#1079 Aaron Daniel On How Free Speech Is Under Attack

Aaron Daniel is a Partner and Board Certified Appellate Attorney at Kula & Associates. The future of speech is in peril. As new technologies emerge, the definition of protected speech becomes more uncertain every day. In this interview, First Amendment Lawyer, Aaron Daniel, explains everything you need to know about the latest battles in free speech. Topics include Tornado Cash, Bitcoin, and Alex Jones. ======================= Crypto wallets and browser extensions are outdated, limited in features, and don’t meet the needs of today’s Web3 users. Core, the free, non-custodial browser extension built by Ava Labs, is more than just a wallet. Core is packed with features that give Avalanche users a more seamless, and secure, Web3 experience. With Core, any crypto user can easily swap assets, display NFTs in a beautiful interface, and store your assets in a Ledger-enabled wallet. Plus you can put real dollars in your Core wallet in just a few clicks. Go to www.core.app to access the full power of Web3 on Avalanche! ======================= Bullish is a powerful new exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Combining the innovations of DeFi with the regulated environment of traditional finance, Bullish empowers users to trade with certainty and earn passively at scale across variable market conditions, in an environment backed by multibillion-dollar liquidity contributions from the Bullish Treasury. Visit bullish.com/pomp today to learn more. Note: Bullish is licensed by the Gibraltar Financial Services Commission. Virtual assets and related products are high risk. Consult your investment advisor and trade responsibly. Bullish is available in select locations only and not to U. S persons. Visit bullish.com/legal for important information and risk warnings. ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp ======================= Exodus is leading the world out of the traditional financial system by building beautiful and user-friendly blockchain products. With its focus on design and user experience, Exodus has become one of the most popular and loved cryptocurrency apps. It’s supported on both desktop and mobile, allowing you to sync your wallet across multiple devices so you can have access to your funds anywhere. You can instantly exchange around 100 different cryptocurrencies straight from your wallet. Visit exodus.com/pomp for your free download or search Exodus on the App Store or Playstore. ======================= The number one name in NFT domains and the world’s most powerful wallet are teaming up to bring something new to the crypto and Web3 world: Sign up for a free blockchain.wallet or visit Unstoppabledomains.com to buy your domain today. ================== Valour (formerly DeFi Technologies) represents what’s next in the digital economy -- providing simplified, trusted access to crypto, decentralized finance and Web 3.0 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, through a single stock purchase on a regulated exchange. Currently listed on U. S. (OTC: DEFTF) and Canadian (NEO:DEFI) exchanges. For more information or to subscribe to receive company updates and financial information, visit our website at valour.com =======================

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

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Aaron Daniel is a partner and board certified appellate attorney at Kula and Associates. In this conversation, we discuss free speech in the First Amendment, including an overview of the landmark Bernstein versus Department of Justice case, the recent issues with tornado cash, and the OFAC list. We talk about Alex Jones, the mainstream media, and what it means to actually go after someone for defamation. And then we talk about Bitcoin, how Bitcoin can eliminate negative externalities, how Bitcoin could change many parts of the legal

• 0:42Anthony Pompliano?

  system, and why Bitcoin as a piece of technology is neutral, but what it could mean for things like the First Amendment. I really enjoyed this conversation with Aaron, and I hope that you guys enjoy it as well. Once we get to the end, make sure that you let me know in the comments or tweet at me on Twitter. And I hope that you guys find this just as fascinating as I did.

• 1:01Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:25Anthony Pompliano?

  All right, guys. Bang, bang. I've got Aaron here with me. I'm very excited about this because it seems like a huge debate in society that has happened in the past but is resurfacing is this idea of software being free speech and being protected by the First Amendment. You have a specialty in understanding a lot of this, but I thought a great place to start would be the kind of quintessential legal case of Bernstein versus that Department of Justice, which really set the precedent for code being free speech. Help us understand, like, what should people know about that specific case that really laid the precedent for, you know, some of the things that are happening today?

• 2:02Speaker 01

  Yeah, so it's really interesting, and I didn't know as much about it until recently, and I started going back and researching, you know, the crypto wars of the

• 2:10Speaker 02

  Nineties and the, you know, formation of the cypherpunk movement and all of this, you know, that's, that's where all this started. And it's interesting to know that the, the Bernstein case, Bernstein was a professor and had basically created an algorithm, right? Encryption and decryption algorithms and, and also had an academic paper on it and wanted to publish the paper and, you know, publish the, the algorithm. You know, this was his, you know, he worked on it as a graduate student and wanted to put the information out there and teach on it. And so at the time, you had these really strict export regulations, you know, cryptography was classified as like a munition. So you had to get permission, pre-permission from the government.

• 2:54Speaker 02

  At the time, it was State Department and then it shifted during the litigation, it was moved to different departments and things like that. But you had to get pre-permission to essentially export these munitions, you know, encryption algorithms, right? And so he sued the Department of State to get permission to do, well, if he sought permission, they denied it. Got it. Within their boundless discretion, which then became really important to the decision because the trial judge, Judge Patel in Northern District of California, said that first, there were, there were actually a series of orders that she issued. The first was code is speech and that's what everybody thinks of when they think of Bernstein

• 3:37Speaker 02

  is, you know, the source code is speech. Then the next order was summary judgment in favor of Bernstein because this scheme of boundless discretion within, you know, an agency of determining whether or not to license the speech, it just violates the First Amendment. There's got to be, you know, you can have time, place, manner restrictions on speech, right? Noise ordinance stuff, right? Yep. But it's got to be, there's also got to be, you know, really strict judicial review and a method and a process for reviewing the discretion of the agency that's licensing speech, basically.

• 4:22Speaker 02

  So that was the first part of it. Now what happened was, and this is what I didn't realize either until, until I started looking into it more deeply. That's a trial, those are trial court orders.

• 4:35Anthony Pompliano?

  Okay.

• 4:36Speaker 02

  In terms of like order of precedential value, those are pretty low compared to something like the Supreme Court case, which would be the highest precedent in the land. Every single court has to follow it, even the state courts. And you've got the intermediate appellate courts. And in this case, it was out in California. So it was the Ninth Circuit Court of Appeal. The Ninth Circuit did issue an opinion affirming. But what happened was the government asked for rehearing, which mean rehearing en banc, which means you get most of the judges together instead of a three judge panel, really big decision. And, you know, get all of the judges to weigh in on the court. So they rescinded, the Ninth Circuit rescinded the affirmance

• 5:19Speaker 02

  of the Code of Speech, you know, orders. And then never got around to issuing an en banc opinion because in the interim, basically the government backed down on.

• 5:32Anthony Pompliano?

  Bernstein basically said, hey, I'm going to release this code, the source code, along with a white paper essentially. And it was related to encryption.

• 5:43Speaker 02

  Yes.

• 5:44Anthony Pompliano?

  At the time, encryption was literally deemed a weapon, ammunition.

• 5:46Speaker 02

  Yep.

• 5:47Anthony Pompliano?

  And therefore they said, you are exporting weaponry.

• 5:50Speaker 02

  Right.

• 5:51Anthony Pompliano?

  Even though it was words in a database. And he said, no, I'm not, I am speaking.

• 5:58Speaker 02

  Exactly.

• 5:59Anthony Pompliano?

  I'm using words. And so they went to court as these things tend to do.

• 6:03Speaker 02

  Yep.

• 6:04Anthony Pompliano?

  One, just like, how about the balls on Bernstein? Yeah. Against the United States government around weaponry or words.

• 6:10Speaker 02

  It's, it is, yeah. It, it, talk Bernstein, all of these, you know, the cypherpunks and folks who are cypherpunk adjacent, like Zimmerman who created PGP. Like Zimmerman, you know, went not only against like the government and NSA and stuff. Like he went against like the patent holders of these encryption algorithms, public key, private key encryption algorithms. RSA was the company that had a lot of the patents. And we could get into, you know, how a lot of people think that, you know, also delayed. The public's use of encryption because not only had NSA trying to, you know, and the State Department preventing, you know,

• 6:50Speaker 02

  private use of encryption, but then you also had patent holders who had the most powerful, you know, encryption products, you know, as,

• 6:58Anthony Pompliano?

  And was the thought process that encryption essentially allowed for their use cases, but they didn't see the use case for like the individual to have privacy?

• 7:08Speaker 02

  Oh, no, they saw the use case.

• 7:09Anthony Pompliano?

  They just didn't want to have it.

• 7:10Speaker 02

  It was exactly, it was, it was that the trade off, you know, privacy to the NSA and the government was, you know, a sacrifice they were willing to make, you know, on behalf of the American people to keep people safe.

• 7:25Anthony Pompliano?

  Got it.

• 7:25Speaker 02

  That was the idea is that we can't let terrorists and arms dealers and, you know, foreign adversaries have this, you know, important shielding technology to shield communications because then it's going to make America less, less safe.

• 7:40Anthony Pompliano?

  Got it. And so as Bernstein went to court, wins kind of the court case, there's these two distinct and different kind of judgments, if you will, or outcomes. One code is speech and two, US, the US government can't just say like, hey, we make up the rules as we go.

• 7:55Speaker 02

  Exactly.

• 7:57Anthony Pompliano?

  Why did the government back down in some of the appeals process or eventually not take it to the Supreme Court or whatever?

• 8:04Speaker 02

  Yeah, I mean, what, what happened was Bernstein essentially lost his, his standing. And the issue became not ripe was one of the final, final rulings in that, in that saga because the government essentially just let him.

• 8:20Anthony Pompliano?

  Just said, hey, we're not going to win to some degree. So rather than catch the L.

• 8:24Speaker 02

  Yeah, it was probably a strategic decision. Yeah. And so then what you had, you had two other decisions that were subsequent to Bernstein. One from the Sixth Circuit Court of Appeals called Jungar. And Jungar was also almost same fact pattern as, as Bernstein. He was a Case Western professor who had, you know, algorithms and papers he wanted to publish and ran the same playbook. And that actually did get an opinion, code is speech. Now, the problem was it was much more limited and kind of problematic. And I think this is a nuance that a lot of people are missing today in the discussion about code being speech and, you know, First Amendment rights protecting code. The Jungar court said,

• 9:11Speaker 02

  Code is not just speech. It has conduct elements to it.

• 9:15Anthony Pompliano?

  Okay.

• 9:16Speaker 02

  Right?

• 9:16Anthony Pompliano?

  Explain that.

• 9:16Speaker 02

  You run, you, you, you've got source code, which is speech. But then you also run the source code through a compiler and click a button. And now your program, you know, just decrypted DVDs or whatever it is. So there's a conduct element to it that, you know, the, the person who's receiving and running the software isn't reading the source code. It's not communicative. It's, it's conduct. And so the government, Jungar said, should be able to, should be able to regulate the functions of code if they're doing it in a way that is content neutral as to the speech.

• 9:57Anthony Pompliano?

  So is this like when you get into like the ghost gun stuff where it's like

• 10:01Speaker 02

  Oh, yeah, that's.

• 10:02Anthony Pompliano?

  The, the code for, or like the plans of, of the ghost gun itself are protected by the first amendment.

• 10:09Speaker 02

  Right.

• 10:10Anthony Pompliano?

  But then if I download it and I go and I create a 3D printed gun, that would be more of this idea of like there's.

• 10:16Speaker 02

  Functional component. Yeah, this conduct and function. And then, so then, yeah, so we'll put a pin in that. We'll, we'll come back to that.

• 10:24Speaker 02

  The other case was in the Second Circuit, which is overseas New York. And so they get a lot of, you know, the financial type litigation. But this was Universal Studios brought an action, not under the export laws, but under DMCA, which we're all familiar with, you know, the strikes and takedowns and stuff. But there's actually a provision in DMCA that says circumvention technology, technology that's designed to circumvent digital rights management encryption that, you know, prevents you from playing a Japanese DVD on an American DVD player. That technology was, you could, the government could get injunctions to enjoin publishing

• 11:07Speaker 02

  that circumvention technology that's circumventing, you know, rights, copyrights and things like that. And so I don't know if you ever read the 2600 magazine. It was like a hacker hacker quarterly 2600 magazine. It was a little like 10 inch, you know, pamphlet magazine in high school. I got it. You know, I'd go find it and felt like I was, you know, like on the edge, like, you know, living the cypherpunk dream as I was reading about it, you know, I barely knew how to code. I was just, you know, messing around with computers and stuff in high school. But the publisher, the editor of 2600 was publishing DVD decryption algorithms.

• 11:47Anthony Pompliano?

  Got it.

• 11:47Speaker 02

  He didn't write them, but he was publishing the code and publishing links to the code on 2600's website. And Universal Studios came in and sued him to get an injunction to stop that decryption software from getting out. And the Second Circuit said the same thing as Junger is that there's this functional component to code. And so if the government is going to regulate the functional components without, you know, obviously regulating the speech elements and saying what you can and can't necessarily.

• 12:20Anthony Pompliano?

  What is the difference?

• 12:21Speaker 02

  Right. Yeah, it's, it's a difficult distinction to bring up there. The function was, you know, essentially circumventing copyright regimes.

• 12:32Anthony Pompliano?

  So you can have the code, you can.

• 12:34Speaker 02

  Right. You can look at it. You can look at the code. Yeah, you can look at the code. There, I think the actual ruling was, you know, they couldn't, 2600 couldn't link out to it and disseminate it that way. But it gets, there's not much of a distinction. Let's put it that way.

• 12:52Anthony Pompliano?

  Yeah.

• 12:53Speaker 02

  The Bernstein decision, Judge Patel's decision was the more principled, I think. Because what the Junger court and the Corley court were saying was that.

• 13:11Speaker 02

  The functional aspects, we're going to use these tests to analyze whether or not the functional aspects can be regulated. We're going to use these tests that came out of like the flag burning and the draft card burning cases, which is, which Judge Patel also looked at and analyzed that argument and rejected it and said, regulating flag burning and nude dancing is so totally different from regulating source code. It, the analogy just doesn't, just doesn't fit because, you know, and this is something that Peter Van Valkenburg at Coin Center has written on too. And he also agrees, you know, with, with Judge Patel's reasoning.

• 13:54Anthony Pompliano?

  Which is.

• 13:55Speaker 02

  Which is that.

• 13:56Anthony Pompliano?

  Code is pure speech.

• 13:57Speaker 02

  Yeah. And they're, sure, there's some conduct elements to it, but it is a medium of speech.

• 14:03Anthony Pompliano?

  And the part that I described to people is like, you write words.

• 14:08Speaker 02

  Right.

• 14:09Anthony Pompliano?

  In a database.

• 14:09Speaker 02

  Right.

• 14:10Anthony Pompliano?

  And so if they are going to say you can tweet, or you can write on paper, or you can write into a database, it seems in today's day and age that that is all speech and is protected. Where we get into this weird world is, and really kind of the conduct component, I think a modern day example is this idea of tornado cash.

• 14:31Speaker 02

  Yeah.

• 14:32Anthony Pompliano?

  Where my, you know, elementary view, or the way that I would describe it to somebody is, an engineer went, wrote code, that code allows for people to use it and do things with it. And there's a lot of people who say, hey, that's protected by the First Amendment of the United States.

• 14:49Speaker 02

  Right.

• 14:50Anthony Pompliano?

  Because code is speech. Maybe it's not as black and white as that.

