America's War on Crypto

SCOOP: @FoxBusiness has learned that some Republican members of the @FinancialCmte led by @RepJohnRose sent a letter today to @SECGov Chair @GaryGensler and @FINRA President/CEO Robert Cook expressing concern over their continued silence regarding @PrometheumInc’s May launch of custody services for Ethereum as a so-called “crypto asset security.”

The letter states that the agencies’ silence on the matter signals they are “complicit” in creating market confusion and uncertainty given that the SEC has already acknowledged that $ETH is not a security and the term “crypto asset security” does not apply to the token itself, but rather the manner in which it is sold.

“Players in the digital assets space deserve certainty from their regulators,” Rose writes. “Yet under Chair Gensler they’ve only received chaos and confusion. I hope while Chair Gensler is cleaning out his office, he can heed our concerns seriously and maybe deliver some real guidance on his way out the door.”

Co-signers of are @RepFrenchHill, @USRepMikeFlood, @RepDustyJohnson and @RepTimmons.

Last year, @CGasparino wrote in the @nypost that the SEC’s regulations on #crypto are an “uneven mess,” citing Prometheum as a company that “appeared to have slipped through some very large SEC cracks to become a thing.”

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SEC Chair Gensler to Depart Agency on January 20​

Washington D.C., Nov. 21, 2024 — The Securities and Exchange Commission today announced that its 33rd Chair, Gary Gensler, will step down from the Commission effective at 12:00 pm on January 20, 2025. ...

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A Texas federal court has rejected the U.S. Securities and Exchange Commission's recent rule expanding the definition of a securities dealer to include a wider swath of firms — including some in the cryptocurrency sector. This adds a significant legal loss to the crypto legacy of SEC Chair Gary Gensler on the same day he announced his January departure.

In response to a lawsuit from the industry lobbying group Blockchain Association and the Crypto Freedom Alliance of Texas, a judge in the U.S. District Court for the Northern District of Texas granted an early decision Thursday that slammed the SEC for overextending its legal reach. The court ordered that the rule be thrown out.

"The court concludes that the SEC exceeded its statutory authority by enacting such a broad definition of dealer untethered from the text, history, and structure of the Exchange Act," according to the ruling from Judge Reed O’Connor.

The judge, who previously handled a Consensys suit against the SEC, issued an order that no part of the final rule approved in February can stand.
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Tyler Winklevoss said:

Let's all be clear on one thing. @GaryGensler is evil. He should never again have a position of influence, power, or consequence. Any company, university, or organization that hires or works with him post-SEC is betraying the crypto industry and should be boycotted aggressively. This the only way to prevent this kind of misuse of government power from happening again in the future.

Gensler’s behavior can't be explained away as a good faith mistakes. It was entirely thought out, intentional, and purposeful to fulfill his personal, political agenda at any cost. Even if this meant nuking an industry, tens of thousands of jobs, people’s livelihoods, billions of invested capital, and more. Ironically, his sociopathic ambition ended up torching his own political party.

No amount of apology can undo the damage he has done to our industry and our country. This type of person has no place at any institution, big or small. Americans have had enough of their tax dollars going towards a government that is supposed to protect them, but instead is wielded against them by politicians looking to advance their careers. It's time for this pathology to be stopped once and for all. Onward!

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U.S. sanctions against Tornado Cash, a service that anonymizes crypto transactions, must be abandoned, a federal appeals court ruled Tuesday.

The decision answers a controversial privacy debate on whether the government — via a sanctions list maintained by the U.S. Treasury Department — has a right to target the technology because it's associated with criminals. The ruling reversed a district court's August ruling that had sided with the government's pursuit of what it had characterized as a "notorious" crypto-mixing service.
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Two significant legal victories for the #crypto industry in the past few days:

1. Today’s ruling by the Fifth Circuit Court of Appeals in regards to Tornado Cash which says the @USTreasury acted unlawfully when it added an open source protocol to its list of sanctioned entities. This ruling will set a precedent that open source technology cannot be banned solely because it gets used by bad actors — also a blow to @SenWarren’s AML bill.

2. A district judge striking down the @SECGov’s proposed expanded broker-dealer rule which would have included decentralized protocols and automated market makers in the agency’s definition of a “dealer,” subjecting them to regulatory scrutiny. The judge ruled the SEC exceeded its Congressional authority by trying to cast its net so broadly.

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Some quotes:

• “election outcome stunted OCP2.0, but needs to be rooted out.”
• “ETF’s would’ve been the only approved crypto vehicles; US exchanges would’ve been extinct in 24 months.”
• “forget political tribalism, Trump equaled survival.”
• “debanking, bias against tech/crypto friendly banks (Custodia) was hard to comprehend; anti-American type stuff.”

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Can confirm this is true. It was one of the most unethical and un-American things that happened in the Biden administration, and my guess is we'll find Elizabeth Warren's fingerprints all over it (Biden himself was probably unaware).

