Thought Leadership Weekly Spotlight
Weekly Recommended Thought Leadership From Our Editorial Team (Article, Post, Podcast, Video, Webinar, etc.)
January 30, 2023
“What happens when a software engineer and database/network administrator with 40+ years of experience gets tired of seeing his friends claim, “Blockchain is the future! “And then subsequently loses, lots of money. The result of an exhaustive decade-long investigation into crypto tech, plus several years of being in the trenches of social media, debating with crypto enthusiasts, culminating in a feature length film that un-diplomatically pulls the curtain away from the core of the crypto industry to reveal what's really there...”
Video: Blockchain: Innovation or Illusion, by Adam R. Smith (January, 2023)
January 23, 2023
“I am no SEC shill and have not hesitated to criticize the SEC over the years (see, e.g., my criticisms of the SEC's recent enforcement action against Covington & Burling; the recent surge of SEC cybersecurity enforcement actions; the SEC's recent proposed cyber-attack disclosure rules and the SEC's neglect of the privacy of SEC witnesses).
But the SEC's crypto-mission is spot-on and the SEC staff are not guilty of “regulation by enforcement.” Far from it, SEC staffers are merely doing their job, and, for the most part, doing it pretty darn well. Period. End of story.
Why “SEC Regulation by Enforcement” is a Bogus Big Crypto Catchphrase, by John Reed Stark (Securities Docket, January, 2023)
January 9, 2023
“Bitcoin to Blockchains, to NFTs, to Web 3.0... it's time to find out if it's really all the hype or just part of one of the greatest scams in human history.”
Video: The Great Crypto Scam, by James Jani (January, 2023)
January 2, 2023
“2022 has seen numerous crypto disasters, most notably FTX. Also the price of most coins has tumbled massively. One coin that's done fine is the stablecoin Tether, which is interesting, because its had so many naysayers for so long. There are even hedge funds who have bet on its implosion. But what is Tether? How does it work? And where does it come from? On this episode of the podcast, we speak with Bennett Tomlin, co-host of the Crypto Critics' Corner podcast, who has an encyclopedic knowledge about the company. He walks us through what we know about the entity, and its relationship with other entities in crypto.”
Podcast: This Is What We Know About How Tether Works (Bloomberg, December, 2022)
December 26, 2022
"Confront any crypto-enthusiast with statistics regarding the mammoth rise in crimes facilitated by cryptocurrencies, the response will almost always be: What About Fiat? Crimes Committed With Fiat are Far Worse Than Crime With Crypto. This newfangled retort of Whataboutism is a flawed pivot and anemic argument form. Yes, legions of criminals have committed crimes using fiat currency. But crypto has evolved into the killer app for criminals, ushering in a crypto-crime wave of epic proportions. The scale of crime in crypto is orders of magnitude greater than what it is in traditional finance."
The Fallacies of Crypto-Whataboutism, by John Reed Stark (Duke FinReg Blog, December, 2022)
December 12, 2022
“As I will argue throughout this essay, the truth about cryptocurrencies is that they fail to accomplish nearly every objective they purportedly were created to achieve. It may be that in the future, some new purpose for the cryptocurrency ecosystem will emerge that will justify continued investment and development of these technologies. But the catastrophic failures of nearly every major cryptocurrency project—including the recent bankruptcy of cryptocurrency exchange FTX - are not flukes.”
The Death of Cryptocurrency, By Nicholas Weaver (Information Security Project, December, 2022)
December 5, 2022
”Regulatory frameworks come in all shapes and sizes and are not all equally robust, vigorous and effective. For instance, there exist regulatory frameworks designed to ensure that dog poop is cleaned up by dog owners and to ensure that only those individuals with the proper level of experience, training and competence can fly commercial airplanes or perform heart surgery. The same variations apply to financial frameworks. Registering with FinCEN, with New York State as a “Trust,” with a non-U.S. regulator, even with all of the 50 states as a “money service business” are meaningful achievements – but are all a far cry from U.S. SEC registration. There’s a reason there are only 16 SEC-registered “exchanges” -- the oversight is akin to experiencing a permanent financial and operational colonoscopy, 24-hours a day, 365 days a year.“
A New Crypto Regulatory Framework? No Thanks, by John Reed Stark (Securities Docket, December, 2022)
November 28, 2022
"From the moment the FTX bankruptcy debacle began, the Big Crypto cartel has predictably pivoted to their flawed and anemic go-to talking points when any investor suffers crypto-related losses:
The SEC is to blame for all crypto-problems, because the SEC has failed to provide the crypto ecosystem with “regulatory clarity.”
