Gensler, is art a security? Hey SEC, is art a security if it comes in the form of a digital token?" And that's like, kind of the core message of your guys' lawsuit, right? Kind of like, walk us through the 101s of this lawsuit. Because just really to remind listeners, what's going on here is we are suing the SEC. Two people on the show today are suing the SEC, trying to establish a precedent. What's the 101 of what's going on here?

• 14:31Speaker 01

  So we've created, we've each created our own new project that we are presenting to the court. We've created, we've created these new projects specifically to present to the court as a example of, here's something that we're ready to release, we want to put this out, and we are asking the court to do something called a declaratory judgment, or a summary judgment.

• 14:56Speaker 02

  Declaratory judgment.

• 14:58Speaker 01

  Saying, saying either yes, this thing that you are presenting to us is a security, or no, in fact, this thing you're presenting to us is not a security. So mine is, you know, it's a programmatic remix of my, this song is a security song. You know, I made a bunch of layers and I, I remixed it and it'll be remixed 10,420 times, which is the same amount of NFTs that the Stoner Cats put out, you know, were, you know, the projects that we are putting out, while they're not exactly like Stoner Cats, because nothing is ever the same, there is no real difference between. There's no material difference. There's no material difference. The structure is the same. Between the projects that we're presenting and things like Stoner Cats or even Impact

• 15:40Speaker 01

  Theory, which was also another case that, that got settled. So we're presenting this to the court and we're saying, hey, court, give us some clarity here, like, give us a ruling and hopefully, Brian can talk to this, but hopefully what will happen is that the SEC will, you know, come and, and have a good faith exchange with us of, of why, why they think that these things are securities and we'll, and we'll, you know, get into, and Brian can get into that more specifically.

• 16:12Speaker 02

  Yeah, so, so I created a project that's a little more pointed in some ways in Jonathan. It's titled Cryptographic Tokens of Material Financial Benefit. It's a work of conceptual art that consists of the concept of thinking about why art is valuable. And I'm selling this work in conceptual art in an edition of 10,320 NFTs for 0.01 each. And essentially what you get in exchange for buying one is the feeling of being a winner. Because. Because you understand what it means for art to be valuable.

• 16:51Speaker 02

  And, you know, as with previous works, I'm going to explain to people exactly how this fits into the securities slash cryptographic art ecosystem. And I hope it's really clear to the SEC that if they're going to pursue the line of argumentation that they have been, then they have no choice but to tell me that I'm not allowed to sell conceptual art.

• 17:22David Hoffman?

  Okay, so we're taking this lawsuit to the SEC and there's going to be some back and forth, there's going to be some conversation, something's going to happen. What are we hoping, what's the win scenario look like?

• 17:33Speaker 02

  Well, so, I mean, if I may, right, this is a really, this is a really particular kind of lawsuit, right? So what you're allowed to do under federal law, there are no lawsuits, but we're filing in federal lawsuits, right? What you're allowed to do under federal law is if you have a reasonable belief based in fact that the government, or someone else, but here the government, is going to do something that will prejudice your interests in one way or another, it's going to harm you in some way, you can preemptively file a lawsuit against that other party, in this case, the government, or specifically the SEC, saying, hey, I want to do this. I think that if I do this, the government is going to sue me for it, they're going

• 18:16Speaker 02

  to prosecute me for it, they're going to bring a civil action against me for it. Therefore, I want the court to preemptively say that what I'm doing is something that I'm allowed to do and that the government isn't allowed to bring a lawsuit against me for doing this thing. It's called declaratory judgment action because the court declares that what you're doing is something that you're allowed to do. So that's what we're doing in my now hometown of New Orleans, Louisiana, in the Fifth Circuit, bringing in action against the SEC, saying, hey, we want to release these projects. They haven't done it yet because we're worried. That if we do it, the SEC is going to come after us and the SEC is going to prosecute

• 18:59Speaker 02

  us for this and it's going to do like it did to Stoner Cats and make us give it a lot of money as like a fine. We don't want to do that, right? We want to be able to do our conceptual art making and songwriting in peace. And specifically in my case, right? One of the reasons I think I was an attractive plaintiff here was that I've already gone to the SEC a couple of times since I want to do this and they refuse to respond to me, right? They refused to respond to my letters that I wrote to them describing exactly what I wanted to do, explaining why I thought it was a problem in the form of an entire Law Review article, laying out the entire kind of theoretical concern that I had. They just ignore me.