• 14:55Speaker 02

  It's not as black and white, unfortunately. You know, if, if, right. So that, so we're stuck with the Corley and the younger, you know, functional distinction with code. And so that's where tornado cash, now there's a lot of different issues with tornado cash.

• 15:13Anthony Pompliano?

  Okay.

• 15:14Speaker 02

  So we can peel it apart, but that is, that is where, that is where there's wiggle room for. Or the government to regulate code in certain ways.

• 15:25Anthony Pompliano?

  So tornado cash, for those that don't know, is a mixer, which at the most basic sense allows you to take the information on the blockchain. The sender is very clearly able to track funds from sender to receiver, right? Is the whole idea of a blockchain, everything's transparent.

• 15:44Speaker 02

  Transparent, yeah.

• 15:45Anthony Pompliano?

  Everything's written there. It's immutable. It can't be changed, etc. A mixer, in the most basic form, says the information or the value of the transaction from the sender to the receiver is now not as easily trackable. And the way that that's done is you can send economic value into the mixer. It mixes your funds with somebody else's or many other people's. And then the output is, appears to be random to somebody looking at this, but you're able to direct it as the sender and the recipient still receives the value that you want them to receive. Walk us through like the analysis of software as speech.

• 16:25Speaker 02

  Yeah.

• 16:26Anthony Pompliano?

  But it sounds like the government drastically disagrees. We've now seen them invoke OFAC. There's been a developer who was arrested. How do you look at a situation like this?

• 16:37Speaker 02

  Yeah, so the, so I guess let's just reset where, what happened with tornado cash and, and OFAC is the Office of Foreign Asset Control. That's the Department of Treasury that, you know, hunts terrorist funds, basically, and money launderer funds and tries to, you know, stamp, stamp that, you know, tamp that back down. And so they have a list of, you know, specially designated nationals, has to be foreigners, can't be Americans.

• 17:09Anthony Pompliano?

  Okay.

• 17:09Speaker 02

  And if, if someone's put on that list or someone's bank accounts are on that list. Americans are on notice. They cannot transact.

• 17:19Anthony Pompliano?

  So Americans can't be put on the list.

• 17:21Speaker 02

  Correct.

• 17:22Anthony Pompliano?

  But if you're an American and you transact with or engage with-

• 17:25Speaker 02

  Then you can be liable, yes, under the regime. There's like civil penalties. There's also some criminal penalties. I'm not, this is not an area of law. Compliance is not my area of law. But I, you know, I've been following along.

• 17:39Anthony Pompliano?

  Slept at a Holiday Inn.

• 17:40Speaker 02

  Exactly. I slept at a Holiday Inn last night down the street and, you know, it's all good. So, so OFAC, though, as far as I understand it, is authorized by its authorizing statute to add entities and individuals to that list.

• 17:59Anthony Pompliano?

  Okay.

• 17:59Speaker 02

  That SDN list of sanctioned, the sanctions list. And then the essentially, you know, account aliases of those individuals and those entities.

• 18:08Anthony Pompliano?

  Okay.

• 18:09Speaker 02

  So, let's talk about what happened with tornado cash. Tornado cash, tornado cash, you know, scare quotes, is what was the first entry on the list. And then the website. Okay, let's, let's, for purposes of the discussion, just assume there is an entity, a group of people, called tornado cash. Sure.

• 18:30Anthony Pompliano?

  Okay.

• 18:31Speaker 02

  Call it, you know, people like to get into like, well, it's a DAO and it's not a real entity because it doesn't have legal rights. It's like, well, DAOs are all kind of general partnerships. Under most state laws, like if people get together or joint ventures, if you know, you and I get together and, you know-

• 18:47Anthony Pompliano?

  It's kind of like a contract is if you and I can have a verbal contract, even if we didn't paper it. If we, you and I start working together on something.

• 18:53Speaker 02

  Unincorporated entities.

• 18:54Anthony Pompliano?

  Yes.

• 18:54Speaker 02

  Yeah, yeah, we can have, you know, full liability.

• 18:57Anthony Pompliano?

  Okay.

• 18:58Speaker 02

  For, for our enterprise that we start working on. So, but, but, so let's just say tornado cash is an entity. Sure. You know, the website being added to the list, you know, I guess that's the front end. So, you know, you can't go in and transact through that front end if you're an American. And then there's this list of Ethereum addresses on the blockchain. I didn't understand this at first because I'm, I'm not really steeped in, you know, how Ethereum works. I mean, I know it's smart contracts and Turing complete and all that stuff and- But some of those addresses were like donation addresses for the project. And so presumably there's like an admin key that someone holds and there's some control or the DAO holds or something. There's control over those.

• 19:44Speaker 02

  Others, though, were just the address where the smart contract of the mixer exists, right? Where you call on the contract at that address, that's where you send your funds. That's how the mixer works. It would be like listing, you know, the Cal Berkeley server where Bernstein's algorithm was.

• 20:07Anthony Pompliano?

  Got it, got it.

• 20:07Speaker 02

  Right? That's essentially what happened. Now, where we get into whether or not that was authorized is, well, is that property of tornado cash? Like, they can't change that code now. It's like you said, it's immutable and it's on the blockchain, right?

• 20:27Anthony Pompliano?

  This is very similar to like Uniswap has the front end, which is controlled by the Uniswap entity and they have made changes. They have responded to regulation, but theoretically, the Uniswap smart contract cannot be changed, shut down, etc. And there's, I don't know, 50 to 100 other interfaces that leverage that, you know, almost backend that is...

• 20:49Speaker 02

  Yeah, the front end, you can point to whichever smart contracts, you know, you want. But if someone knows the address of the previous smart contracts, then you can just go access those smart contracts, just like, you know, you change the links on your websites, but if you don't take down the original page and you remember the link, you can go access it.

• 21:09Anthony Pompliano?

  So let's go through this part by part. So tornado cash, there's a group of individuals, right, that the organization, whether incorporated or not, that gets put on the list. That seems to be, based on your analysis and maybe others that I've seen, well within what normally would have been expected by OFAC.

• 21:27Speaker 02

  Yeah, exactly.

• 21:29Anthony Pompliano?

  Then there are what I'll call those individuals' accounts, which is equivalent, although different, but equivalent to their bank accounts in the legacy financial system. And so if the people or the group is going to be put on the list, then you would expect their accounts to be put on the list.

• 21:42Speaker 02

  And the analogy, this happened recently with blender.io, which was another mixer that was custodial.

• 21:50Speaker 02

  Meaning, you know,

• 21:51Anthony Pompliano?

  You sent your funds.

• 21:52Speaker 02

  They had a lot more, you know, the contact with the actual users who were using it. And we're just taking it in and then remitting out. They had a lot more discretion over what was going on. It was the same, these announcements and the listings mirrored each other. And in the blender.io, there were Bitcoin addresses that were listed. And the entity that ran blender.io presumably had, you know, the private keys.

• 22:17Anthony Pompliano?

  The accounts. So let's stop right here for one second. There's a couple of questions, just at like the highest level around the US government stepping in and saying, you know, no mas, right? This is not good. Their argument, from what I read, is that there's North Korean hackers.

• 22:37Speaker 02

  Right.

• 22:37Anthony Pompliano?

  Who were able to launder funds using these products or this technology. And that was really the impetus for why the government was stepping in and saying, hey, this isn't allowed. If that was not the case, let's say that there was no trace of North Korean hackers using the technology. It is unclear whether they would step in and say, you cannot use this, you cannot do this. There's a lot of people who would argue, no, they were just looking for a reason to step in and shut this stuff down. There's other people who argue, no, it's good faith. They are only trying to stop it because of North Korean hackers. You and I aren't going to get to the bottom of that.

• 23:16Anthony Pompliano?

  But it does bring the question of, it appears that the North Korean hacker argument is true. And rather than debate the accuracy of it, let's just hold that as true. Now, the counter argument is, well, Wells Fargo and JP Morgan and UBS, they seem to be doing a lot of, you know, complicit activities that help people launder money, whether they know it or not.

• 23:45Anthony Pompliano?

  It over and over and over again, we see from Mexican cartels to terrorists to, you know, whoever, there's money going through those organizations, but we don't see the same heavy handed approach. There's fines sometimes, there's whatever.

• 23:56Speaker 02

  Yeah, there are a lot of fines. I mean, like HSBC, I think got hit with.

• 24:00Anthony Pompliano?

  They're probably the big one.

• 24:01Speaker 02

  Yeah, they're the big one. And that was, and that was, it was pretty, pretty impactful, I think, for that bank. And, you know, I think the distinction that some would make is that, well, yes, but all of these banks have very robust compliance regimes, departments, anti-money laundering protocols. And they're, so long as they're making, you know, the good faith effort, and they're checking all the boxes on the compliance checklist, then that's different than what we have here because, one, we have a group that's not doing that.

• 24:44Speaker 02

  Now, I think they did start to make some efforts at one point, the tornado cash entities to screen OFAC sanctioned addresses.

• 24:55Anthony Pompliano?

  Which feels like at the most elementary level, like that's like a pretty simple, okay, fine, we'll prevent the OFAC sanctioned addresses from interacting with it.

• 25:07Speaker 02

  Yeah, we can, yeah, we can have a debate about whether or not, you know, your privacy tools should be, should be accessing blacklists. But, but yes. So, so they were attempting to do this, but at the same time, you know, the other distinction is, well, banks, you know, have a social economic purpose, you know, extend credit and, you know, just allow the economy to grow at a much faster rate than, you know, barter, et cetera, et cetera.

• 25:37Anthony Pompliano?

  Basically, that argument is like, yes, they're being treated differently, but there's a reason.

• 25:40Speaker 02

  There's a reason why, right. And, and because this, because tornado cash, the purpose for tornado cash, it's a privacy enhancing tool, right? Some would say it's a money laundering tool. No, no, no, it's a privacy enhancing tool and money launderers have used privacy enhancing aspects of it to their benefit and to the detriment of national security.

• 26:00Anthony Pompliano?

  This episode is brought to you by Core, the free, non-custodial browser extension built by Ava Labs, which is more than just a wallet. Did you know that you can also bridge Bitcoin natively across the avalanche bridge and take advantage of the thriving DeFi ecosystem in that community? With Core, any crypto user can easily swap assets, display NFTs in a beautiful interface, and store your assets in a ledger-enabled wallet. Plus, you can put real dollars in your Core wallet in just a few clicks. Go to core.app to access the full power of Web3 today. This episode is brought to you by Bullish. They've reinvented the digital asset exchange. They give you access to DeFi features like automated market making and liquidity pools in a regulated environment. It's a whole new way to generate alpha.

• 26:44Anthony Pompliano?

  Bullish's total trading volumes have exceeded $25 billion just in the seven months since it launched. And their industry-leading order depth means you can trade confidently when you want, at scale with better pricing and lower risk, all within a regulated market environment. Good reason to be bullish. Learn more at bullish.com/pomp and follow @bullish on Twitter today. And this goes back to the whole encryption debate of you and I can message on, I'll use WhatsApp as the example. Plenty of people will pay the encryption there. But if we are communicating, it's not because we necessarily are hiding anything. It's actually, we just want the privacy to be able to communicate without worrying about people hacking our communications or whatever. But the argument previously had been,

• 27:28Anthony Pompliano?

  no, this is only going, or bad people will use it. Right. And so just because bad people will use it doesn't mean that good people shouldn't have the ability to do it. Same thing with the bank, right? Right. Bad people will use it, doesn't mean good people shouldn't use it. Right. Which then brings us to tornado cash, which is like, if bad people use it, does that mean? Yeah. And this is what a lot of people are struggling with, and I'm struggling with it too, is to figure out where the line is, right? Because if we start from first principles and say code is speech, you have a First Amendment right to code and to publish that code, then there should be very few prior restraints on your ability to publish that code.

• 28:11Speaker 02

  Again, you can make these edge case hypotheticals where you've got you know, dirty bomb plans and stuff like that, right? That are clear, clear national security importance that you know, there might be some, but again, even in that case, you know, if you're arguing from just first principles, you know, this is where we're, we're still, there's, there's some social value to even, you know, discussion, publishing dirty bomb plans, right?

• 28:43Anthony Pompliano?

  I mean, this is

• 28:44Speaker 02

  You can figure out how to defuse the dirty bomb plans.

• 28:46Anthony Pompliano?

  Yes, but this is like the whole like ghost gun argument, right? Which is like, there's a lot of people who are like, hey, we don't want unregistered guns on the streets. We don't want all this stuff. And then there's a whole nother group of people who say the plans are not the gun. And even if the plans increase the likelihood that somebody will create a quote unquote gun, but actually it's the receiver, it's not the full gun. Like, there's all this nuance to that debate that we don't need to get into.

• 29:11Anthony Pompliano?

  The plans for a bomb and the plans for the lower receiver of a weapon

• 29:16Anthony Pompliano?

  still are protected to some degree, right? And again, you know, if you're publishing it with an explicit call, everyone go make bombs and, you know, go blow up buildings.

• 29:25Speaker 02

  Then you're inciting violence and then that's not protected by the First Amendment.

• 29:28Anthony Pompliano?

  Correct. So there's context that goes into if you just publish something versus if you alongside say,

• 29:37Speaker 02

  Right.

• 29:37Anthony Pompliano?

  Go incite violence. Okay, that's a little bit different. But with the tornado cash specific example from, again, I've read enough about it to understand it was always just, you can use this to enhance your privacy. It was not a call to, hey, every terrorist criminal and money launderer in the world, come use our tool because like it's a free for all.

• 29:56Speaker 02

  Yeah, as far as we know, publicly, that was what was going on, you know? Who knows, who, literally, who knows what's going on behind the scenes?

• 30:04Anthony Pompliano?

  The details would change if all of a sudden the developers of tornado cash were emailing it to North Korean hackers.

• 30:10Speaker 02

  We have now, yeah, and the publicly available information we have now, yeah, that's true. And so, yeah, you get into this

• 30:19Speaker 02

  because of where we are in our First Amendment precedent with functional aspects of code allowing incidental regulation of the speech elements. It, it is now

• 30:33Speaker 02

  the government.

• 30:35Speaker 02

  Gets to draw lines on how much usage is illicit before they're going to regulate the speech. So

• 30:46Anthony Pompliano?

  Like literally a percentage amount, like if 1% or less, then they're okay.

• 30:50Speaker 02

  This is obviously not the like, the law, right? And this is not like the doctrine, but this is functionally, I think, a way to, this is a heuristic to look at it, right? It's a mental model to look at it. You know, there was about 10%, I mean, it was 12% that was flagged of funds that went through tornado cash that was ransomware derived. Half of the funds were DeFi, where flagged was just DeFi funds, right? So, you know, when you look at the percentages of licit versus illicit use, and then I forget what the other categories were, you know, the overwhelming amount was just general trade and commerce, right? Some would say speculation.

• 31:33Anthony Pompliano?

  Gambling.

• 31:34Speaker 02

  But that's, but that's also trade and commerce. Okay? So in that case, the government stepped in.

• 31:42Anthony Pompliano?

  Which is almost like you're hinting at, because we don't know the answer. But like, let's say the government had an unofficial rule that once it crosses over 10%. Once we hit double digits of illicit, you know, use or flags. Now we will step in.

• 31:56Speaker 02

  Right.

• 31:56Anthony Pompliano?

  But if it had stayed at 9.5%, maybe they wouldn't have stepped in.

