Block & Order | SEC Priorities, Pumps & Dumps, Pump.Fun, NFT Act, CFPB-RIP, ElizaOS + More
In this episode of Block and Order, Kyle Lawrence and Moish Peltz dive into the legal drama surrounding President Trump’s memecoin and other crypto-focused executive orders. They also explore DeepSeek AI’s effect on the market, the ongoing legal issues with Tornado Cash, and the shocking kidnapping of Ledger’s CEO. To wrap things up, they hit on hot topics like the state of the Metaverse, the Pump.Fun lawsuit, and the recent pardon of Silk Road founder Ross Ulbricht.
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Chapter Markers:
00:00 Welcome to Block and Order
01:39 SEC Priorities
19:58 Pumps & Dumps
25:33 Pump.Fun
30:29 Lightning Round (ElizaOS, Jesse Powell, NFT Act, CFPB-RIP, Crypto’s Hiring, Hong Kong)
Show Notes:
SEC Commissioner Hester Peirce Lays Out 10 Priorities for New Crypto Task Force:
https://www.coindesk.com/policy/2025/02/04/sec-commissioner-hester-peirce-lays-out-10-priorities-for-new-crypto-task-force
Law Firm Behind Pump.Fun Class Action Demands Removal of Tokens Mocking It:
https://www.coindesk.com/markets/2025/02/06/law-firm-behind-pump-fun-class-action-demands-removal-of-tokens-mocking-it?utm_source=Sailthru&utm_medium=email&utm_campaign=node%20feb%206%202025&utm_term=The%20Node
Lightning Round:
Ai16z Is Rebranding as ElizaOS After Request From Venture Firm a16z:
https://unchainedcrypto.com/ai16z-is-rebranding-as-elizaos-after-request-from-venture-firm-a16z/
Crypto, Law, and Discrimination: Jesse Powell’s Housing Lawsuit and Its Broader Implications:
https://x.com/thedefidefender/status/1887518308083061092?s=46&t=dj6HIBf_lWkY9LawDv2aNg
Congressmen Push for ‘Crucial’ NFT Protections in Revised Crypto Bill:
https://decrypt.co/304760/congressmen-nft-protections-revised-crypto-bill
Musk’s DOGE Descends on CFPB With Eyes on Shutting It Down:
https://news.bloomberglaw.com/banking-law/musks-doge-descends-on-consumer-financial-protection-bureau
Crypto Firms on the Hunt for Well-Connected Washington Lobbyists:
https://www.bloomberg.com/news/articles/2025-02-08/crypto-firms-on-the-hunt-for-well-connected-washington-lobbyists?embedded-checkout=true
Hong Kong Accepts Crypto as Proof of Assets for Investment Immigration:
https://news.bitcoin.com/hong-kong-accepts-crypto-as-proof-of-assets-for-investment-immigration
Watch or listen to the podcast here:
Transcript:
**this transcript has been prepared automatically by AI and may contain inaccuracies**
Kyle Lawrence [00:00:00]:
Hester Peirce unleashes the roadmap. Memecoins are just for fun. And lawyers have feelings, too. Who knew? 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’m Kyle Lawrence, and with me as always, he’s the Batman to my Robin, Mr. Moish Peltz.
Moish Peltz [00:00:30]:
Kyle, great to see you, man. How you been?
Kyle Lawrence [00:00:32]:
Great to see you, my friend. I gave you the ultimate honor of being Batman while I designated myself as Robin. How about that? What a friend I am.
Moish Peltz [00:00:41]:
That feels untrue. The power dynamic is more balanced than that.
Kyle Lawrence [00:00:49]:
Well, we can’t both be Batman. It’s like the Superman paradox. If there’s two Superman, but they’re both good, but they have to kill each other because there can only be one.
Moish Peltz [00:00:57]:
There’s the Avengers. You have a team of pretty good superheroes. Like, they don’t need to be, like, you know, a sidekick.
Kyle Lawrence [00:01:04]:
Right. Even though Hawkeye and Black Widow would get eviscerated in five seconds.
Moish Peltz [00:01:09]:
There are lesser superheroes, but, you know, there’s some good ones. So we. We have, you know, the top two here. So that’s.
Kyle Lawrence [00:01:15]:
That’s. That’s true. That’s true. And producer Shaun, he’s. He’s the guy in the chair. Without him, there is no superpower.
Moish Peltz [00:01:23]:
I think he’s played by Samuel L. Jackson in the Marvel Cinematic Universe.
Kyle Lawrence [00:01:28]:
I think he might be. Well, Moish, we got a burner of an episode coming up. A lot of stuff going on, a lot of things moving forward, and we are here to break it all down. So why don’t you kick us off with the top story of the Order.
Moish Peltz [00:01:39]:
All right, well, leading off the order tonight is the SEC Commissioner Hester Peirce has laid out as a continuation of her crypto task force, 10 priorities for the crypto task force.
Kyle Lawrence [00:01:53]:
The Lord. The Lord Jehovah has given unto you these 151010 commandments for all to obey.
Moish Peltz [00:02:06]:
So, Kyle, we’re going to go through the task force priorities tonight, which are presented not in. In rank order, not in order of importance, but there are 10 different topics, and we’re run through them and see how we feel and see how America thinks we should feel.
Kyle Lawrence [00:02:24]:
Former guests of the show, SEC Commissioner Hester Peirce, friend, and somebody we should all be worshiping right about now.
Moish Peltz [00:02:31]:
Yeah, I mean, look, I think it’s very cool that she was named the, you know, task force leader of, you know, how these securities are going to be viewed or how Crypto securities are going to be viewed in the US and you know, I was reading the Matt Levine article this morning, which I think ties into this, which is really thinking about, well, these things are securities or not securities, but if they’re not securities, which is kind of what everyone wants the SEC to say, then, well, what’s the SEC doing saying they’re not securities if they’re not securities? So it’s interesting dynamic of them trying to unwind the craziness of what’s happened over the past four years, but do so in a way that there’s kind of legal logic to it and it can be followed and ultimately people can rely on it.