• 19:39Speaker 01

  And then, and then, and then they go and sue Stoner Cats, totally, totally in line with what you were saying to them in the first place. They ignore you and they sue Stoner Cats. It just, it boggles the mind how stupid that is and how annoying that is.

• 19:58David Hoffman?

  New projects are coming online to the Mantle Layer 2 every single week. Why is this happening? Maybe it's because Mantle has been on the frontier of Layer 2 design architecture since it first started building Mantle DA powered by technology from Eigen DA. Maybe it's because users are coming on to the Mantle Layer 2 to capture some of the highest yields available in DeFi and to automatically receive the points and tokens being accrued by the $3 billion Mantle Treasury in the Mantle Reward Station. Maybe it's because the Mantle team is one of the most helpful teams to build with, giving you grants, liquidity support, and venture partners to help bootstrap your Mantle application. Maybe it's all of these reasons all put together. So if you're a dev and you want to build on one of the best foundations in crypto, or you're a user looking to claim some ownership on Mantle's DeFi apps, click the link in the show notes to getting started with Mantle.

• 20:42David Hoffman?

  Introducing Fuel, a purpose-built operating system for Ethereum rollups. Fuel is revolutionizing the Ethereum ecosystem with features like Paralyzed and state minimized execution, cross-chain interoperability, and native account abstraction. Plus, it supports wallets of all networks, ensuring you can use Fuel no matter where you store your crypto. But that's not all. You can join the Fuel Points program today to earn points, unlock rewards, and qualify for future incentives as Fuel marches towards mainnet. Fuel points are off-chain points earned by completing on-chain actions that positively contribute to the growth of the network, and holding Fuel points can automatically qualify you for a future network reward. So don't miss out on the Fuel opportunity. Click the link in the description below to get started. Fuel points are here. Go get it. The Uniswap extension is here.

• 21:25David Hoffman?

  The self custody wallet created by the most trusted team in DeFi, Uniswap Labs, designed to make swapping feel effortless. This extension lives in your browser's sidebar, letting you swap, sign transactions, and send or receive crypto without ever losing your place on the internet. Plus, with human readable transaction messages, you'll always know exactly what you're signing. Navigate a multi-chain world effortlessly with support for 11 chains like Ethereum Mainnet, Base, Arbitrum, and Optimism. No more chain switching or token importing. All your assets are right where you need them to be. The Uniswap extension is designed to level up your swapping experience with other Uniswap Labs products as well. Easily onboard to the extension using the Uniswap Mobile Wallet to begin managing your assets across platforms and take advantage of smooth, seamless synergies with the Uniswap Web App. So go and download the Uniswap extension today

• 22:10David Hoffman?

  by clicking the link in the show notes. Just another way Uniswap is helping you swap smarter. And so Jonathan, you're, one of the things I enjoy about this is that this is a continuation on Brian's arc against the SEC. Like this is the next logical like milestone in the quest line. That is Brian Fry versus the SEC. And I think the role that you play in this Jonathan is that as I've watched Brian engage with the SEC, it's like it's an attempt in a conceptual art manner to like pants the SEC more or less. And the way that I'm seeing this unfold is that, say that this goes to court, say the SEC wants to take this to court. And you have like defendant Gary Gensler versus Jonathan Mann,

• 22:55David Hoffman?

  the song a day man. And we have Jonathan Mann, the guy that writes a song a day, every single day. And he's just simply asking for the court to protect his ability to write a song a day, every single day. And if you go and you juxtapose some of the songs from Jonathan's Song a Day Man, which with Gary Gensler, the defendant. Like Gary does not want to be in that position of being the guy that says that Jonathan Mann does not get to write a song a day and listen on Ethereum. That's just like, it's just a bad look for the agency. And so that, this is a part of like the game theory going on, right?