The SEC consistently violates the due process rights of legitimate crypto-financiers, by failing to provide “fair notice” of its anti-crypto posture.
The SEC repeatedly and recklessly exceeds its authority and is a rogue and dangerous regulatory outlaw, practicing “regulation by enforcement” and stifling innovation, technological progress and investor empowerment.
What a crock."
Big Crypto’s Bogus Demands For “Regulatory Clarity," by John Reed Stark (Duke FinReg Blog, November 2022)
November 21, 2022
“Try to imagine a world without Bitcoin, Ethereum, Ripple, Litecoin and the like. I suspect you will find it easy. That’s because it is in no way embedded in your life. You don’t use it, you don’t spend it, you don’t think of it as a medium of exchange or currency, it likely isn’t in your pension, and if anyone asked you what problem in your life it might solve, you probably wouldn’t be able to think of any. That makes sense. I can’t either.”
FTX Crypto Bubble Really Is the Worst of Its Kind, by Merryn Somerset Webb (Bloomberg, 2022)
November 14, 2022
"John Reed Stark, lecturing fellow at Duke University Law School, and Neel Maitra, partner at Wilson Sonsini Goodrich & Rosati and former SEC senior special counsel, join Yahoo Finance Live anchor Akiko Fujita to discuss the blowup of crypto exchange FTX, ramifications for the entire industry, and the outlook for SEC enforcement and a regulatory crackdown on digital assets and exchanges."
Video: FTX Failure Worse Than Theranos, Worse Than Madoff (Yahoo Finance, November, 2022)
November 7, 2022
"Despite yesterday's historic $3.36 billion cryptocurrency seizure and conviction of James Zhong in connection with the 2012 Silk Road dark web fraud, the bottom line is that, at least for now, tracing crypto-transactions to catch criminals requires immense resources, years of doggedness and lots of luck – and prosecutorial success rarely happens. Indeed, the stark reality is that most criminals who use crypto to facilitate their crimes will likely never get caught and their ill-gotten crypto will likely never be recovered. That is axiomatic -- and to state otherwise is not just irresponsible, it's just plain false."
Crypto-Traceability: Don't Believe The Hype, by John Reed Stark (Securities Docket, November, 2022)
November 1, 2022
"Non-fungible tokens, or NFTs, have mirrored the broader crypto world by crashing in value over a very short period of time. They were supposedly meant to give more control to musicians and artists when it came to their work. But as big corporations move into a space previously inhabited by innovators, is that vision of the NFT dead? And can the underlying technology prove useful even if its promise as an investment is never realized? "
Video: What Went Wrong With NFTs? (Bloomberg, November, 2022)
October 24, 2022
"Numerous narratives exist regarding crypto and financial inclusion, each addressing a different set of needs or group of individuals. But a closer examination of these narratives reveals a mismatch between what crypto can actually provide and the needs of the groups it purports to serve. This piece will explore crypto’s potential to exacerbate unequal financial services to historically excluded groups, and how policymakers and regulators can protect retail investors and consumers while addressing financial inclusion in ways that do not require crypto. "
Debunking the Narratives About Cryptocurrency and Financial Inclusion, by Tonantzin Carmona (Brookings Institution, October 2022)
October 17, 2022
"Although almost every public blockchain implementation today necessarily includes some kind of token (that is, "coins") which you must somehow mine or straightforwardly purchase from an exchange in order to participate on and make use of the network, the hype of the last few years has seen grandiose and frankly delusional claims made about how the idea of blockchain might be used in future for purposes besides currency."
Web 3.0 - The Great Con, by Dave Gebler (October, 2022)
October 10, 2022
"Regulators should turn their attention to the bigger fry. It is all well and good that they are keeping up with the Kardashians, but they need to make sure they are keeping up with the rest of the lawless land of crypto, too."
Spare a Thought for Kim Kardashian, by Jemima Kelly (Financial times, October, 2022)
September 26th, 2022
""Blockchain solutionism." A guest lecture by Molly White at the University of Texas at Austin on September 21, 2022. This lecture was for a course in the School of Design and Creative Technologies called "Anti-Solutionism". There is a Q&A portion at the end—to protect the privacy of students only my own audio is included, and I've replaced the question audio with a text summary of the question."
September 13, 2022
"In Wyoming, the crypto guys are writing the laws."
Podcast: A Sceptic’s Guide to Crypto: the Crypto Wild West (Financial Times, September, 2022)
September 6, 2022
"The criticism of 'regulation by enforcement' by crypto enthusiasts is sorely misguided and an absurd pivot. It’s not regulation by enforcement. It’s enforcement.”"
