Kyle Lawrence [00:00:00]:
OpenAI is for profit. The IMF tells El Salvador to cool it. And ecstasy in Met-land, baby. All that and more, coming up on Block and Order. Welcome to Block and Order, the show that explores the legal issues facing the world of Web3 and beyond. I am a beaming over the moon, elated Kyle Lawrence. And this man I'm about to introduce, not even he can wipe the smile off my face. Mr. Moish Peltz.

Moish Peltz [00:00:36]:
Well, nice to see you again, Kyle. I know we were on a little bit of a break, but it's. It feels good to be back, and I'm happy, you know, for, for all the New York Mets fans out there who, you know, don't always have a lot to be happy about. But, hey, $300 million later, look, you got. You got a playoffs series win.

Kyle Lawrence [00:00:53]:
Listen, money works. Yeah. It's been several decades of it being not great. I'm 45, and the Mets have spent probably less than 10% of my life being, forget about good, just largely mediocre. And it's like, I don't know, Shawshank Redemption, basically. I've spent the last 20 years just crawling through human excrement. But myself and all the other med fans, we have emerged victorious and clean, and this is a new day, and it's awesome, and I'm here for it. And hope you are, too.

Moish Peltz [00:01:19]:
All right, let's calm down. You won one series. Let's.

Kyle Lawrence [00:01:23]:
Yeah, but it was exciting.

Moish Peltz [00:01:25]:
It is October. At least you're not a Marlins fan, so.

Kyle Lawrence [00:01:29]:
That's true. Well, thank you for letting us digress and talk about baseball for a second, folks. On Block and Order, we discuss the legal issues and the world in general of all emerging technologies, whether it be blockchain, cryptocurrency, AI, and just cool new innovations in general. The show is designed as a point counterpoint style program where Moish and I discuss the pros and cons of various issues that come up the topics du jour, as you were. We tried to come at it from different angles. To the extent that that's even feasible, we design it to each have each segment be three minutes and thirty seconds. But we're lawyers, and we get paid by the word, and sometimes we're verbose and we go over that time limit. What can I say? Other times, we get just right.

Kyle Lawrence [00:02:13]:
What's that?

Moish Peltz [00:02:15]:
Deal with it.

Kyle Lawrence [00:02:16]:
Yeah, deal with it. Viewer. That's right, our one viewer. Take that. Remember, Block and Order is available on all podcast platforms as well as on YouTube. So I think, without further ado, let's kick off the rust and get to the order. Kicking us off, this is an interesting one. The Lido DAO.

Kyle Lawrence [00:02:34]:
Moish, you remember these guys?

Moish Peltz [00:02:36]:
They're facing these guys.

Kyle Lawrence [00:02:38]:
They were huge. Are they still huge?

Moish Peltz [00:02:40]:
They're still one of the largest staking service providers.

Kyle Lawrence [00:02:43]:
They were like the biggest one for a while, weren't they? Or they were up. They were right up there.

Moish Peltz [00:02:47]:
I mean, I can check the stats while you're doing the intro here, but they're definitely up there.

Kyle Lawrence [00:02:51]:
Yeah, for sure. So. Lido DAO is facing a lawsuit from token buyers alleging the sale of unregistered securities, testing the legal standing of a decentralized organization in court. In response the Lido DAO, members voted to appoint Dolphin CL, LLC, which aims to represent the DAO in court, and file a motion to dismiss the lawsuit, a move seen as an attempt to protect the client privilege. Moish, this is an interesting tactic. As you were. What do you think about this? Do they have a chance in hell? What's going on here?

Moish Peltz [00:03:24]:
It'll be interesting to see how the plaintiffs respond here, because I think they're going to be a little bit challenged to say, we have a cause of action against Lido DAO, whoever's performing the staking services, and that's who we're trying to sue. We don't care what entity it is. And so if that entity, if that, you know, Lido DAO, then points to that entity and says, hey, they're defending us, this is the entity which is liable. There's no reason they have to accept that at face value. And I presume they won't here. So, you know, it's going to be on. On the DAO to make the case there. And, you know, be interesting to see, you know, if.

Moish Peltz [00:04:13]:
If in fact, this entity is going to be able to mount a defense on behalf of the DAO as a whole. And Kyle, while, while I was checking, at least according to Dune.com, the analytics provider, Lido currently has a 27% market share, which is the number one market share of all of the ETH staking services so far and away the second highest is Coinbase, with 11.5%.

