1 00:00:00,360 --> 00:00:03,080 Hello and welcome. You are listening to Patrick 2 00:00:03,080 --> 00:00:06,800 Boyle on Finance, a podcast exploring ideas from 3 00:00:06,800 --> 00:00:10,320 quantitative finance, examining events occurring in markets 4 00:00:10,320 --> 00:00:14,080 right now and financial history to see what lessons can be taken 5 00:00:14,080 --> 00:00:17,400 away, including interviews with some of the most interesting 6 00:00:17,400 --> 00:00:20,960 people in the world of finance. To learn more about the podcast, 7 00:00:20,960 --> 00:00:29,520 visit on finance.org. With a bit over a month to go 8 00:00:29,520 --> 00:00:33,080 till the US elections this November, it might surprise you 9 00:00:33,080 --> 00:00:36,760 to learn that the crypto industry has spent almost $120 10 00:00:36,760 --> 00:00:41,480 million already this year in political contributions, meaning 11 00:00:41,480 --> 00:00:45,320 that crypto makes up for almost half of all corporate political 12 00:00:45,320 --> 00:00:48,160 contributions in this election cycle. 13 00:00:48,600 --> 00:00:52,040 I'm sure you've seen all of the political adverts telling you 14 00:00:52,200 --> 00:00:56,360 how important this industry is to the average American and how 15 00:00:56,360 --> 00:01:00,120 you should vote for a crytofriendly candidate, no? 16 00:01:00,840 --> 00:01:03,440 Well, that would be because that's not how the 17 00:01:03,440 --> 00:01:07,080 advertisements work. The contributors know that the 18 00:01:07,080 --> 00:01:10,560 average American doesn't care one bit about crypto. 19 00:01:10,920 --> 00:01:14,920 When the Super PAC's funded by the crypto industry spent money 20 00:01:14,920 --> 00:01:19,200 to influence races, either by attacking crypto skeptics or 21 00:01:19,200 --> 00:01:23,880 boosting crypto supporters, the ads never mention crypto at all. 22 00:01:24,200 --> 00:01:27,000 A few of you are possibly nodding your head, saying, Yep, 23 00:01:27,280 --> 00:01:29,880 it'll be Trump. He'll be on their payroll. 24 00:01:30,040 --> 00:01:32,760 After all. He famously called Bitcoin a 25 00:01:32,760 --> 00:01:37,720 scam against a dollar in 2021, and then a bit over a year later 26 00:01:37,880 --> 00:01:41,480 licensed his image for a series of NFTS. 27 00:01:41,720 --> 00:01:45,800 This summer, he even flew to Nashville to speak at a Bitcoin 28 00:01:45,800 --> 00:01:49,720 conference, where he said that if he was elected, he would fire 29 00:01:49,720 --> 00:01:53,640 the head of the SEC and appoint someone who will build the 30 00:01:53,640 --> 00:01:57,800 future, not block the future. He even promised to create a 31 00:01:57,800 --> 00:02:01,680 strategic crypto reserve, whatever that is, saying that 32 00:02:01,680 --> 00:02:05,600 the United States will be the crypto capital of the planet, I 33 00:02:05,600 --> 00:02:10,759 guess overtaking El Salvador. But no, it's not just Trump. 34 00:02:10,759 --> 00:02:13,920 According to Bloomberg, while lots of money has gone to 35 00:02:13,920 --> 00:02:17,920 Republicans, the majority of the money from the crypto industry 36 00:02:17,920 --> 00:02:20,720 has been spent on influencing Democrats. 37 00:02:21,000 --> 00:02:23,720 Republicans are not too happy about this. 38 00:02:23,960 --> 00:02:29,120 A GOP strategist involved in Senate races told NBC that the 39 00:02:29,120 --> 00:02:33,720 spending on Democrats risks hurting Trump since his allies 40 00:02:33,720 --> 00:02:37,960 are being attacked instead of picking a side in the election. 41 00:02:38,160 --> 00:02:41,960 The crypto industry has put together a super PAC with no 42 00:02:41,960 --> 00:02:46,040 focus other than advancing the interest of crypto corporations. 43 00:02:46,280 --> 00:02:48,360 They've raised a massive sum of money. 44 00:02:48,520 --> 00:02:52,400 That's sending the message to politicians that if they commit 45 00:02:52,400 --> 00:02:56,360 to advancing pro crypto policies, they'll get help, and 46 00:02:56,360 --> 00:02:59,600 if they oppose the industry, it could end their political 47 00:02:59,600 --> 00:03:03,120 careers. This spending has been effective 48 00:03:03,120 --> 00:03:05,680 too. In the primaries earlier this 49 00:03:05,680 --> 00:03:09,760 year, crypto PAC backed candidates were big winners. 