Kyle Lawrence [00:00:00]:
The eye of Sauron lands on OpenSea, Friend.tech gets shut down, and Telegram gets the silk road treatment. That's right, baby. Block and Order is back. Coming right up. Welcome to Block and Order, the show that explores the legal issues facing the world of Web3 and beyond. I'm Kyle Lawrence, and with me, as always, you're not going to catch him wearing white after Labor Day, mister Moish Peltz. All right, Moish, it's been a little while. I've missed you.

Kyle Lawrence [00:00:30]:
I feel like I haven't seen you in quite some time.

Moish Peltz [00:00:32]:
It does feel a little while. It may not feel that. It feels like a little while may not feel away to our listeners. And we had a nice episode we ran in the meantime. But, yeah, Kyle, I miss you too.

Kyle Lawrence [00:00:41]:
Oh, thanks, buddy. Well, well. Time's a waste in my friend. Let's dive right in. Well, for those of you tuning in for the first time, Block and Order is a point counterpoint style show where Moish and I, we are friends, we are also law partners, attack the issues of the day in the world of blockchain, cryptocurrency, Web3, emerging technologies, AI, and everything that gets born out of that. We try to have a three and a half minute time cap on each of the topics that we cover, but sometimes we go over, we are paid by the word, and sometimes, you know, we hit it right on time and then we cap it off with a lightning round. You can listen to us on any platform where your favorite podcasts are available. You can also watch us on YouTube for some fun graphics and additional content.

Kyle Lawrence [00:01:23]:
Now let's kick it off. Kicking off the order tonight, Friend.tech, a topic that we actually covered a couple months ago on Block and Order, a blockchain based social network built on Coinbase's base. Blockchain is shutting down. Project's creators have transferred admin rights to a null address, effectively rendering the protocol unchangeable and preventing any future fee collection. The shutdown leaves investors with significant losses. The friend token has fallen a whopping 98% since its May launch. That's not good. And user activity has dwindled in the.

Kyle Lawrence [00:01:55]:
During this time period, deposits have dropped from 52 million to just 4 million, with daily fees falling from 2 million to under $100. Well, Moish, I recall when we talked about this a couple months ago, I thought this was really cool. Obviously, we knew it was a bit of a flash in the pan, but you nailed it. You said this was going to die a painful death. And here we are. I tip my cap, you were right. I was.

Moish Peltz [00:02:17]:
Well, look, I hope this isn't surprising to anyone. I think this has followed a pattern of. An unfortunate pattern. Like, look, I think the technology is really cool. I think there's gonna be a time where we have a blockchain based social network that is vigorous and well used and sustainable. I just didn't think this was it. And it's too bad I was right because it, you know, I don't like to, to be right when something fails. So, look, I think fundamentally, if you run a blockchain project and you don't find product market fit, you should be able to find a way to shut down and move on and not have infinite legal liability and tons of token holders that feel that they've been rugged and are going to go after you.

Moish Peltz [00:03:10]:
So I guess, Kyle, a question to you is, from your outside view, from our outside view, looking in, what do you think about legal risk and liability for the way that this product was shut down?

Kyle Lawrence [00:03:24]:
Well, I mean, I think these guys did do it correctly to the extent that it could be done directly. Obviously, I haven't seen their investment documents because I, as a securities attorney, any investment document says, hey, no assurances can be given that any of this stuff is going to come true. And you an adult, and if you lose your money, then, you know, sucks for you. The founders did walk away with $44 million in fees earned from the protocol, and that might upset some investors who put some money into this and walked away with nothing. But, you know, as more details emerge from.

Moish Peltz [00:03:57]:
Yeah, let me, let me ask you that, like, who is, who is the investor here, right? Because if you, if you made a venture investment in this company and it goes to zero, that's part of the game, right? You're kind of expecting that, right?

Kyle Lawrence [00:04:11]:
We don't know what those documents say, but conceptually that's correct.

Moish Peltz [00:04:14]:
But if you're a quote unquote, investor and friend token, and you either acquired that token or earned that token by virtue of your social activity, or you bought like a huge stack at the tippy picotop, like, what about that? Are you not an investor in this platform? Have they not advantaged perhaps the employees and the executives, maybe even the venture capitalists compared to the friend token holders?