Kyle Lawrence [00:04:43]:
So this is like blowing everybody out of the water.

Moish Peltz [00:04:46]:
Yeah, exactly.

Kyle Lawrence [00:04:48]:
What's interesting that I found was that this is actually being brought by the buyers and not by the SEC. Usually it's the SEC that says, hey, you're selling unregistered securities and you can't do that and all that. But it's not them. It's the actual token holders. You would think that if they were doing so well, why are they doing that?

Moish Peltz [00:05:06]:
Well, exactly. And this is, this kind of, you know, really highlights the challenges of, you know, if you have a DAO that is not wrapped in a legal entity. And as we've seen in other cases, the courts are going to presume if there's no entity, we like to presume things are general partnerships because that's what we as judges do. And this is a major DAO where there's lots of big institutions that have ETH staked in this general partnership. There's investors like a16z and other limited partner venture investors in the company. And so if everyone that's staking and investing and whatever has unlimited liability as a general partner, then the jig is up. It'll be interesting to see how this plays out from here and whether this sticks.

Kyle Lawrence [00:06:03]:
Don't be a general partnership PSA.

Moish Peltz [00:06:06]:
All right, so next topic up on the order, OpenAI has declared that they will become a for profit company. Kyle, remember a few episodes ago we were talking about will they or won't they? And, well, here you go.

Kyle Lawrence [00:06:20]:
I do recall.

Moish Peltz [00:06:20]:
So the CTO, Mira Murati, has resigned over six years with the company, citing a personal reflection for her decision. And her departure follows ongoing discussions about restructuring OpenAI into a for profit entity, and also coincides, I think, quite notably with the resignations of many other senior leaders amid a larger leadership shakeup. So Kyle is disconcerting that OpenAI, which was in a nonprofit structure in order to save the world and make sure AI doesn't take over everything, suddenly saying, well, maybe we should be a for profit. Raise any concerns, in your view?

Kyle Lawrence [00:07:04]:
I don't think it raises any more concerns than what was previously in existence. I mean, they weren't, they weren't a true nonprofit. They were what was called, like a hybrid profit or something like that, where there were limits on how much profit they could generate. The reality is, when you're talking about the numbers that they are looking at in terms of valuation and what they're trying to raise, you can't be a not for profit at those levels. You just can't. It doesn't make any sense. Specifically, this restructure is designed in part to make OpenAI more attractive to investors, as they're currently attempting to close a round of 6.5 billion with a B venture capital firm. Thrive Capital has already committed a billion in OpenAI's talks to get further investment from their long time backer Microsoft.

Kyle Lawrence [00:07:46]:
Together with Apple, Nvidia, the UAE, and the firm MGX Wall Street Journal previously reported, so it really doesn't come as a surprise. I am surprised, though, that I just didn't see Elon Musk tweeting about this, or maybe he did, and I just didn't notice it because he was busy dancing around on stage a couple days ago. But do you think this is problematic? I mean, you know, Moish, we talked about this in prior episodes, but I don't know. How do you feel? You know, is OpenAI, is AI something that belongs to humanity, or is it? Does it belong to the people who created it and they deserve to profit off it?

Moish Peltz [00:08:19]:
Well, I think fundamentally here, there has to be a profit motive to spending billions, perhaps tens or hundreds of billions of dollars in training these models, because right now, I think it was also reported, this is a little bit of a, you know, like, kind of like a leaked whatever that they're currently losing. I think it's like $5 billion, and they're expected to lose something, like, I think, projecting like, $44 billion by 2029. It's like, all right, if you're just gonna take money and, like, light it on fire and burn it, well, it can't be for nothing in return, because who's gonna keep doing this? I don't know.

Kyle Lawrence [00:09:03]:
Is that not a good strategy?

Moish Peltz [00:09:05]:
Yeah, so, I mean, look, I guess some people would say, well, we shouldn't train these models because then they're gonna be too smart and they're gonna, like, destroy everyone. Right? I'm a little bit skeptical that there's going to be this AI enlightenment and it's going to take over the world. But I think it's important that if we're going to raise six and a half billion dollars, there has to be some sort of financial model that shows we're going to recoup that money. Otherwise, they're not going to have money to continue buying and trading using GPU and et cetera.

Kyle Lawrence [00:09:36]:
That's exactly right. If it's not, it would become a rudderless ship at that point, and it would have, you know, a million masters and no directions. But it doesn't make any sense.