50 00:03:09,920 --> 00:03:14,440 According to the data, out of 42 primary races where crypto 51 00:03:14,440 --> 00:03:18,960 backed super PAC's intervened, their preferred candidate won 52 00:03:18,960 --> 00:03:23,400 86% of the time. Politicians are bending to the 53 00:03:23,400 --> 00:03:27,800 will of the crypto industry too. The American Prospect reports 54 00:03:28,000 --> 00:03:31,640 that both beneficiaries of crypto campaigns spending and 55 00:03:31,640 --> 00:03:35,440 their opponents, the ones who have received no help, are 56 00:03:35,440 --> 00:03:40,360 desperately endorsing crypto. Hours before Trump's speech at 57 00:03:40,360 --> 00:03:43,680 the Nashville Bitcoin conference, a group of 14 58 00:03:43,680 --> 00:03:48,840 Democratic lawmakers released an open letter to the DNC urging 59 00:03:48,840 --> 00:03:52,880 them to endorse cryptocurrency policies that would support the 60 00:03:52,880 --> 00:03:56,600 crypto industry. All 14 signatories appear to 61 00:03:56,600 --> 00:03:59,640 have received support from crypto super PACs. 62 00:04:00,120 --> 00:04:03,480 A few weeks after the open letter was published, Vice 63 00:04:03,480 --> 00:04:07,800 President Harris gave a speech saying that it's important for 64 00:04:07,800 --> 00:04:11,480 the United States to maintain its dominance in blockchain 65 00:04:11,480 --> 00:04:14,840 technology. Her campaign policy document, 66 00:04:15,040 --> 00:04:18,920 under a heading of sectors that are critical for our economic 67 00:04:18,920 --> 00:04:23,640 and national security, included the suggestion of investing in 68 00:04:23,640 --> 00:04:26,400 technologies like digital assets. 69 00:04:26,680 --> 00:04:30,760 The Washington Post reported last week that she's signalling 70 00:04:30,760 --> 00:04:34,560 support for the expansion of the cryptocurrency industry and was 71 00:04:34,560 --> 00:04:38,320 rebuffing claims that she would seek a crackdown on the sector. 72 00:04:38,520 --> 00:04:41,760 In a separate article, they reported that she promised 73 00:04:41,760 --> 00:04:46,160 donors in New York City a safer business environment for digital 74 00:04:46,160 --> 00:04:49,280 assets. Mark Cuban, who's described in 75 00:04:49,280 --> 00:04:52,840 the press as one of Kamala Harris's most influential 76 00:04:52,840 --> 00:04:57,000 political surrogates, told guests at a fundraiser last week 77 00:04:57,200 --> 00:05:01,000 that Harris's team opposes regulation through litigation 78 00:05:01,160 --> 00:05:05,320 and suggested that Gary Gensler could be removed from his role 79 00:05:05,320 --> 00:05:11,000 at the SEC if Harris is elected. Cuban noted that Harris''s team 80 00:05:11,000 --> 00:05:14,480 used no uncertain terms to express their lack of support 81 00:05:14,480 --> 00:05:18,800 for the Secs current approach to Regulation C against their. 82 00:05:19,000 --> 00:05:23,680 You leaving is worth a point in GDP growth he finished up with. 83 00:05:24,320 --> 00:05:27,560 So who is behind these massive political donations? 84 00:05:27,760 --> 00:05:31,640 Why are Americans seeing so many campaign commercials paid for by 85 00:05:31,640 --> 00:05:35,400 the crypto industry that never get around to mentioning crypto? 86 00:05:35,600 --> 00:05:39,720 And is it true, as the crypto industry claims, that 50 million 87 00:05:39,720 --> 00:05:43,880 Americans own crypto currencies and that it's legal treatment is 88 00:05:43,880 --> 00:05:46,680 one of American voters top concerns? 89 00:05:47,200 --> 00:05:50,240 It seems like no time since our screens were filled with 90 00:05:50,240 --> 00:05:54,000 celebrities and influencers pitching crypto and crypto 91 00:05:54,000 --> 00:05:56,880 exchanges. The most memorable example being 92 00:05:56,880 --> 00:06:01,240 the Larry David FTX Super Bowl commercial, which even featured 93 00:06:01,240 --> 00:06:04,640 P Diddy's roommate's father, Joseph Bankman. 