Kyle Lawrence [00:03:20]:
Yeah, your lips to God’s ears. Let’s see what she has in store for us.
Moish Peltz [00:03:24]:
All right, so first I’m going to quote a little bit from the preamble which said that basically a better regulatory environment should not be viewed as an endorsement of any particular crypto coin or token. The commission in fact does not endorse any products or tokens. Spinning up coins and tokens is easy. If people want to buy anything that lacks long term value proposition, they should be free to do so. But they should not be surprised if someday the price drops. In this country, people generally have a right to make decisions for themselves. But their counterpart to that wonderful American liberty is the equally wonderful American expectation that people must decide for themselves not look to mama government to tell them what to do or not, nor to bail them out when they do something that turns out badly. So here I think we have a little bit of the heart and soul of what this is about, which is, hey, if you’re going to go out and buy something stupid, don’t get mad and don’t come crying to us when that decision turns out to have been a bad one.
Moish Peltz [00:04:22]:
So, I mean, does this kind of philosophy kind of, you know, one, do you think this is right? And two, does it kind of bake its way through the rest of this discussion?
Kyle Lawrence [00:04:31]:
I mean, I think it’s a valid point for sure. Buyer beware. There is always an element of we are responsible adults and if you’re willing to throw thousands of dollars at fake Internet money, you need to be prepared for those consequences. But where does that line get draw? I mean, if there’s laws preventing the car manufacturer from selling me a car that doesn’t drive, and if I pay all the money for it, it’s not just like, oops, sorry, you’re, you’re SOL. So I, I agree with her about this, but I think that can lend itself to a very slippery slope.
Moish Peltz [00:05:01]:
Well, I think that’s true. Right. If you buy a car and the dealer says, aha, it was just a piece of art, it’s a joke, it doesn’t actually work. You should have known that. Right. I mean, well, I think that’s more fraud. Right. You’re.
Moish Peltz [00:05:13]:
You’re. I think you could. You could draw a line of, well, I. I bought something I didn’t intend to, or I was advertised something different. But I think, and this is getting into some of the priorities here is how do you start weaving through these? So why don’t we kind of jump into the priorities? The first they said it’s not really the, you know, rank order. This one’s big. The security status of crypto tokens under the securities laws, which even the Commissioner says is fundamental to resolving a lot of the other questions. So the task force is working hard to examine different types of crypto assets and whether they fall under the securities laws.
Moish Peltz [00:05:50]:
So, I mean, what do you think? Is this kind of the top of the pyramid here?
Kyle Lawrence [00:05:56]:
Yeah, I mean, this is kind of the ultimate question. Without this, if they’re not subject to the securities laws, then Hester Peirce is gonna have nothing to do for the next couple years, at least not in this industry. So I think that’s fair.
Moish Peltz [00:06:09]:
Yeah. But I think it’s probably more than that. Right. Which is like kind of pulling out the framework by which you can make these evaluations, or at least I think.
Kyle Lawrence [00:06:16]:
We’re going to get into that.
Moish Peltz [00:06:17]:
Yeah, Yeah.
Kyle Lawrence [00:06:19]:
I think that’s part of the rest of the roadmap here.
Moish Peltz [00:06:22]:
All right, so number two is scoping. So the task force is going to work to help identify areas that fall outside the Commission’s jurisdiction. So we’re talking about some things are going to be securities, some things are not.
Kyle Lawrence [00:06:34]:
It’s nice to have interdepartment. Interdepartmental, if I can say that word correctly, communication. I mean, that’s something that I. In the corporate world, it infuriates me to no end that you have in New York State and every state, you have the Corporations division, and then you have the tax department, and they don’t talk to each other, so they have no idea what’s going on. It’s really baffling. So that’s a step in the right direction. I’m here for that.
Moish Peltz [00:06:56]:
Yeah. I mean, you’ve seen some kind of topics already kind of bouncing off the CFTC with Carolyn Pham as the new commissioner there and how there might be More interagency coordination. But I think also this one, and they mentioned the body of the discussion, that it’s going to also welcome no action letters. And then this SEC is actually going to give a bit more into the thinking behind their views and to why things may or may not be securities. All right, so number three is coin and token offerings. So task force is thinking about the possibility of recommending. So like, even there it’s kind of qualified. Right, like thinking about the possibility of recommending commission.
Kyle Lawrence [00:07:42]:
They’re still the government, after all. Yes.
Moish Peltz [00:07:44]:
Right. So look, this, this gets down to whether the entity. You know, there’s going to be some sort of information that’s going to be required to be released and updated. This is the proposal. It’s almost like the regulatory sandbox, which if you come into the commission, it’s not like a full registration, but you give us your name and contact information and you agree not to contest SEC jurisdiction in the event of an allegation of fraud or some other kind of claim against you, then we’re going to deem them like presumptively non securities, that you can go off and to the wilderness and do what you want with them. So what do you think of this kind of a little bit more flesh on the bone proposal about, let’s call it like a regulatory sandbox?
Kyle Lawrence [00:08:27]:
I think this is fantastic. And this is basically what Hester Peirce was talking about when she was on her show about encouraging people to say, if you’re unsure of where you fit in the regulatory scheme, come in and talk to us. And we. I mean, I don’t need to do it again, but it’s the joke of you walk into the SEC and talk to Gary Gensler. You’re lucky if you walk out of that building with your freedom. Now you’re talking about people coming in and saying, this is what we’re doing. Here’s the information about it. Tell us how to make it work under the current regulatory scheme.