Moish Peltz [00:09:44]:
So what's your take? I want to know, do you think OpenAI is going to cause the end of the world, or what's your view on this?

Kyle Lawrence [00:09:50]:
I don't think OpenAI is going to cause the end of the world. I think social media is doing that all on its own and is doing a great job at it needs no help. An interesting topic here, a practical guide to geofencing. Geofencing is a technology that uses global positioning services and other location based services to create virtual boundaries. Kind of like the running man. Remember when the dude ran out of the prison and his head exploded? That's what geofencing is. This enables businesses, though, to trigger actions such as notifications or data collection when users enter or leave specific areas. Just like running man.

Kyle Lawrence [00:10:25]:
This tool is widely applied in marketing, logistics, app development. But it also raises, I think, important privacy considerations that organizations must address to comply with legal regulations that ensure user content. You know, Moish, how does geofencing apply in the cryptocurrency or blockchain context? What do you think is the sort of use case here?

Moish Peltz [00:10:48]:
Well, when you said Running Man, I was thinking of the little yellow AOL guy running across my screen.

Kyle Lawrence [00:10:53]:
That would have been appropriate for this podcast.

Moish Peltz [00:10:55]:
Yeah, 30 years ago or whatever. But when I think geofencing in cryptocurrency, my first thought is VPN's virtual private networks. And the idea that if you're a blockchain project and you want to limit your liability to regulatory enforcement and other crazy stuff happening in the us market or other markets, doesn't have to just be the US. There are other places, but you might not want to be regulated. Presumably then what you do is you say, well, we don't have any US users. We only have Asian users, or we only have users in this other jurisdiction. But we know we don't have US users. And how do we know that? Well, we geo fence them out.

Moish Peltz [00:11:37]:
We've taken our service and we've said if this user has an IP address associated with the United States, they are not welcome to use our services. Sorry, go somewhere else. Right. And so the problem there, and I mentioned VPN's, is I think, and there's other, not just VPN's, but other technologies that allow you to circumvent your geographic nexus. And so that's what users do. Say, well, if you don't welcome me from the US, I'm going to take a flight down to the Brazil and access your service there through a VPN. Even though I'm still sitting in my living room. So I don't know.

Moish Peltz [00:12:19]:
So I think it's interesting from a legal perspective that companies saying, well, I don't want us citizens or us users, let's geofence them out and then use those users. So like, I mean, Kyle, what do you think if you're a company, you're taking the approach of no US users, thank you very much. But you kind of know that some people are accessing it through other methods. Where does it leave you?

Kyle Lawrence [00:12:39]:
Well, I think if you're trying to do it correctly, I mean, look, the United States is not exactly a friendly player in this playground. So it, you can understand why some of these other countries and these organizations want to geofence us out, because if they do, it's. You're opening Pandora's box, potentially. And we've seen that in play in our practice a lot of the times. But I think the privacy concerns and the data harvesting is just rife with all kinds of problems. And you talk about VPN's, people use VPN's when they go to Europe because they want to watch Netflix. It's a pretty simple technology, but when you can extrapolate beyond what we're talking about here with cryptocurrencies, I think it can raise some real potential alarms and nullify this whole concept altogether.

Moish Peltz [00:13:27]:
Well, look, I mean, people use VPN's for much more positive uses as well. I mean, if you're traveling for business or, and you want to protect your privacy and make sure people aren't stealing your company's trade secrets, use a VPN. If you're just trying to protect your own privacy, you can use a VPN. So I think this technology is fundamental to, like, a free and private open Internet. So I don't think the technology itself, I think it's neutral technology, but I do think there is this reliance on geofencing. And companies think, well, if only we geofence away users from whatever jurisdiction, then we have no liability. And although, as far as I know, this hasn't really been litigated squarely, at least not by a regulatory enforcement agency, I just don't think that the United States SEC, as it's currently composed, or other kind of regular, like, you know, DOJ, whatever else are going to say, oh, sorry, you were geofencing us users away. You're right.

Moish Peltz [00:14:26]:
There's no liability.

Kyle Lawrence [00:14:29]:
Yeah, you're probably right about that. I mean, but I haven't seen any specific cases come down because they're too busy picking on the people here. But, yeah, that's. It's an interesting use. I'd be really curious to see how that kind of plays out in the coming years, especially if we are stuck in this regulatory logjam. I know there's, you know, a lot of hope on the horizon for 2025, regardless of who wins the presidential election, but that remains to be seen as to what actually is going to happen. I mean, it's, you know, and we know it's a popular topic in the election cycle, but who knows how, you know, integral it really is to either party's platform. So I feel like we're just going to be stuck in the mud here.

