Are All Crypto Funds Basically Engaging in Illegal Activity Now? - Ep. 700
The SEC and CFTC’s recent actions against Uniswap and Galois Capital could mark a turning point in crypto regulation. With both firms settling on relatively low fines, are we witnessing regulators establish precedent for a broader crackdown on the industry?
In this episode, Larry Florio, general counsel at 1kx, delves into the implications of these settlements, the frustrations asset managers face with regulatory compliance, and whether the SEC’s approach could push the crypto industry into a corner. Will these actions set a precedent for more aggressive enforcement ahead?
Show highlights:
Why the SEC's action against Galois Capital highlights a shift in language, focusing on tokens "offered and sold as securities"
What a qualified custodian is and why the SEC's action against Galois punishes them for using FTX, which could have fit one definition of a qualified custodian if it hadn’t been perpetrating a fraud
How the SEC demands crypto fund managers comply with regulations on qualified custodians while also limiting qualified custodians in crypto
Whether the SEC is effectively banning crypto funds by requiring compliance with impossible rules
How the SEC penalized Galois for giving affiliates better liquidity terms than outside investors
How SEC Commissioner Mark Uyeda’s call for clarity on "crypto asset securities" reflects the industry’s frustration with the lack of clear guidelines from the SEC
Why the CFTC's fine against Uniswap for alleged leveraged transactions may set a precedent for future enforcement actions
How Commissioner Summer K. Mersinger's dissent highlights the unfairness of punishing Uniswap despite their proactive compliance, according to Larry
Whether the New York Attorney General’s subpoenas to VCs about Uniswap signal a renewed adversarial approach to regulating DeFi
The timing of these actions, along with the SEC’s Wells notice to OpenSea
Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com
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Guest
Larry Florio, general counsel at 1kx
Timestamps:
➡️ 01:51 - The SEC using different language to describe tokens as securities
➡️ 04:53 - Qualified custodians & Galois Capital's use of FTX
➡️ 09:04 - Compliance frustrations for crypto asset managers
➡️ 11:58 - The SEC effectively banning crypto funds?
➡️ 18:22 - Penalty for giving some investors undisclosed preferential treatment
➡️ 18:25 - SEC Commissioner Mark Uyeda’s call for clarity on crypto assets
➡️ 19:35 - CFTC's fine against Uniswap: A troubling precedent?
➡️ 23:09 -Uniswap's compliance efforts & two CFTC Commissioners’ dissents
➡️ 24:56 - NY Attorney General’s subpoenas
➡️ 27:04 - OpenSea’s Wells notice: NFTs as securities?
➡️ 30:34 - Crypto News Recap
Links
Galois Capital:
The Block: SEC charges and settles with crypto-focused Galois Capital over custody issues
Larry Florio’s thread
Uniswap:
CoinDesk: Uniswap Labs Settles CFTC Charges Over 'Illegal' Margin Products
Blockworks: CFTC Commissioners dissent on Uniswap settlement
Comments from Uniswap counsel
Axios: The SEC has questions for VCs about Uniswap
NY Attorney General’s Subpoenas
CoinDesk: VC Giants a16z, Union Square Ventures Get Subpoenaed by New York About Uniswap: Sources
OpenSea’s Wells notice:
Unchained: If the SEC Sues OpenSea, Here's Why the NFT Platform Could Win Easily
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Debating the DePIN Flywheel: Token Incentives, Business Models, and Mainstream Adoption | Kyle Samani & Dmitriy Berenzon
In today's episode Jason is joined by Kyle Samani of Multicoin Capital and Dmitriy Berenzon of Archetype for an in-depth debate on the emerging decentralized physical infrastructure industry. They analyze the complex economic flywheel effects that drive growth, including how token incentives align infrastructure providers and fuel liquidity and value. The discussion covers considerations around hardware needs, revenue models, and mainstream adoption challenges. They also assess the differences between B2B and B2C models, approaches to token issuance, and evaluating timing for mainstream adoption. We hope you enjoy!