Kyle Lawrence [00:08:58]:
I think this is fantastic and I hope that this. Of all of these things, I hope this one really comes forth.
Moish Peltz [00:09:04]:
Yeah, I agree. I think it’d be great if there was just some process by which it’s like, hey, do X, Y and Z. And then you can actually experiment and try stuff like, cool. All right, so number four is registered offerings. So the task force will consider working with staff to recommend existing pathways, modifying existing pathways to registration, including regulation A and crowdfunding. So people interested in registering token offerings have a viable path to do so.
Kyle Lawrence [00:09:35]:
I love this one. Yeah. I mean, I love this one. In regulation A and crowdfunding, it’s similar to regulation D and the other private offering statutes. This is, you divulge information about your project, who you are, what are you going to do with the money. Which, that can be weird for crypto offerings, but in general, we’re looking to raise money for a specific purpose or cause or whatever it may be. Just provide information, provide disclosure. So the people who are buying these things, they’re not just naked in the rain and have no idea what they’re buying.
Moish Peltz [00:10:03]:
Right. And I think this is something that’s currently possible in the US under security token offering kind of, you know, crowdfunding platforms, and we’ve worked on some of those, but it’s very constrained and very much, you know, not the kind of public, open roadmap building, public network, you know, token offerings that I think people are really excited for.
Kyle Lawrence [00:10:25]:
Also, it takes a little while and there’s costs associated with it. We’re lawyers, we are not free, you know, so there’s a, there’s an element of that. And people don’t always want to do that. They just say, I just want to mint something cool and make some money. And I get that. I do too. But there are rules in place and posse, you have to absorb. Absorb.
Moish Peltz [00:10:42]:
Well, yeah. And I think it’s also like, look, there’s some things that are appropriate, like if you want to do a memecoin, and there’s really no business kind of offering behind that. Like you’re not expecting return of value. That’s one type of offering. But if you’re very clearly saying, hey, put your money in and we’re going to do lots of centralized company stuff and then give you a return, just it happens to be in a token. People also want to do that. There just hasn’t been a pathway to doing it. So, you know, here, here, here we go.
Moish Peltz [00:11:10]:
Maybe that’ll come to fruition. All right. I think after that we start getting into more specialized niches. So here we have a special purpose broker dealer task force exploring updates to the special purpose broker dealer no action statement, which in its current form has not been a success. And so expanding it so broker dealers can custody crypto asset securities alongside crypto assets that are not securities and then work with the public to identify other obstacles to registration. What do you make of that one, Kyle?
Kyle Lawrence [00:11:43]:
I mean, sounds logical and makes sense. I don’t really have much color to add to it. It just sounds like an obvious thing to do and I’m shocked that it hasn’t come to be. I’m surprised that there hasn’t been more push from broker dealers to get this. To get this.
Moish Peltz [00:11:59]:
I think there has been to their credit. I think you’ve heard a lot of crying and whining from, you know, like Robinhood for example. It’s like we want to do whatever, whatever, but we’re told we can only, we can only have securities and have non securities and if we want non securities, it’s this whole like. So I think it’s making that a little bit easier for people that don’t have probably hundreds of millions of dollars like Robinhood on legal to find a way to do this right. All right. Custody solution number six, Custody solutions for investment advisors. Oh, I like this one. So it can work with investment advisors to provide appropriate regulatory frameworks so advisors can safely, legally and practically custody client assets themselves or with third party.
Moish Peltz [00:12:39]:
I think that’s fantastic. So yeah. What do you think, Kyle?
Kyle Lawrence [00:12:43]:
I think it’s fantastic and I think it’s an obvious corollary to one what we just talked about with the broker dealers. And it just kind of fits into the existing rules about what advisors can and cannot do. Anyway. It’s just a no brainer. Again, it’s just a no brainer. It’s, it’s so obvious a fourth grader could figure this out.
Moish Peltz [00:12:59]:
Well, I mean, does that mean that, that this is kind of like an elementary task force or is this like it’s just the low hanging fruit that like, is this just like they may be not ambitious enough or are these like the right things that they just need to start plucking the lowest hanging fruit?
Kyle Lawrence [00:13:14]:
I think you have. Well, look, Rome wasn’t built in a day. It took hundreds of years. But you still have to start somewhere. And to me, you have to start with the obvious ones because if you start going with extremely esoteric and highly technical things that relate to this industry, you’re going to lose a lot of the interest in it. It’s just, it’s not, I don’t want to say it’s not sexy enough because we understand what they’re talking about and people are in this industry know what she’s talking about, but you still need to just hammer out the obvious ones and then use that as the building blocks for what comes next. And these things are obvious.
Moish Peltz [00:13:45]:
I think that’s right. I think what this is showing is there’s a mix of like really big issues, like what’s the security and like really niche issues which are like how do investment advisors Custody and what do broker dealers get to do that that are like both building blocks and you kind of need like the kind of niche and like really broad building blocks to like lay the foundation for the next generation of crypto rights. So yeah, I mean, I guess, I guess this is a, you know, as we’re working through the list it’s like, oh right, I see why they’re doing these things. All right, number eight, crypto exchange traded products. So the commission’s already receiving proposed rules for. And there are, you know, on the market, right. Some, some pretty nice crypto exchange rate products. But it’s expanding that list and then allowing modification of futures, including staking in kind creations and redemptions and you know, things like that.
Moish Peltz [00:14:44]:
So again is that, I think that just is makes sense and is a further expansion of what they’ve already been doing.
Kyle Lawrence [00:14:50]:
And I remember there was talk, I think when we had Hester Peirce on, we asked her about this. But these self regulating organizations and you know what they can and cannot do, what does that mean? What is the breadth of that of their own self regulatory power? So this is really useful especially when you start talking about staking because there’s a lot of stuff out there. You know, people don’t necessarily fully understand what it means. What are the tax implications, what are the securities implications of it if you get yield on it, does that fit into all these? I think all of these things are really important. Even though it’s buried kind of down further on the list. It’s very important to the people who are huge in the space. I mean big bucks you’re talking about here. And I think this is extremely important.
