DEX in the City: Why the Binance Case Against the WSJ ‘Is Probably Not a Winner’
The crew unpacks the Binance case against the Wall Street Journal. Is the lawsuit just for optics? Plus, why crypto can't turn a blind eye to one Aave user's $50 million loss.
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Binance has sued the Wall Street Journal for defamation over a report that money has flowed from its platform to the Islamic Revolutionary Guard Corp.
DEX in the City hosts Katherine Kirkpatrick Bos and Jessi Brooks are joined by Arktouros Partner Jane Khodarkovsky to discuss the sanctions implications of the story, what is at stake in the lawsuit and the burden of proof on Binance.
Is Binance fighting a losing battle? And could the case backfire amid a parallel DOJ investigation?
Beyond the Binance case, the crew unpacks recent efforts by the CFTC and SEC to provide crypto with regulatory clarity. Find out why KK says the CFTC's recent prediction markets guidance is a “nothingburger” and why a no-action letter to Phantom is not a carte blanche for all crypto frontends.
Plus, is it time for crypto to consider best execution rules as an Aave user loses $50 million in a DeFi swap gone wrong?
Hosts:
Jessi Brooks, General Counsel at Ribbit Capital
Katherine Kirkpatrick Bos, General Counsel at StarkWare
Guest:
Jane Khodarkovsky, Sanctions expert
Links:
Unchained:
CFTC Moves to Rein In Prediction Markets as Industry Booms
SEC and CFTC Move Toward Unified Crypto Rules
Dueling Post-Mortems Reveal How a $50 Million DeFi Swap Went From Bad to Catastrophic
Vy Le's paper on on-chain best execution:
Fairness by Design: Verifiable Execution in On-Chain Markets
This week's good news:
Tech boss uses ChatGPT to create cancer vaccine to save dying dog
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2 Lawyers on How the U.S. Can Finally Regulate DeFi - Ep. 604
Listen to the episode on Apple Podcasts, Spotify, Fountain, Overcast, Podcast Addict, Pocket Casts, Pandora, Google Podcasts, Amazon Music, or on your favorite podcast platform.
Trying to regulate DeFi is a huge challenge because in a truly decentralized system, there should be no centralized actors to make and enforce rules for. This could make combating illicit finance challenging since traditionally, regulation has been targeted at centralized intermediaries. Yet Rebecca Rettig, Chief Legal and Policy Officer at Polygon Labs; Michael Mosier, the co-founder of boutique law firm Arktouros; and Katja Gilman, senior lead for public policy at Polygon Labs, published a paper last week that proposes to do just that.
Rebecca and Michael join Unchained to discuss what prompted them to write the paper, what the difference is between "onchain CeFi" and "genuine DeFi," how targeting high-risk wallets can be one part of the solution, how critical communications transmitters (CCTs) are another piece of the puzzle, and what next steps they are pursuing.
Show highlights:
The motivations behind their paper and Michael and Rebecca’s legal backgrounds
Why Michael views the Bank Secrecy Act as outdated in the context of DeFi
How critical KYC and AML compliance is for the integrity of DeFi
What Rebecca identifies as the principal risks in the DeFi sector
Why their proposal targets the protocol layer for effective DeFi regulation
How "onchain CeFi" differs fundamentally from "genuine DeFi"
Whether a decentralized protocol can be effectively regulated when controlled by a DAO
How if DeFi were to be classified as critical infrastructure by the Cyber and Information Security Agency (CISA), it would impact the sector
Whether the critical components of blockchain networks, such as RPCs, can be regulated effectively
How categorizing wallets based on risk can be one part of the solution to fighting illicit finance
Why Rebecca considers Tornado Cash a prime example of “genuine DeFi”
What steps Rebecca and Michael plan to take next following the publication of their paper
Thank you to our sponsors!
Popcorn Network
Polkadot
Guest:
Rebecca Rettig, Chief Legal and Policy Officer at Polygon Labs
Previous appearances on Unchained:
Just a Coincidence? Coinbase and Polygon Lawyers See Bad Omens in SEC Crackdown
Kik’s Surprising Move in Its Lawsuit With the SEC
Michael Mosier, cofounder of Arktouros PLLC
Links
Previous coverage of Unchained on the topic: Could the Bank Secrecy Act Harm Crypto? Coin Center Thinks So
Full paper: Genuine DeFi as Critical Infrastructure: A Conceptual Framework for Combating Illicit Finance Activity in Decentralized Finance
Rebecca’s thread
Coin Center: Broad, Ambiguous, or Delegated: Constitutional Infirmities of the Bank Secrecy Act
Tornado Cash
Unchained: Given the Sanctions on Tornado Cash, Is Ethereum Censorship Resistant?
Illicit funds in crypto:
Unchained: How Much Money Are Terrorists Actually Raising in Crypto?
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Surveillance Finance 101 with Seth Hertlein and Michael Mosier
Seth Hertlein, VP Global Head of Policy at Ledger, and Michael Mosier, Co-Fouder of legal boutique Arktourous, Build Exante - FinCEN, Treasury, and Chief Technical Counsel at Chainalysis join us on today’s show to explain the modern financial surveillance apparatus. FATF, FinCEN, AML/KYC, OFAC...the blacklists, the greylists. How does it all work? Who makes the rules?
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----- TIMESTAMPS
0:00 Intro 9:10 Financial Surveillance 13:10 Data Collection 17:10 The Bank Secrecy Act 20:30 SARS 23:10 Understanding the Enforcers 30:30 Goals for FINCEN 38:55 OFAC Explained 51:11 Strict Liability 56:26 Process of Getting OFAC SDN List 1:00:50 Tornado Cash 1:11:05 What Should We Do? 1:21:05 Closing & Disclaimers
----- RESOURCES
Michael Mosier https://twitter.com/m_mosier_
Seth Hertlein https://twitter.com/SethHertlein
----- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures
Your Privacy, Risks, and Rights Following Tornado Cash Sanctions | Jill Gunter & Michael Mosier
The US Treasury's sanctions on Tornado Cash could go down as one of the most significant events in crypto's history. The implications and nuances are vast, so we've decided to do something a little different for today's episode.
On August 12th, Jill Gunter and Michael Mosier from Espresso Systems hosted a Twitter Space on Tornado's sanctions, financial privacy and regulation. We've teamed up with Jill and Michael to share this epic conversation with a wider audience.
This is a massive episode, almost 3 hours, but it's full of profound insights and has an all-star lineup of speakers. I highly recommend listening if you want to learn more about the recent sanctions and where regulation is heading!
Shoutout to @f1v3am and @nedbgq, who provided a recording of the conversation and made this episode possible.
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Follow Jill: https://twitter.com/jillrgunter
Follow Michael: https://twitter.com/M_Mosier_
Follow Empire: https://twitter.com/theempirepod
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Resources
Link to the original Twitter Space
https://twitter.com/jillrgunter/status/1558150917387534336