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Join us at DAS (Digital Asset Summit) in London this March! DAS is the #1 institutional conference in crypto, hosted by Blockworks.
Use the link below to learn more, and use EMPIRE10 to get 10% off your ticket! Sign up now because the price goes up every month. See you there!
Learn more + get your ticket here: https://blockworks.co/event/digital-asset-summit-2024-london/home
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Timestamps:
(01:24) What is DePIN?
(09:33) Barriers to DePIN
(21:40) DePIN Flywheel
(24:22) B2C vs B2B DePIN Designs
(33:41) Arbitrum Ad
(34:28) Harpie Ad
(35:43) CapEx & OpEx Costs
(45:00) Filecoin Thesis
(49:28) Best Token Issuance Models for DePIN
(55:56) Open Sourcing Hardware
(57:48) Active vs Passive DePIN
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Disclaimer: Nothing said on Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Santiago, Jason, and our guests may hold positions in the companies, funds, or projects discussed.
Sidelined crypto VCs are jumping back into the market
After sitting on the sidelines during the bull market mania of 2021 and the early part of 2022, early-stage investment firm 1kx has been deploying at a "frantic" pace since the third quarter of last year, according to Founding Partner Lasse Clausen.
"We really like the bear markets," Clausen said, "We know that this is the good time to be very actively investing."
1kx has a policy of holding onto its crypto investments for at least three years, which Clausen suggests is a good guideline given the industry's rapid rate of development:
"The space overall just innovates much much faster than anything else, so I think a three to five year time frame makes sense for crypto venture."
During this episode, Chaparro and Clausen also discuss:
Why 1kx is betting on zk-tech to take Ethereum from '0 to 1'
Opportunities in 'NFT financialization'
Development of on-chain identity
This episode is brought to you by our sponsors Circle, Railgun, Flare Network, NordVPN
About Circle
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The Case for Sovereign Blockchains | Sunny Aggarwal, Dmitriy Berenzon
There's a heated debate in crypto right now around AppChains and the modular vs monolithic paradigm. That's why we released this special episode today from our other favorite podcast, Bell Curve.
Sunny Aggarwal and Dmitriy Berenzon discuss how AppChains enable developers and protocols to customize consensus, cryptography, MEV rules, fees and more. But is this customization worth the fragmentation, start-up costs, lack of tooling and other challenges AppChains face? Tune in to find out!
And don't worry - we'll be back to the usual roundup with Jason and Santi next week!
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Timestamps
(00:00) A Note from Jason
(02:45) Intro: Pre-Interview
(05:15) The AppChain Thesis
(13:34) Reasons to Build an AppChain
(30:00) Blockworks Research ad
(31:33) The Downsides and Challenges
(46:22) What is Permissioned Blockspace?
(53:06) Cosmos vs Ethereum
(01:06:28) Solving Interoperability
(01:12:12) User Lock-in, Wallets
(1:18:00) Recap: Post-Interview
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Follow Myles: https://twitter.com/MylesOneil
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Resources:
Bell Curve podcast
https://spoti.fi/3JWqLmK
Dmitriy's blog
https://dberenzon.medium.com/
Osmosis
https://osmosis.zone/
1k(x)
https://1kx.network/
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Disclaimer: Nothing said on Bell Curve or Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Mike, Jason, Michael, Vance and our guests may hold positions in the companies, funds, or projects discussed.
"Things Tend to Get Better. For Anyone Involved in Crypto, It's Obvious That This is 1,000x Better," 1kx's Lasse Clausen
In this week's episode, I speak with Lasse Clausen, founding partner of 1kx, one of the most active venture funds in DeFi. A typical VC question in the traditional tech space is it a 10x? Is it 10 times faster, better, cheaper? This concept has been dressed up very nicely as like, often with grand statements about making the world a better place, but really, Lasse says, VCs are subsidizing a market takeover. The real question they're asking is, can this become a national monopoly, where users are so locked in, that they have no choice but to use the product. Lasse thinks crypto will crack this system open and that the paradigm shift is so big that there will be some networks that are really 1,000x improvement over the status quo. That's why his fund is called 1kx.