Kyle Lawrence [00:04:43]:
Yeah, I mean, there's certainly an argument to be made for that. I mean, when this thing was pumping a couple months ago, people were just all over it. I mean, you remember when we covered it, this thing was just humming right along. So I'm sure there were some people who participated in the ecosystem with the idea that, oh my God, look at this thing, let's get in on this and make some money. So I think you raise a fair point, but I, on the outside looking in without knowing what these, what these people were thinking or who went in for what, it's kind of a, you know, anybody's guess.

Moish Peltz [00:05:11]:
Yeah, look, I think those are the questions people are asking whether there's actually legal, you know, liability for any of that. You know, I think, I think is correctly a much more difficult question. Right. But I do think the cool thing about social media blockchain projects, like is this is one you can, you can turn off the contract or you can kind of turn off the fee collection portion of the contract and the whole thing's effectively open source, the code's accessible, the protocols, developers can fork it and there can be new versions, things like that. So I think that part of it makes it less sad than some of the other recent token shutdown, like NFT shutdowns. I'm thinking for example, like DraftKings lost motion to dismiss and then like immediately shut down their NF- their NFL project and then the NFL like immediately sued them for breaching the licENSe agreement. And so like, like that's like a little bit different. It's maybe more of a rug, whereas this is like, I don't know, people are going to call them a rug, but the contracts there, protocols there, they actually made the fees less.

Moish Peltz [00:06:20]:
They're just not actively providing new stuff.

Kyle Lawrence [00:06:22]:
Yeah, I mean I like the idea that anybody can kind of resurrect this thing. I mean we've seen people trying to do that, resurrecting dead projects or defunct projects, whatever you want to call them. So I mean there's certainly a, there, there certainly an idea that people gravitated towards. So maybe somebody can pick this thing up off the floor and make it work.

Moish Peltz [00:06:42]:
Well, onto our next topic, there's a North Carolinian charged with music streaming fraud aided by artificial intelligence. Something a little different, right? So allegedly this person, Michael Smith, is facing various fraud and conspiracy charges in connection with a scheme to create hundreds of thousands of songs using artificial intelligence and then using automated programs like bots to stream these songs billions of times and listening to them using the bots. And then of course, the way Spotify and other music streaming platforms detect, like how to distribute royalty payments is based on proportionate number of streams. So it led to him earning over $10 million in royalty payments, which they're now trying to say are wrongful and fraudulent. So, Kyle, is this just a good natured person having fun with AI and trying to make a buck in a. In a sharp kind of way? Or is this, like, throw me in jail, lock away the key kind of activity?

Kyle Lawrence [00:07:46]:
Right. Well, putting aside, I think the biggest problem is that because he purposefully lied to the streaming services that, you know, the accusations include wire fraud. But let's put that aside for a second. I, when I was reading about this, was wondering to myself, I mean, people put up fake names all the time, like prince. His name's not Prince. It's the symbol thing. You know, why does I think he.

Moish Peltz [00:08:07]:
Did legally change his name to maybe the symbol thing, but if not Prince, like, in the middle.

Kyle Lawrence [00:08:12]:
All right, well, all right, fine. Well, Michael Keaton. Michael, I know you're making an analogy for the record, but it's, you know, if I release a couple, so if I release one song and make $10, they're not going to come after me. If I release ten songs, make $100, they're not going to come after me. Where does that line get drawn? And I think, obviously, that's part of it. The fact that it was so much. I don't know if the thinking was, look, you. You have other musicians who are doing this in earnest, and you're somehow cutting into their revenues.

Kyle Lawrence [00:08:39]:
I don't know if I find that to be a somewhat specious argument, but that was all over the articles that we were reading about it. So for me, I'm just curious as to where that line gets drawn. I mean, yeah, I mean, clearly this guy kind of knew what he was doing, but I don't know. Is it worth ten years in jail? I don't know. I think that's a bit extreme.

Moish Peltz [00:08:58]:
It's an interesting point you make about the. The way I see it, right, is where is it just being creative and kind of pushing the boundaries versus, like, fraud and wire fraud, right. And I do think the idea that you're using bots to manipulate the streams and. And the counting of royalties, and then you're pulling away from, like, artists that are working in earnest, like, money that would otherwise be received from them. So, like, that part I kind of get. But I also think, like, if you look at this in the vacuum, like, compared to, like, a struggling indie artist, like, that's one thing. But I do think there's lots of, like, weird AI stuff on these services anyways.