94 00:06:05,280 --> 00:06:09,440 In the wake of the collapse of FTX, lawsuits were launched 95 00:06:09,440 --> 00:06:12,800 against the celebrities and influencers who had promoted it. 96 00:06:13,000 --> 00:06:17,240 Sam Bankman freed Puffy's roommate, stood trial last year 97 00:06:17,240 --> 00:06:21,160 on a long list of charges. But some of the charges, like 98 00:06:21,160 --> 00:06:24,600 conspiracy to make unlawful campaign contributions, 99 00:06:24,840 --> 00:06:28,400 conspiracy to bribe foreign officials and two other 100 00:06:28,400 --> 00:06:32,560 conspiracy counts, were held back for a second trial because 101 00:06:32,560 --> 00:06:35,200 these charges had not been approved as part of his 102 00:06:35,320 --> 00:06:39,440 extradition from the Bahamas. Those charges were supposed to 103 00:06:39,440 --> 00:06:42,760 be brought at a second trial that should have occurred this 104 00:06:42,760 --> 00:06:45,680 year. Last December, the prosecutors 105 00:06:45,680 --> 00:06:50,160 told the judge that evidence at a second trial would duplicate 106 00:06:50,160 --> 00:06:54,360 evidence already shown to a jury, also saying that a follow 107 00:06:54,360 --> 00:06:58,200 up trial would ignore the strong public interest in a prompt 108 00:06:58,200 --> 00:07:02,000 resolution of the case, particularly because victims 109 00:07:02,120 --> 00:07:05,400 would not benefit from forfeiture or restitution in 110 00:07:05,400 --> 00:07:07,800 orders if sentencing was delayed. 111 00:07:08,240 --> 00:07:11,880 Now, it can be argued that there might have been massive public 112 00:07:11,880 --> 00:07:16,600 benefit associated with hearing testimony about the $40 million 113 00:07:16,600 --> 00:07:20,480 that SBF handed out to politicians and political action 114 00:07:20,480 --> 00:07:24,920 committees ahead of the 2022 midterm elections and what he 115 00:07:24,920 --> 00:07:28,600 expected in return. While federal election receipts 116 00:07:28,600 --> 00:07:33,920 showed that SBF donated almost entirely to Democrats, guided by 117 00:07:33,920 --> 00:07:38,160 his mother, Barbara Freed, in an interview with Tiffany Fong, he 118 00:07:38,160 --> 00:07:42,480 claimed to have made significant dark or undisclosed donations to 119 00:07:42,480 --> 00:07:45,920 Republicans, too. None of this was explored in 120 00:07:45,920 --> 00:07:49,040 court. Celebrities, it turns out, took 121 00:07:49,040 --> 00:07:53,040 more heed for accepting advertising money from FTX than 122 00:07:53,040 --> 00:07:56,160 politicians did for accepting donations. 123 00:07:56,440 --> 00:08:00,720 The original indictment stated that he leveraged his influence 124 00:08:00,720 --> 00:08:04,680 that his contributions bought him to lobby Congress and 125 00:08:04,680 --> 00:08:09,920 regulatory agencies to support legislation and regulation that 126 00:08:09,920 --> 00:08:14,240 he believed would make it easier for FTX to continue to accept 127 00:08:14,440 --> 00:08:19,760 customer deposits and grow. We recently saw news of Ryan 128 00:08:19,760 --> 00:08:24,040 Salami and Caroline Ellison being sentenced to prison time 129 00:08:24,160 --> 00:08:28,000 for their participation in the massive fraud at FTX, but 130 00:08:28,000 --> 00:08:31,280 there's no news about any prosecutions relating to the 131 00:08:31,280 --> 00:08:34,200 massive campaign finance fraud that occurred. 132 00:08:34,520 --> 00:08:36,799 That seems like quite an omission. 133 00:08:37,400 --> 00:08:41,600 So if crypto makes up for almost half of all corporate political 134 00:08:41,600 --> 00:08:45,360 contributions in this election cycle, who are the donors? 