Are Regulators and Regulations Fit to Meet the Crypto Challenge? (Crypto-Policy Symposium, September 2022)
August 29, 2022
"The growing number of celebrities who gleefully market their love of crypto, NFTs, etc. may as well be boasting about transacting in blood diamonds. Under the auspices of technological prowess and pioneering entrepreneurial blockchain embrace, celebrities are helping swindle their fans and supporters. Ironically, such hi-tech celebpreneur crypto-braggadocio is not an example of innovation and vision but is instead, a compelling illustration of noxious crypto-crime enabling, and a glaring case of commercial ignorance, opportunistic pandering and plain old-fashioned irresponsibility and avarice."
10 Axioms That Crypto-Shills Don’t Want You to Know, by John Reed Stark (August, 2022)
August 22, 2022
"Months into a rout for crypto assets, the full extent of the financial pain suffered by millions of everyday Americans is still being calculated. What's clear, though, is that scores of celebrities touted the life-changing power of crypto investing at the worst possible time — just as the speculative mania was approaching its peak. "
The Disastrous Record of Celebrity Crypto Endorsements, by Immanuel John Milton (Bloomberg, 2022)
August 15, 2022
"The sheer number of red flags in the crypto market shouldn’t downplay just how pernicious each alone is. Some of crypto’s most problematic features, all of which should be top of mind in future regulatory frameworks, include its: Disproportionate threat to the economic stability and wealth-building of Black and brown people; Systemic risk to the larger US financial system and macroeconomy, including by jeopardizing retirement account security; Exacerbation of climate and energy crises; and Refuge for bad actors and intentional fraudsters."
Crypto’s Red Flags, and the Need for Regulation, by By Emily DiVito, Joseph Miller (Roosevelt Institute, August, 2022)
August 8, 2022
"Billionaire investor Mark Cuban wrote about his efforts to make money as a liquidity provider using the TITAN token in a June 13, 2021, blog post titled “The Brilliance of Yield Farming.” He emphasized that this is not investment advice. The token subsequently tumbled 99%."
The Disastrous Record of Celebrity Crypto Endorsements, by Immanuel John Milton (Bloomberg, 2022)
August 1, 2022
"We already have digital land registries built on SQL databases, and they work wonderfully; what exactly is this alleged innovation actually solving? There is none; blockchain land registers are bullshit. And even worse, it is a perfect example of the convoluted directed reasoning of trying to rationalize crypto’s existence in increasingly intellectually incoherent ways."
Land Registrars On The Blockchain is Bullshit, by Stephen Diehl (August, 2022)
July 25, 2022
"In June 2021, at a video presentation at a bitcoin conference in Miami, Bukele announced that his country would be the world’s first to adopt the digital token as legal tender. On September 7, 2021, bitcoin was officially introduced in El Salvador to much propagandistic fanfare and some discontent, including social protests. That day, the global crypto markets crashed, with a number of exchanges unexpectedly shutting down. Numerous reports of fraud and identity theft followed; one local coiner told us that his friend used a photo of a dog to verify his identity. Rampant technical problems plagued the rollout of Chivo, the official wallet in which all citizens would receive $30 worth of bitcoin (whose value has since plummeted). Overall adoption has been minimal, with most people still preferring U.S. dollars, the country’s other legal tender. Nor has bitcoin proved useful with remittances, which are key to El Salvador’s economy: Less than 2 percent of remittances sent to El Salvador now use bitcoin."
Nayib Bukele's Broken Promise, by Jacob Silverman and Ben Mckenzie (the Intercept, July, 2022)
July 18, 2022
"Dr. Nicholas Weaver’s well-known lectures on cryptocurrencies explain why he believes it needs to be “burned with fire.” Today, we speak to Dr. Weaver, an expert in computer science and a long-time observer of the cryptocurrency space. He holds a BA in Astrophysics and Computer Science and a Ph.D. in Computer Science from UC Berkeley, where he was also a lecturer until recently. His primary research focus has been network security, among other topics. His interest and search for comedy “godl” have also resulted in published papers on cryptocurrency. In our conversation, Dr. Weaver untangles the complexities of the perceptions of cryptocurrencies with the actual technology. We talk about decentralization, if cryptocurrencies are achieving it, and the underlying concept of blockchain technology, as well as whether or not blockchains are secure and what the potential benefits of cryptocurrencies are to developing countries. We then go into detail about why Dr. Weaver thinks the crypto space is not beneficial, why prestigious academic institutions are teaching about it, and why he thinks it will never work in the log-run. "
Video: Understanding Crypto 7: Nicholas Weaver: A Computer Scientist's Perspective on Cryptocurrencies and Blockchain (Rational Reminder, July, 2022)
June 28, 2022
"Blockchain is a fancy word for append-only database, which somehow makes venture capitalists throw money whenever anyone mention it."