• 32:00Speaker 02

  And it's, also, it's like, well, is it percentage of, you know, they were going by percentage of funds that were flowing through, but percentage of users, you know, the North Korean hackers was much smaller percentage of users. And so that's where, you know, neutral tools, so you can say tornado cash is a neutral tool. It just allows privacy. Neutral tools can be used for good or for, for bad. You know, the internet is used for good and bad.

• 32:28Speaker 02

  So, you know, where you draw that line is, is the question. And right now, the government has the pen and they get to draw the line now.

• 32:36Anthony Pompliano?

  Is that a good thing?

• 32:37Speaker 02

  That the government has the pen?

• 32:38Anthony Pompliano?

  Yes.

• 32:39Speaker 02

  The government's got to have the pen to some degree. We do, you know, if we want to live in a society that's, you know,

• 32:46Anthony Pompliano?

  Has a government.

• 32:47Speaker 02

  That has a government and, and is safe and then protecting you from, you know, foreign aggression, what have you, then you need to have a government that is drawing lines somewhere. But the way, how they use the pen, it would respect to tornado cash, I, I think was outside their, their statutory, OFAC statutory mandate. Because again, they used, they drew the line by adding just pure unowned code. Those addresses that are on the Ethereum blockchain forever were sanctioned. But the statute, the authorizing statute

• 33:32Speaker 02

  doesn't give OFAC the ability to sanction unowned code.

• 33:36Anthony Pompliano?

  So is this

• 33:36Speaker 02

  Right. This is not intellectual property of tornado cash. This is unowned code.

• 33:41Anthony Pompliano?

  Is it the equivalent of, we said, okay, the, you know, unincorporated organization, right? Or whatever, the group of people. Okay. Again, we can debate whether they should or should not have been.

• 33:49Speaker 02

  Entity, they're authorized.

• 33:50Anthony Pompliano?

  It fits what they're allowed.

• 33:52Speaker 02

  It fits what they're statutorily allowed to do.

• 33:54Anthony Pompliano?

  Those people have accounts.

• 33:55Speaker 02

  Yeah.

• 33:56Anthony Pompliano?

  And so similar to the, a bank account, right? Those get put on. Again, whether or not they should have been put on is different than they are allowed to be put on, or there's precedent for being put on this list. But then you're saying it's almost like, oh, these individuals read a book one time.

• 34:12Speaker 02

  Right.

• 34:12Anthony Pompliano?

  And now they don't own the book. So we're going to put the book on the list. And it's like, wait a second, like, the book is a neutral thing.

• 34:19Speaker 02

  If you go to the library and you pull the book, then you're going to be in violation.

• 34:23Anthony Pompliano?

  Yes. And that is where I think this First Amendment question comes in, which is just because these people who you deem to be in violation of something, and again, we'll debate, you know, whether that's true or not, they read this book, now no one else can read the book. And that seems to be where a lot of lawyers are saying, wait a second, we may need to have a deeper conversation about this.

• 34:48Speaker 02

  Exactly, yeah.

• 34:49Anthony Pompliano?

  How do you think that plays out?

• 34:50Speaker 02

  Yeah, it's difficult to game out because, again, because it's code that's not owned by anyone, you know, going back to that question of like standing, who has the, who's been harmed and has the ability to bring a suit to challenge these, this OFAC action, it's, it's difficult to, to identify anybody, right? So, so teeing up a court case, which I know Coin Center is trying to do, is really difficult. There, there's some argument to be had that Americans who use tornado cash and deposited into tornado cash and had not withdrawn funds from tornado cash and still have their funds

• 35:34Speaker 02

  locked in the protocol and are now presuming, look, I'm not giving anybody legal advice,

• 35:42Anthony Pompliano?

  None of this is legal advice.

• 35:43Speaker 02

  But are wary about withdrawing that?

• 35:44Anthony Pompliano?

  Yes.

• 35:46Speaker 02

  Those folks might have a claim because their funds have essentially been frozen without prior

• 35:53Anthony Pompliano?

  Like due process, I guess.

• 35:54Speaker 02

  Yeah, without prior notice. So that, that's an avenue that if somebody wanted to challenge these broader, this broader action, that would be, you know, I, I think that's a strong, that would be a strong case.

• 36:09Anthony Pompliano?

  So from a non-lawyer, a lot of times there's cases. Bernstein seems a little bit different, but maybe in the crypto world, there's an individual, I believe he was in Kentucky, he was taxed on, I think, staking

• 36:24Speaker 02

  Yeah.

• 36:25Anthony Pompliano?

  rewards. And it was a pretty nominal amount, I mean, I think it was like $2,000 or $3,000 frankly. But it was more of a principled fight than it was the economically driven, hey, this is a lot of money. And he's continued to pursue that.

• 36:40Speaker 02

  Yeah.

• 36:41Anthony Pompliano?

  There's a lot of folks who are watching because they're saying, hey, this is pretty important.

• 36:43Speaker 02

  That is an interesting case, yeah.

• 36:44Anthony Pompliano?

  Um, it feels like here

• 36:48Speaker 02

  Jared, Jared versus the US or IRS, yeah.

• 36:52Anthony Pompliano?

  It feels like here with the tornado cash, like there are probably people who have material amounts of money locked up, whatever that is to them. But it does feel like there's almost this like legal apparatus that is somebody is going to pick up the flag and take on this fight. And it's more of the principled fight than it is, hey, I've spent $10,000 and like, you know, that's my life savings.

• 37:14Speaker 02

  Yeah, no, and but but you need, but you do need some, some harm.

• 37:18Anthony Pompliano?

  Yes.

• 37:19Speaker 02

  To be able to bring a case. The First Amendment is a little bit, First Amendment challenges, it's a little bit easier that like harm requirement is a little softer.

• 37:29Anthony Pompliano?

  Okay.

• 37:29Speaker 02

  Because the idea is you don't have to have suffered a direct harm if there's an argument that it's like overbroad and there's a chilling effect and it's preventing the public from engaging in that type of speech, then then your direct harm requirement is a little, there's a little more wiggle room there.

• 37:49Anthony Pompliano?

  Okay, so then let's go to maybe the second step, which was there's this OFAC list, a bunch of stuff gets put on it. I think there was kind of a shot across the bow a little bit and the crypto community was like, oh shit, things just got ratcheted up, you know, a couple of notches. And of course, there are people on the internet who will take things into their own hands. And there's an individual who went and collected a bunch of publicly known or kind of doxed addresses.

• 38:20Speaker 02

  Right. It was like Puma and.

• 38:22Anthony Pompliano?

  Companies.

• 38:23Speaker 02

  Shacks.

• 38:24Anthony Pompliano?

  Celebrities, well-known people in the crypto world. I mean, this was very much like, let me go to, you know, a whole list, get a bunch of these addresses. And then they began to withdraw very small amounts, I think it was 0.01 ETH into these publicly known addresses. So at the most kind of barbaric analysis, Puma, which is a legal, you know, a corporation that would like to be in good legal standing in the United States of America and for everything that we understand, does not want to participate in any sort of money laundering or violation of the OFAC list. They potentially violated the OFAC list because they received funds that came

• 39:06Anthony Pompliano?

  from a entity slash software and account whatever.

• 39:11Speaker 02

  Sanctioned piece of software, yeah.

• 39:12Anthony Pompliano?

  That was sanctioned.

• 39:13Speaker 02

  Yeah.

• 39:13Anthony Pompliano?

  Now, I would imagine, and again, you will correct me if I'm wrong here, if they went to court and said, "We didn't do this. We didn't know. It's the equivalent of somebody sending me a wire, right? And I didn't ask them to do that. I just woke up one morning and it was sitting there." They probably won't get in trouble.

• 39:32Speaker 02

  Right.

• 39:33Anthony Pompliano?

  But I don't know.

• 39:34Speaker 02

  Well, that's where, how do you analyze that? That's where OFAC is like serious business because it's a strict liability regime where like you don't, the government doesn't have to prove intent.

• 39:45Anthony Pompliano?

  Okay. So explain this a little bit more, like, and maybe let's use Puma, only because they are an entity.

• 39:51Speaker 02

  An entity in faceless.

• 39:52Anthony Pompliano?

  I don't want to pull individuals in, Puma, I apologize.

• 39:55Speaker 02

  You're not getting sponsored by them.

• 39:57Anthony Pompliano?

  Somebody else did this to you. But like, as a corporation, I think it's, it's different than an individual as well, where it's like, they have legal teams, they have compliance, like they have shareholders, like, like, there's a lot of complexity. How would you begin to analyze, like, is Puma potentially liable for something here? Or do they just go to court and say, like, "Hey, guys, come on."

• 40:16Speaker 02

  Right. Well, it would take, right. I mean, like, practically speaking, OFAC is not, you know, Department of Justice is not going to bring an action against Puma for, you know, unknowingly accepting funds that came from tornado cash. But, you know, again, so going back to the strict liability, right? They could. It doesn't matter. It happened. You received the funds. So, so a legal scholar, he's practicing attorney, but I'll call him a legal scholar, because he predicted this a few years ago.

• 40:54Anthony Pompliano?

  Really?

• 40:54Speaker 02

  Yeah. Andrew Hinkus. He's an attorney at KNL Gates. He, he had, he had predicted that like someone could, he called it like a spray attack, right? Could just spray this essentially tainted. You know, be it ether, you know, Bitcoins out and because, right, Ethereum and Bitcoin and, you know, most cryptocurrency, you know, you don't have to accept it. It just, you know, it just shows up on the ledger as being in your address. So he had predicted this, and it's a big problem. It's a big problem because under the letter of the law, yeah, there's violations there. And so it's just, it goes back to kind of that boundless discretion

• 41:38Speaker 02

  of OFAC, right? It's just up to them now, like, how they're gonna treat all this.

• 41:43Anthony Pompliano?

  And let's say that they were like, no, you know, fuck you guys, you did this. And they wanted to enforce the letter of the law. What is the penalty? Or like, how bad could it be?

• 41:53Speaker 02

  Yeah. I mean, the penalty can be jail time for folks. Yeah, it's real serious. Probably it would be like fines. But it can, yeah, it can be jail time. There's criminal penalties. But I think, you know, there's a process and a procedure for like, sequestering funds that you suspect are tainted and, you know, flagging it with OFAC and things like that. So I think, I'm sure Puma's compliance folks have, you know, checked all the boxes and, you know, made sure to quarantine off any tornado cash.

• 42:29Anthony Pompliano?

  Well, so the reason I want to start with Puma is because they have all that infrastructure. Shack, I do not think has a full-fledged, you know, compliance team.

• 42:37Speaker 02

  Right. I don't think you might be surprised. He's a pretty, he's a pretty big business.

• 42:42Anthony Pompliano?

  So I'm gonna move from Puma to Shack to then

• 42:45Speaker 02

  To whoever

• 42:46Anthony Pompliano?

  The average citizen, right? And I think that it's, it's at least expected that Puma has some sort of legal, you know, team and compliance team, etc. Shack's maybe in the middle, maybe, maybe not. The individual doesn't.

• 43:00Speaker 02

  Right.

• 43:03Anthony Pompliano?

  It almost goes back to this idea of like the banks, right? I remember reading this article at one point. One of the things that the banks do in order to kind of shield liability, or at least, again, you could argue whether it's good faith, or it's kind of cover your ass. If there are transactions that they think could potentially be troublesome.

• 43:23Speaker 02

  Right.

• 43:23Anthony Pompliano?

  They basically just flag them. But the problem is that they're incentivized.

• 43:27Speaker 02

  Suspicious reports, yeah. Suspicious activity reports, yeah.

• 43:29Anthony Pompliano?

  They are incentivized to use these S A Rs, or suspicious activity reports. Just do them all, right? Like at some degree, like just keep processing all the transactions and then just, you just say they're all suspicious. Now, again, they don't do that, but they do a lot of them. And so if at some point-

• 43:46Speaker 02

  They err on the side of caution. Let's put it that way. Yeah.

• 43:48Anthony Pompliano?

  It's a very politically correct way to say it. They err on the side of caution. And again, there's an argument as to like, maybe that's a good thing, right? But then if somebody shows up later, like OFAC or whoever, and says, hey, that one was problematic, they say, well, we flagged it, like, we thought it was suspicious, and like, we sent it to you guys, and, you know, whatever happened from there happened. The average individual doesn't have that infrastructure, doesn't even know some of this stuff exists. And you get into these problems. So I guess it becomes this weird thing where like, now it's almost up to whether it's the Department of Justice or somebody, do they want to enforce the law or not? And that feel, like that kind of gray area feels like, again, where some legal folks are standing up and saying like, let's have a deeper conversation about this.

• 44:29Speaker 02

  Absolutely. Yeah, that's, that's where it goes back to, you know, there's got to be, especially when you're talking about speech, there's got to be some kind of guidance on agency discretion. When they're licensing or, you know, preventing speech of some type, there's got to be, just, you know, just protocols that they follow. And then there's got to be a clear method for reviewing that. Now- On that point about a clear method to review it, someone whose funds are in tornado cash, there is a process whereby you can apply for a license from OFAC to remove funds or to to transact with a sanctioned entity. So there is a process, but again,

• 45:12Speaker 02

  that's a post facto process. And when we're talking about due process, we're talking about, you know, pre notice. That's, that's the, that's the gold standard of due process.

• 45:23Anthony Pompliano?

  So forget crypto for a second. If, I don't know, you were on the OFAC list, right? And I had previously had a business relationship with you, you had some money, I wanted to withdraw or get that money back. I could go and say, hey, here's all the details. Will you pre approve me to do this transaction? I'm not trying to do anything nefarious. They approve.

• 45:40Speaker 02

  Yeah, there's a process for that.

• 45:42Anthony Pompliano?

  Okay. I can't imagine they're handing out a lot of those licenses at the moment.

• 45:46Speaker 02

  No, I don't, I can't imagine anybody would want to dox themselves to apply for one of those licenses.

• 45:53Anthony Pompliano?

  So this brings up another fascinating point, which is, we have a piece of software, which we will hold the assumption that it is decentralized. No one has control. I do think that that will come into question and it will be fascinating to see how decentralized is it actually. But many of the addresses who have been engaging with it or interfacing and transacting are not like, you know, Anthony Pompliano's wallet address.

• 46:19Speaker 02

  Right.

• 46:19Anthony Pompliano?

  It is a random string of letters and numbers.

• 46:21Speaker 02

  Yeah, they're, they're still anonymous. Yeah.

• 46:24Anthony Pompliano?

  And so I do wonder how far will legal organizations or government organizations go to figure out who are all those addresses? Now, they've obviously done it for the ones that they claim to be money laundering or whatever. But, you know, Joe Blow off the street who put $10 in because he wanted to test out the tool.

• 46:46Speaker 02

  Right.

• 46:47Anthony Pompliano?

  Is just a random address today.

• 46:51Anthony Pompliano?

  Because it now is on the OFAC list, do we expect every single one of those accounts, they'll do the work to like dock?

• 46:56Speaker 02

  I don't think so. I don't think the incentive is there for OFAC or Department of Justice to do that because, you know, again, they they traced the, you know, the Lazarus group, I think that was the North Korean groups, they traced the money into tornado cash, right? Because you got you got to start somewhere. You can't you can't really it would be difficult to, I mean, I guess you could, I guess there are ways you could trace it if you, you know, you could map a personal identifiable information onto coins essentially, or, you know, ETH that comes out of tornado cash after the fact. But yeah, I mean, they they were they were chasing,

• 47:42Speaker 02

  you know, the money laundering funds and the ransomware funds into tornado cash.