Kyle Lawrence [00:15:29]:
So I, I hope this really comes too.
Moish Peltz [00:15:31]:
Well, it’s true because it is kind of like this more niche issue buried towards the bottom of the list. But you’re exactly right. The existing exchange traded products, the, the Bitcoin ETFs are, are the largest, most liquid, biggest institutional assets like in crypto. So you know, there you go. All right, number nine, clearing agencies and transfer agents. You’re gonna have to help me out with this one, Kyle. So the task force is working on the intersection of crypto and clearing agency transfer agent rules, continuing to work with market participants interested in tokenizing securities or otherwise using blockchain technology to modernize traditional financial markets. So what do you make of that one?
Kyle Lawrence [00:16:11]:
This doesn’t even apply to crypto. These rules needed have been needing an update for the past 50 years. Transfer agents are the ones if you own stock in a public company and you need to get the transfer legend removed, you need to transfer to somebody else. Can’t do that without a transfer agent. And they send you this list of things you have to do and you have to shave your body and bathe in there and set your house on fire and you have to do all these crazy things. I’m not joking. These people don’t go to the bathroom without a legal opinion from a, you know, Am 100 firm. So the, all of those rules need to be updated.
Kyle Lawrence [00:16:42]:
And if they want to apply them and have transfer agents have the ability to transfer crypto assets, I’m all for it. Just don’t make it impossible to do so. That’s, I beg of you, please don’t do that.
Moish Peltz [00:16:54]:
So this might be like the most niche issue on here, but I think it’s also the most groundbreaking, which is if this were implemented, it would allow, you know, like the, the broader stock market to, to be tokenized. Right? And that’s like, now you’re talking about hundreds of trillions of dollars of value that’d be unlocked, right?
Kyle Lawrence [00:17:13]:
That is a seismic shift if that happens.
Moish Peltz [00:17:16]:
So there you go. So, you know, it’s these niche issues that, that then when you lay the groundwork and unlock, you know, ginormous implications. All right, number 10, last task force priority, task force priority on this list at least is the cross border sandbox recognizing the crypto’s international scope task force looking to facilitate cross border experimentation on a limited scale, temporary time frame, but with the goal of more permanent long term approaches. How do you see this being implemented? What are examples of, you know, potential international cross border sandboxes that could work here?
Kyle Lawrence [00:17:59]:
This one’s interesting because it’s certainly important for this industry. Crypto is borderless, you know, the participants all over the world. However, this is also coming at a time where United States relations with some of these other countries is maybe not the best. You know, we’re talking about tariffs, where there’s trade war talk, and wherever you land on the fence about that, just push that aside. This is, I think, going to be more difficult than we hope and think it will be. For some of those reasons, unfortunately, this is kind of collateral damage. But in the grand scheme of things, it’s obviously important because in the past few years we’ve seen jobs and projects and platforms and all these great things move offshore and they should be here in the United States, but those things are now existing offshore. What do we do with them? We can’t just kind of port them back over here with one fell swoop.
Kyle Lawrence [00:18:47]:
There needs to be a mechanism in place, and I think that’s part of what this is. Listen, international cooperation is always a good thing. That makes for a better tomorrow. I just don’t know how it’s going to work right now in the current environment.
Moish Peltz [00:18:59]:
Yeah, look, it’d be great if there was international cooperation with Europe and Mi. And if you qualified in one jurisdiction, you were good in the other, and vice versa. So that would be fantastic. And I think to counterpoint to your point about the. If all of a sudden there’s tariffs and there’s kind of this friction on international movement of, like, physical goods, like, well, doesn’t even make more sense to have digital goods kind of moving internationally more freely. So maybe this is an outlet for some of that friction.
Kyle Lawrence [00:19:34]:
Rational point in an irrational world.
Moish Peltz [00:19:36]:
All right, well, that concludes our overview of the top 10 priorities of the crypto task force as launched and announced by friend of the show, Commissioner Hester Peirce. And if there’s any task force priorities that are missing, we’d love to hear for you. What should be number 11 on the task force list? And maybe we’ll ask Commissioner Peirce to come back on and talk about it.
Kyle Lawrence [00:19:58]:
Well, next up on the order, Moish, I have a question for you. Is the pumping and dumping of memecoins legal?
Moish Peltz [00:20:05]:
Oh, God, Kyle, whenever you hear pump and dump, it just in my body, I’m like, oh, that’s illegal.
Kyle Lawrence [00:20:11]:
Speaking in the parlance of our time.
Moish Peltz [00:20:13]:
You said dump in sequence, so it’s illegal. That’s the answer, right?
Kyle Lawrence [00:20:16]:
That’s exactly right. Well, listeners and viewers of block and order, I highly encourage you to read Matt Levine’s most recent article about whether or not these things are, in fact, legal. We’ll put a link in the show notes to the most recent article. It is behind a paywall. But I highly, highly encourage all of you out there to listen to his podcast, read his articles. He’s. He’s the. The titan of.
Kyle Lawrence [00:20:38]:
Of writing about these kinds of things. Anything, financial economics. He’s the. He’s the guy.
Moish Peltz [00:20:43]:
So now that my shilling for him is our listeners. Our listeners have the. The bounty of a free gift. Link to the Bloomberg article. And if you. If you don’t know this, you can subscribe to his newsletter for free. And then you can view it every day without subscribing. So that’s the.
Moish Peltz [00:20:58]:
That’s the trick for Matt Levine.
Kyle Lawrence [00:20:59]:
There you go.