Kyle Lawrence [00:09:43]:
Sure.

Moish Peltz [00:09:43]:
That are so, like, you know, I don't think, like, people that have, like, white noise or, like, people that have, like, the guy who does, like, the yule logs burning for 10 hours on YouTube, you know, like, those guys are probably getting royalties, too, right? And if you make 100 or a thousand or ten, like, you know, at some point. Yeah, but I think. I think the bot manipulation stuff is. I think that's what they've also. I think there's other cases we've talked about. I think, like, I'm also thinking of, like, the mango markets issue.

Kyle Lawrence [00:10:13]:
Right? That guy. Just listen, don't hate the. Hate the player, hate the game. I don't know. It's like.

Moish Peltz [00:10:22]:
Yeah, but I'm trying to construct, like, a mental model here of using bots to do activity that otherwise couldn't happen organically. That's manipulating a market. And I don't think that's classically securities fraud or market manipulation fraud. I don't think if you looked in a textbook, you would see that. But I think if you start pulling out. What's the commonality in these several recent kind of bot related fraud actions that have been brought, I think that's it, right?

Kyle Lawrence [00:10:59]:
I mean, I guess it would. It has to be. It's. It's just. I don't know. I find here's where you get into a real slippery slope of what is and what is not permissible. I mean, people use AI for all kinds of things, whether it's a shortcut or not. And I think just because if you say, well, it's $10 million, you can't do that, it's, all right, fine, I'll get $8 million.

Kyle Lawrence [00:11:17]:
And that's where I find it problematic.

Moish Peltz [00:11:20]:
Well, I'm. Right. But then you're. Look, you're talking about whether wire fraud covers, like, dabbling in manipulation versus, like, manipulation for real, and then what is already such a vague statute and has been. Been challenged and been struck down for vagueness in many instances, especially, like, insider trading is now being used for, like, bot manipulation in markets that aren't really regulated. And it gets like. Like, a Spotify royalty proportionality market. Like, I don't know, it's like, how would I.

Moish Peltz [00:11:55]:
Like, obviously, I'm not spinning up TENS of millions of AI songs, but, like, it's not like. I guess maybe he should have known that was illegal. I don't know. It seemed. It feels wrong. It seems wrong, but, like, where's the law that says it's wrong?

Kyle Lawrence [00:12:09]:
Right, exactly. Well, I guess it's the classic. If you have to ask, it's probably illegal. The old tricks are the best tricks. Well, moving right along to, you know what is and what is not illegal. The SEC has charged Plutus Lending LLC, also known as Abra, with failing to register its crypto asset lending product. Abra Earn, and operating as an unregistered investment company. The SEC has claimed that it used investors crypto assets to generate income and fund interest payments without qualifying for any exemptions from SEC registration.

Kyle Lawrence [00:12:42]:
That that's the problem right there. Abra is also accused of operating as an unregistered investment company by holding over 40% of its assets in investment securities. Also recently in the news is Galois Capital was also fined by the. Charged by the SEC as a former registered investment advisor for a private fund that primarily invested in crypto assets. And the SEC order there said that Galois failed to ENSure that certain assets, crypto assets specifically held by the fund, were maintained with a qualified custodian, which is a violation of the Investment Advisors act custody rule. Commission found that Galois misled investors and required them to pay a whopping $225,000, which to me, shows you just how serious they were about coming after them. You know, Moish, 225,000 whopping, it's like couch change right there for these guys. The.

Kyle Lawrence [00:13:32]:
You know, Moish, now that you're starting to see the SEC come after some other players in the space, what do you think? Where is the. Where does this leave us? Or where does it lead to?