• 47:46Anthony Pompliano?

  The funds led them to the tool, not let's start with the tool and then work backwards.

• 47:49Speaker 02

  Exactly. And so, again, because, you know, I forget who was Chain Analysis or one of those, you know, analytics firms has has done the, you know, done some heuristics and breakdowns and said, you know, half of it is DeFi, you know, presumably they know that there's not really, they know generally what type of, you know, activity was going on in tornado cash. Again, they don't know who was doing what necessarily all the time. But yeah, I don't think the incentive is there for DOJ to go after every single user who's ever used tornado cash. But again, these are now we're having these conversations and and we're having conversations again about privacy enhancing tools. And it really all comes back to, do we have a right

• 48:34Speaker 02

  to anonymity? And is that right? So when you're talking about speech, the Supreme Court has said you have a right to anonymous speech in certain circumstances, like when you are engaging in political assembly. So actually, and this is this is kind of what what gives me a little bit of hope about where we're going with with, you know, the First Amendment and code and anonymity and privacy.

• 49:04Speaker 02

  I think it was last year, a case called like Bonta, Americans for Prosperity versus Bonta, came out and the Supreme Court invalidated California law or regulation that required disclosure of political donors' identity over like a certain amount threshold.

• 49:26Anthony Pompliano?

  Oh, interesting.

• 49:27Speaker 02

  Yeah. And it was like $5,000 or something like that. So like major donors, they, yeah, all these PACs had to like create a list and like turn this list over to like the California regulator who was, you know, regulating in election spending. And the Supreme Court struck that down and, you know, based in part on this line of cases that you do have a right to anonymous speech and anonymous assembly, which stems from, you know, our, our rights to assemble anonymously when we are creating this nation, you know, for fear of, you know, being hung by the, by the British, right?

• 50:09Speaker 02

  So it's, it's, it's a, the right to anonymity is like a deeply ingrained, I think, American value. And it's only really in, you know, recent times, modern times, where that the practical ability to maintain anonymity has been rolled back.

• 50:27Anthony Pompliano?

  Mm hmm.

• 50:28Speaker 02

  Right? So, um, so the Supreme Court is, is, is putting out opinions that respect and acknowledge that right of speech. And even so, this was in the context of spending too, right? This was in the context of, um, you know, keeping, um, keeping political donations anonymous.

• 50:48Anthony Pompliano?

  Are electronic dollars, like if I go to the bank and I send you a wire, is that considered speech because it's software?

• 50:55Speaker 02

  Is it considered speech because it's software?

• 50:58Anthony Pompliano?

  Like I'm not sending you physical dollars.

• 51:00Speaker 02

  Right. That, that is a metaphysical question that has not been resolved in the courts. So this gets into, yeah, this gets into, um, if, if I was going to give you a physical dollar, that's kind of like conduct.

• 51:15Anthony Pompliano?

  Yes.

• 51:16Speaker 02

  But it's also speech, you know, if I'm giving you that money, um, to, to support your, you know, campaign for mayor of Miami or whatever.

• 51:26Anthony Pompliano?

  I'll never.

• 51:29Anthony Pompliano?

  Let Suarez keep doing his thing.

• 51:30Speaker 02

  Yeah. But, you know, I, look, I'm of the opinion, and not a lot of legal scholars agree with this, but I think a lot of people in cryptocurrency and Bitcoin industry would agree with this is that money and transacting is a form of speech. It might be more conduct than speech, but it transmits information because what's that phrase? Like, you know, don't tell me what you think. Show me your investment portfolio. Right? Like, what do you value in life? You know, where, and what is more expressive than me showing you where I prefer to spend

• 52:15Speaker 02

  my hard earned, you know, time and effort, right? Money is just like the store of all of your prior work and effort and blood and sweat and tears. Right? So when I show you what I'm going to spend that on, that, that tells you a lot about me. Yeah. Right? I think that's, I think there are a lot of communicative elements to transactions.

• 52:39Anthony Pompliano?

  Well, I'll take you a step further of just like, if money is not in the analog form, or it's not physical money, and I send you a wire, it's all software.

• 52:47Speaker 02

  Yeah.

• 52:48Anthony Pompliano?

  Yeah. I'm sending you words in a database. Right? And now, sure, they have a purpose, they have value assigned to them, they have all these different things. But I communicated with the bank, literally, I told the computer, do this. The computer then sent you words. Your, your bank accepted those words and put them in a database for you to look at later.

• 53:09Speaker 02

  Right.

• 53:09Anthony Pompliano?

  And in some way, it's words.

• 53:13Speaker 02

  Yeah, it is. And, and it always go, you know, it, it, money, money also is like this, this, this giant accounting system, right? It's how society directs where to place, you know, is its efforts and its capital so that we can progress. And so that, it's a giant information system, all forms of money, you know, even before, even before you had, I heard this, this explanation of what credit was the other day from, from a podcaster. And he was, you know, he describes it as, you know, just at its base level, two cavemen in the cave and, you know, you make fire today, I make fire tomorrow.

• 53:56Speaker 02

  Yep, that's a credit transaction.

• 53:58Anthony Pompliano?

  Yep.

• 53:58Speaker 02

  Speech, right? That's speech. That's not, you know, there was some work that occurred, you know, at different times. And there was value that was exchanged with, you know, the work that was done to make the fire, but it was all just speech.

• 54:16Anthony Pompliano?

  Yeah.

• 54:16Speaker 02

  You know, that credit formation was just speech. I'm not going to take credit, no pun intended for that analogy, because it was really good. It was a, um, the guy from the Crypto Voices podcast.

• 54:26Anthony Pompliano?

  Yeah, he's very good.

• 54:27Speaker 02

  Yeah.

• 54:28Anthony Pompliano?

  This episode is brought to you by LMAX Digital, the number one institutional crypto exchange. They offer clients the deepest pool of liquidity and they have 100% uptime track record through all the volatility spikes. LMAX Group's liquidity relationships and ultra-low latency technology means that LMAX Digital is the market-leading solution for institutions across crypto trading and custodial services. LMAX Digital, secure, liquid, and trusted. Go learn more at LMAXdigital.com/pomp. Again, that's LMAXdigital.com/pomp. This episode is brought to you by Exodus, the world's leading desktop, mobile, and hardware crypto wallet. They offer beautiful, user-friendly blockchain products that sync across all your devices, making it easy to send, receive, and exchange over 150 crypto

• 55:12Anthony Pompliano?

  assets in one place. And with world-class customer service available to you 24/7, Exodus always has your back. Run, don't walk. Over to exodus.com/pomp for your free download today. Again, that's exodus.com/pomp. Go check him out for your free download today. If we go back to 22 Cash, uh, the next step in this kind of analysis is, you know, so we have the OFAC stuff, then we've got the like spray attack.

• 55:38Speaker 02

  Yeah.

• 55:40Anthony Pompliano?

  The, one of the developers gets arrested.

• 55:43Speaker 02

  Yeah.

• 55:44Anthony Pompliano?

  Not in the United States.

• 55:45Speaker 02

  Mm hmm.

• 55:46Anthony Pompliano?

  How do you analyze? The arrest itself, the fact that it didn't happen in the US.

• 55:52Speaker 02

  Yeah.

• 55:52Anthony Pompliano?

  I don't know if he was an American citizen or not.

• 55:54Speaker 02

  I do not, I do not know.

• 55:56Anthony Pompliano?

  Okay.

• 55:59Speaker 02

  Yeah, I don't know if he was a citizen.

• 56:00Anthony Pompliano?

  Okay. But just the arrest in general, how do we understand the legalities of it? Or the precedent it sets?

• 56:11Speaker 02

  Yeah, I mean, it, it's a big chilling effect. It sets a huge precedent that, you know, if you're, if you're coding and launching and publishing privacy enhancing tools, that then money launderers go and use that you could be liable, I guess. Now, again, we don't know all the facts behind that. Who knows? Maybe, maybe, you know, I don't want to, I don't want to hope for criminality, but I hope there's more of a tie than just the fact that this guy in this group wrote this code and, and published this code.

• 56:46Anthony Pompliano?

  There are details.

• 56:47Speaker 02

  There's more details than we don't know.

• 56:48Anthony Pompliano?

  There are details that could come out, which we are not privy to today. I don't think anyone in the public is, that would drastically change the analysis. But given the information we have right now, it appears that there's not nefarious malicious conduct or anything, and that's why there's so many questions.

• 57:03Speaker 02

  Yeah, and it, and it really has created a chilling effect. I mean, anyone who is an engineer and a software developer is scared. I mean, they're scared and understandably so. I mean, it's, it is, you know, it's like, it's like we're thrust back into the 90s and, you know, you've got big, you know, you've got Goliath, you've got, you know, the governments coming down on, on developers. And that's a, that's a scary thing. And we as a society shouldn't tolerate it. We should, we should, you know, raise our voices and say, this is not, this is not consistent with our values as a country and a nation and, you know, not consistent with

• 57:48Speaker 02

  our constitution. We don't want to live in a society where anonymity is criminalized. We want to live in a society where, you know, privacy and anonymity are seen for what they are, which is protection, right? Protection from, you know, those who might want to, you know, steal our identities, you know, steal our funds, those who might want to harm us if we have the wrong political opinion. Um, which thankfully in the US is not, you know, always the case. Certainly, the government not is not always trying to harm us because of our political opinion. But in most of the world, that's not the case.

• 58:29Speaker 02

  And so we should be promoting these tools and as a society and trying to reclaim our, our rights to, to anonymous speech and anonymous assembly and, and the ability to go throughout our lives with the,

• 58:48Speaker 02

  authority and the autonomy and the power to choose what information we disclose to others. Cause that's what privacy is. You know, there's been tons of definitions of privacy over the years and everyone struggles to understand what it is. Justice Brandeis wrote a law review article back in like the twenties. It was like the foundation for our understanding of privacy where he said it's the right to be left alone. It is, but I think the cipher punks helped us realize that privacy is really the right to let other people know what you want them to know and that you maintain control over your information. And it's the, that control over your information that is the key to privacy.

• 59:33Anthony Pompliano?

  It feels like um,

• 59:37Anthony Pompliano?

  the OFAC list stuff, a lot of people, uh, wow, like that's surprised and shocked people. The rest of the developer, I think, ratcheted it up even more.

• 59:48Speaker 02

  Yeah.

• 59:49Anthony Pompliano?

  And again, we don't have all the details. But how do they draw the line in terms of the privacy technology? And I'll give you maybe kind of different as the spectrum. So if I was a software developer who worked at, I don't know Coinbase, a publicly traded business that for all intents and purposes, follows the rules, you know, has a compliance team, legal team, regulators have signed off, it's in the public market and all that stuff. And I am uh, creating technology that enhances the privacy of our users to be able to transact. And then you've got, you know, maybe tornado cash on the other end of the spectrum. Not saying that either one is right or wrong or whatever, but just like,

• 1:00:31Anthony Pompliano?

  how do they think about like, is it all privacy technology? Is it just ones where somebody does something bad? Unfortunately, I am sure that somebody has used Coinbase to do something nefarious or wrong.

• 1:00:46Anthony Pompliano?

  And so how do they think through that? Or is it literally just a kind of a group of people that get together and they decide the severity? And then later on, the courts figure out whether it was the right decision or not.

• 1:00:57Speaker 02

  Yeah, I mean, again, I think it comes back to,

• 1:01:01Speaker 02

  you know, the government does have, you know, it doesn't have boundless resources. We think, we think it does, it has a lot.

• 1:01:11Speaker 02

  But they still do have to, you know, Department of Justice and OFAC and,

• 1:01:17Speaker 02

  these, these departments have to pick and choose what they're gonna, you know, who they're gonna go after. And so, again, I think it just comes down to the, the most nefarious characters are gonna, you know, go down first.

• 1:01:33Anthony Pompliano?

  As well as with the SEC regulations.

• 1:01:35Speaker 02

  Right, right, the low hanging fruit.

• 1:01:38Speaker 02

  And in the process, right, they're, they're taking a swing at, at privacy tools.

• 1:01:44Anthony Pompliano?

  If we had a third person here on the podcast and they were from the Department of Justice or from the Treasury or whatever, what are some of the questions that you would have to better understand the situation? Like, are there things that you're like, man, these are like the two or three open questions right now? That maybe it'll be decided in court, maybe we'll get more information. But these are the things that you're most interested in learning more about around the specific case?

• 1:02:06Speaker 02

  Yeah, I mean, it would, you know, first and foremost, it would be, and this is the question we should all be asking whenever there's any government action anywhere, state or local or federal.

• 1:02:18Speaker 02

  What's your authority for this? What, where, where do you derive the power for this action? Like we were talking about before. So I would like to get some understanding of their thought process for putting these, these, these smart contracts that no one owns on the list. Whose property is that? Are these aliases for someone? What, what's the rationale behind that? Because I think, you know,

• 1:02:48Speaker 02

  Perhaps there's not an understanding from OFAC of the engineering behind this system. And maybe there is. I mean, a lot of smart people.

• 1:03:02Anthony Pompliano?

  Well, and I think it brings up the question of like, again, decentralization, like how decentralized is it? And we've heard from the securities regulators and others, you know, was it Dino? The decentralized in name only. I think most people who have looked at the tornado cash situation, people way smarter than me, who are much more technical and read the code and stuff, they do believe that it has legitimate claims to decentralization. Now, decentralization does a spectrum, this whole thing of like, is it, you know, you need 10 nodes, you need 50 nodes, you need, you know, a certain amount of people holding the keys lately. There's so many different ways you could cut it. But it does feel like a lot of people think it checks.

• 1:03:44Speaker 02

  Right. And those are, and those are some questions that we could ask, right? Like, what, what is, what is the rubric internally that you're using to determine, you know, control over this, this tool? You're right. Admin keys or, you know, however many developers are working on it. And, you know, who's, who's directing, you know, directing flow of funds, you know, the developers weren't directing the flow of funds through this protocol.

• 1:04:08Anthony Pompliano?

  Yeah. It's fascinating to think about also because it begs the question that, one, regulators, governments, organizations that have oversight in various parts of economies, I think most of them, and I've, I've talked to some of these individuals, everything from, you know, SEC commissioners to the head of CFTC, they're like, look, we got a pretty good grasp of like, some basic stuff. But we're figuring it out along with everybody else. Because guess what? A piece of technology that exists today didn't exist two years ago. Right? And like, as this thing's getting built, the builders and investors are figuring it out. But also the regulators are kind of running side by side, trying to figure it out. And just naturally, the innovators will always be out in front. And then the regulators kind of catch up as they go.

• 1:04:53Anthony Pompliano?

  So I think anyone who analyzes this stuff, you have to like, one, put in one part of the conversation of like, if you were the regulator, would you have all the information necessarily to make an analysis? Some situations, yes. Other situations, no. And I think that's an important distinction. But the second piece of it is,

• 1:05:13Anthony Pompliano?

  There's a lot of information that we don't have in tornado cash situation, but many others where what's being publicly presented, if you hold it at face value, you come to one analysis.

• 1:05:25Speaker 02

  Right.

• 1:05:25Anthony Pompliano?