Moish Peltz [00:20:59]:
Whichever, everyone, if you listen to our show, you should definitely be subscribing to Matt .
Kyle Lawrence [00:21:05]:
So I Take it back. Well, his article gets into the prevalence of these schemes in the memecoin market. And in the time that we’ve been talking about this topic, there’s been probably 16,000 of them that have gone straight to zero. But basically, these, there is a lot of, you know, pump and dump in the industry. Let’s call a spade a spade. Groups coordinate to inflate the coin’s price. We’re selling off their own holdings, leaving the late investors with significant losses. And the rise of these memecoin pumps has attracted regulatory attention due to concerns over market manipulation, investor protection, all the things for which securities laws have been developed over the past 100 years.
Kyle Lawrence [00:21:42]:
Now, as we’ve said on the show, the rules today and the rules in October of 2024, they are the same as of right now. So, Moish, where are we? I mean, we just talked a lot about what the new SEC is going to look like, what these new securities laws may in fact look like if they come to pass. But where are we, Is this legal? What are we doing here?
Moish Peltz [00:22:06]:
Well, I mean, I think a lot of the rules as applied to the market in general are like pump and dump is applied to generally thought of as securities. Right. So when you have a security, there’s a certain kind of layer of investor protections that apply. And so, and then it just, in the past few weeks, I can’t think of what the catalyst was. It seems people kind of have coalesced around the idea that memecoins are just an expression of, you know, art and memedom and belief and speculation have no intrinsic value utility and are not securities. And so we went from, you know, a few months ago being like, well, maybe they are, maybe they’re not, to the kind of the regulatory sphere kind of saying, not legal advice that they’re not. Right. So that kind of starts melting away a lot of the regulatory concerns and the pump and dump kind of concerns especially.
Moish Peltz [00:23:08]:
I mean, we were, we were talking about Dave Portnoy, for example, and the idea that, well, and this is also in the Matt Levine article, who very much goes through the Dave Portnoy kind of exception. But if, and I’ll quote a little bit from Matt Levine’s article, who wrote basically if memecoins, which are not securities, people want to buy memecoins because Dave Portnoy tweeted about buying them. So Dave Portnoy bought memecoins, tweeted about buying them, and then sold them for a profit, telling people he would do exactly that, then there’s nothing going on. There because there’s nothing for anyone to be deceived about. There’s no material facts and there’s no one deceived about any material facts. So Matt Levine says, I don’t even know what I’m doing with my life. Which was Portnoy’s takeaway from the Experience. And Matt Levine’s too.
Kyle Lawrence [00:23:56]:
Yeah. And interestingly, yesterday afternoon, Dave Portnoy did release a memecoin called Jail. It was like Jail Stool or something that pumped for a little while and today went to basically zero and he was kind of bitching about it on Twitter. And then a couple hours ago, there was the barstool official token and then there was another one that came out. They did pretty well for a little while to throw that out there. But yeah, he, he was like, I don’t understand this. This at all. We can, I think we can link his tweet where he video where he filmed himself.
Kyle Lawrence [00:24:25]:
To his credit, you’re right. He didn’t deceive anybody. He didn’t do anything. He wasn’t even involved in this thing at all. He wasn’t a key opinion leader. He was just some guy trading memecoins. It’s no different than you or I doing it. The only difference being he has millions of followers.
Moish Peltz [00:24:40]:
Well, but we all know, right? The reality is when you’re a very famous celebrity and even if you think you are saying all the right things and you feel like you’re entitled to say those things, when someone loses a lot of money, who are they going to turn to?
Kyle Lawrence [00:24:53]:
Knives out. Yep, that’s it.
Moish Peltz [00:24:56]:
I mean, I, I agree with you and I, I agree with Matt Levine and I agree with Davey Day Trader. But you know, the reality is he’s. He’s now a pretty juicy target for someone.
Kyle Lawrence [00:25:09]:
That’s it.
Moish Peltz [00:25:10]:
It sucks. It’s fun, though. It’s a pump, but it’s fun.
Kyle Lawrence [00:25:16]:
I think memecoins are fun. Just gonna say it.
Moish Peltz [00:25:19]:
Yeah, that’s why there’s the .Fun domain extension, like to indicate that it’s fun. Speaking of .Fun, like that segue.
Kyle Lawrence [00:25:28]:
Oh, yes. Speaking of .Fun.
Moish Peltz [00:25:31]:
Speaking of fun. Yeah. The law firm behind Pump.Fun class action suit, it’s called Berwick Law, has now demanded removal of the tokens that are mocking it on Pump.Fun. So, Kyle, as you may remember, in January, Berwick Law filed a class action lawsuit against Pump.Fun alleging that the platform violated securities laws by enabling the creation and sale of unregistered securities, which, you know, I guess it’s an open question, you know, if they release 53,000 tokens or they enabled the release of 53,000 tokens in January, which is something like doing the math. 1700 tokens per day in the month, 70 tokens per hour. So while we from recording the show like another 50 tokens have been coming out. All right, so they did a plaintiff’s class action lawsuit against Pump.Fun and the lawsuit claimed that Pump’s model allowed users to easily launch memecoins. How dare they.
Moish Peltz [00:26:33]:
Without proper regulatory oversight, potentially misleading investors and facilitating market manipulation. Regulation. So what do you think about the, the claims in the suit and, and the potential meritoriousness of their, of the action?
Kyle Lawrence [00:26:48]:
I don’t agree with their stance on the suit. I mean Pump.Fun’s terms are there. We just talked about, you know, kind of the whole buyer beware aspect of this thing. I’m not sure where they really get the standing to even do this. This is also the same law firm that filed the lawsuit against the Walk to a Girl in December. A slightly different situation, but really that one a little different. I’m not blessing it, for the record. I am not blessing that one.
Moish Peltz [00:27:14]:
I’ve not judged any of this. I’m just reading the news like you are.