135 00:08:45,640 --> 00:08:49,240 According to the consumer advocacy group Public Citizen, 136 00:08:49,440 --> 00:08:53,560 crypto sector corporations, primarily Coinbase and Ripple, 137 00:08:53,680 --> 00:08:59,560 have dumped over $119,000,000 in real money, not meme coins, into 138 00:08:59,560 --> 00:09:04,600 the 2024 election so far, almost entirely into super PAC's 139 00:09:04,600 --> 00:09:08,840 dedicated to elevating pro crypto candidates and attacking 140 00:09:08,840 --> 00:09:13,000 crypto skeptics. Fair Shake, Defend American Jobs 141 00:09:13,000 --> 00:09:17,920 and Protect Progress make up a network of super PACs funded by 142 00:09:17,920 --> 00:09:21,360 the crypto industry. Fair Shake is listed as being 143 00:09:21,360 --> 00:09:24,360 nonpartisan. It's affiliated super PAC 144 00:09:24,360 --> 00:09:28,960 Protect Progress supports Democrats and Defend American 145 00:09:28,960 --> 00:09:32,640 Jobs supports Republicans. According to data from The 146 00:09:32,640 --> 00:09:36,720 Washington Post, all three received funding from the same 147 00:09:36,720 --> 00:09:41,160 crypto industry donors. Fair Shake has raised over $200 148 00:09:41,160 --> 00:09:45,880 million and its biggest donors by far were Coinbase and Ripple, 149 00:09:46,080 --> 00:09:50,200 with large donations also coming from the founders of the venture 150 00:09:50,200 --> 00:09:54,280 capital firm Andreessen Horowitz, $5,000,000 came from 151 00:09:54,280 --> 00:09:59,120 the Winklevoss twins who run the Gemini exchange, and $1 million 152 00:09:59,120 --> 00:10:02,360 came from Coinbase CEO Brian Armstrong. 153 00:10:02,680 --> 00:10:06,360 According to news reports, almost all of these donors have 154 00:10:06,360 --> 00:10:09,480 had run insurance with securities regulators due to 155 00:10:09,480 --> 00:10:14,160 their crypto related activities. The crypto industry denies that 156 00:10:14,160 --> 00:10:17,360 its involvement in US elections is a problem. 157 00:10:17,640 --> 00:10:21,960 The Fair Shake website writes of the need to support innovators 158 00:10:21,960 --> 00:10:25,680 building the next generation of the Internet and argues that a 159 00:10:25,680 --> 00:10:29,800 clearer regulatory and legal framework is vital if the 160 00:10:29,800 --> 00:10:33,520 broader open blockchain economy is to grow to its full 161 00:10:33,520 --> 00:10:37,080 potential. According to Logan Dobson of the 162 00:10:37,080 --> 00:10:41,360 lobby group Stand With Crypto, who spoke with The Hill earlier 163 00:10:41,360 --> 00:10:46,400 this month, the crypto voter is real, bipartisan, and ready to 164 00:10:46,400 --> 00:10:50,280 engage this cycle. Amusingly, Bloomberg reported 165 00:10:50,280 --> 00:10:53,800 this summer that the Winklevoss twins, Harvard's dumbest 166 00:10:53,800 --> 00:10:57,960 graduates, had their money sent back to them after their Bitcoin 167 00:10:57,960 --> 00:11:01,480 donations to Trump's presidential campaign exceeded 168 00:11:01,480 --> 00:11:04,440 the maximum limit allowed under federal law. 169 00:11:04,520 --> 00:11:08,560 The Winklevoss twins run the crypto exchange Gemini, many of 170 00:11:08,560 --> 00:11:12,400 whose users spent months trying to get back funds they invested 171 00:11:12,400 --> 00:11:17,040 in a program called Gemini Earn. The exchange agreed to refund at 172 00:11:17,040 --> 00:11:22,640 least $1.1 billion to its customers and pay a $37 million 173 00:11:22,640 --> 00:11:27,000 fine earlier this year following a settlement with the New York 174 00:11:27,000 --> 00:11:29,280 Department of Financial Services. 175 00:11:29,600 --> 00:11:33,120 As embarrassing as all of this should be for them, the great 176 00:11:33,120 --> 00:11:36,280 thing about being a twin is that you get to claim that whenever 177 00:11:36,280 --> 00:11:39,320 you did something stupid that the other one did it. 178 00:11:39,520 --> 00:11:42,120 I think at this point they should probably claim to be 179 00:11:42,120 --> 00:11:45,480 triplets and all of the dumb stuff was done by Billy 180 00:11:45,480 --> 00:11:48,400 Winklevoss. Then look around and say where's 181 00:11:48,400 --> 00:11:51,960 he gone now? One of the claims made by crypto 182 00:11:51,960 --> 00:11:56,080 insiders is that crypto is owned by at least 50 million 183 00:11:56,080 --> 00:11:59,320 Americans. The claim is that it's a general 184 00:11:59,320 --> 00:12:02,200 interest group rather than a special interest group. 