Video: Intellectual Vaccination against the Crypto Virus for Policy Makers, by Nicholas Weaver (July, 2022)
June 21, 2022
"Unless whole societies shift their collective moral compass overnight, the use of a blockchain dictates that we must choose between three equally unpalatable solutions: heartless, pointless, or useless."
Bitcoin Users Should Not Overlook Cryptocurrency's Fundamental Flaw, by Kelvin Low (Nikkei Asia, June, 2022)
June 13, 2022
"The entire crypto space has been a Jenga stack of interconnected time bombs for months now, getting ever more interdependent as the companies find new ways to prop each other up. Which company blew out first was more a question of minor detail than the fact that a blow-out was obviously going to happen. The other blocks in the Jenga stack will have a hard time not following suit. Here’s a quick handy guide to the crypto crash — the systemic risks in play as of June 2022. When Bitcoin slips below $20,000, we’ll officially call that the end of the 2021 bubble."
The Latecomers Guide to Crypto-Crashing: A Quick Map of Where we Are and What's Ahead, by Amy Castor and David Gerard (June, 2022)
June 6, 2022
"This ecosystem is basically preying on the ignorant. The high-minded aspects of crypto and blockchain have been directed at extracting money from these people. Instead of this decentralized, financial nirvana, it's become a predatory junkyard." (Jim Chanos)
Video: Cryptocurrency, Coinbase, and Contagion (Feat. Jim Chanos) (Crypto Critics Corner, May, 2022)
May 31, 2022
An open letter to the U.S. Congress from an esteemed group of the expert, universally well-regarded, experienced, independent and objective computer scientists, coders, programmers, engineers, software developers and other technologists just wrote an open letter to the U.S. Congress ridiculing and obliterating blockchain technology and exposing Web3 for the bogus and nefarious marketing tool and high-tech swindle that it is.
Concerned.tech (May, 2022)
May 23, 2022
"The CFTC describes its mission as “to foster open, competitive, and financially sound markets and to protect users and the public from fraud, manipulation, abusive practices and systemic risk.” FTX’s proposal involves a number of practices that could harm retail participants directly, constitute manipulation or abusive practices from the perspective of the user, and generate systemic risks that could harm the public more broadly. In this Letter, we respond principally to the CFTC’s Request for Comment Question 12. For the reasons we set out here, we urge the CFTC to deny FTX’s request to revise its existing non-intermediated model to allow for clearing of margined trades."
Non-Intermediate Clearing Of Crypto Derivatives On Margin Is A Bad Idea, by Hilary Allen, Lee Reiners and Ryan Clements (the FinReg Blog, May, 2022)
May 16, 2022
"Bitcoin and other cryptocurrencies went from bad to worse as selling pressure spread across the tech landscape. But the latest crypto crash was also fueled by stablecoins, a type of token that’s supposed to hold up when everything else tanks."
How a Digital Token Designed to Be Stable Fueled a Crypto Crash, by Jack Denton (Barrons, May 2022)
May 2, 2022
Some common sense from the AFL-CIO and a broad range of consumer protection and public interest groups regarding the extraordinary risks of putting cryptocurrency into retirement plans. Never one to back down from a fight, Organized Labor takes on Big Crypto. Respect.
April 25, 2022
If Big Crypto truly wants "regulatory clarity" for Crypto/DeFi/NFTs/Etc., here is a thoughtful/logical/smart regulatory solution per my Duke Law colleague Lee Reiners, CFA. The time is now to act, before the dire externalities of Web3 iterations destroy us all.
Congress Should Grant the SEC Oversight of Digital Asset Spot Markets, by Lee Reiners (Columbia Law School Blue Sky Blog, April, 2022)
April 18, 2022
Algorithmic stablecoins enable perpetual vulnerability. In addition to risks of market integrity/investor protection/no regulatory oversight/illicit finance, stablecoins also raise dire prudential/systemic/run risks. All that perilous risk, and for what?