Kyle Lawrence [00:27:18]:
That one was a little bit different. But what was funny about this one is after the lawsuit was filed, Berwick Law discovered a Solana based meme toy, Solana based token called Dog Shit 2 that appeared to mock or impersonate the firm. And in response, the law firm then sent a cease and desist letter to Pump Fund demanding the immediate removal of this and any other tokens that could be perceived as attempts to undermine its reputation. Now I didn’t see it, I don’t know what it says, you know, or what the, what the tokenomics were or really anything about Dog too. And to be honest with you, but the fact that they responded to it is almost like a tacit agreement with that it was them. If they just ignored it, it would have gone away.
Moish Peltz [00:27:57]:
Well, there, there, there was a suspicion, I don’t know if it’s true or not, that it was actually the law firm that had created the token as, as a, an example of how easy it is to create the token because they were like trying to make an example and show it in their papers and like, no, no, no, that was not us, like, so I don’t know to believe, but that that was the allegation. And the law firm then denied any involvement in any association with the token and saying that it had never launched, endorsed, supported any blockchain based projects and that the projects themselves are misleading the public and kind of falsely associating themselves with the project.
Kyle Lawrence [00:28:34]:
They’re accused, I’m sorry, they’re accusing Pump.Fun, though, of using their platform to intimidate clients and interfere with ongoing litigation. They’re arguing that, excuse me, that launching mocking tokens is a deliberate tactic to disrupt the legal process and all that. Is this legal jargon. I’m sorry, but for them to go after Pump.Fun of this for this specific thing, does that not raise section 230 issues? 230 being the communications decency act that shields online platforms like Facebook or Meta and Instagram from legal liability for content posted by its users. Like Pump.Fun is not doing this. This is all user created stuff.
Moish Peltz [00:29:19]:
Well, I think that’s an interesting argument. I don’t know if anyone’s really expanded on that. And we can, we can kind of take a deeper dive on a future episode, but it’s a, it’s an interesting proposition, right, that this is just a platform for creating tokens. They themselves are not the speaker. Right. Just like, you know, Facebook is not the speaker. It’s the user generated content, or in this case, user generated tokens. That is the speech.
Moish Peltz [00:29:44]:
That is the. You know, if meme tokens are not securities, which I guess Berwick law disagrees with, right. Then all they are is art and speech and expression of memedom. So if that’s the case, then it’s the creators of those tokens that would have liability, not the platform itself. But I guess Berk law would say, well, that’s not correct because it’s not just a neutral platform. They’re offering unregistered securities through the platform. And so there’s probably a different level of obligation that falls on them than just being like Facebook.
Kyle Lawrence [00:30:19]:
Yeah, I’m curious to see how this one shakes out. I. I’d be looking to be like to see how Pump.Fun response to this.
Moish Peltz [00:30:26]:
Yeah, we will. We will see, right?
Kyle Lawrence [00:30:28]:
We’ll see Lightning. Round time, folks. We made it a116Z. Is it a116Z or AI?
Moish Peltz [00:30:35]:
No, that’s like. It’s not A1 sauce. It’s. It’s AI16C.
Kyle Lawrence [00:30:39]:
It says a116Z. Here’s AI16Z. A DAO, a decentralized autonomous organization integrating artificial intelligence into treasury management and investment, is rebranding as Eliza OS following a request from venture capital firm Andreessen Horowitz. A16Z due to potential name confusion. And what’s funny is when I first saw this headline, I actually assumed they were the same and I did not know that they were different. This rebranding will not involve the creation of new tokens or changes to the project’s development roadmap, DAO holdings or governance structure. The ticker will remain in any future changes to be decided by community votes upon the launch of the DAOs voting module.
Moish Peltz [00:31:21]:
See, I had the exact opposite impression. I was like, oh, it’s AI 16Z. It’s like a meme DAO token that’s going to be like the AI decentralized Andreessen Horowitz. That’s funny, but it’s obviously not actually launched by Andreessen Horowitz. But I think the idea is, well, if some people aren’t sure, then that’s quintessentially trademark confusion. Yeah, and when I saw that, I could see, well, I don’t know how long Andreesen Horowitz is going to allow this to stand. And as you can see, they let them have their fun.
Kyle Lawrence [00:31:55]:
Maybe not. I’m patient zero. I proved they were right. So there you go.
Moish Peltz [00:32:01]:
All right, next lightning topic. Jesse Powell, the co founder of the Kraken cryptocurrency exchange, has sued his, well, his potential co op board, I guess the co op board that denied him his apartment building in San Francisco, alleging that they denied his purchase due to his crypto industry ties and political views. So the lawsuit raises broader legal questions around housing discrimination, economic freedom and regulatory attitudes towards crypto entrepreneurs. And Powell had expressed frustration over, you know, alleged discrimination based on his inability to basically buy a co op here. So Kyle, what do you think if, if you’re a crypto founder and your name has been in the news or even been named as a defendant in regulatory questions, should a co op board have the right to say, well, no thanks down in my backyard.
Kyle Lawrence [00:32:55]:
I mean, co op boards are a bad example because they deny everybody for any random reason. Lawyers can be denied housing in New York City state because they’re lawyers. So, you know, if it’s good enough for, for us to get screwed, it’s good enough for him. I mean, obviously we would need to know a little more specifics about it. Anybody can make, have a cause, celebrate and say, you’re discriminating against me because of this, that or the other thing, you know, if they’re the co op board and they don’t want, you know, this, this high profile person there, I mean, are they within their rights? I mean, to me that’s kind of capitalism. I don’t know.