Moish Peltz [00:13:44]:
Well, I think it's become very clear that the SEC thinks all of these pseudo crypto banks, where you take your crypto, they then, and then you expect a financial return on that based on the efforts of Abra versus the efforts of the protocol directly, are a part of a securities contract. And so I think this fits into the same rubric of Celsius, which we've talked about a bunch in the context of their ongoing bankruptcy. Voyager, other crypto banks like that. I think this is really interesting to compare to Celsius, because the big issue right now in the Celsius bankruptcy is whether in the context of bankruptcy clawback actions, this is Celsius trying to take money back from customers that that preferentially held more money than they should have had to give back to the bankruptcy estate, at least in Celsius's view, is whether. Is whether this was a securities transaction, and securities transactions are supposed to be exempt from bankruptcy clawback. And so the SEC is saying, yeah, this is obviously a securities transaction, and in the context of. Of the bankruptcy litigation, it's an unsettled question as to whether Celsius was a securities contract with a Celsius earn was. So I think here it's like a pretty, really good example of why the SEC thinks it is.

Moish Peltz [00:15:15]:
Obviously, it's not a traditional determination that it absolutely is. But there have already been settlements related to Celsius and Voyager and things like that. Now, I know Coinbase, right? Like, I'm Kyle, where's the line? Right? Because Coinbase is saying, well, we're just a offering like Ethereum staking as a service. You're getting all the fee revenue directly from the protocol, which is a different product.

Kyle Lawrence [00:15:40]:
I mean, it's exactly right. And also with Uniswap, it's just like a token on their platform. I mean, does that mean that every single DeFi protocol is operating in violation of law? The SEC would say yes based on these actions.

Moish Peltz [00:15:54]:
Well, I don't know. I mean, like, I think there's a way to say, well, these centralized companies that take your crypto, rehypothecate it, lend it out to three arrows capital, and then give you the net return is a very, very different product than Ethereum's taking and we saw the Ethereum ETF's get approved without an official declaration that Ethereum is not a security and that ETH two staking is not a securities contract. But I think those are, those are two different things. I think even this SEC recognizes that there are at least two different models and require different analysis.

Kyle Lawrence [00:16:33]:
Yeah. I don't know. Curious. This one makes me nervous. This one keeps me up at night.

Moish Peltz [00:16:37]:
But why does it make you more nervous than, like, Celsius and Voyager?

Kyle Lawrence [00:16:41]:
I just think they're trying to expand the breadth of their scope even more than they were before. And I think that they're trying to, they, and we've talked about this before, is they take the existing regulatory framework and they kind of just manipulate it a little bit to get to where they want to go. Just a little bit. And they keep doing it a little bit every time. And so originally they were here, and now they're all the way over here, and that's where it's a problem. And, oh, my God, I sound like, you know, I sound like a, what do you call them? An originalist. But that's what they're doing. And, you know, I don't know, I just, I don't see how they can justifiably make these kinds of determinations and, and the Galois thing is ridiculous.

Kyle Lawrence [00:17:23]:
I'm sorry. $225,000 tells me on its face that they do, that they weren't serious about this, and they're trying to establish some sort of enforcement precedent that they can now use to go after other protocols, and I think that's highly problematic. See, you got me going. I think that's got you going. Yeah, that's.

Moish Peltz [00:17:38]:
Well, you heard it here first. Right? The crypto entrepreneurs are the frogs in the boiling pot.

Kyle Lawrence [00:17:44]:
That's right.

Moish Peltz [00:17:44]:
With the SEC throwing logs under, underneath it. So.

Kyle Lawrence [00:17:47]:
I love that analogy.

Moish Peltz [00:17:49]:
It's a great analogy.

Kyle Lawrence [00:17:51]:
Well, the SEC has warned the FTX estate against using stable coins or other cryptocurrencies to repay creditors. The SEC did not outright state that such an action would be illegal, stating, the SEC is not opining as to the legality under the federal securities laws. Bullshit. Of course they are. Of the transactions outlined in the plan, but notes that the agency reserves its rights to challenge transactions involving crypto assets. The SEC also joined the US trustee overseeing the bankruptcy and objecting to a discharge provision in the plan that would indemnify the FTX debtors from future legal actions by creditors. Unless the plan provides that the debtor shall not receive a discharge and removes any discharge injunction, the court should deny confirmation. The us trustee wrote in the filing.

Kyle Lawrence [00:18:35]:
Moish, I'm sure you got. I see a smile on your face. I would love to hear your thoughts about this. You know, FTX just can't stay out of the news.