• 23:28Speaker 01

  You said it, not us. You said it. We didn't say it. We, we, we have no comment on that specifically, but I would say, you know, I would just say that I, you know, it's, as, we can joke about it and it's funny and, and there's things, but I am genuinely angry. Like I'm like, like every time I actually talk to like the Stoner Cats people and like, I get angry all over again. It just, the unfairness really is driving me batty. And so I would relish an opportunity, any opportunity, and this is the opportunity that I'm relishing to like, just make it stop, you know, hopefully. And so the, for me, the end goal is like,

• 24:13Speaker 01

  NFTs are forevermore, you know, we can just be artists and not have to worry about this bullshit.

• 24:21Speaker 02

  So unlike, unlike Jonathan, I would say that I'm disappointed. I'm disappointed in the SEC. And my Jewish mother would tell you that that's way worse. That's, that's way worse than angry, right? And I'm disappointed in the SEC because I don't think they're doing their job. I don't think they're doing their job right. I don't think they're thinking about what their job is. I don't think they're thinking about what they're saying and why they're saying it. I think they're being irresponsible with the incredible amount of power that they've been given as a government agency to regulate people's lives and people's ability to express themselves. And I think that's a really profound problem that they

• 25:05Speaker 02

  should be thinking about. And I'm disappointed. I'm disappointed that they don't have it in them to even recognize how they're affecting people's lives.

• 25:15David Hoffman?

  Mm hmm. And Jonathan, you say you're angry, but I would imagine if I was in your shoes and I am an artist who is creating and selling NFTs and then I observe stoner cats getting sued for a million dollars, I would also feel fear.

• 25:30Speaker 01

  Yeah, absolutely.

• 25:30David Hoffman?

  For my livelihood of my job.

• 25:31Speaker 01

  Oh, 100%.

• 25:32David Hoffman?

  How many days in a row have you been singing songs?

• 25:35Speaker 01

  We're on 5,689 today.

• 25:40David Hoffman?

  And that, like, if the SEC comes and sues you, you could still write a song, but you, your material income and your hobby of your, your, your life's career of like writing a song a day for five, over 5,000 days would be materially threatened.

• 25:56Speaker 01

  Yeah, it would be, you know, I mean, I came into NFTs in 2017 specifically with the hope that this would be a really great way to monetize Songaday that I hadn't been able to do before. And so I finally get there and to, yeah, to face up against this like weird government agency overreach, which is not really like my bag normally, you know, but, but here I am, is just, it's really, it's really strange. It also is very like Songaday. Songaday is always leading me in these really weird places. And it's like, I, I just sent my friend Ethan Buckman from Cosmos Chain a meme because he was the first person that got me interested in blockchain way back in 2017. So the meme is the, it's,

• 26:41Speaker 01

  it's the domino meme where it's like a tiny domino and a big domino. It's meet, meet Ethan Buckman at a conference, tiny domino, sue the SEC, big domino. It's like just one thing leads to another and here I am. But that, yeah, no, absolutely. I would be, if, if the SEC continues down that path of, of attacking.

• 27:04Speaker 01

  Capriciously attacking NFT projects. Not only, not only does it like threaten me directly, but also, you know, everyone in the ecosystem is harmed and everyone who maybe wants to collect a song, they're implicated. Everybody is implicated.

• 27:19David Hoffman?

  I have purchased NFTs from an artist friend of mine, Nate Moller. And as a result of that interaction I had with him, him and I have become friends. I have met his friends. I have learned from him and had just like amazing experiences, like learning from this artist and his network of people. And that was because of just like the purchasing of a financial object on Ethereum that is associated with digital art with an MP4 file. I would be very disappointed had I not been able to have this experience that Ethereum and NFTs have created for me. And Brian, can you walk us through some of the logistics of this suit? You guys are filing the suit today. Congratulations.