185 00:12:02,560 --> 00:12:05,880 Federal Reserve data shows that this is not the case. 186 00:12:06,120 --> 00:12:11,200 The most recent data shows that 7% of Americans, or 18 million 187 00:12:11,200 --> 00:12:14,960 people held or used cryptocurrency last year. 188 00:12:15,240 --> 00:12:20,320 This is down 2% from the prior year and only 1% of Americans 189 00:12:20,360 --> 00:12:24,360 actually used crypto to buy something or make a payment last 190 00:12:24,360 --> 00:12:28,400 year, and it's use for payments was high based amongst lower 191 00:12:28,400 --> 00:12:33,560 income adults and the unbanked. Crypto appears nowhere in any of 192 00:12:33,560 --> 00:12:36,680 the surveys measuring voters top concerns. 193 00:12:37,120 --> 00:12:40,440 If we look at the ownership of Bitcoin as a representative 194 00:12:40,440 --> 00:12:45,640 cryptocurrency, approximately 29% of all mined bitcoins are 195 00:12:45,640 --> 00:12:50,160 estimated to have been lost forever, and 60% of Bitcoin are 196 00:12:50,160 --> 00:12:54,680 held in fewer than 7000 wallets, implying that a small number of 197 00:12:54,680 --> 00:12:58,280 people care a lot about the price of Bitcoin, and the 198 00:12:58,280 --> 00:13:01,280 majority of people have little interest at all. 199 00:13:01,600 --> 00:13:05,440 Politicians are cozying up to the crypto industry not because 200 00:13:05,440 --> 00:13:08,840 it represents a significant portion of the voting public, 201 00:13:09,080 --> 00:13:12,400 but simply because of the amount of money being thrown around. 202 00:13:12,680 --> 00:13:15,760 The reason that none of the adverts paid for by the crypto 203 00:13:15,760 --> 00:13:19,280 industry mention crypto currencies at all is that the 204 00:13:19,280 --> 00:13:22,680 advertisers know that the public either don't care about this 205 00:13:22,680 --> 00:13:26,880 issue whatsoever, or that they would be turned off by an advert 206 00:13:26,880 --> 00:13:30,920 sponsored by an industry that's been plagued with legal problems 207 00:13:30,920 --> 00:13:35,400 and accusations of fraud. The crypto super PACs have names 208 00:13:35,400 --> 00:13:40,600 like Protect Progress and Defend American Jobs rather than NFT 209 00:13:40,600 --> 00:13:44,880 Hodlers for Harrison, meme coin pumpers for Trump for fairly 210 00:13:44,880 --> 00:13:47,720 obvious reasons. At least when you see a 211 00:13:47,720 --> 00:13:52,000 political advert paid for by the oil industry, they're open about 212 00:13:52,000 --> 00:13:55,240 their self-interest, warning voters that a particular 213 00:13:55,240 --> 00:13:58,880 politician's policies might push up the price of energy. 214 00:13:59,120 --> 00:14:03,280 Disclosing the true purpose of the crypto funded adverts would 215 00:14:03,280 --> 00:14:06,560 likely be toxic for those who took money from them. 216 00:14:06,800 --> 00:14:10,400 Jillian Ted in the FT highlighted in a recent column 217 00:14:10,640 --> 00:14:14,120 that all of this political lobbying seems to contradict the 218 00:14:14,120 --> 00:14:18,200 mantra of the digital assets world, that crypto is a tool 219 00:14:18,200 --> 00:14:22,040 that would enable citizens to challenge the establishment and 220 00:14:22,040 --> 00:14:25,520 that it was meant to be the antithesis of the Washington 221 00:14:25,520 --> 00:14:28,800 swamp. Molly White, a prominent crypto 222 00:14:28,800 --> 00:14:32,720 critic, wrote on her blog this summer that Coinbase may have 223 00:14:32,720 --> 00:14:37,040 violated campaign finance laws with its super PAC donations. 224 00:14:37,680 --> 00:14:41,720 Campaign finance law prohibits federal government contractors 225 00:14:41,720 --> 00:14:45,680 from making contributions or promising to make contributions 226 00:14:45,920 --> 00:14:50,120 to political entities, including super PACs like Fair Shake. 