Moish Peltz [00:18:44]:
Yeah, look, we were just talking about Celsius, which is bankrupt from a few years ago, and now we're going to FTX. And I think this is very frustrating. I think from the standpoint of FTX is trying to pay back its creditors money that has now been stuck in this bankruptcy for years. And the creditors like, well, can you please just pay us in crypto also? We're in many cases all over the world. It's just easier, right? It's what we gave you. We want liquid crypto, we don't want cash. We don't want you to wire it to us. And the FTX bankruptcy is like, okay, that sounds reasonable.

Moish Peltz [00:19:23]:
And the judge is like, yeah, here's an approved plan. Let's like, let's do it. Pay everyone back. And now the SEC is saying, wait.

Kyle Lawrence [00:19:30]:
Whoa, whoa, whoa, whoa, whoa, whoa.

Moish Peltz [00:19:32]:
Hold on. We're not going to tell you if it's legal or not legal, but we might challenge it later, so please don't do it. We're warning you. And I just think that's ridiculous. Like, if you want to challenge it again, we've had this discussion. Like, challenge it. Let's, let's, let's have a ruling. Let's have the bankruptcy judge hashtag like, all right, what's the challenge?

Kyle Lawrence [00:19:52]:
Right.

Moish Peltz [00:19:52]:
Why do you feel that way? What law can you support? What's the equities here? Let's balance these out. Is it better for, you know, FTX creditors to be able to get crypto in a quick, easy way, which is what stablecoins promise or other crypto even maybe don't have a tax liability when they sell their bitcoin into USD or something like that. And then the SEC can make that argument, and then the bankruptcy plan can challenge. But they're not doing that.

Kyle Lawrence [00:20:21]:
Correct. Yeah, that's why it's infuriating. I didn't mean to cut you off. The stable coin aspect of this is what truly baffles me. You want to say, don't pay people in meme coins, fine, but why not stable coins? That makes no sENSe to me. Why they would have an issue with that. And I haven't seen any justification in anything that's come out of the SEC or anywhere that justifies that position. I with you, it's absolutely absurd.

Moish Peltz [00:20:47]:
Well, even, like, bitcoin. Like, there's a bitcoin ETF, so how can you be upset that people like, you know and. Right, we're not going to tell you, but you have a bitcoin ETF, you have an Ethereum ETF, you have stable coins. So those three assets, like, typically are 90% of what we're talking about. So for 90%, we're not even. We can't. We can't opine on the legality of those assets. I think that's ridiculous.

Kyle Lawrence [00:21:06]:
Right?

Moish Peltz [00:21:07]:
I think they should opine that. Do it in bitcoin, Ethereum, and USCC, and we'll reserve it as everything else that would at least make sENSe. And keep in mind, all of these creditors are, like, doing insane amounts of, like, KYC and all this stuff. It's not. They're just like, hey, I'm a dark, shadowy person. Like semi crypto. No, like, they're. They're participating in a us bankruptcy act.

Kyle Lawrence [00:21:29]:
The whole thing is ridiculous. I am with you 100% Moish. You hit the nail on the head, as you always do. It's asinine. All right, speaking of asinine.

Moish Peltz [00:21:41]:
All right, folks, buckle up. Next one OpenSea gets a wells notice from the SEC. So, Kyle, we've been talking about whether NFTs are securities now for, I don't know, three years, four years. I don't know if we can pick a date. It's been a little while and you know, we talked about before on a previous episode of Block and order that there has been the stoner cats and the impact theory actions the SEC brought, really picking on people that didn't have the ability to fight back. And getting, as we were just talking about an order on the record saying that we did an enforcement action against NFTs. These companies are offering securities. We just had on song a day guy, Jonathan Mann and Brian Frye, who are suing the SEC, saying we don't know if what we're offering is NFTs, are securities or not.

Moish Peltz [00:22:41]:
And here we go. I think this is probably what we've been asking for. It's like, well, if we're going to go after someone, go after someone that can actually fight back, go after someone that's actually making a market in NFTs as securities. So, like, the premise that they are securities thing is ridiculous, but at least they're targeting now the right person. OpenSea CEO Devin Finzer expressed surprise and concern and emphasized all the negative impact on creators and artists, which I completely agree with. They've also pledged $5 million to support other NFT creators. And look, OpenSea is going to challenge us. So, Kyle, where do you think it goes from here?