  And then we've later found out all sorts of different, you know, pieces of data that you're just like, if I hadn't known that other data point, like my mind would have completely, you know, changed. And so I think that there's a little bit of like the fact finding mission that some of these bodies are going through of just like, how do we understand the full playing field before we start making decisions or frameworks or rubrics or whatever? And I don't know if there's right answers, right? Like sometimes there is definitely a right answer.

• 1:05:53Speaker 02

  Right. And from, from the regulators perspective and, you know, OFAC and DOJ's perspective, like the FBI's perspective, if they wait, you know, this would be the argument to let it all play out and to have it figured out, then these tools are going to be in the hands of every bad guy and every bad guy is going to be using it and it's going to be too, you know, it's too late to do anything about it.

• 1:06:17Speaker 02

  And some of that is just, you know, the answer to that is we have to tolerate some criminality in our society. You can't, you know, look, we've been having, we've been having these debates, you know, since the nineties, but you know, definitely since nine 11 and the Patriot Act, you know, Americans have been struggling with the trade off between safety and civil liberties and privacy. And this is just another front in that continuing discussion or battle, if you want to call it that.

• 1:06:53Anthony Pompliano?

  How do you think we're doing in that balance now? Like, would you give us a A plus, a F minus? Like, like, like, it, it, obviously each situation is a little bit different, right? Like TSA and, and all that people get all worked up about, but like,

• 1:07:08Anthony Pompliano?

  Do we do a pretty good job? Do we do compared to like other countries? Are we actually like really shitty? Like, how do you think it?

• 1:07:16Speaker 02

  Well, if it's a comparison game, I think we're doing okay. I would give us a C. Okay. Just because I feel like our, you know, ability to challenge actions in the courts is still pretty strong. You know, our, as much, you know, we're talking about free speech and the First Amendment. We still have a First Amendment, you know? It's still there and it exists and we point to it and we can argue over it. And, you know, it is enforced. That's not the case in a lot of the world. So I, I, I feel good about that, you know? Now, yeah, I think, I think, you know, and this is just,

• 1:08:02Speaker 02

  since the Patriot Act and nine 11, yeah, we've gone backwards in our, in our, you know, rights and civil liberties and our, and our freedoms. And, you know, again, it was understandable at the time, the fear that the country felt and, you know, but, you know, then we, we, you know, had too much of a, a counter response domestically, internationally as well. I mean, it's just, it's kind of wild because, you know, we're about the same age. And so like,

• 1:08:34Anthony Pompliano?

  Both 21.

• 1:08:35Speaker 02

  Yeah, exactly.

• 1:08:39Speaker 02

  You know, our, our adult lives, we've been living in the GUAT, in the global war on terror. Right? I mean, it's, it's something that, but, but we're old enough to have remembered like the before times. You know, in the nineties and, you know, how it felt different. Even as kids, I, you know, I just felt a little bit like freer in terms of.

• 1:09:04Anthony Pompliano?

  Walk to the gate.

• 1:09:06Speaker 02

  There was, yeah.

• 1:09:07Anthony Pompliano?

  At the airport.

• 1:09:08Speaker 02

  Exactly, exactly, exactly.

• 1:09:10Anthony Pompliano?

  You could pick up somebody.

• 1:09:11Speaker 02

  Pick up your family at the, yeah, you go back and you watch Seinfeld or Friends on Netflix and you're, you just like, it's a time capsule.

• 1:09:17Anthony Pompliano?

  Yeah.

• 1:09:18Speaker 02

  And, you know, it's, it, sometimes it, it hurts because you're like, wow, that was like, it, it wasn't all, it wasn't all bad. Like, we didn't have, you know, planes falling out of the sky every, every other day. Like, and this is, you know, this debate about like safety and the trade-offs between safety and civil liberties. You know, I had a, a German professor in, in college and, uh, and this was, you know, early-ish in the war on terror and, and, and, uh, everything was still fresh. And she was saying, look, you know, Germany went through this. Germany had a, you know, I guess in the seventies, um, series of, you know, terrorist organizations and, and, um, attacks. And she said, look,

• 1:10:02Speaker 02

  we had to, we had to decide, like, do we want to lock ourselves down and live in fear? Um, and give up all of our liberties for safety or perceived safety, I guess. Or are we going to, you know, hold our heads high and live our lives without fear and, and, and treating everybody with, you know, dignity or respect and, and keeping our rights. And, you know, she was of the opinion that Germany at the time had, you know, made the right choice and, and chose not to, um, you know, aggressively, uh, shut society down, um, to combat terrorism. And, uh, America went in a different direction. We did. Um, and

• 1:10:41Speaker 02

  it, and it's a shame. But again, it gives me hope because we have tools, uh, like Bitcoin that, that do provide financial freedom. Um, then we have tools like cryptography and, you know, those tools are enhancing our safety and our, you know, through anonymity. Um, while at the same time, they can be used, uh, for ill. But I think those tools are in everyone's hands and, and, and so we've, we've, we've got the ability to keep moving forward, uh, and reclaiming freedom.

• 1:11:14Anthony Pompliano?

  So, uh, I met you because you were on Peter McCormick's podcast.

• 1:11:19Speaker 02

  That's right.

• 1:11:19Anthony Pompliano?

  Uh, shitty podcast, but good podcast. Um, I love Peter.

• 1:11:24Anthony Pompliano?

  And you were talking about Bitcoin and what Bitcoin, the first question that came to mind when I saw the tornado cash stuff was if I was a government official and I was hell bent on just completely stomping out Bitcoin and I was based in America, could they do what they did to tornado cash and just say the entire Bitcoin blockchain is now on the OFAC list and anyone who touches it?

• 1:11:50Speaker 02

  I mean theoretically, they could, right? Theoretically, they could.

• 1:11:53Anthony Pompliano?

  Like I've never heard anyone talk about it.

• 1:11:54Speaker 02

  No, no, but yeah.

• 1:11:58Anthony Pompliano?

  You and every other lawyer would be lined up outside the court, ready to like have a field day. But it does open up.

• 1:12:05Speaker 02

  No, it opens up this, this is, this is an attack vector for any, any protocol. And so every protocol and all developers working on these systems, communication systems for transferring value or just communication systems in general should be rigorously testing and, and having really serious conversations about whether or not their technologies are sufficiently decentralized to survive something like that. Bitcoin will survive something like that. It'd make it difficult for us in the States to transact, but it would survive, you know?

• 1:12:45Anthony Pompliano?

  The technology and infrastructure would survive. The US user could be quote, quote, frozen out, right? Right? From, from this. What it then brings into is this whole thing like decentralization is really freaking important.

• 1:12:59Speaker 02

  It's really important, right?

• 1:13:03Anthony Pompliano?

  But just because you have the decentralization, that protects the protocol, that protects the, the tech itself.

• 1:13:09Speaker 02

  Right.

• 1:13:10Anthony Pompliano?

  It doesn't necessarily have the same impact on the individuals because they are still subject to being good standing citizens.

• 1:13:17Speaker 02

  And this is where you need base layer privacy and base layer anonymity and Bitcoin's not, doesn't score great on that. There are tools you can use that are similar to mixers, but are, are different.

• 1:13:32Speaker 02

  Coinjoin tools and things like that where you can obscure and regain, you know, forward anonymity in your transactions. And those types of tools are desperately needed because that's the piece, like you said, that's going to allow individuals to continue to use a decentralized network. You know, there are privacy coins and privacy protocols that have that built at the base layer and they make different trade offs that Bitcoins made. But that's the, that's the key. That's, that's what's needed is, is privacy and anonymity. And, and the problem is, is we live in this, you know, Bank Secrecy Act regime where there's

• 1:14:11Speaker 02

  know your customer regulations and it's really hard to participate in these protocols, these cryptocurrency digital asset protocols without going through these KYC processes and these KYC gates now. Like it's, it's really difficult. You can do it, but it's not user friendly. And that's where, you know, and I'm not an engineer. If I were, that's what I'd be working on. I'd be working on, you know, those privacy tools, anonymity tools that, you know, help us and help individuals participate in these, in these protocols anonymously. You know?

• 1:14:53Anthony Pompliano?

  When you think of Bitcoin, it has the ability, right? If people can tend you to build technologies to do a whole bunch of things that I think the Bitcoin community is very excited about. One of the things you've looked at, which I find fascinating is Bitcoin today in its current form without having to be built, uh, kind of further continued innovation, uh, can really, I don't know, mitigate some negative externalities. Um, and one of the things that I, I saw that you wrote that fascinated me is in many legal cases, there is a judgment and if there are financial penalties or fines, uh, through a whole host of different actions, the court essentially can take the money.

• 1:15:35Anthony Pompliano?

  They can freeze assets, they can confiscate it right out of somebody's bank account. Uh, the IRS does this time to time, somebody owes back taxes or, or whatever.

• 1:15:45Anthony Pompliano?

  The idea of self custody changes the playing field there.

• 1:15:48Speaker 02

  It does, yeah.

• 1:15:50Anthony Pompliano?

  How did that, like, how does that now enter into the fray of just like, if they can't freeze your assets, or they can't confiscate your assets, does that level the playing field? Does that ratchet up their scrutiny of, hey, we don't like this?

• 1:16:05Speaker 02

  Yeah, so that's the Bitcoin is a seizure resistant, it's not seizure proof, and censorship resistant money, you know, and if you self custody it, it's not like having a bank account that can get frozen, right?

• 1:16:24Speaker 02

  So what happens in the, how it affects the legal system? This is something I've been thinking about because this is what I, probably what I do is, you know, I work on litigation, but I'm an appellate attorney. So I see the cases after there's an order that needs to be appealed and overturned or upheld. And then sometimes we get into these like post judgment collection issues. And sometimes they're pre judgment where somebody is being forced to turn over money before there's even a determination of liability.

• 1:16:54Anthony Pompliano?

  Why would they do that?

• 1:16:55Speaker 02

  So, yeah, exactly. So this is, this is very important because in the United States, pre judgment attachments are really hard to get. They're frowned upon by the court system because if you have your property and you haven't been determined liable, it's still your property. If ownership hasn't been determined by the court, we're not going to take property that's probably yours, maybe yours, maybe not, but it's in your possession, possession's nine tenths of the law. They're going to let you keep that property until there's determination. That's not the case in a lot of countries. So we saw this in Canada with the trucker rally. And, you know, there was a big movement, a lot of donations through Bitcoin

• 1:17:40Speaker 02

  to fund that political protest. And then there was actually a civil class action lawsuit by like the Ottawa businesses.

• 1:17:51Anthony Pompliano?

  Interesting.

• 1:17:51Speaker 02

  Who were, you know, saying that they lost revenue from this. And they sued the organizers of the trucker rally.

• 1:18:00Speaker 02

  And one of the Bitcoin for the truckers organizers was a defendant and had to turn over all the Bitcoin that they flagged as his.

• 1:18:17Speaker 02

  So that it wouldn't be dissipated and disappear before there could be a collection. So that's, that's the theory.

• 1:18:25Anthony Pompliano?

  It was like a flight risk.

• 1:18:26Speaker 02

  It is.

• 1:18:27Anthony Pompliano?

  Tight situation.

• 1:18:28Speaker 02

  It's like, it's like that. Now, in that case, I mean, this is something called a Mariva injunction, like the common law jurisdictions have this. It came from England, Canada has it, I'm sure like Australia and it's, it's spread out. And it's used, right, to prevent dissipating and shielding capital that can eventually be used to satisfy a money judgment, which then, you know, meets out justice between the parties.

• 1:18:53Anthony Pompliano?

  I don't know how important the distinction is. I feel like I'm going to get a law degree here. But is it different than freezing assets? Like I think of freezing assets, it's like it's in your bank account and they say, hey, you're not allowed to move it and maybe the bank helps them or whatever. This sounds more like you, we're scared you're going to move it or we think there's a threat that you're going to move it. Give it to us.

• 1:19:15Speaker 02

  Yeah, I think in that case, I think in that case, perhaps it would have had to been transferred because the nature of Bitcoin is like, if you remember your seed phrase, like, yeah, you could give, you could give them, you know, your wallets or whatever. But then, you know, you just go right, spin up another wallet with your seed phrase and move it. So they probably, yeah, the authorities, probably somebody had to take custody of it. But usually when you're talking about bank accounts, right, it's just a freeze. And, and this is, this is where, you know, this is the difference between Bitcoin and the traditional financial system when it comes to money judgments. You know, all of our financial system is built on intermediaries, banks, custodians,

• 1:20:00Speaker 02

  and Bitcoin allows for self custody and disintermediates.

• 1:20:05Speaker 02

  And the way that money judgments are executed and collected is writs of garnishment on those third-party custodians. You have a bank account, you know, I tag you with a judgment because whatever, you hit me with your car, you know, simple tort claim or whatever, and you owe me money, and you know, you don't pay it. So then I get a writ of garnishment from the court, and it's served on your bank, and your bank says, that's a valid writ, and here's the money. I'm going to remit it to you, Mr. Plaintiff. With a Bitcoin system where everyone's holding their own keys and has their own, you know, their own wallets,

• 1:20:45Speaker 02

  there's no one to serve that writ of garnishment on to collect from. So now, right, the question is, what do courts do about that? You know, let's, obviously, right now, it's not a huge issue, but if we're like, going to talk in like, a hyper Bitcoinized world, you know, and intermediaries are gone, you know, what, what do the courts do? And, and, you know, I think the tools they have available are these prejudgment-type attacks, where, you know, maybe if they know that an individual has funds, because, you know, they have KYC'd funds, and all of their information is on the blockchain, and they can, you know, follow

• 1:21:27Speaker 02

  the funds around, they can then get orders to freeze that money. Now, again, I have the keys, so who's going to freeze it? That's where the second piece comes in, where the courts have contempt powers, where they can hold individuals in contempt and put them in jail for not complying with court orders. So then, if I get an order to turn over my private keys, and I refuse, and the only place they are in my head, then the only recourse left for the courts is to start imprisoning people, and now I literally have the key to the jail cell in my head.

• 1:22:03Anthony Pompliano?

  So this brings an even kind of more complex piece of everyone that I know who has done any self custody.

• 1:22:11Speaker 02

  Right.

• 1:22:12Anthony Pompliano?

  When they first started, like, I've forgotten things, right? Or I lost something, or I sent whatever, right? And thankfully for me, up until this point, let me knock on wood, it's always been non-material amounts, I was screwing around or whatever and learning. But there are definitely people who, on one extreme, you know, the guy who's digging through the landfill trying to find his hard drive. But supposedly he's got hundreds of millions of dollars, but he literally can't find it. To maybe the people who joke on Twitter and say, oh, I got in a boating accident, right? How do they determine whether you actually forgot it versus you won't hand it over?

• 1:22:48Speaker 02

  Yeah, that's just gonna be, that's just gonna come down to, you know, putting, putting the contemnor, possible contemnor on the stand. Asking them questions and then making that credibility determination there in court. I mean, this is.

• 1:23:04Anthony Pompliano?

  Yeah, it is crazy.

• 1:23:05Speaker 02

  It is crazy. And it's something that, like, it sounds, it sounds for a fetch, but like, it's, like, it's happening. I'm tracking cases where this is happening.

• 1:23:15Anthony Pompliano?

  Really?