227 00:14:50,440 --> 00:14:55,080 White argues that Coinbase began a contract in July with the US 228 00:14:55,080 --> 00:14:59,480 Marshals Service for asset forfeiture and that as a federal 229 00:14:59,480 --> 00:15:02,440 contractor, they are not permitted to make these 230 00:15:02,440 --> 00:15:06,120 contributions. Because Coinbase first sought 231 00:15:06,120 --> 00:15:10,040 the contract in March and gave Save $25 million to Fair Shake 232 00:15:10,040 --> 00:15:14,600 in May, She says that their donation is the largest illegal 233 00:15:14,600 --> 00:15:18,080 campaign contribution by a federal contractor in U.S. 234 00:15:18,080 --> 00:15:21,960 history, the second having been for $1 million. 235 00:15:22,840 --> 00:15:27,280 Coinbase has since denied that their contribution was illegal, 236 00:15:27,480 --> 00:15:30,640 arguing that they are not a federal contractor because the 237 00:15:30,720 --> 00:15:35,040 US Marshall Service contract is not funded by appropriations, 238 00:15:35,240 --> 00:15:39,440 but by asset forfeiture funds. The consumer advocacy group 239 00:15:39,440 --> 00:15:42,800 Public Citizen rejects that argument, saying that the 240 00:15:42,800 --> 00:15:46,400 creation of the Asset Forfeiture Fund itself was an 241 00:15:46,400 --> 00:15:50,400 appropriation. I asked Zeke Fox, the author of 242 00:15:50,400 --> 00:15:53,960 Number Go Up, who's appeared on this channel in the past, about 243 00:15:53,960 --> 00:15:57,160 his thoughts on whether politicians should get in bed 244 00:15:57,160 --> 00:16:00,720 with the crypto industry and on the industry's relevance to 245 00:16:00,720 --> 00:16:04,120 regular American voters. Here's what he had to say. 246 00:16:04,280 --> 00:16:06,120 I can't. Believe these politicians are 247 00:16:06,120 --> 00:16:09,600 going full crypto again. The other day Maxine Waters, 248 00:16:09,960 --> 00:16:12,960 influential Democrat, said blockchain was the future. 249 00:16:13,320 --> 00:16:15,880 The future. That's what crypto Bros have 250 00:16:15,880 --> 00:16:18,080 been saying for literally a decade at this point. 251 00:16:18,320 --> 00:16:20,720 They've yet to come up with anything useful to do with 252 00:16:20,720 --> 00:16:23,400 crypto. Don't these politicians remember 253 00:16:23,680 --> 00:16:27,120 the last person from the crypto industry who came to DC bearing 254 00:16:27,120 --> 00:16:29,640 campaign contributions? Sam Bankman. 255 00:16:29,640 --> 00:16:32,520 Freed. He was running a giant scam. 256 00:16:33,000 --> 00:16:36,440 And what about all the ways that crypto is facilitating crime? 257 00:16:36,880 --> 00:16:39,920 Ransomware. It's shut down hospitals, It's 258 00:16:39,920 --> 00:16:42,040 grounded flights. It wouldn't be possible without 259 00:16:42,040 --> 00:16:45,040 crypto and then you got pig butchering scams. 260 00:16:45,320 --> 00:16:48,360 Americans are losing billions of dollars to those every year. 261 00:16:49,040 --> 00:16:52,400 Cryptos helping Russia move money to evade sanctions. 262 00:16:52,720 --> 00:16:55,600 Chinese fentanyl suppliers are using it for their money 263 00:16:55,600 --> 00:16:59,480 laundering purposes, and the industry is still completely 264 00:16:59,480 --> 00:17:02,000 rife with ponzi's and pump and dumps. 265 00:17:02,480 --> 00:17:06,119 The biggest crypto donors are companies like Coinbase that are 266 00:17:06,119 --> 00:17:09,200 facing lawsuits from the SEC that could potentially put them 267 00:17:09,200 --> 00:17:11,359 out of business. Plus you got the venture 268 00:17:11,359 --> 00:17:15,000 capitalists like A 60 and Z who invested in those companies. 269 00:17:15,480 --> 00:17:17,920 Rather than comply with the existing securities laws, 270 00:17:18,240 --> 00:17:20,440 they're lobbying for looser ones and they're trying to get a 271 00:17:20,440 --> 00:17:22,480 friendly chairman of the SEC installed. 272 00:17:23,119 --> 00:17:27,400 Honestly, it appears like this influence buying campaign is 273 00:17:27,400 --> 00:17:29,200 going pretty well for the crypto industry. 274 00:17:29,680 --> 00:17:31,360 They definitely have tons of money. 