Kyle Lawrence [00:15:05]:
So maybe one of these cases will come out. Oh, curious. Interesting take. I like it.

Moish Peltz [00:15:09]:
Yeah. All right, next topic on the order the SEC has, speaking of, filed a notice of appeal in the XRP Ripple case, citing a conflict with Supreme Court precedent. So, as you may remember, the SEC lost in large part in its recent decision on whether Ripple had basically sold securities, and except for institutional sales, basically lost everything else that mattered. And so look at here. We had discussed before. Will they or won't they? And yes, they will. The SEC has appealed. So, Kyle, is this a good thing or a bad thing, this appeal of Judge Torres order?

Kyle Lawrence [00:15:55]:
First off, I can't believe that Judge Torres decision was July of last year. If you had asked me without looking at that, I would have been like, that was four months ago. What are you talking about? But no, here I am. Time is just whizzes by. In the context of these procedures exist for everybody to get a fair day in court. It's a good thing, but in reality, I don't understand why they have to do this. Why, why can't you just accept the fact that a judge disagreed with you and move forward? Move forward with any of the other countless other enforcement actions you have? You know how much money and time and resources they have spent a trying to prosecute Ripple? It's insane. And all they're doing is costing the taxpayers money. They're costing Ripple money even if they win.

Kyle Lawrence [00:16:43]:
What is the upside here? I just don't get it. I'm sorry. I don't get this.

Moish Peltz [00:16:49]:
That's, you know, I don't disagree with you from the SEC's perspective. Like, if you're the SEC, why? What's in it for you? How is, how is this furthering the goals of the agency in this case? But I think this is actually very, like, a good thing. I think, you know, we've been talking a lot about the star map that's been created by all these different legal decisions about cryptocurrency, mostly SEC regulatory cases, some, you know, putative class action cases, some other things that are kind of giving us, like, bits and pieces of what is the law? Because there is no law except for the law as the judge see it, because we're kind of relying on Howie, which is too outdated to really matter for any of the stuff, and there's no guidance. Great so where does the law come from? It doesn't come from district courts. It comes from appellate courts.

Kyle Lawrence [00:17:46]:
Right.

Moish Peltz [00:17:47]:
And unless you appeal and have an appellate decision as to what is the Howie test as applied to digital assets, you really have no binding precedent on other district courts. And so from my perspective, this is a kind of a dog of a case, and the SEC is appealing, and you're gonna get the second circuit to say, yeah, this is a dog of a case. There's no securities sales here. I mean, if that's what they decide. Now, it's very possible that the second circuit, which is, we're both in the second circuit, this is the most important circuit court, as we all know. It's very possible they could say, Judge Torres got this wrong. Everything here is a security sale. Like, what are you talking about? Right.

Moish Peltz [00:18:32]:
So it could go that way. But I think even that is probably okay because that teased up to go to the Supreme Court where they. I don't know. Right.

Kyle Lawrence [00:18:41]:
So I just feel like if that's the first off, that was a great answer and a terrific, you know, with your litigation background, I mean, I've been to court twice in 20 years and both times to fill in for somebody. So, so I don't know. It's not my area, but I would.

Moish Peltz [00:18:54]:
Have liked to be in a fly on wall for that.

Kyle Lawrence [00:18:56]:
If that's the first time I got hazed badly, I'll tell you about it. Offline, it was terrible. But they're setting themselves up for even further failure because, you know, Judge Torres decision, at least from my perspective, and not just because I agree with it, it was very well reasoned, it was fair, it was down the line. She really analyzed all the different sales and the securities laws and how it applies to them, and I just feel like they are really kicking the hornets nest. And really, if they want to continue down this path of just nailing everybody to the ground, they might be really shooting themselves in the foot with this. I don't know.

Moish Peltz [00:19:31]:
Well, so. Right. But I mean, that, that's exactly it. I think it's great. I think from a stepping back, I think this is great. I think it's great. If they're actually going to go through with the appeal of this, I think this is a good, this is on net a good thing. It has potential for disaster.

