Security is on the timeline again, so I figured it was a good time to give you some tips that will help you keep your funds safe. This thread will focus specifically on Coinbase. A 🧵...

Did you know that you can set up alerts for when certain security-related activities occur on your account and that you can restrict transfers out of your Coinbase account?

Start by clicking your your profile in the top right corner. Then, click "Settings" on the drop down to be taken to the settings screen.

The first thing we want to fix are the Security Alerts. Click the update button next to Security Alerts.

When you do that, you will see this popup. This is where you control how you will be notified of security changes to your account, like password resets. Notice what isn't here? THERE IS NO OPTION FOR CALL ME BECAUSE COINBASE WILL NEVER CALL YOU ABOUT A PASSWORD CHANGE! I've turned text alerts off because (a) I have the app and have push notifications turned on, and (b) texting is one vector for attackers to send a bad link. If you don't have texting turned on, you'll know that any "password change" text you receive from "Coinbase" is actually a scam.

Once you have security alerts set up how you want it, click the next option down on the main page - Account Activity. See post number 3 for the screenshot. When you do that, you will get this popup. Set it how you want it to get notifications of any transactions. 

Next, we're going to set up an address book to keep someone that does gain access to our account from sending crypto to an unknown address.
Click the "Allow list" button on the left.

You will then be presented with this screen. The address book prevents sending funds OUT of Coinbase, except to wallets that are already in the address book. You must wait 48 hours to add a new address or to turn it off completely, and adding or turning it off requires 2-factor authentication.

Click the add address button and you'll be get this popup. Simply select the type of crypto, fill out the form, and click "Add address' and you're good to go. Again, you will need access to your 2-factor method to do this.

Now, you might have noticed in post 8 that I JUST added the only address in the address book. "ex, why should I trust you if you don't actually use the security features?" I haven't used the address book until now, because there is actually an even better security feature that I have used for years.

Let's go to the accounts page by clicking "Go to accounts" in the box on the left. 

That's going to open a new browser tab with all of your personal info in the middle of the screen and this navigation bar on the left. Click the security button. 

You'll now see a navigation bar at the top of the screen. click the 2FA Settings button to see this.

The first thing to notice about this screen is that I only have one form of 2FA turned on - Security key. A security key is a physical hardware device that you plug into your computer to secure accounts. I use one from @Yubico. This is the most secure form of 2FA available. Get multiple keys and set them up. Keep at least one in a safe place in case your primary gets lost. EVEN IF YOU CHOOSE NOT TO USE A SECURITY KEY, TURN OFF TEXT MESSAGE 2FA AND USE A SECURITY PROMPT OR AUTHENTICATOR APP AT A MINIMUM. Text based 2FA is not secure and you should never use it unless it's the only option.

Once you have 2FA set up, click the Update button next to "Your 2FA preferences for crypto sends". 

You will then get this popup. Select the "Any amount of cryptocurrency" button. This will REQUIRE your 2FA approval to send ANY crypto anywhere. If you set up only security keys like I have, no one can send crypto out of your account without having your physical security keys.

If you've followed my instructions, you will receive a push notification (but not text) anytime a security event (like a password change) occurs. You will also not be able to send crypto without confirming with 2FA and you will only be able to send to addresses in your address book without waiting 48 hours. 

With a little bit of effort, you can make sure your funds are as safu as possible. 

Keeping Your Coinbase Account Secure

If anyone wonders why someone murdered UnitedHealthcare’s CEO, the answer is just a search away. 

Was it right for someone to murder him? No, but a lot of people who have insurance from the company he ran should not have been denied coverage either. 

We need real reform. Now.

First, a quick example of the insanity that is American health insurance, then I've linked to several examples of objectionable conduct by Unitedhealthcare.

Long ago, my wife suffered from very, very bad allergies. So bad, that she was basically living with year-round sinus infections. After multiple images and consultations with several doctors, her medical team advised...

that she have surgery to correct a deviated septum and to unblock her sinuses. Our insurance company agreed the surgery was medically necessary and to cover it. But.. they determined that the anesthesia and operating room were medically necessary. 