275 00:17:31,760 --> 00:17:34,720 After all, they're in the business of selling made-up 276 00:17:34,720 --> 00:17:38,040 coins for real cash. It's pure profit I. 277 00:17:38,040 --> 00:17:41,600 Can't find the exact source, but a while back Joe Wiesenthal 278 00:17:41,600 --> 00:17:45,520 joked that buying gold instead of stocks was one of the most 279 00:17:45,520 --> 00:17:49,280 bearish bets a person could make, describing it as a bet 280 00:17:49,480 --> 00:17:53,040 that a rock would generate more wealth than human effort would. 281 00:17:53,280 --> 00:17:56,120 He went on to joke that cryptocurrencies were maybe 282 00:17:56,120 --> 00:18:00,360 worse, as at least gold has industrial uses and doesn't 283 00:18:00,360 --> 00:18:03,400 require a computer running forever to preserve of its 284 00:18:03,400 --> 00:18:06,280 existence. Hopefully I'm not misquoting 285 00:18:06,280 --> 00:18:09,000 him. While many crypto investors 286 00:18:09,000 --> 00:18:12,560 think of crypto as a hedge against inflation or as some 287 00:18:12,560 --> 00:18:16,600 sort of digital gold, the reason you might expect it to hold its 288 00:18:16,600 --> 00:18:20,320 value or even grow in value in the coming years is because of 289 00:18:20,320 --> 00:18:24,720 its importance to criminal organizations in storing, moving 290 00:18:24,720 --> 00:18:28,120 and laundering money. If you believe that large scale 291 00:18:28,120 --> 00:18:32,320 criminality is likely to grow in the coming years, it might be 292 00:18:32,320 --> 00:18:36,480 reasonable to expect cryptocurrency prices to rise as 293 00:18:36,480 --> 00:18:38,960 this is a big driver of its demand. 294 00:18:39,200 --> 00:18:42,680 It's been quite some time since we've heard crypto enthusiasts 295 00:18:42,880 --> 00:18:46,760 making any sort of claim of use cases for crypto. 296 00:18:47,000 --> 00:18:50,720 The closest thing to those claims today is the idea that 297 00:18:50,720 --> 00:18:54,880 the price should go up because of ETF money inflows. 298 00:18:55,560 --> 00:18:59,280 After years of scandals, exchange hacks, Ponzi schemes, 299 00:18:59,440 --> 00:19:03,400 and repeated frauds, crypto is finally facing a real 300 00:19:03,400 --> 00:19:08,000 existential crisis in the United States, not because of its 301 00:19:08,000 --> 00:19:11,800 price, but because it appears that regulators are finally 302 00:19:11,800 --> 00:19:15,400 waking up. According to the SEC, most 303 00:19:15,400 --> 00:19:19,000 crypto currencies qualify as unregistered securities 304 00:19:19,000 --> 00:19:22,440 offerings, and they've been pursuing enforcement against the 305 00:19:22,440 --> 00:19:26,240 exchanges for illegally offering these to the the public. 306 00:19:26,560 --> 00:19:31,360 The crypto industry would much rather be regulated by the CFTC, 307 00:19:31,640 --> 00:19:36,520 a significantly smaller and more poorly funded Regulatory agency 308 00:19:36,680 --> 00:19:39,760 who they believe would take it easier on them. 309 00:19:40,280 --> 00:19:44,360 This is possibly why both presidential candidates are so 310 00:19:44,360 --> 00:19:47,560 vocal about how they would replace Gary Gensler. 311 00:19:47,800 --> 00:19:51,160 Not for his lack of enforcement, which has allowed ordinary 312 00:19:51,160 --> 00:19:54,720 Americans to lose fortunes to crypto fraud over the last few 313 00:19:54,720 --> 00:19:58,200 years, but because their financial backers are 314 00:19:58,200 --> 00:20:01,160 complaining about heavy-handed enforcement. 315 00:20:01,640 --> 00:20:05,080 The heavy-handed enforcement argument is pretty hard to 316 00:20:05,080 --> 00:20:09,040 believe when almost every big name celebrity seems to have 317 00:20:09,040 --> 00:20:12,600 been involved in promoting crypto Ponzi schemes in recent 318 00:20:12,600 --> 00:20:17,320 years, and I don't think any of face real legal consequences 319 00:20:17,600 --> 00:20:21,920 despite ripping off their fan bases in clear public view. 320 00:20:22,600 --> 00:20:26,920 After a Kamala Harris speech at the Economic Club of Pittsburgh, 321 00:20:27,200 --> 00:20:31,880 Mark Cuban, an outspoken cryptocurrency advocate, told a 322 00:20:31,880 --> 00:20:35,320 Fox News reporter that if he was to join the Harris 323 00:20:35,320 --> 00:20:40,200 administration, it would be to replace Gary Gensler as SEC 324 00:20:40,200 --> 00:20:44,720 chair, a rather disturbing idea from the perspective of investor 325 00:20:44,720 --> 00:20:47,960 protection. Governments, regulators, and law 326 00:20:47,960 --> 00:20:52,000 enforcement generally dislike cryptocurrency because it makes 327 00:20:52,000 --> 00:20:56,200 it extremely difficult to enforce laws, laws that most 328 00:20:56,200 --> 00:20:59,560 members of society think are worth enforcing. 