• 1:23:15Speaker 02

  There was a case, there was a case, I can't remember was in the States, but somebody, the plaintiff accused somebody of defrauding them out of Bitcoin and some other cryptocurrencies. They were in some business deal and the defendant never paid. And so I guess they were in the Netherlands, maybe. So the plaintiff gets one of these prejudgment attachments in the Netherlands. Wouldn't have been able to get that in the States. It's, again, it's very hard to get those. Wouldn't have been able to get that in the States, comes to the States and what domesticates is what it's called, that judgment.

• 1:23:56Speaker 02

  And so, you know, we generally, our courts generally give credit and, you know, full faith and credit to foreign judgments that, you know, look, look like they're on the up and up, right?

• 1:24:07Anthony Pompliano?

  You can challenge them.

• 1:24:08Speaker 02

  Not from North Korea.

• 1:24:09Anthony Pompliano?

  Not from North Korea, right. You can challenge them and say there was, you know, your due process was violated in that proceeding.

• 1:24:15Speaker 02

  So, so this judgment gets domesticated, turn over the Bitcoin. And US Marshals actually came to this defendant's house.

• 1:24:27Speaker 02

  To ask him for the private keys and he gave him the finger. I mean figuratively and didn't turn it over. And so this, this guy is being, is going through contempt proceedings now in federal court for not turning over, you know, I don't know anything about the facts of the case. I don't know, you know, what, you know, whether or not the allegations are true, but that, that is an instance where the, the court is going through contempt proceedings because someone is not turning over private keys.

• 1:24:56Anthony Pompliano?

  So 15, 20 years ago, you know, pre Bitcoin, uh, the only thing I could think of that is any what similar would be like if I had some massive safe.

• 1:25:06Speaker 02

  Exactly.

• 1:25:07Anthony Pompliano?

  Right. In my apartment or something and I had a bunch of cash and they came and they said, give us the code and you're like, I'm not giving you the code.

• 1:25:13Speaker 02

  Exactly.

• 1:25:13Anthony Pompliano?

  Yeah. They probably would just take the safe and like break it open, you know, or whatever. Like there was still some path.

• 1:25:19Speaker 02

  Yeah.

• 1:25:19Anthony Pompliano?

  Even if, uh, you, you wanted to make it harder for them. This is that on steroids, right?

• 1:25:26Speaker 02

  It's that on steroids.

• 1:25:26Anthony Pompliano?

  And it feels, uh, very different.

• 1:25:28Speaker 02

  Yeah. So now, so now if, if we're, you know, proponents of this technology, we have to acknowledge that this is not, this is an externality that for an individual who's being wrongfully sued is great that I can protect my, my funds, you know? I had, you know, I've told this story before, but you know, I had a client whose father's gold coins that she was bequeathed and kept in a safety deposit box were, um, seized to satisfy her husband's judgment, um, in a case where she wasn't a defendant and he wasn't even an account holder on the box, but he had access to the box.

• 1:26:11Speaker 02

  And so the courts basically inferred, yeah, that, you know, he had access and it belonged to him and those coins could be used to satisfy. So for someone like that who wants to store value and not have it seized under the color of law, because it happens, it's great. The flip side is though, you know, the money judgment, transfer of value to administer justice is like a really important thing to society, right? Before we had this system, you know, it was just go to the king and he's going to tell you, you know, what the judgment is.

• 1:26:46Anthony Pompliano?

  Yeah.

• 1:26:46Speaker 02

  Right? And, and like, or, or it just goes back to like, you know, I have to resolve my disputes through conflict because there's no other way.

• 1:26:55Anthony Pompliano?

  Mm hmm.

• 1:26:55Speaker 02

  Right? This money judgments are very like, you know, safe, orderly, you know, they generally give process to everyone to have facts determined and, and if you're now going to remove that linchpin from the justice system of being able to satisfy money judgments through, you know, garnishment on your mediaries, where you have recalcitrant defendants, you know, it's, it has the possibility to stymie justice and to prevent justice. So that's an externality that we as proponents of this technology need to acknowledge and realize, like Bitcoin doesn't fix everything, fix a lot of things, can also break some things in the process.

• 1:27:37Speaker 02

  I think, you know, the society we eventually get to with mass adoption is on the whole better, but there's a lot of growing pains between now and then. And so we should think about those negative externalities and how to maybe avoid them and how, how we can facilitate systems that, that can accommodate, you know, that help us get on the right path to our, you know, where we're going.

• 1:28:02Anthony Pompliano?

  Yeah, that, that makes a lot of sense and, and you could see good and bad coming out of that, right?

• 1:28:07Speaker 02

  Yeah. And again, it goes back to that neutral technology that's, you know, being used for good and bad.

• 1:28:12Anthony Pompliano?

  This episode is brought to you by Unstoppable Domains. They've partnered with blockchain.com to create NFT domain names ending in .blockchain. It's the perfect ending to show that you're a believer in a decentralized future. The blockchain.com community can join a short waitlist to get one for free at blockchain.com/ waitlist/ blockchaindomain. Free NFT domains provide all the benefits of premium unstoppable domains, including fee free. Free lifelong ownership. If you don't have a blockchain.com wallet, no worries. There's new free domains available to everyone. Either join the waitlist for a free blockchain.com domain, or visit unstoppabledomains.com to buy your domain today, starting as low as $5. Unstoppabledomains.com.

• 1:28:55Anthony Pompliano?

  This episode is brought to you by Valor, which represents what's next in the digital economy. They provide simplified trusted access in crypto, decentralized finance, and Web 3 investment opportunities. Institutions and investors can gain diversified, secure, compliant, and easily tradable access to a diversified set of industry-leading equity products and protocols, all through a single-stock purchase on a regulated exchange. They currently are listed in the US under the DEFTF stock ticker and on the Canadian NEO exchange under DEFI. For more information or to subscribe to receive company updates and financial information, visit their website at valour.com. That's V A L O U R dot com. I got a question on Twitter. I've already told you this question, because I want you

• 1:29:39Anthony Pompliano?

  to look it up first. And let me put a big caveat on this is I don't know the individual. They were, I think, I'm pretty sure it was a student anonymous account, and they DM'd me and they said, right after the Alex Jones judgment, and they basically said, this opens a can of worms. This is insane. If somebody can hold a media publisher liable for saying something that they actually do not believe to be true, then their words, not mine, essentially was, well, then every media company on earth, you know, should be held liable and explicitly pointed to, I believe he mentioned the Hunter Biden laptop story of like, somebody who

• 1:30:23Anthony Pompliano?

  is publishing it may have thought it was really real, but they were saying it wasn't, or whatever. So.

• 1:30:29Anthony Pompliano?

  Crazy characters involved, lots of complexity. But if we just pull out of this for a second, what was interesting to me, and I didn't want to engage too much because I didn't know who this person was. And I was like, I have no idea. But what was fascinating was this idea of free speech. But there's an element of publisher versus private individual. And then the moving of belief. And what I mean by that is like, if somebody says something and believes it to be true when they say it, and they keep repeating it, but at some point, they change their mind, then it feels like then they could become liable, which, you know, however that plays out.

• 1:31:08Anthony Pompliano?

  But like, how do you analyze the Alex Jones kind of entire judgment with mainstream media? And at least the perception, I think, from the average American being like, oh, they're lying to us.

• 1:31:20Speaker 02

  Right.

• 1:31:21Anthony Pompliano?

  Whether that's true or not, you know, it could be debated. But like, has the game shifted now a little bit after this? Or is this just implementing old rules?

• 1:31:31Speaker 02

  I think what's interesting about the, well, I guess it's not interesting, but the Alex Jones judgment is actually, he actually defaulted on liability.

• 1:31:39Anthony Pompliano?

  Okay, explain what that means.

• 1:31:41Speaker 02

  So the, whether or not he was, the court essentially adjudicated him liable without him defending, because I think he was like dragging his feet on a lot of, a lot of discovery issues and didn't turn over a ton of evidence and was just stonewalling for years and years. And eventually courts get fed up with that because it is an obstruction of justice essentially. And they will default you, meaning you, you're now, you're now liable. Liability is determined. Now we just have to decide how much you owe. So he essentially forfeited his right to defend himself.

• 1:32:21Anthony Pompliano?

  Interesting.

• 1:32:22Speaker 02

  On, yeah, defamation.

• 1:32:23Anthony Pompliano?

  So from a legal proceeding standpoint, they made a claim, he could have defended himself and maybe been victorious or not.

• 1:32:31Speaker 02

  Right.

• 1:32:31Anthony Pompliano?

  But he just decided for whatever reason not to do that.

• 1:32:34Speaker 02

  Right. He was just stonewalling. So, you know, that's, that's an interesting caveat to whenever we're comparing this, you know, this case to anything else is that liability was a foregone conclusion based on Alex Jones's actions within the litigation.

• 1:32:50Anthony Pompliano?

  Okay.

• 1:32:52Speaker 02

  Now, you know, in terms of like, just general defamation law, right? I mean, there's, there's a few, you know, truth is a defense to defamation. You know, opinion speech is a, you know, defense to defamation because that again gets into free speech, right? You know, something that's, you know, if, if I call you a, you know, shitcoiner, that's my opinion. It's not, I'm not calling you that. So, so that's, that's another defense that could have been raised. Again, the allegations and, you know, the statements that were made were like, were really tough statements, right? That he was making about these parents of, you know.

• 1:33:35Anthony Pompliano?

  Because it wasn't just about the event. I think it was also about individuals themselves.

• 1:33:38Speaker 02

  It was about individuals themselves.

• 1:33:40Anthony Pompliano?

  And that's how they said, hey, now you're talking about us.

• 1:33:42Speaker 02

  Right. And attacking them when they went on, you know, and gave interviews on television as crisis actors and, and things like that. That would have been really hard to defend. If, if I'm part of his defense team, you know, that's because like, truth is a defense. So like, what, you're going to try and, you know, prove that this person was an actor? Like, you're not, you're not going to do that. That was, that was a lie, right?

• 1:34:05Anthony Pompliano?

  So, hi, hi, his situation has a lot of emotions attached to it, right? But, but we kind of pull away from the emotions and we just look at it. If he had showed up to court and not stonewalled or whatever, and he just been like, that was my opinion, does that like absolve him? And he could have said whatever he wanted it because it was quote, quote, his opinion? Or like, how does the court look at opinion verse like, I don't care what your opinion is, you can't say certain things?

• 1:34:27Speaker 02

  Yeah, there's, again, it, it gets into, it's like a really like gray area when you go into that opinion.

• 1:34:32Anthony Pompliano?

  Interesting.

• 1:34:33Speaker 02

  Calling someone, calling someone a crisis actor is, it seems qualitatively different than calling someone an asshole, right? You're, you're, because now what you're doing is you're, there's this like concept in defamation law of like, you know, the, the reason that you're being harmed is because your status in the community is being denigrated by that, you know, presumed fact, you know, that statement that's being offered as a fact. Um, so yeah, it would have been, it would have been.

• 1:35:11Anthony Pompliano?

  He was in a tough situation.

• 1:35:12Speaker 02

  He was in a tough situation. He would have been on the hook.

• 1:35:14Anthony Pompliano?

  He put himself in a situation.

• 1:35:16Speaker 02

  Yeah.

• 1:35:17Anthony Pompliano?

  But yeah, let's be, let's be clear. Let's be clear. If, if I were on his defense team, I would have. I talk about a lot of crazy stuff on this podcast. I was gonna make sure people understand that I am in no way defending anyone's actions. I'm just simply trying to understand what kind of, what some details are. If we take that a step further and we say to ourselves, okay. One of the things that you always hear, and I think actually Elon Musk tweeted about this a couple of weeks ago. He was like, oh, it's really hard for public figures or people that, you know, that are in the news or whatever, to prove this defamation stuff. And it was around the article about him sleeping with Sergey Brin's wife.

• 1:35:52Speaker 02

  Oh, right.

• 1:35:53Anthony Pompliano?

  Right. And he was like, well, she's not a public figure. Like, maybe she could go after them, but like, basically, you know, I can't.

• 1:35:58Speaker 02

  He's a public figure. Yeah.

• 1:36:00Anthony Pompliano?

  How do they determine that in the sense of like, if the parents in this situation, who I think, as far as I think everyone would analyze are not public figures.

• 1:36:07Speaker 02

  Right.

• 1:36:08Anthony Pompliano?

  But then they go on television and they're doing interviews on national television. Like, how does a court look at like, what becomes of public?

• 1:36:13Speaker 02

  I actually don't know the answer to that question. That's a good question. I actually don't know the answer to that. It would probably. I mean, I'm sure that it's gonna be case law dependent on whatever jurisdiction you're in. But I, you know, it's probably gonna be looking at just general, general press coverage of somebody, you know, like.

• 1:36:31Anthony Pompliano?

  Like, do you just walk out on the street and ask a hundred people?

• 1:36:33Speaker 02

  Yeah, right.

• 1:36:34Anthony Pompliano?

  51 or more know that like you're a public figure?

• 1:36:36Speaker 02

  Yeah, that's a good, that's a good question. I don't know the answer to that one.

• 1:36:38Anthony Pompliano?

  The reason why I think of it is, um, uh, it's separate from that case. It's almost like, you know, A-list celebrity, like definitely public figure, like D-list celebrity, maybe not.

• 1:36:46Speaker 02

  This does get litigated. Like, there is, there is case law out there on this. Like, who's, who's a public figure? Cause that's, that, you know, that's one defense is like, oh, no, you know, that plaintiff is a public figure. So, you know. The, the standard is.

• 1:37:00Anthony Pompliano?

  Game on.

• 1:37:00Speaker 02

  Yeah, it's like, it's like game on. Yeah. So, yeah, that's a.

• 1:37:06Anthony Pompliano?

  And if we go back to the question this person asked me, in terms of like the mainstream media, they have legal teams, they have compliance, you know, they've got all this stuff that they're trying to do things the right way, hopefully. Could they be held liable? Like if they wrote an article saying something and somebody else at the organization didn't believe that thing, is that like a legal liability?

• 1:37:28Speaker 02

  It can be. It's really difficult because you, you have to, it can't really be an oops, right? It can't be like, you know, the investigative team, you know, did its diligence and put out this piece and then come to find out there was additional information that we learned after the fact. And then, you know, now probably, probably newspaper has to retract at that point, maybe. You know, there's actually a really good movie about this set in Miami with, with Paul Newman, Absence of Malice.

• 1:38:03Anthony Pompliano?

  Oh, I've not seen that.

• 1:38:03Speaker 02

  Yeah, you should go check it out because it's a great time capsule of Miami in like the seventies. And you look at, you know, I mean, it's shot like on location here. And so like, you know, he's living like in the Bay downtown on a boat and like, there's nothing around, right? It's just totally wide open. But yeah, there was a movie about this and like, you know, Sally Fields was a reporter and like reported on like, I guess his relationship to like the mob or something like that, which turned out not to be true. And like, it was, yeah, it's an interesting movie. And it's called Absence of Malice because, you know, that's, that is part of what you're looking at in defamation cases when you're going after

• 1:38:44Speaker 02

  a, a public figure or whatever. And, you know, you've got to prove, or malice is actually what you don't have to prove is a public figure, right? It's, it's just the public figure.

• 1:38:58Speaker 02

  Actually, I think I've got that backwards. But anyways, it's a, it's a good movie. Go, go check out Absence of Malice.

• 1:39:04Anthony Pompliano?