Moish Peltz [00:33:25]:
Well, yeah, I mean, I think that’s that’s what, you know, co op boards have this reputation, right? And even the value of co ops versus a similar condo, at least in New York City, there’s like, there’s a big discount for co ops because of that now when, and they used to be the opposite, right back in the, you know, 50s, 60s, 70s, kind of the golden age of co ops. It was very much those were like the, the flagship, like apartment buildings where everyone wanted to live. But because of this, right, you can, you can screen out the undesirables in the, in the co op board’s esteemed view. And here they’re saying, well, you’re a crypto executive. We don’t want your, your type around here is kind of the attitude. But I think this is the, the backdrop of this is the, the, the kind of bank, you know, cancellations of people being debanked because they’re in crypto. And so there is this like really real discrimination of something that should be a neutral thing. You know, banking access, housing and kind of where do you draw those lines as against an industry that frankly does have a lot of litigation risk?
Kyle Lawrence [00:34:33]:
It’s true. I mean, if his check clears, then it’s one thing he can’t get his check clear because his bank won’t bank him. That’s really the bank’s fault. I don’t know. We’ll see. I have to see the complaint. Next up, representatives William Timmons, Republican from South Carolina, and our friend Richie Torres, Democrat from New York, are advocating for the inclusion of the New Frontiers in Technology act, the NFT act, because of course, in the revised Financial Innovation and Technology for the 21st Century Act. The NFT act seeks to establish clear regulations for digital assets by designating certain NFTs as non securities, thereby providing legal protections and delineating oversight responsibilities between the CFTC and the SEC.
Kyle Lawrence [00:35:15]:
This initiative aims to create a more sensible regulatory framework for digital assets. I think they need to talk to our friend Hester Peirce and make sure that we’re not, you know, doing one of these things here.
Moish Peltz [00:35:26]:
Well, I mean, you got to have the legislators do that and you have the executive branch doing the executive stuff. But you know, look, I think it’s great that the FIT 21 act has now been renewed and there’s this big push to include the NFT Act. I hate these acronyms, man. I don’t, I do not like them. But, but putting that aside, I love that there’s a push to get, to merge them in and get the NFT act in which we covered on a previous episode as a standalone segment the idea that things that are clearly art and speech and, and you know, even memedom should not be kind of fit and wedged into this kind of larger market structure regulatory framework that the FIT 21 act is proposing to be built.
Kyle Lawrence [00:36:08]:
Yeah. Speaking of acronyms, your favorite.
Moish Peltz [00:36:12]:
Next up, Elon Musk’s Department of Government Efficiency, another great acronym. DOGE has initiated efforts to dismantle the CFPB or the Consumer Financial Protection Bureau. Did not know that this was going to be the Alphabet soup acronym show, but here we are. So the CFPB, which as you may have remembered, was originally funded by a loophole where they said we do not need congressional appropriations, we just need to receive money from, I believe is from the Federal Reserve. Right, they were funded directly from the Federal Reserve. And that was challenged at the time. And people said the CFPB cannot be exist, should not be funded because it was not congressionally appropriated. And actually the Supreme Court ruled and said, well no, as long as they get funding from some source that like, if that source is okay on its own, it’s fine.
Moish Peltz [00:37:05]:
And so that was seen. Well, okay, this thing can be propped up, it can exist, it can do the work of protecting consumers. And here we go. That, that kind of like little like small leg that propped up the CFPP CFPB back in the day. And the labor to say, hey, you’re, you’re good to go is ultimately now what’s its downfall? Because DOGE is saying kind of and cutting it off at the knees and saying, well, if this funding is discretionary, it’s not congressionally mandated, we’re just going to yank it. Nothing you can do about it.
Kyle Lawrence [00:37:39]:
You know, listen, I’m all for creating more efficient things in our government in particular, where there is, you know, a lot of, look, there’s a lot of bloat, let’s call it what it is. But the CFPB actually does a very important thing in this country. And while we talk about buyer beware and people buying NFTs and memecoins and hahaha, I just lost five grand. And isn’t that funny? And yet there is an element of that, but there is still a lot of fraud and unconscionable behavior, especially in the consumer space. And there, there has to be something. There cannot be nothing. You want to, you want to fix it. And I know you and I have talked about this and it’s the idea, it’s like, well, we’ve tried fixing it for the past 20 years and nothing has happened.
Kyle Lawrence [00:38:19]:
So we, we have to take these extreme measures and try to build from the ground up. I just fear, like, Elon Musk doesn’t care. Elon Musk. Talk about not congressionally appropriated. Nobody elected him. And for him to kind of unilaterally decide to do this and just kneecap this entire thing, a lot of people are going to get screwed. They’re just. I hope they actually have a plan for reestablishing this type of organization and don’t just leave it on the cutting room floor.
Kyle Lawrence [00:38:44]:
Something that I said a couple weeks ago and was scoffed at, but here we go. Crypto firms are increasingly hiring foreign former regulators to navigate complex legal landscapes and enhance compliance. For instance, in 2021, Robin Hood appointed former SEC commissioner Dan Gallagher as his chief legal officer, compensating him with over $30 million. Wow. All right.
Moish Peltz [00:39:04]:
Stay at the bank.
Kyle Lawrence [00:39:05]:
Not bad, right? You can buy a lot of memecoins with that. Similar. Similarly, in 2024, OKX named ex monetary Authority of Singapore official Gracie Lynn is CEO of its Singapore operations. While these hires aim to bolster regulatory understanding, they’ve sparked concerns about a potential revolving door between regulatory bodies in the crypto industry. I actually don’t see that as necessarily a problem. As I said on a previous episode, if you hire people from within the industry, they know how the sausage is made and they know how these things work, and they know how to help you position yourself in a way that you will not run afoul of their rules. And if something happens, you’re better equipped to deal with it and cut it off in the past. I don’t see a problem with it.