Moish Peltz [00:19:44]:
But I think even, like, a really bad appellate decision only sets, like, then everyone's going to want to appeal that. I mean, like, on the Ripple side, I assume if they sell the funds to do it, they're going to do it.

Kyle Lawrence [00:19:55]:
Yeah.

Moish Peltz [00:19:57]:
So, so on that, I think it's just, it's great. I just, I just don't understand why the SEC would want to do it. Yeah, just pick a, pick a better case to do it. If you're the SEC, what's in it for them?

Kyle Lawrence [00:20:07]:
Right. Alright. We'll see. We'll see what happens.

Moish Peltz [00:20:10]:
We'll see. Yeah. I mean, the brief, the briefing here is going to be interesting, and I'm really excited to see. I'm sure like top legal minds in the country are going to be weighing in on this. Maybe we'll have to find a way to submit a Block and Order amici here, you know, and Block and Order. And friends, if you're interested in filing an amici on the Ripple case, please contact us.

Kyle Lawrence [00:20:34]:
Yeah, interesting topic coming out of El Salvador. And just before I get into it, just, we're going to talk about President Bukele down in El Salvador. We're not commenting on his politics. We are, you know, sort of nonpartisan here at Block and Order. We're not going to get into, you know, whether the way he governs the country is right or wrong. We're just talking about the bitcoin law and El Salvador and just how this all, you know, shakes out. So there, that's my, that was my disclaimer, Kyle.

Moish Peltz [00:21:02]:
If our audience is concerned about our political viewpoints as related to El Salvador, I like, well, here's specifically, he does.

Kyle Lawrence [00:21:13]:
Some things that are, as they say, questionable, you know, but nonetheless, we don't judge.

Moish Peltz [00:21:19]:
This is a non political show.

Kyle Lawrence [00:21:22]:
Just the facts, I have to say it. I don't want to get, I don't want people to at me everywhere. It does happen. So the IMF, the International Monetary Fund not impossible mission for us, is urging El Salvador to limit the scope of the bitcoin law and increase regulations surrounding its use, citing concerns about financial stability and risks associated with crypto in general. Despite this, President Bukele remains a staunch advocate for bitcoin. The bitcoin law went into effect in September of 2021, which the first country to adopt bitcoin as legal tender. The IMF is urging El Salvador to limit the scope of its bitcoin law and enhance regulations around the use of crypto. They recommend tightening controls, increasing oversight of the sector, reducing public sector exposure.

Kyle Lawrence [00:22:04]:
Moish, is this, do you know a lot about what's going on in El Salvador? It's actually something that I followed in no small part because Alex Gladstein's book, which I love and tout all the time has a great chapter on this very topic and I find it really fascinating.

Moish Peltz [00:22:20]:
You know, I've read a little bit here and there and like, I know about bitcoin beach and I know they're trying to get the lightning network and they forced everyone to accept crypto. And it didn't really kind of work. But, you know, like that, that's basically it. Like, I don't, I don't know why this concerns the IMF. I feel the same way.

Kyle Lawrence [00:22:39]:
Right, right. I feel the same way. I mean, El Salvador is the smallest and most densely populated country in Central America. It's a company, it's a country that was just ravaged by civil war and internal strife and just governments that weren't functioning properly. They don't have a strong banking system. The GDP per capita is $3,500. So over the, since the civil war. And that's crazy.

Kyle Lawrence [00:23:04]:
So since the civil war has ended and the people are trying to find a way just to earn a living, just to feed their families. You have gang violence, you put your money in the bank, you have no guarantees that you're going to be able to extract it. So now they have bitcoin that can use as legal tender. You have baristas who can accept it, you know, accept it as tips and do something with it and keep it safe. For the IMF to come out and say, no, no, no, I get it, that they want to keep their eyes on it, that's fine, but give these people a lifeline. I mean, come on. To me, that defeats the purpose of why you exist.

Moish Peltz [00:23:35]:
Yeah, I think you're exactly right. I mean, just the idea that they are strong arming country away from bitcoin for whatever reason, um, it just doesn't make it, I don't know. Yeah, I guess. Look, if this country had become drunk on bitcoin and was failing because of their bitcoin investments, you know, then, then I would say, you know what? Like, IMF, maybe, maybe you've got something here. But by all accounts, this has been quite successful. And yeah, the country is like, like, yeah, the adoption within El Salvador isn't massive, but from a government investment standpoint, they've done completely fine. They've made money, their bitcoins worth more than they started with. And it doesn't seem any less sustainable or irresponsible than like, all the other crazy stuff happening in Central and South.