  And when we think about the public conversation, right? The media publishers are one piece of it. Celebrities, whatever, another piece, but we talk on Twitter. There's, you know, hundreds of millions of other people on Twitter.

• 1:39:18Speaker 02

  Yeah.

• 1:39:18Anthony Pompliano?

  You've got all the other social networks or whatever. One of the things to me that feels the big question mark in society is how comfortable is society with those platforms moderating speech?

• 1:39:32Speaker 02

  Right.

• 1:39:32Anthony Pompliano?

  And I think most people, again, not everyone, but most people would say, hey, if you go on Twitter and you're like, you know, I'm gonna go shoot something, you know,

• 1:39:40Speaker 02

  Right.

• 1:39:41Anthony Pompliano?

  Conduct a shooting or whatever, people are like, that shouldn't be on. And by the way, like law enforcement should probably be given heads up and kind of addressed. If you go on and in March of 2020, you say, I think that this thing may have come from a lab.

• 1:39:58Speaker 02

  Right.

• 1:39:58Anthony Pompliano?

  At the time, no bueno, right? You're literally, people were kicked off, like all this stuff. Now there's politicians going on national television talking about it. Right? And so if we just zoom out for a second and with the benefit of hindsight, we say to ourselves, oh, facts can change. Right? Like, like literally quote, quote, truth changes based on the information we have at the time. You can also look at CDC at one point said masks don't work. Then they say they work. Now the new guidance kind of is like, you know, everyone's good. Like, you know, it's over.

• 1:40:32Anthony Pompliano?

  How do lawyers, courts, platforms think about like, what's true in one moment in time may actually not be the like consensus truth at another time?

• 1:40:44Speaker 02

  Right? Yeah, I think your example of like, you know, someone going, you know, making threats and threatening speech and inciting violence. That's a pretty good like line in the sand for a platform. I guess we're gonna, we're, we're, we're gonna make sure that, you know, that that's not part of our terms of service and we're gonna moderate that content. Um, yeah, content moderation is not, I mean, I'm of the opinion that there's a lot, there's too much content moderation going on.

• 1:41:12Anthony Pompliano?

  I generally.

• 1:41:13Speaker 02

  Yeah, there needs to be more of a free hand when it comes to speech. At the same time, these are private companies that are running these platforms and, you know, they can, they can moderate how they, how they choose to. That gets difficult. That's, that's where there's a lot of pushback from people because it's like, well, no, they should be treated as common carriers like, you know, they're, they're just the telephone wires now of our society. You know, they should be regulated like a utility and, and then we could tweak that. Now, the problem with that is like, you're going to regulate Twitter like a utility. Well, who's doing the regulating, right?

• 1:41:54Speaker 02

  Like now you've just given the government, you know, the ability to tweak what the content moderation is.

• 1:42:02Anthony Pompliano?

  What does the government?

• 1:42:03Speaker 02

  Does anybody really want that? I mean, some people might, but.

• 1:42:06Anthony Pompliano?

  Yeah, a lot of people, in a scary way.

• 1:42:09Speaker 02

  Yeah.

• 1:42:10Anthony Pompliano?

  What does the government do with the telephones? Do they give them like, again, a, a, a uneducated view of it would be, I can call you and say whatever I want. And the telephone isn't gonna all of a sudden shut down or, you know, my phone doesn't blow up in my hand, you know, like, there's nothing kind of crazy that happens.

• 1:42:28Speaker 02

  Yeah.

• 1:42:28Anthony Pompliano?

  But maybe that's not true. I don't know.

• 1:42:29Speaker 02

  Yeah, but telephones, you know, there's like wire fraud and stuff. If you commit crimes over the, over the telephone, you know, it's interstate wire fraud and, and stuff like that, but.

• 1:42:38Anthony Pompliano?

  But it's all after the fact and goes to court.

• 1:42:42Speaker 02

  Right.

• 1:42:43Anthony Pompliano?

  It's not like all of a sudden that like AT&T or Verizon can't show up and be like, we're shutting down your service before you've gone to court.

• 1:42:50Speaker 02

  Yeah, think, think of them, you know, the analogy is, I guess, to like, to broadcasters in the airwaves and stuff like that and, and regulation of that.

• 1:43:00Speaker 02

  And you know, I'm not, I'm not like a, you know, regulatory expert when it comes to that.

• 1:43:06Anthony Pompliano?

  Neither am I.

• 1:43:07Speaker 02

  I know there is some.

• 1:43:10Speaker 02

  You know, the, the first amendment does prevent what the government can do to, to some degree when it comes to, you know, allowing, like, you know, allowing counterpoints to be broadcast on a, on, but yeah. So the first amendment still backstops what can and can't be regulated there.

• 1:43:32Speaker 02

  But, you know, like, so, you know, I, I'm not sure. Folks, folks who say they want regulation around Twitter and, and these platforms, you know, I think they need to think through a little bit more carefully, you know, what, what that's going to mean. And if it's just that you don't like being, you know, you don't like the way a, a platform is, is, you know, preventing a certain conversation from happening.

• 1:44:04Speaker 02

  Again, I just, I, I want to reiterate, like, you really won't like it if the government's doing that.

• 1:44:11Speaker 02

  I mean, it's, it's, now, one can argue, well, they essentially are captured by the government already. They don't want to run afoul of the government.

• 1:44:22Speaker 02

  Cause they're huge, giant centralized corporations that are easy targets for regulation and antitrust, which is, you know, what's, what's going on.

• 1:44:29Anthony Pompliano?

  Yeah.

• 1:44:30Speaker 02

  A lot of noise on the hill about antitrust regulation and breaking up, you know, these big tech giants again.

• 1:44:35Anthony Pompliano?

  Yeah.

• 1:44:37Speaker 02

  So, yeah.

• 1:44:38Anthony Pompliano?

  I don't know how true this is, but I saw a screenshot, which again, you know, I hope it wasn't fabricated. There was a screenshot where, are you familiar with this guy, Alex Berensen? I think is how you say his name.

• 1:44:54Speaker 02

  Sounds familiar.

• 1:44:55Anthony Pompliano?

  He, he was one of the, probably the loudest voice questioning the response to COVID.

• 1:45:01Speaker 02

  Okay.

• 1:45:02Anthony Pompliano?

  At least one of them. And.

• 1:45:06Anthony Pompliano?

  The screenshot was notes or communication inside of Twitter after they had visited some politicians in Washington DC. And it was, and I'm paraphrasing, but basically something to the effect of like, you know, meeting went well. Their main sticking point was like, they were asking why Alex Bernstein hasn't been kicked off Twitter yet. And so it kind of shocked me a little bit like,

• 1:45:29Speaker 02

  yeah, you don't get to see these communications every day. Obviously, there was some lawsuit

• 1:45:32Anthony Pompliano?

  or something where they probably made public. But that was like a question like, hold on a second here. Like, we have a government official and it was unclear who government or whatever. But some, somebody in the government, you know, apparatus, asking a private company about it. Now, what didn't appear to be the claim was they were demanding kick them off explicitly.

• 1:45:55Speaker 02

  Right.

• 1:45:56Anthony Pompliano?

  Implicitly, right? If you're asking about one of the 330 million people who happen to use the service or, you know, whatever the numbers are. How does that play? Like, like, right? Is that's, that's normal?

• 1:46:10Speaker 02

  I, oh, I don't know. But, you know, that's an example of like, well, maybe, maybe if, maybe if it were all out, you know, the regulation were all out in the open, it would be better than this backdoor regulation that may or may not be going on. I mean, look, we know there's a lot of interfacing, you know, back channel interfacing that happens. I don't know. It's, it's a huge, I don't have the answers. It's a huge, huge issue. You know?

• 1:46:37Speaker 02

  Yeah. Society needs to be able to communicate freely with each other. At the same time,

• 1:46:46Speaker 02

  you know, companies should be allowed to make decisions, you know, for themselves.

• 1:46:53Speaker 02

  I mean, that's, that's, actually, there's a case going on here in Florida right now with the like anti-woke legislation that was passed, where a judge, I think it was maybe in the northern district of Florida, but here, a federal judge here in Florida enjoined part of the legislation

• 1:47:15Speaker 02

  Prevented private companies here in Florida from requiring like DEI trainings, like diversity, equity, inclusion.

• 1:47:24Anthony Pompliano?

  So the government said you cannot require this?

• 1:47:27Speaker 02

  Yes, the state of Florida said, here's a list of essentially viewpoints that that were essentially like, you know, white fragility type talking points that you are not allowed to make it a requirement that.

• 1:47:44Anthony Pompliano?

  Doesn't mean you can't do it, just means you can't require it of your of your employees.

• 1:47:47Speaker 02

  I don't know.

• 1:47:48Anthony Pompliano?

  Or did they outlaw?

• 1:47:49Speaker 02

  I think it was pretty, it was pretty broad. That's what the, that's what the opinion said. It was pretty, pretty broad and enjoined enforcement of this saying like, look, now private companies need to be able, it's free speech, private companies should be able to, you know, hire folks and as a requirement, you know, have them go to whatever trainings. That person doesn't like that training, they don't have to stay at that job, like, you know. So that's, that's an example of where, you know, content, the government's now engaging in content moderation or was trying to, state of Florida on private companies. And, you know, the first amendment still prevents that. You know, the government can't, can't regulate viewpoints.

• 1:48:35Speaker 02

  And so, you know, forcing Twitter to offer viewpoints, I think that's, I think that's still violation of the first amendment. If you're going to regulate Twitter and force them to air, you know, viewpoints that they wouldn't air themselves.

• 1:48:56Anthony Pompliano?

  It brings up.

• 1:48:57Speaker 02

  It's weird because we're talking about Twitter, which is a huge faceless corporation.

• 1:49:00Anthony Pompliano?

  Yeah.

• 1:49:00Speaker 02

  But corporations have speech rights too.

• 1:49:02Anthony Pompliano?

  Yeah, it's on all the platforms they do this now, but we talk about all kinds of stuff on this show.

• 1:49:11Anthony Pompliano?

  Spotify and YouTube are the two biggest ones where I see it. They will put these labels over the content.

• 1:49:19Speaker 02

  Yeah, I've seen these.

• 1:49:20Anthony Pompliano?

  And it's not a

• 1:49:21Speaker 02

  It's like a COVID, learn about COVID 19 or something.

• 1:49:23Anthony Pompliano?

  Always learn about.

• 1:49:24Speaker 02

  Which is always weird because then I'll listen to like that podcast and it literally has nothing to do with. I almost think it's like random at some something. I don't know.

• 1:49:35Anthony Pompliano?

  There's algorithms. There's two things that I'll, I'll, I'll tell you that I've noticed recently and then I'll tell you a story when I worked at Facebook.

• 1:49:40Speaker 02

  Okay.

• 1:49:41Anthony Pompliano?

  That will, I think, give people more context for the internal workings of some content version. So if we mention the word COVID, Spotify, YouTube, bam, you're getting the, the label.

• 1:49:54Anthony Pompliano?

  There are audiences where when they see the label like, oh, this is going to be good.

• 1:49:59Anthony Pompliano?

  Marketing, not saying that's good or bad. I'm just saying like, I've seen the comments and for sure. People are like, oh shit, you got the label. I'm definitely listening. Which is like some weird like counterculture.

• 1:50:09Speaker 02

  Like the black flag.

• 1:50:10Anthony Pompliano?

  Yeah, like just like some weird thing that comes out of some. But also, guess what the one topic is that without fail gets suppressed? Like it, it's so egregious now that it's impossible to ignore.

• 1:50:25Speaker 02

  I have no idea.

• 1:50:26Anthony Pompliano?

  Not the virus, China.

• 1:50:29Speaker 02

  Really?

• 1:50:30Anthony Pompliano?

  We put a video up. It's like a joke now, right?

• 1:50:33Speaker 02

  It's like, what are they, what are they labeling it?

• 1:50:35Anthony Pompliano?

  There's no labels. It just, you can just see

• 1:50:37Speaker 02

  It just goes into a black hole.

• 1:50:38Anthony Pompliano?

  Content has like kind of an average, you know, velocity and all stuff.

• 1:50:42Speaker 02

  It's the shadow, shadow banning type thing. Yeah.

• 1:50:44Anthony Pompliano?

  And I'm sure that there are explanations, whether I agree with them or not, or you know, whatever and all stuff. But it's fascinating to watch. Like, yeah, you know, when you create a lot of content on the internet, I think you pretty much know. Hey, if I post this, it'll be popular. If I post this, it won't be popular.

• 1:51:03Speaker 02

  Yeah, you've got a baseline now.

• 1:51:04Anthony Pompliano?

  And there's certain words that just you know that they're going to get treated differently. And so what does it change the way the content gets created, right? Because then people started to like, we joke like, maybe we should talk about it.

• 1:51:13Speaker 02

  Self censorship.

• 1:51:14Anthony Pompliano?

  And every time it comes up, we'll just bleep it.

• 1:51:16Speaker 02

  Yeah.

• 1:51:17Anthony Pompliano?

  Everyone knows it, but like, we had not done that.

• 1:51:22Anthony Pompliano?

  But when I was at Facebook, I, so I'd been in the military. I was working at Facebook and I worked on the Facebook pages team.

• 1:51:31Speaker 02

  Okay.

• 1:51:32Anthony Pompliano?

  And we had a job where it's supposed to grow the pages, all that stuff. But it was a very kind of unique position because the pages was like the top of the funnel for their business product.

• 1:51:41Speaker 02

  Okay.

• 1:51:41Anthony Pompliano?

  So you got a page to be an advertiser, revenue, like all stuff. And so you'd meet a lot of people around the company. And I remember I met, I met a gentleman and I can't remember if he reached out to me or somebody introduced, whatever. And he was on the, he was on a different team, but part of what he did was he was very interested in content moderation, specifically around specific groups from the Middle East that had either been labeled as terrorist organizations or were questionable. I remember talking to this guy and he was like, you have no clue. Like a video come out and it's like, it spreads like freaking wildfire, right? And it's not just one account. It's uploaded to hundreds of thousands of accounts. So I remember being like, interesting data point.

• 1:52:23Anthony Pompliano?

  As it is, you know, three, four weeks later, a video comes out and I don't want to describe it in too much detail, but basically it was, they'd capture, allegedly had captured a pilot and they basically burned them. And it was all on video and it was done in like a very, almost like a high school football highlight tape, right? And there's music and this, and it was just so grotesque.

• 1:52:47Speaker 02

  Yeah.

• 1:52:48Anthony Pompliano?

  Got uploaded and there was an internal thing and I saw it got uploaded, right? And I, I went, clicked on it and I remember being like, man, I've seen some crazy shit in my life. It's bad. And it was just getting uploaded over and over and over and over and over, just all over the place. And they had systems internally to try to, you know, whether it's something about the video and the metadata or whatever, and just try to identify it, take it down, take it down, take it down. It was impossible, right? Just because it's just the scale of billions of users, one video being replicated over and over again, just all this stuff. And I remember for the first time being like, oh, man, if there was no moderation, like if there was, if there was nothing and it was like completely wild wild west, you know,

• 1:53:31Anthony Pompliano?

  like you wouldn't go on Twitter. Yeah. Right. Cause the videos that would end up getting so much engagement and all stuff would be the most extreme things that.