Moish Peltz [00:39:45]:
Well, I. Okay, so there’s a few things here. One is why, I mean, like, every other industry does this. Why, why is it news if they crypto industry does it like, or if the banking industry does it and the, the agricultural industry does it, like, why, why can’t crypto do it? So I think there’s, I know, kind of exceptionalism here. And then it’s like, well, they’re gutting all the, the regulatory agencies anyways. These guys need jobs. Like, it’s not like the regulators in the US at least the regulators weren’t doing anything because they couldn’t get anything passed and like, nothing was happening except for saying, you can’t do that. So what, like inside baseball knowledge do they have besides.
Moish Peltz [00:40:18]:
Besides like just being a good regulator and one of the good, good guys? I don’t know.
Kyle Lawrence [00:40:23]:
Well, well, at least coming from the SEC Because I know we talked about, when I forget what firm it was, but they were like, we’re not going to hire Gerber Grohl or we’re not going to work. Coinbase wasn’t going to work with the firm that hired Milbank. They hired Gerber Grohl, the former enforcement action chair and they said we’re not going to do work with, we’re not going to work with that firm. And you know, and I get that, but it’s like, well, you got, you were coming after our industry. We’re not going to hire you. But it’s like, I mean the guy knows how enforcement actions work. He knows the SEC’s playbook. I don’t know, it seems.
Moish Peltz [00:40:53]:
Well, I think that one took on a personal note for, for Coinbase and for, for Grohl because it was like they, they went after them and now in the foil litigation, just the extent of the choke point 2.0 efforts. And it’s like, well, people that were involved that took like a personal stake in trying to take these companies down shouldn’t be working in the industry. I, I sympathize with the argument.
Kyle Lawrence [00:41:18]:
Okay.
Moish Peltz [00:41:19]:
It’s a revolving door for the good guys, not the bad guys, I guess. Right? Yeah, I don’t know.
Kyle Lawrence [00:41:23]:
Yeah, that’s true.
Moish Peltz [00:41:24]:
It’s kind of a weird, I guess, you know, if it’s going to be a revolving door, let’s just have equal act. Everyone gets to revolve wherever they want. If you’re getting a 30 million dollar payday coming out of the SEC, then like, you know, it’s. Yeah, you take the reputational flack. Right, I get it.
Kyle Lawrence [00:41:38]:
That’s fine. You know what, every people’s memories are so are so much shorter than they were a couple years ago. They get pissed at you for 30 seconds and then move on to the next thing.
Moish Peltz [00:41:46]:
Six months. Nobody’s going to care what your job was. It’s like, hey, can you help me do this thing right?
Kyle Lawrence [00:41:52]:
Everybody loves Dan Gallagher and his $30 million annual salary. He’s the best.
Moish Peltz [00:41:56]:
That’s cool.
Kyle Lawrence [00:41:58]:
Last up on the lightning round, Hong Kong has announced that it will accept cryptocurrencies as proof of assets for its investment immigration program, allowing applicants to use digital assets to meet financial requirements. This move is part of Hong Kong’s broader strategy to establish itself as a leading global digital asset hub, aiming to attract new sources of capital and talent. Seems like a no brainer to me. I’m actually surprised that this wasn’t already in place given the way a lot of these immigration mechanisms work where you, you either pay or you need to have a certain, you know, net worth in order to get in. I. I’m shocked that this is news, to be honest with you.
Moish Peltz [00:42:33]:
Well, I think, I think it’s difficult because I think traditionally there’s like, well, what’s in your bank account? And I mean, this is. You hear this all the time with people and they’re in this crypto. Does she say, you know, I’m a crypto entrepreneur or I’m just a regular VC and my company just raised a Series C and it’s worth, you know, $100 million, but I go to get a bank loan to buy a house, and they’re like, where’s your, you know, where are your assets? And you can’t get a loan. So I think it’s the same thing here where, you know, governments say, hey, we want to approve you for, you know, immigration program. Show us what’s in your bank account. And guys like, I have a few hundred bitcoins, like, well, sorry, that doesn’t count. So, yeah, I think it makes complete sense. I think it also makes complete sense that if you’re going to welcome immigration, well, what is the most liquid, most international asset if you’re moving from country A to country B to bring with you? It’s obviously going to be bitcoin or USDC or something like that.
Moish Peltz [00:43:25]:
So you might as well be able to measure that.
Kyle Lawrence [00:43:28]:
A lot of digital nomads out there. I mean, this just makes sense. Like, we used to call it real estate rich for people on Long Island. Now it could be anywhere. It’s like, you, billion dollar house, but you can’t afford the gas in your car kind of thing. Well, that wraps it up for a banner episode of Block and Order. We’re recording this the day after the super bowl, so all kinds of good stuff to talk about. Very special thank you to producer Shaun.
Kyle Lawrence [00:43:52]:
Without him, the show would not be possible. Please do not forget to like and subscribe to our channel and follow us on all our socials. Links are down below in the show notes. Please note, the show is meant for informational and entertainment purposes. Purposes only. Nothing that we say is meant to be construed as legal or financial advice, especially about Memecoins. Please hire your own representatives if you’re going to take the plunge. Neither the discussion of nor the fact that Moish and or I may own any of the assets that we discuss on the show is meant in any way to serve as an endorsement of such such assets.
Kyle Lawrence [00:44:20]:
So from Block and Order, I’m Kyle Lawrence on behalf of Moish Peltz. See you next time, everybody.
Moish Peltz [00:44:25]:
See you next time.
Please note that this show is meant for informational and entertainment purposes only. This is not legal advice. Please hire your own attorney. The hosts or guests appearing on Block and Order may hold cryptocurrency, NFTs, or other digital assets from companies mentioned during our programming. This possession of digital assets does not constitute a professional endorsement, legal advice, or financial advice. Listeners are encouraged to consult with their own legal and financial advisors for personalized guidance in the blockchain and cryptocurrency space.