Kyle Lawrence [00:24:29]:
America seems better than when they tried, you know, dollar. They tried to adopt the us dollar and the whole country collapsed. I mean, where's the IMF, then. That's right. IMF, we're coming for you.

Moish Peltz [00:24:47]:
That's Tom Cruise, right?

Kyle Lawrence [00:24:49]:
Yeah, exactly.

Moish Peltz [00:24:50]:
All right, so next topic on the order, Crypto.com has sued the SEC. We've had a lot of topics about people suing the SEC on the show recently, but now we're talking about Crypto.com, who had received a wells notice claiming that the agency had overstepped. So the lawsuit claims that the agency overstepped regulatory authority by treating nearly all crypto assets as securities. So the lawsuit seeks to challenge the SEC's inconsistent regulatory approach regarding the classification of various digital currencies. So what do we say here besides, like, go get them?

Kyle Lawrence [00:25:29]:
Yeah, go get them. I mean, that's exactly right. I love when these companies do that, when they get the wells notice and they just go right after them. And it's interesting to note some of the specifics of their response. Crypto.com's legal action follows the trend where multiple companies, Robinhood and Coinbase, did this. The regulatory environment, as you noted, is increasingly tense. But they said in their response, our decision to sue the SEC follows our receipt of a wells notice from the commission, illustrating their unauthorized and unjust regulation by enforcement campaign continues despite, and this is my favorite part, despite bipartisan indications that the next administration will take a more constructive and effective approach to advancing crypto in the US. While that's true, and I'm all for Crypto.com here, is that a viable legal argument? Like, you guys are on the way out, no matter what happens, it's not going to be as bad next year, so you can't do this.

Kyle Lawrence [00:26:25]:
That, that sounds a little tenuous to me.

Moish Peltz [00:26:28]:
I think that's like a marketing statement. And I think, I think we'll look, I don't know that that's like the basis for the lawsuit. I think the basis for the lawsuit is the inconsistency, the lack of fair notice, you know, just like the failure of regulatory guidance, etcetera, all the stuff we've been talking about on Block and Order for the past year. But I think they're, I think they're, I think that's right. I think, which, I mean, this is something I heard. I was just at the Fordham Regulatory Law Conference for digital assets last week, or earlier this week, and this thing I heard from a bunch of people that are very clued into the political status in Washington. And the consensus is, despite what you think about Harris and her administration, Trump has been, I think, a bit more clear about where he stands on crypto, you know, whatever you, again, like, like, I'm not being political here. I'm just saying he's objectively just said more about crypto than hundred percent.

Moish Peltz [00:27:30]:
Harris and the thinking is that either administration will take a more constructive and effective approach to cryptocurrency. So, like, it can't, can't be worse than it is now. So let's just ride it out and see what happens after January. Right? So from a marketing perspective, from a business perspective, I think that makes sense from a legal perspective. Yeah. Like, it is what it is.

Kyle Lawrence [00:27:56]:
Thought it was interesting. It's also worth noting that earlier today, breaking news, the SEC actually sued Cumberland, the Chicago based crypto trading firm, again alleging that Solana and Polygon are securities. And it's like, I don't even know what to say at this point. Like, what are you talking about?

Moish Peltz [00:28:14]:
But, like, has the SEC sued Solana? Has SEC sued Polygon?

Kyle Lawrence [00:28:19]:
Not that I'm aware of. They've sued these companies.

Moish Peltz [00:28:22]:
Why the heck are they suing? Cumberland? Like, what? Like, why would you sue if you think someone's offering securities?

Kyle Lawrence [00:28:28]:
And so it's like that old, the old joke about law school, and they say, how do they grade the papers? And they would take them from the top step, throw them down. And it's like, whatever landed on this step got an a, then b. and c. It's like that. It's like you open up the yellow book for you kids out there, the yellow pages. Cumberland boom lawsuit. That's how it seems. It's ridiculous.

Kyle Lawrence [00:28:47]:
Here is a truly fascinating one, Moish. I love this. Federal prosecutors in Boston have charged three crypto companies, Gotbit, ZM Quant, and CL's Global, along with 15 individuals, including executives and employees at those firms with fraud and market manipulation. These charges stem from an extensive investigation that revealed the use of alleged illegal trading practices. These companies allegedly engaged in wash trading, which we've talked about in Block and Order a lot practice where trades are executed without actual market intent. The idea is to juice the price, create, you know, a kerfuffle, and you can sell with juiced prices. Great. All that's fascinating.