• 28:02Speaker 02

  Thank you.

• 28:03David Hoffman?

  What are the next steps? How does this proceed from here?

• 28:05Speaker 02

  Well, for the, for the time being, it's basically in the SEC's court. And so the SEC is going to have to decide how to respond to the lawsuit. Essentially, there's, there's two initial ways that a defendant in a lawsuit can respond to it. And that's what the SEC and the various commissioners are here, is defendant. So they got two choices. They can either do what's called what's answer the complaint, right? In other words, file a responsive document or responsive pleading, answering all the claims that we have in the complaint, saying, you know, yes or no, that's true, that's not true, we agree to this, we don't agree to this, we don't know about that with respect to the various claims that we've made.

• 28:47Speaker 02

  Or they can take it a procedural approach and file a motion to dismiss under Rule 12B of the federal rules of civil procedure. In this case, they'd probably go for Rule 12B6, which would essentially be them saying, based on this complaint, you haven't actually stated a claim against us. We don't have to respond to this because everything you've said, you know, even if everything you said is true, it doesn't matter. We're still allowed to do what we want to do and there's no basis for you to bring this declaratory judgment action in, in the first place.

• 29:22Speaker 02

  Typically, what a defendant will do is file that second motion, that motion to dismiss, because it kind of is like kicking the can down the road, right? It's giving you an opportunity to kind of air your best position to the court and let the court kind of let you know what it's thinking about, you know, where you're at and whether or not the plaintiff has any possibility of success. I'm really interested to see what, if anything, they say in that 12B6 motion, if and when they file it. However, in this case, I actually think, and this is kind of unusual, I think there's a third option, right? Where the SEC at least conceivably could just say, "Our bad, right?

• 30:07Speaker 02

  We didn't mean it, right? We don't actually want to do that. And everything you've said are things that we have no intention of regulating. Therefore, you can have your declaratory judgment action. We agree with you on the merits."

• 30:22David Hoffman?

  They just fold. They just take it.

• 30:24Speaker 02

  They just, they just fold. And I think that, I hate to be a predictor, right? But in this particular case, it wouldn't shock me if they folded, right? Because this will be a very awkward lawsuit for the SEC.

• 30:41David Hoffman?

  It's not, it's not a good look. It's not a good look.

• 30:45Speaker 02

  No. And they've already had a bad experience with our lawyer. So, you know, that once bitten, twice shy, as it were.

• 30:53David Hoffman?

  And while we've, like, hoping for or being optimistic for optimistic outcomes with the SEC, hasn't historically been the right horse to bet on. But the political climate is materially different six months, in the last six months. So, like, kind of playing slate here, like, as the November, as the November election draws close, like, there's a different calculus being, being played out here.

• 31:20Speaker 01

  Yeah, that's definitely true. Brian, I wanted to ask you a question that I don't actually know the answer to. Is there a timeline? Do they have a certain amount of time before they have to, they have to respond one way or the other?

• 31:35Speaker 02

  Technically, yes, but realistically, no.

• 31:39Speaker 01

  Oh, interesting.

• 31:40Speaker 02

  Right? So there is a timeline. They have a certain number of days before they have to file their motion to dismiss, but they can ask the court for more time. And in a case like this one, and especially with a defendant like the SEC, like a government agency, in general, courts are pretty receptive to defendants in general, but the government defendants in particular, asking for more time to respond to a lawsuit of this kind. They'll get it. They can take as much. They can kind of drag their heels as long as they want on on this one until the court kind of loses its patience with them. But I mean, I really think the

• 32:24Speaker 02

  harder question for them is going to be, do they really want to litigate this at all?

• 32:30Speaker 01

  Right.

• 32:32David Hoffman?

  Well, guys, I find this immensely entertaining. As a piece of, as a piece of art, I'm enjoying it. So thank you for, thank you for taking this to the court, taking this to the SEC. Is there anything we can do as listeners, as onlookers, as supporters, any way that we can support?