Kyle Lawrence [00:23:25]:
I mean, look, they're going to challenge it, and I do think that this one will go away just because of the kind of ridiculousness of it. I mean, OpenSea is not an issuer. For something to be classified as a security and falling under the purview of the SEC's watch, it has to be an investment contract. The SEC, OpenSea is not offering anything. They're just the platform. It's the issuers who are offering. There's no common enterprise. There's no expectation of profit derived from open seas efforts.

Kyle Lawrence [00:23:55]:
I think that just the argument falls flat on its face. But what's interesting for me is I'm curious as to why now and why not a couple years ago, when OpenSea was the only ticket? I mean, they had north of 90% market share. Today they're at 20%. I think it's even under that. I just, I don't understand why they would do this right now and not go after Blur or Magic Eden, or OKX or Tenzer or any of the other ones. But they only went after them. That's kind of baffling to me. What I do think is part of the reason why they're doing this is instead of death by a thousand cuts and suing a thousand other impact theories and stoner cats out there, they could just go after OpenSea, and it kind of kneecaps all of these other issuers who are relying on these secondary sales to keep their boats floating.

Moish Peltz [00:24:46]:
Yeah, I mean, it does strike me as kind of kicking them while they're down already.

Kyle Lawrence [00:24:51]:
Right.

Moish Peltz [00:24:52]:
You know, there are other marketplaces, you know, maybe they are going after them, but we haven't heard about it. You know, I do think it is kind of this broader concern, though, about like, well, this is what we were talking about with Brian and Jonathan on our last interview, which is like, well, the SEC is now regulating the art market. Like, when did they get congressional authorization to do that? Why are they have anything to do with the art market? And so, you know, I think there is an argument that some NFTs that are trading on OpenSea are something different than, like, art. But I think a lot of what this is, is art and collectibles. And I just think there has to be a better explanation for why this is happening. And as you, I think, really aptly state, like, why is this happening now in 2020 at the end of 2024? And nothing. You know, if they thought this was an issue in earnest, they had the information to call that out in 2021.

Kyle Lawrence [00:25:50]:
And also not to go too far over on time. What we've seen in the various dissents and decisions and people who have been responding to these cases over the past year. What is a security? If these things are going to be securities, then me going to a baseball card show and buying baseball cards, guess what? Those are now securities. And USCC have said that those are nothing. You know, square that for me. I don't understand that. I'm sorry.

Moish Peltz [00:26:15]:
And there's like, auction websites and there's eBay and there's like, where do you draw the line?

Kyle Lawrence [00:26:19]:
Right. I go buy something on eBay. I just bought a security. Nice. Yeah, that's what they're saying. NonsENSe. Now that I'm all riled up last main topic, Kyle, let's go. I'll take some pre workout and do this next topic.

Moish Peltz [00:26:38]:
That's right.

Kyle Lawrence [00:26:39]:
Telegram founder Pavel Durov was arrested at Le Bouger. Sorry if I mispronounced that. Airport near Paris. After arriving on a private jet from Azerbaijan. Durov faces charges for allegedly permitting criminal activities on Telegram due to insufficient moderation and lack of cooperation with authorities. He's also charged with complicity in enabling distribution of child sexual abuse material, drug trafficking and fraud. Telegram has stated that it complies with all of the EU laws, including not limited to the Digital Services act, and claims that these calling these claims against Durov, absurd. And the company asserts that Durov travels frequently and is committed to user privacy and free speech.

Kyle Lawrence [00:27:19]:
So, Moish, what do you think about this one? Is this Ross Ulbricht 2.0 or Cz? You know, where, what's his culpability? What do you think?

Moish Peltz [00:27:28]:
I think this is completely different than any of these darknet markets. I mean, Telegram is a, you know, whatever you think about it as a us citizen is a legitimate social media platform. This is like Mark Zuckerberg being arrested or something like that. You may not know the name of Pavel Durov, but he is effectively the founder of one of the top social media platforms in the world. And just getting hauled out of his private jet and thrown in jail is kind of jarring, I think. All joking aside, look, I think there is some truth to the idea. I was reading a Wall Street Journal article about the idea that a lot of criminal activity does take place on Telegram, and more so, perhaps, than other well regulated social media platforms like Facebook and others. So I don't want to diminish the idea that if there is sexual abuse material or drug trafficking or other fraudulent things happening on Telegram, that Telegram probably has some obligation to police that and have appropriate mechanisms in place to make sure that it's not running rampant and it's being taken down in a concerted way.