• 1:53:40Speaker 02

  Yeah. Well, that brings up an interesting question, right? Like because of the, the sheer number and size of, you know, the sheer quantity of content that is, that is available now on the internet. You know, back in the nineties, it was like you were on chat, you know, rooms and message boards and, you know, there wasn't, there wasn't that many people on the internet. It was like 40 million people or something like that. Like in the nineties, like it wasn't.

• 1:54:06Anthony Pompliano?

  More people using Bitcoin today.

• 1:54:07Speaker 02

  That's right. That's right. Absolutely. That's where we are. Like, um, and so, you know, the necessity such that there is one, and here it sounds like there absolutely was a necessity for content moderation, especially when you're talking about, right, violent.

• 1:54:22Anthony Pompliano?

  And it was like a, not just, hey, here's violence. It was everyone else should go conduct violence. Right?

• 1:54:27Speaker 02

  Right. Um, you know, the need for that kind of moderation wasn't, wasn't as, nobody was, you could avoid the content. Let's put it that way. If you, you knew, you knew to like, you know, unsubscribe from that listserv, you know, if too much of that stuff came up and like, you could avoid it, I guess. And now it's, it's, you know, with, you know, billions of people on the internet and on these platforms, it's hard to avoid, uh, content.

• 1:54:57Anthony Pompliano?

  Well, if you think that just the newsfeed, right? I mean, the invention of the newsfeed itself of, uh, if you were on MySpace and I went to your profile, right? Okay. I navigated there or whatever. But the invention of like, let's take all this content, let's put it into one specific location. Let's start to algorithmically rank it. Uh, okay. Still, that's like people that I somehow have connected with, right? Whether I friended them, on page, whatever. But then you get share on a Facebook or a retweet on Twitter. And now technically, yes, if you retweet something, I followed you. But the velocity at which this information can spread is drastically different.

• 1:55:34Speaker 02

  Yeah.

• 1:55:34Anthony Pompliano?

  Then, you know, if you had to copy and paste it and go and like, it's just different.

• 1:55:39Speaker 02

  Yeah.

• 1:55:40Anthony Pompliano?

  And so then you also get into things like, I don't know if you've seen on Instagram does this a lot. It's like they'll show you a post and they'll have a little thing at the top and it'll be like, you're seeing this because you follow this account.

• 1:55:54Speaker 02

  Yeah, yeah.

• 1:55:56Anthony Pompliano?

  You know, like some everyone's on my all like, good, good new account.

• 1:56:00Speaker 02

  You know, that's I'm like, this is kind of weird. It's the reason I quit Instagram, actually, among many other reasons. But yeah, it just felt, it felt like I was just grist in their advertising mill.

• 1:56:12Anthony Pompliano?

  Yeah.

• 1:56:12Speaker 02

  And it was, and it sucked because like I liked, you know, like I'm a photographer, like amateur photographer. And so like I followed, you know, just photographers, basically. And like, that was, you know, accounts that had, you know, good artistic merit.

• 1:56:24Anthony Pompliano?

  They love you guys. They got the camera advertisers.

• 1:56:28Speaker 02

  That's right. That's right. And, uh, and, but it was just like, yeah, it was too much.

• 1:56:33Anthony Pompliano?

  Over and over.

• 1:56:34Speaker 02

  It was too in your face. And so now, you know, so applaud them for putting that out there and saying like, you know, hey, you're seeing this because, because then I was able to make a decision to not use the service anymore. But so we'll see how long they keep doing that.

• 1:56:48Anthony Pompliano?

  Yes.

• 1:56:50Speaker 02

  Yeah. And I don't know if that's something that, um, you know, that, that Congress wants to do. I mean, you know, I know they've been holding tons of hearings on, you know, the algorithms and mental health and social media. And, um, you know, eventually I guess Congress is just going to have to try and, you know, pull the trigger and pass something to regulate. And then we'll work it out in court.

• 1:57:14Anthony Pompliano?

  Weird to me. Like it, like it's classic, uh, grandstanding to some degree.

• 1:57:19Speaker 02

  Oh, for sure.

• 1:57:19Anthony Pompliano?

  It's always like this, um, uh, I have a nine month old daughter, right? So like, uh, when I see the hearings and they're like teenage girls, mental health. I'm like, by the way, yes. But so is the 65 year old man who's on the same platform. Like they're getting the same garbage as well. Right? And like, sure. I get like, one is, you know, self-image and body and, and you're in a kind of malleable part of your life. And like, so there, there's a difference to a degree. But in some way, it's like, no, this is like a humanity thing.

• 1:57:51Speaker 02

  Yeah.

• 1:57:51Anthony Pompliano?

  Right? If you sit and you just doom scroll all day long, like that's gonna fuck with your mind.

• 1:57:55Speaker 02

  It has, it has a serious effect on people's mental health. It's tough.

• 1:57:59Anthony Pompliano?

  Yeah.

• 1:57:59Speaker 02

  And people, people are not designed to have this like constant feed of information about the world all the time, right? Right? Like we're, we're not omniscient. Like we're, you know, we, we, we developed and we evolved in these like tiny little communities. Right? Where it was like your relation, you could like max out your relationship at like a hundred. Right? Or something like that. I think there's been some like studies about, you know, networks.

• 1:58:25Anthony Pompliano?

  Yes.

• 1:58:26Speaker 02

  Stuff. And, you know, basically like, yeah, individual humans see a top out.

• 1:58:30Anthony Pompliano?

  We've got so many.

• 1:58:31Speaker 02

  Yeah. Where you can really like service them and, you know, and know each other well and, and, and create a society around that. Without some kind of scaling solution. So we're just not, we're not meant to, to have all this information, but here it is.

• 1:58:44Anthony Pompliano?

  I, I've noticed a, a trend in communication that maybe I wasn't paying attention before or whatever. But I now regularly get emails and people will say, you know, hi, pump. And then there's some qualifier as to how I know them, what they do, or where we met. And then they, whatever the email is about. And like, I'm sure that, you know, if, if I walked up to somebody randomly on the street 20 years ago or something, right? And we started talking, I said, oh, remember we met?

• 1:59:13Speaker 02

  Yeah.

• 1:59:13Anthony Pompliano?

  Whatever. Right? So, so it's not that like this is some brand new thing.

• 1:59:16Speaker 02

  Right.

• 1:59:17Anthony Pompliano?

  But it's almost like there's this expectation that the people you communicate with actually may not remember you or whatever. And it feels like that is sad in a way. But it's just the nature of like, you know, how many emails do you get? How many people on social media? Like, like you can't keep track of everyone.

• 1:59:31Speaker 02

  Right. And especially if you haven't met these people face to face, then you don't.

• 1:59:35Anthony Pompliano?

  So now I ask myself like, damn, should I start off emails with like, you know, and it's almost like, you're like, oh, this is definitely a memetic response. I see other people do it, I need to do it. Uh, but, but it does, it does change the way that people communicate and interact. And I don't know, it's just a weird frigging thing.

• 1:59:50Speaker 02

  Yeah. And I don't, I don't know what the answer is. Um, and, and it, but it's, but look, like the conversation needs to be had. And you know, I think ultimately, the answer is going back to, um, you know, the internet and voiding content and stuff like as long as, as long as there, you know, there are forums in places where people can go to find the content that is not mainstream and that is being suppressed by these platforms, like the alternate forums exist. Um, and maybe one day those alternate forums and the ideas on those alternate forums, um, catch, you know, more mainstream, you know, uh, acceptance.

• 2:00:33Speaker 02

  And then it shifts and the bigger platforms are now, you know, just like you were saying with Hunter Biden's laptop and, you know, the, the lab leak theories and stuff, um, you know, but as long as there's, as long as there is a forum somewhere for ideas, um, you know, maybe that's the answer. As long as you're not totally suppressing every forum. Um, and, and you know, there's, there's, there was gab and there's truth social and, you know, there's, you know, for train, for Chan and eight Chan and 12 Chan and whatever Chan it's up to now, like, you know, those like, you know, kind of seedy parts of the internet, if you want to call it that, um, exist where, you know,

• 2:01:15Speaker 02

  those non-mainstream ideas can be discussed. Um, as, you know, distasteful as the mainstream finds them, or you and I would find them, um, the fact that they exist, that's, that, that's good and that should be, it's, there's a market for it. And, you know, even if it's small. Um, and so, yeah, cause you're battling network effects is hard. Yeah. Battling network effects is hard and it's, it's really hard, even when, you know, when it's a level playing field. And then when the network, you know, the owner of the network is, you know, using that network, you know, it's, yeah, it's tough. It's tough to beat.

• 2:01:51Anthony Pompliano?

  The place I want to end on, you spent a bunch of time, First Amendment, many other legal issues, but if somebody wants to go learn more about the First Amendment and kind of how it's role in today's like modern society, I'll give one suggestion and then I'd love to hear from you where they can go. Mine is just go read the First Amendment.

• 2:02:13Speaker 02

  Yeah.

• 2:02:14Anthony Pompliano?

  Like, I'm always surprised, like, by the way, I don't have it memorized or anything. You don't have to be like, you know, an expert on it, but like, literally just go read it one time, so you know what's in there.

• 2:02:22Speaker 02

  It's always a good place to start.

• 2:02:23Anthony Pompliano?

  It's probably a good starting point. But are there other places that you would suggest people to go and get educated or things that you feel like are good resources or anything?

• 2:02:32Speaker 02

  Let's see. Start, definitely start with the First Amendment and read that. It's not going to give you too much clarity, though, you know, as there are lots of provisions of the Constitution that, you know, we don't have much clarity on. And then, you know, funny, funny story real quick about that is, you know, I have like little pocket constitutions that I keep around the house. And, you know, my, my son, I took it to like show and tell one time for like, you know, it was like Memorial Day or something like that, Something About America. And then I also have like my law books and like some treatises from law school and stuff. And these are like, you know, a thousand pages and like 10 times the size

• 2:03:14Speaker 02

  of the pocket Constitution. And, you know, my son saw it and was like, oh, that's, that's the Constitution too? I was like, well, yeah, that's all, everybody fighting over what that little book and those little words mean is, is right here. So.

• 2:03:29Anthony Pompliano?

  It's a great way to look at it.

• 2:03:29Speaker 02

  Yeah, there, there are tons of treatises you can go and look at. That's probably too high level. You know, if you're interested, if you're coming at it from a perspective, from, you know, like a digital assets perspective, Coin Center has a lot of great explainers. If you just go to their website, they have a lot of educational material and they've put out some really good. Analysis of like Dex's decentralized exchanges and the First Amendment. I would suggest just checking that out and see what Peter Van Valkenburg and Jerry Breido have written over there because they're pretty good at laying things out, laying out the relevant doctrines, First Amendment doctrines that apply to digital assets. That's a, that's a good place to start.

• 2:04:12Anthony Pompliano?

  Awesome. And then for you and your practice, like what do you specialize in or if folks want to reach out, where can they?

• 2:04:19Speaker 02

  Yeah, so I'm an appellate attorney, which means whenever there's an appeal of a judgment or an order, you want to reverse it or uphold it, that's where I get involved. And sometimes I'm involved earlier during the litigation or anticipating, you know, appeals. So that's, I do a lot of briefing and researching and writing and that's, you know, kind of, kind of where I came into Bitcoin and digital assets is I've now started to write and research on issues like the First Amendment that intersect with, with Bitcoin. And so you can, you can find me bitcoinbrief.io is my newsletter, legal research newsletter where I cover a lot of these topics. I've written some pieces for Bitcoin magazine. If you just go to like

• 2:05:04Speaker 02

  their search author page, you'll find it. I'm on Twitter at WA Daniel. And if you go to like Florida Bar's website, put in my, my name, William Aaron Daniel, you'll, you can call my, you can, you can, I'm doxing myself, you know, I'm out there, I'm, you know, here's my face, you can find my office, call my office. Yeah.

• 2:05:25Anthony Pompliano?

  I, I do love a good, a good person to come up to me in some social setting and say like, I'm so and so on Twitter.

• 2:05:32Speaker 02

  Yeah.

• 2:05:33Anthony Pompliano?

  And my wife always laughs. She's like, it's always like, you know, like Crypto Panda.

• 2:05:36Speaker 02

  Right, right, right.

• 2:05:39Anthony Pompliano?

  How'd you call that name?

• 2:05:40Speaker 02

  Yeah. No, the, again, NIMS are important. It's, you know, we've been bashing Twitter a little bit, but it's great that Twitter is still, you know.

• 2:05:49Anthony Pompliano?

  Twitter's the most important platform.

• 2:05:51Speaker 02

  Yeah.

• 2:05:53Anthony Pompliano?

  One of the most important platforms for sure in America, I would argue that for most people, or many of the people who are listening to this from a business, professional career standpoint, Twitter is what LinkedIn should have been.

• 2:06:06Speaker 02

  Yeah.

• 2:06:06Anthony Pompliano?

  Which is like, that's where you actually go meet people.

• 2:06:08Speaker 02

  Right.

• 2:06:09Anthony Pompliano?

  And you have connections.

• 2:06:09Speaker 02

  You have conversations.

• 2:06:11Anthony Pompliano?

  Yeah, and it's like, cool, you know, yes, the whole LinkedIn profile of like, what have you done in your career is like, cool, but the social aspect is so powerful.

• 2:06:20Speaker 02

  It is. It's really powerful. And it's, again, because, because you get to stay anonymous if you choose to on Twitter. I mean, that's, that's, I understand it creates a lot of bots. And we've got a big problem.

• 2:06:32Anthony Pompliano?

  Less than 5%.

• 2:06:33Speaker 02

  Yeah. That's what Elon was, was getting, you know, being his bot about was all the bots. And, and, but, you know, it's, it's important that we're allowed to have the option to go into these space, these public spaces and have these debates anonymously, just like our founders did, right? You know, they, they were able to publish anonymously and have these really important debates about the direction of our country and the structure of our government anonymously, so that, you know, their personalities, you know, they were, they were public figures, some of them, their personalities didn't bias people to the message they were hearing. So they didn't get, you know, backlash. It's, it's important that we have these, these anonymous channels.

• 2:07:15Anthony Pompliano?

  Yeah. I appreciate your time. This is a fantastic.

• 2:07:19Speaker 02

  Thanks for having me on.

• 2:07:19Anthony Pompliano?

  I literally felt like I got a crash course. And my conclusion on many of these things is like, they are way more complex than people on the surface realize.

• 2:07:27Speaker 02

  Yeah.

• 2:07:28Anthony Pompliano?

  And, you know, in things like tornado cash, we're going to have to wait to get a lot more information before we kind of understand how to play out. But it's concerning times. But at the same time, I think it's, you know, important people educate themselves so that they are informed in terms of how the direction of this stuff goes.

• 2:07:45Speaker 02

  Exactly. Couldn't agree more.

• 2:07:47Anthony Pompliano?

  Thanks so much for listening to today's episode. I really hope you enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to transition into a brand new job in the Bitcoin or crypto industry, we've got you covered. Head over to thecryptoacademy.io. My team and I have been working with the top HR teams in the industry to develop an intensive three-week training program with over 50 live events. We teach you exactly what you need to know to break into the industry, including live interview prep and resume review. Our students have been hired at over For the world's best Bitcoin and crypto companies, go to thecryptoacademy.io to learn more. Again, that's thecryptoacademy.io. If you enjoyed today's episode, make sure you share it with your friends, and I'll see you all for the next episode.