• 32:51Speaker 01

  Yeah, I mean, from, from my perspective, I have a couple of things that I've set up. So as always, purchasing my songs helps me, helps my family. This is a great thing you can do. You can bid on today's song, which is called "I'm Suing the SEC." And it's a, it's inspired by classic TV intros, and it imagines Gary Gensler and me in a sort of TV show together that we're experiencing. So please go bid, please go bid on that. I've also set up a PFP that people can mint for free on my website to use as their avatar if they want to like signal support. The good news is the lawsuit is taken care of,

• 33:34Speaker 01

  so we don't need help, we don't need financial help with the lawsuit itself. But, you know, this is my livelihood, and any, any help people want to throw my way is always very much appreciated.

• 33:44David Hoffman?

  Is it appropriate to ask who is, is funding the lawsuit?

• 33:48Speaker 01

  I think we were told not to say. So no comment on that.

• 33:54David Hoffman?

  Private, private, secret benefactor.

• 33:55Speaker 01

  Yeah, yes, exactly.

• 33:56Speaker 02

  Yeah, and in my case, you know, you can follow me on Twitter. I always love that and I would love interacting with with new people. And I've written a lot about this subject. I've tweeted recently, just earlier this morning, a lot of the stuff I've written. So if you go to my SSRN page, you can download all that material and read it for free. Learn more about my kind of journey in securities law and cryptographic tokens. And I'd be delighted to, you know, have people check that stuff out.

• 34:26Speaker 01

  And your podcast.

• 34:28Speaker 02

  That's right. Oh, yeah, I have a podcast. IPSDIXIT Podcast, I.P.S.E.D.I.X.I.T. It focuses primarily on legal scholarship, broadly defined as a whole bunch of crypto related content on there as well.

• 34:42David Hoffman?

  Yeah, and if Bankless listeners, you guys are entertained and piqued by some of the conceptual legal crypto art being presented here, and you don't want this episode to end, I would actually go and suggest our other episode with Brian Fry.

• 34:56Speaker 01

  Highly suggest.

• 34:57David Hoffman?

  Highly suggested. I, one of the more entertaining, fascinating, insightful podcast episodes that we've done in a very long time about how there's this secret fifth prong of the how we test. And that's kind of the one that really matters the most. It's the only one that matters. So we'll link, we'll link all of these things just mentioned in the show notes. Jonathan, Brian, congratulations on suing the SEC. And thanks for coming on the episode today.

• 35:21Speaker 01

  Thank you so much for having us.

• 35:23Speaker 02

  Thank you. Bye bye.

• 35:44Speaker 03

  My name is Jonathan Meech And to be perfectly plain This wasn't part of my plan Like, I didn't grow up with a distant dream Of someday suing a government agency But there's this rogue regulator Who's been up to no good Doing his level best to try and best to my life

• 36:10Speaker 03

  So while there's a million other things that I'd rather be doing Projects that I've got ruined Instead, I'm suing the SEC I'm doing this I'm suing the SEC Oh, boy Hey, really doing this Here I go I'm suing the SEC Why? Because they say these NFTs Are in fact securities And when you buy them That's an investment That I'm taking contact That's an investment contract

• 36:55Speaker 03

  Every single NFT that's been sold Oh, there's illegal under this blue print They have hoed It's so ridiculous Can't go on like this, we need clarity So we're going to court Cause what we want is judgment, son Marie Really doing this I'm suing the SEC That's right Hey, really doing this I'm doing it I'm suing the SEC I don't know what I'm doing Hey, really doing this I'm suing the SEC SEC Really doing this Here we go I'm suing the SEC Alright Hey, really doing this I'm suing the SEC Okay, really doing this I'm suing the SEC Okay, really doing this

• 37:40Speaker 03

  I'm suing the SEC Okay, really doing this I'm suing the SEC

• 37:46Speaker 04

  I'm suing the SEC It's filmed before a live studio audience

• 38:00Speaker 05

  Gary! Breakfast is ready. Sunny, dear.

• 38:08Speaker 05

  Good morning! Good morning! Well, doesn't this look wonderful? Did you have any trouble? No, not a bit.