Built To Fail, The Inherent Fragility of Algorithmic Stablecoins, by Dr. Ryan Clements (Wake Forest Law Review, October, 2022)
April 11, 2022
"The rhetoric around crypto and access reminds me of something similar to the rhetoric around mortgages in the lead-up to 2008. Again, there are striking similarities. With subprime mortgages, the line was that it increased the opportunity for more people to own homes. But that rhetoric is sometimes used to hide predatory practices. Let’s go back to credit default swaps and this idea of multiplying the amount of risk in the system by allowing essentially unlimited bets on the performance of a single bond. I worry in DeFi what’s being constructed is essentially the unlimited ability to create financial products and borrow against them. We are increasing the amount of risk—because the assets are essentially anything that somebody with programming knowledge who can mint a new coin can make up. You don’t necessarily have to tie these assets to something physical: like, say, a house somewhere in the world."
Is Crypto Re-Creating the Next 2008 Financial Crisis, by Charlie Warzel (The Atlantic, April, 2022)
April 4, 2022
"It’s not just Binance . . . Practically all crypto exchanges occupy these varied, potentially conflicting roles, which in conventional markets are divided up between different entities. And they’re completely unregulated. The lack of government oversight, combined with the conflicts, will become more of an issue as cryptocurrencies grow increasingly mainstream, advertised on every possible medium and traded in retirement portfolios. Even relatively savvy investors stand to lose everything on risks they could never take in another circumstance."
Why Users are Pushing Back Against the World’s Largest Crypto Exchange, by Ben McKenzie and Jacob Silverman (Washington Post, April 2022)
March 21, 2022
"That crucial connection of a criminal’s identity to their criminal conduct is one of the main challenges posed by cryptocurrency. A public blockchain can be helpful, but often it can get one only so far. Prosecutors can spend years trying to penetrate the layers of obfuscation by savvy criminals. Even if they succeed, they may still face obstacles due to the current state of the cryptocurrency market."
Written Testimony, Shane T. Stansbury, Duke University School of Law, United States Senate Committee on Banking, Housing, and Urban Affairs Hearing on “Understanding the Role of Digital Assets in Illicit Finance” (March 2022)
March 14, 2022
"If we compare [cryptocurrency] to stocks, it would be a company that issues stock but does nothing. Basically a shell company with no employees, product or business. The value of its future cashflows is zero and it has no capacity to pay dividends, therefore this "stock" is worthless. "
Twitter Thread: Let's Talk About What Type of Financial Products Crypto Tokens are Most Comparable to in Traditional Markets (Stephen Diehl, February 2022)
March 7, 2022
A remarkable interview with software developer Molly White, the creator and maintainer of www.web3isgoinggreat.com - an extraordinary chronicle of all the disastrous projects that have plagued the Web3 ecosystem thus far. The crypto critics ask Molly why so many grifters are interested in blockchains, her goals with her website, and why the Federal Reserve, Treasury, and Jamie Dimon are paying her billions to FUD cryptocurrency.
Podcast: Web3 is Wonky, Featuring Molly White, Crypto Critics Corner (February, 25, 2022)
February 28, 2022
From data scientist and former professional poker player Matt Ranger, learn about how crypto-market manipulations occur in real time. "It’s commonly said that “cryptocurrency markets are manipulated.”.Today, you’ll see one example of how that particular sausage is made."
An Anatomy of Bitcoin Price Manipulation, by Matt Ranger (Single Lunch, February 28, 2022)
February 21, 2022
From American University Law Professor Hilary Allen, this Essay argues for precautionary regulation of DeFi, designed to limit its growth and to cordon off whatever remains from the established financial system and real-world economy. While proponents of DeFi will contend that this will limit innovation, this Essay argues that DeFi innovation has limited benefits for society. DeFi doesn’t aspire to provide new financial products and services – it simply aspires to provide existing financial products and services in a decentralized way (meaning, without intermediaries). This Essay will demonstrate that the DeFi ecosystem is in fact full of intermediaries and explain why full disintermediation of financial services is an entirely unrealistic aspiration. This Essay will then proceed from that finding to argue that if DeFi cannot deliver on decentralization, regulators should feel emboldened to clamp down on DeFi in order to protect the stability of our financial system and broader economy.
DeFi: Shadow Banking 2.0?, by Hilary Allen (William & Mary Law Review, February, 2022)
February 14, 2022
From my Duke law colleague Lee Reiners dissecting a recent bill in Wyoming that would allow merchants to pay sales taxes in cryptocurrency and the strange bedfellows the proposals has created. One of the bills main supporters, American CryptoFed DAO. American CryptoFed DAO is a Wyoming-registered decentralized autonomous organization that is attempting to launch a stablecoin (Ducat) and related governance token (Locke). Their problem is that they’ve repeatedly played fast and loose with federal securities laws.
More Crypto Craziness in Wyoming, by Lee Reiners (The FinReg Blog February, 2022)
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