Kyle Lawrence [00:29:22]:
That's not why we're talking about it, though. The FBI here created its own cryptocurrency and company and company as part of the investigation called Next Fund AI. The token itself was actually also a security, which is pretty interesting. And they did it to identify, disrupt, and bring these alleged fraudsters to justice. Moish is that too far? Where does the FBI get off doing that?

Moish Peltz [00:29:48]:
Wow. First of all, this is just outstanding. What a case. I'm just blown away. The idea that the FBI is saying, you know what? There's definitely wash training going on here. There's definitely market manipulation. How do we prove that?

Kyle Lawrence [00:30:03]:
We'll show you.

Moish Peltz [00:30:05]:
Yeah. Let's launch a token. I mean, this reminds me of. I'm thinking of, like, you know, what's a. What's a good film where, you know, the undercover detective goes, like, a little bit too far? I'm thinking, like, the departed. Yeah. Reservoir Dogs. Like, what else would you go? It's like, oh, no.

Moish Peltz [00:30:23]:
Like, you actually did the crime and, like, shot the person or, like, did the drugs. Like. Like what? You push your example. I don't know.

Kyle Lawrence [00:30:29]:
Right? Reservoir Dogs, you shot somebody. You're totally right. I forgot about that. You're right.

Moish Peltz [00:30:33]:
Yeah. Yeah. So they're launching their own crypto token. This is amazing, right? Yeah, it's. That's. I don't know. Like, can they. I guess we'll find out.

Moish Peltz [00:30:43]:
Like, should they. It seems like a little aggressive to do this and, like, oh, just a joke. It's actually a fake token. But I will say the one thing that come out of it is there was. I saw a chart that was basically communications between the undercover detectives and the market makers saying, all right, now get it up to a million dollars in volume. And then you see the chart go boom. Then it goes back down like, hey, you're not million anymore. And goes.

Moish Peltz [00:31:14]:
So it does make it really, really clear when you have all the communications and the market makers in on it that, like, the market looked really manipulated.

Kyle Lawrence [00:31:24]:
Right. And allegedly, these employees, I mean, that's the reason why people engage them, was to wash trade in order to juice the price. You know, it's just, I mean, the FBI, they're. They're created. Next fund AI is a website. It has terms and conditions and privacy policy on it. It looks like a real website. And.

Moish Peltz [00:31:41]:
And there's a. There's a smart contract that was audited by, like, a dude on Twitter who was like, oops, I accidentally audited the FBI smart contract.

Kyle Lawrence [00:31:50]:
Right? Hey, imagine being that guy. Good job.

Moish Peltz [00:31:53]:
He got paid.

Kyle Lawrence [00:31:56]:
You hope, it is the government. They take a long time. Yeah. I mean, look, I mean, if the company was obviously doing this kind of thing, did the FBI actually need to go and create its own token? They couldn't just show that they were doing it with the other existing assets. Why they have to go ahead and do that? Did somebody make a killing at the FBI? I don't know. It seems like they went just a hair. They were a little too enthusiastic in the enforcement of their duties. I don't know.

Moish Peltz [00:32:23]:
Hey, but it's a fun story for Block and Order, so I'm glad they did.

Kyle Lawrence [00:32:26]:
A fun story for Block and Order. But very quick PSA for you listeners out there. There are two myths I would like to dispel that people. Nonsense people believe because of movies. And one of them is if you are selling drugs and an undercover cop walks up to you and buys the drugs, that is not entrapment. You were selling drugs. That is not how entrapment works. And secondly, if the undercover cop walks up to you and you ask them if they're a cop, they do not have to tell you they're a cop.

Kyle Lawrence [00:32:51]:
That is insane. Think of how dangerous that would be. Movies have convinced people that these things are true and it drives me bananas.

Moish Peltz [00:33:00]:
I will remind our audience that we do not give legal advice, but the cop does not have to tell you the truth.

Kyle Lawrence [00:33:06]:
Sorry. So stupid. I can't believe people believe that. Thank you. Thank you for indulging me.

Moish Peltz [00:33:12]:
Well said. All right, first up in our lightning round, a Punk Ape, one of the most valuable crypto punks out there, making it one of the most valuable NFTs in the world, sold for only $23,000 and change after it got stuck in a defunct fractionalization website. So, you know, bye bye, punk sucks.