We're still collecting documents via FOIA requests, so hopefully the full story emerges of who was involved and whether they broke any laws.

Warren and Gensler tried to unlawfully kill our entire industry, and it was a major factor in the Dems losing the election. The Democratic party should realize Warren is a liability and further distance themselves if they want to have any hope of rebuilding.

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Slowly but surely, the picture is becoming clear. After we sued, @FDICgov finally started giving us information related to our FOIA request about the pause letters it sent to financial institutions as part of Operation Chokepoint 2.0. In short, the contents are a shameful example of a government agency trying to cut off financial access to law-abiding American companies. 1/3

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So far we've uncovered more than 20 examples of the FDIC telling banks to “pause” or “refrain from providing” or “not proceed” with offering crypto-banking services. The public deserves transparency, not an agency that’s working behind a bureaucratic curtain. 2/3

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We don’t have the full letters yet, but what we’ve seen so far speaks volumes. Take a look for yourself. In the meantime, we’ll keep pushing to get clarity from our regulators through FOIA requests and any other means necessary. 3/3

https://assets.ctfassets.net/c5bd0wqjc7v0/7nBWws5LwK6pwHTPcRO76u/7f7f0f78ae404e951c389d28f578a19f/-25-2-_Exhibit_B_-_Vaughn_Index.pdf

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Kept quiet about this for almost a year out of fear but since I'm in good company with @tyler @cameron @brian_armstrong @elonmusk now..Last December, I got a call from JPM saying "we have to close anyone's account that we know their primary source of income/wealth is crypto. This is directly from the top from Jamie. I'm really sorry."

I had a close relationship with my banker so I assume 99% of people wouldn't even get that kind of transparency/explanation. Wanted to add my own name to the debanked OCP list @nic__carter. It's real. It happened. Hopefully now it will soon be over.

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I never shared this publicly before, but since @pmarca opened the floodgates on @joerogan’s pod, it feels appropriate to shed more light on this.

As a reminder, Libra (then Diem) was an advanced, high-performance, payments-centric blockchain paired with a stablecoin that we built with my team at @Meta. It would’ve solved global payments at scale. Prior to announcing the project, we spent months briefing key regulators in DC and abroad. We then announced the project in June 2019 alongside 28 companies. Two weeks later, I was called to testify in front of both the Senate Banking Committee and the House Financial Services Committee, which was the starting point of two years of nonstop work and changes to appease lawmakers and regulators.

By spring of 2021 (yes they slow played us at every step), we had addressed every last possible regulatory concern across financial crime, money laundering, consumer protection, reserve management, buffers, and so much more, and we were ready to launch.

We had worked on a slow rollout of a limited pilot that some members of the Fed’s Board of Governors were supportive of. At last, Chair Jay Powell was ready to let us move forward in a limited way. The story, as I heard it, is that Jay Powell was told by Treasury Secretary Janet Yellen at one of their biweekly meetings that allowing this project to move forward was “political suicide,” and she would not have his back if he let it happen. I wasn’t in the room when this conversation happened, so take these words with a grain of salt, but effectively this was the moment Libra was killed.

Shortly thereafter, the Fed organized calls with all the participating banks, and the Fed’s general counsel read a prepared statement to each of them, saying: “We can’t stop you from moving forward and launching, but we are not comfortable with you doing so.” And just like that, it was over.

One essential point is worth making here. There was no legal or regulatory angle left for the government or regulators to kill the project. It was 100% a political kill—one that was executed through intimidation of captive banking institutions. That was the hardest part of this story for me personally. Not that we had failed, but that America, this country I immigrated to and became a proud citizen of because of its rule of law and value system, behaved in such a way for political reasons. It was a very tough pill to swallow.

The bright side of the story, though, was the many learnings from this wild ride. By the end of the project, we had made so many concessions to get a thumbs-up that the whole design of the network became a Frankenstein of our initial ambitions.

We also learned the biggest lesson of all, which is that if you’re trying to build an open money grid for the world—eventually moving trillions of dollars a day, designed to be here 100 years from now—you have to build it on the most neutral, decentralized, unassailable network and asset, which, hands down, is Bitcoin.

And now this is what many of us who went through this scarring journey are building together at @Lightspark. And this time, we won’t stop until we get it done!

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Here's a special Black Friday FATF Thread to complement @pmarca 's explainer on the Joe Rogan show about how the USG's "control mechanism" was applied to Big Tech by emulating the way it already controlled the banking system.

2/ FATF stands for the Financial Action Task Force (FATF). It originated in 1989 as a one-year fact-finding mission, championed by the United States during the “war on drugs,” but has since evolved into one of the most influential, yet opaque, financial regulators in the world.
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Longer thread on the FDIC’s 2022-23 “pause letters” to banks regarding crypto-asset activities in 2022 and 2023. Strap in
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