Moish Peltz [00:28:45]:
So Telegram is saying it does that. Right. It's just, it's just happened. You know, this gets back into the, I think, a bigger question of encryption and free speech. Right?

Kyle Lawrence [00:28:55]:
Yeah.

Moish Peltz [00:28:56]:
And so this is, this is where, and this is a complicated question when it comes to Telegram, because Telegram doesn't really have end to end encryption the same way that some other platforms, like perhaps Signal, do. And so there is perhaps more of an ability to police and see what's going on under the hood. But it does raise this question of what's the obligation of a service provider like this, and how much do you have to dig into the content of what your users are sending back? And then it gets into, like, well, if you're a Signal and for example, and everything's end to end encrypted, but there is activity happening on there which people don't like or is illegal.

Kyle Lawrence [00:29:36]:
Right.

Moish Peltz [00:29:37]:
What happENS then?

Kyle Lawrence [00:29:38]:
Yeah, it's definitely a slippery slope. And you, I mean, you're absolutely right when you talk about this idea of free speech on the Internet and what is the responsibility of these platforms and companies to monitor it and police it? And it's definitely very slippery slope and very situational specific when you talk about who's supposed to do what. You talked about Signal in the New York Times, Daphne Keller, who's a professor of Internet law at Stanford, said that Mister Durov and Telegram, they're very different from things like Facebook and Google, which have very robust and detailed trust and safety teams that take down illegal content and respond to law enforcement requests. And I think that's kind of one of the bigger problems here, that that's, it's an important distinction to make in this case. And that Telegram was kind of repeatedly approached by the government, you know, by France specifically, and they were saying, hey, you have to address these issues, and they just summarily ignored them. And that's a problem your governments don't like when you do that. You know, whether the government's right or wrong, if they send you a subpoena, you kind of have to answer it. It's, you know, one of those things.

Moish Peltz [00:30:42]:
Yeah, I mean, like, and that's part of the. Maybe this is more of like a, yeah, there's the Internet free speech issue, but there's also, like, this political geopolitical issue where Derov's home country is Russia, and they think this is some sort of like, political witch hunt. He's a political prisoner kind of attitude towards this. So, so it isn't just the Internet free speech thing, but I think that's a, that's a big, big part of that also, you know, Telegram is interesting, right? I think, you know, relevant to our, to our show has been a forum where a lot of crypto activity is taking place. And there's been a lot of. Telegram has a quasi affiliated Telegram token, which was community launch token, after Telegram tried to launch token and the SEC shut them down. This was like in 2018 or 19, and now there's all these hamster combat, I think, is one of the largest trending crypto launches that's probably going to happen between now and our next show. And all this is happening on Telegram through many apps.

Moish Peltz [00:31:43]:
So it's a really interesting platform.

Kyle Lawrence [00:31:45]:
Yeah.

Moish Peltz [00:31:45]:
From a technological perspective, from crypto perspective, from a Internet user privacy perspective, free speech, geopolitical. So there's a lot going on in Telegram for sure.

Kyle Lawrence [00:31:56]:
Yeah, we'll definitely be following this, and we hope to have some updates by the time our next show rolls around. Moish, what time is it?

Moish Peltz [00:32:04]:
Kyle, It's lightning time!

Kyle Lawrence [00:32:08]:
Oh, my goodness. Well, we talked about ETF's in this episode, and lo and behold, the SEC has rejected Solana, ETF's, the SEC has rejected Cboe's BZX 19b-4 filings for two proposed spot Solana ETF's citing concerns that Solana might inexplicably, mind you, be classified as a security. I don't know how. As a result, these filings were withdrawn from the Cboe website and did not proceed to the Federal register, halting the approval process.

Moish Peltz [00:32:35]:
I'm sad for you, Kyle. I wanted you to hold some Solana in your 401k or IRA, but it's too bad the SEC couldn't pick a side on that one.

Kyle Lawrence [00:32:43]:
I'll write them a sternly worded letter.