Kyle Lawrence [00:33:29]:
Yeah. Circle, the issuer of the USD of USDC, is relocating its headquarters from Boston to New York City, specifically to One World Trade center. This move, announced by CEO Jeremy Allaire, aims to enhance Circle's integration with Tradfi as prepares for an IPO and emphasizes the company's commitment to crypto, the crypto industry, despite regulatory challenges in the US. As a New Yorker, I know this is small potatoes, but it's nice to see something happening in New York that is crypto positive.

Moish Peltz [00:33:58]:
Look, New York should be the crypto hub of the world, and that's amazing. But the shame of this is, as a New York resident, we can't use Circle, you can use USDC, but you can't interact as a commercial entity with the exchange window, it's garbage. The Assange DAO, which we talked about a couple episodes ago, was originally, as you remember, fundraising for Julian Assange's defense. DAO faces accusations of being a rug pull after treasure, transferring its remaining treasury, about $10 million, to another foundation without the community's approval. So if you're in a DAO, that. That doesn't really act as a DAO. You know, sometimes the money gets pulled away and I guess you gotta deal with it.

Kyle Lawrence [00:34:40]:
My God, that's terrible. Hamster Kombat is facing significant backlash after it was revealed that 57% of its users were excluded from an upcoming token a airdrop decision that has sparked frustration and accusations of unfairness among the community. The project's team has cited technical issues. Yeah, that's the problem. An eligibility criteria as reasons for the exclusion. But many users feel this undermines the principle of community engagement. And I feel like every time I turn around, there's some company doing a token launch and they are just getting hammered by their users for unfair practices. Every week it's another one.

Moish Peltz [00:35:15]:
Did you do the hamster? The hamster tapping?

Kyle Lawrence [00:35:18]:
I was doing it in my soul.

Moish Peltz [00:35:20]:
Yeah. Did you get it airdropped?

Kyle Lawrence [00:35:23]:
Yeah, exactly.

Moish Peltz [00:35:24]:
Yeah, I did too. Like, they did an airdrop and now what? Like, who's gonna use the app anymore? It's so stupid.

Kyle Lawrence [00:35:32]:
Not me.

Moish Peltz [00:35:33]:
Yeah. Getting it out. I don't think. I don't think they know what they're doing. I think they bundle bungled it. Next up, Bhutan is now a bitcoin miner. It was revealed that the nation state of Bhutan, which I believe is still either the happiest or one of the happiest places on earth, now holds approximately $780 million worth of bitcoin, making it the fourth largest government holder of the cryptocurrency. That's amazing.

Moish Peltz [00:35:59]:
I don't know. Like you said, El Salvador is $3,500 of GDP per person. I don't think Bhutan has that. This is pretty incredible. And they have a really impressive, I think, carbon neutral energy generation now a really impressive investment arm that owns all this crypto. So good job, Bhutan.

Kyle Lawrence [00:36:18]:
Yeah. Nicely done. And lastly, Sean Diddy Combs. Oh, God. He's not having a good month. Has enlisted the same attorney, has SBF, to defend him against serious federal charges, including, but not limited to sex trafficking, racketeering. The two. This is the best part.

Kyle Lawrence [00:36:33]:
The two are currently sharing a jail unit at the Metropolitan Detention center in Brooklyn after both were denied bail. How is that? That's insane.

Moish Peltz [00:36:42]:
That has to be the most interesting jail bunk mate combination of all time. I thought you were gonna say the most interesting part was the baby oil, but you're right. This. This is more interesting.

Kyle Lawrence [00:36:53]:
I don't want to go there. Well, 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 if there's any topics that you'd like us to cover or have any questions or just want to at me for the stupid thing I said earlier. Please drop a comment down below. We take it very seriously. Please note this show is meant for informational and entertainment purposes only. This is not legal advice. Please hire your own attorney.

Kyle Lawrence [00:37:17]:
Neither the discussion of nor the fact that Moish and I may own any of the assets we discuss is meant to serve as an endorsement of these assets. A very special thank you to producer Shaun. His first maiden voyage as producer, and I think he did a fantastic job. So on behalf of Moish Peltz, I'm Kyle Lawrence. Thank you very much.

Moish Peltz [00:37:35]:
Thank you all.

Kyle Lawrence [00:37:36]:
Let's go Mets, baby.