329 00:20:59,840 --> 00:21:03,520 It's hard to understand how a politician could accept support 330 00:21:03,520 --> 00:21:07,200 from this industry while claiming to be tough on crime, 331 00:21:07,400 --> 00:21:10,840 but they do this anyway because they don't want to turn their 332 00:21:10,840 --> 00:21:13,560 back on almost half of the corporate political 333 00:21:13,560 --> 00:21:17,720 contributions available. Since I learnt the scale of 334 00:21:17,720 --> 00:21:21,200 these political contributions, I've started paying more 335 00:21:21,200 --> 00:21:24,880 attention to the footnotes at the bottom of political adverts 336 00:21:24,880 --> 00:21:26,920 that I've been seeing on YouTube. 337 00:21:26,920 --> 00:21:30,760 You can click on the little I near the bottom of an advert to 338 00:21:30,760 --> 00:21:33,280 get more information on who paid for it. 339 00:21:33,520 --> 00:21:36,880 Over the last week, I've been seeing the same advert over and 340 00:21:36,880 --> 00:21:39,920 over again for a candidate running for Senate. 341 00:21:40,160 --> 00:21:43,800 He brings up all of the big topics that voters might care 342 00:21:43,800 --> 00:21:48,040 about with no mention of Crips, but it turns out that the advert 343 00:21:48,040 --> 00:21:52,760 was of course paid for by Protect Progress, a crypto super 344 00:21:52,760 --> 00:21:55,320 PAC. It's quite possible that there 345 00:21:55,320 --> 00:21:59,360 is a candidate that you think is terrible after seeing all of the 346 00:21:59,360 --> 00:22:03,240 attack adverts against them, but maybe they're not nearly as bad 347 00:22:03,240 --> 00:22:06,040 as you thought. Maybe they just said something 348 00:22:06,040 --> 00:22:09,560 that doesn't suit the needs of the crypto industry and all of 349 00:22:09,560 --> 00:22:12,800 the money in the world is being spent on shutting them down. 350 00:22:13,360 --> 00:22:16,880 I hope that even if you are a crypto investor that you find 351 00:22:16,880 --> 00:22:20,680 this video interesting and that you are possibly disturbed that 352 00:22:20,680 --> 00:22:23,680 a group of businesses that have been in constant trouble with 353 00:22:23,680 --> 00:22:27,880 the law and had to pay fines for misleading customers, losing 354 00:22:27,880 --> 00:22:32,240 their money and abusing their trust make up almost half of all 355 00:22:32,240 --> 00:22:35,320 corporate political contributions in this election 356 00:22:35,320 --> 00:22:38,200 cycle. Maybe it's time we stopped 357 00:22:38,200 --> 00:22:42,160 blaming everything on Billy Winklevoss and paid attention to 358 00:22:42,160 --> 00:22:47,160 why every politician is suddenly pro crypto out of nowhere. 359 00:22:47,360 --> 00:22:49,760 Thanks for tuning into this week's podcast. 360 00:22:49,880 --> 00:22:53,240 If you found it interesting, I'd love it if you could send a link 361 00:22:53,240 --> 00:22:56,880 to a friend as podcasts generally grow through word of 362 00:22:56,880 --> 00:22:59,080 mouth. Have a great week and talk to 363 00:22:59,080 --> 00:23:00,640 you again soon. Bye. 364 00:23:01,600 --> 00:23:04,920 If you enjoyed this episode, be sure to subscribe so you're 365 00:23:04,920 --> 00:23:06,920 notified when a new episode is posted. 366 00:23:07,320 --> 00:23:10,080 Thank you to everyone who is supporting this content on 367 00:23:10,080 --> 00:23:12,560 Patreon. If you enjoyed this content, you 368 00:23:12,560 --> 00:23:16,160 can find more like it on YouTube, on the Patrick Boyle on 369 00:23:16,160 --> 00:23:20,400 Finance channel, or follow us on Twitter at Patrick E Boyle. 370 00:23:20,720 --> 00:23:22,080 Thanks for listening. Bye.