Moish Peltz [00:32:45]:
There you go. The CFTC has issued an order. Well, the CFTC order which blocked Kalshi's election bet was overturned by a judge. As we've talked before in Block and Order, Kalshi is an election betting platform which would operate much like polymarket. And this ruling would allow Kalshi to proceed with his plans. Let Americans place bets on things like, for example, which party will control Congress, making a significant shift in us domestic election market regulation.

Kyle Lawrence [00:33:17]:
Interesting stuff. The mining company Rhodium filed for chapter eleven bankruptcy. After the filing, Rhodium secured court approval for a $30 million loan, or 500 bitcoin from Galaxy Digital to support its restructuring. That's a shame.

Moish Peltz [00:33:32]:
Yeah, it's been a tough run now for the miners. They're not really adjusting to the. They haven't in yet. So.

Kyle Lawrence [00:33:39]:
Yeah, it's not, it's not. It hasn't been pretty. We listen, we got these guys right here.

Moish Peltz [00:33:44]:
You got mining. Nice. Big news for your payment apps. PayPal and Venmo now support ENS domains, so they are integrating ENS into PayPal and Venmo. So now users can easily make cryptocurrency transfers by applying, by typing, you know, a user's domain name, an ENS domain name, for example. I'm Peltz.ETH, instead of copying a string of alphanumeric figures like your huge Ethereum address. So I think this is great to see mainstream support of ENS domains. What do you think, Kyle?

Kyle Lawrence [00:34:16]:
That's awesome. Yeah. You are Peltz.ETH, KyleLaw.ETH. Yeah, it's good stuff. And lastly, it is currently 9:24 on Tuesday, September 10. I believe the debate has started. And while Moshe and I are trying our best to escape the effluvium of said debate, we are curious as to whether or not crypto will be mentioned during tonight's debate.

Kyle Lawrence [00:34:37]:
What are the odds right now, Moish?

Moish Peltz [00:34:38]:
So the odds as a polymarket before the start of. Right now, actually, I'm pulling up live were. Oh, man, they cratered. They were about. It was about 20%. Yes. That Donald Trump would mention bitcoin or crypto. It's now gone down to 12%.

Kyle Lawrence [00:35:00]:
No kidding. You got to take that action.

Moish Peltz [00:35:02]:
Yeah, it's moving around pretty rapidly. So $100 bet right now would return $454 or 355%. I think that's a pretty good bet. I think it's not financial advice, not betting advice. Please don't actually do this, especially if you're a US citizen. But seems like, you know, you might mention it, but I'm not watching the debate right now, so maybe that's changed.

Kyle Lawrence [00:35:20]:
I mean, that's dinner at Eleven Madison Park right there. That's not too bad.

Moish Peltz [00:35:27]:
Well, another lightning round as we are about to ding is that the trump family is going to launch, apparently a crypto project, so.

Kyle Lawrence [00:35:38]:
It got hacked the other day. Also. Apparently

Moish Peltz [00:35:39]:
We could probably have an entire episode on that, but I think we'll have to spare our audience.

Kyle Lawrence [00:35:46]:
Certainly half our audience would not appreciate it. Well. Moish sadly, our show must come to an end. Thank you very much for joining us on this episode of Block and Order. Please don't forget to like and subscribe to our channel and follow us on all our socials. The links are down below in the show notes. Remember, if you want us to cover any particular topic, please drop a comment down below. We take all the comments very seriously.

Kyle Lawrence [00:36:08]:
Please note the Block and Order is meant for informational and entertainment purposes only. This is not legal advice. Please hire your own attorney if you're going to take the plunge. Neither the discussion of nor the fact that Moish and I may own any of the assets that we discuss on the show is meant to serve as an endorsement of such assets. Very special thank you to producer Chris on his final episode with us on Block and Order. Chris, we're going to miss you, buddy. You've been aces.

Moish Peltz [00:36:33]:
Chris, bon voyage. We're going to miss you tons. So thank you for everything you've done.

Kyle Lawrence [00:36:38]:
For the show and on behalf.

Moish Peltz [00:36:40]:
And for us.

Kyle Lawrence [00:36:40]:
And for us. And, well, that's it for us. And on behalf of Moish Peltz, I'm Kyle Lawrence. Take care, everybody.

Moish Peltz [00:36:46]:
See you next time.