This outcome is obviously unacceptable. Was she expected to have a doctor break her nose in a back alley without anesthesia? 

Thankfully, I had the time and will to appeal. I wrote a multiple page letter, got letters from all of her doctors, and sent a 50+ page package to the insurance company making it clear that if they did not cover those expenses, I would sue. 

Ultimately, they covered the expenses - obviously. But how many people don't have the time and experience necessary to fight Goliath? How many people have had their lives cut short due to an inability to stand up for themselves? 

“A federal judge blasted UnitedHealthcare last month for its ‘immoral and barbaric’ denials of treatment for cancer patients.”

https://www.cnn.com/2019/05/16/health/judge-proton-beam-therapy-recusal-unitedhealthcare/index.html

“The families of two now-deceased former beneficiaries of UnitedHealth have filed a lawsuit against the health care giant, alleging it knowingly used a faulty artificial intelligence algorithm to deny elderly patients coverage for extended care deemed necessary by their doctors.”

https://www.cbsnews.com/news/unitedhealth-lawsuit-ai-deny-claims-medicare-advantage-health-insurance-denials/

“When 57-year-old Sayeh Peterson, a nonsmoker, was diagnosed with stage 4 lung cancer, her doctors ordered genetic testing to identify the cause. Those tests revealed that a rare gene mutation was, in fact, the culprit for Peterson’s disease and gave doctors the information they needed to create a treatment that targeted the mutation. Her state, Arizona, requires insurers to cover such testing, but Peterson’s UnitedHealthcare plan was self-funded by her husband’s employer, so the law didn’t apply. She and her husband were left with more than $12,000 in bills.

In response to questions, UnitedHealth spokesperson Maria Gordon Shydlo wrote that ‘there is not enough medical evidence to support use of all those tests.’”

https://www.propublica.org/article/health-insurance-denials-breaking-state-laws

“In 2023, UnitedHealthcare proposed a policythat would have required the 27 million people under their plan to obtain insurance approval before they could get diagnostic or follow-up colonoscopies. After protests from physicians and patients, the insurer put the policy on hold. 

UnitedHealthcare has also made plans to introduce a program in 2024 that could involve prior authorization for colonoscopies. The insurer has released little information about why it feels such requirements are necessary, what services would require prior authorization and how it would protect patients from unnecessary delays and denials.”

https://theconversation.com/colon-cancer-rates-are-rising-in-young-americans-but-insurance-barriers-are-making-screening-harder-228673

“In the fall of 2021, when the air grew crisp and the leaves reddened in central Ohio, Little John Cupp began feeling short of breath. He gasped while pushing a shopping cart. His feet and ankles swelled. He could only sleep while sitting up.

An echocardiogram revealed that his heart was having trouble pumping blood. Cupp’s doctor suggested more testing, including the insertion of a catheter to examine whether his arteries were blocked.

A few days after the doctor made the request, Cupp received a letter from his insurance company, UnitedHealthcare. The procedure, it said, was ‘not medically necessary.’”

https://www.propublica.org/article/evicore-health-insurance-denials-cigna-unitedhealthcare-aetna-prior-authorizations

“Gloria Lee was perplexed when the phone calls started coming in from a representative of her Medicare insurer. Could a nurse stop by her Boston home to give her a quick checkup? It was a helpful perk. No cost. In fact, she’d get a $50 gift card.
After several such calls in 2022, Lee agreed. A nurse showed up, checked her over, asked her questions, then diagnosed her with diabetic cataracts. 

The finding was good news for Lee’s insurer, a unit of UnitedHealth Group UNH 0.30%
increase; green up pointing triangle
. Medicare pays insurers more for sicker patients. In the case of someone like Lee with diabetic cataracts, up to about $2,700 more a year at that time. 

But the retired accountant doesn’t have diabetes, her own doctor later said, let alone the cloudy vision sometimes caused by the disease.”

https://www.wsj.com/health/healthcare/medicare-health-insurance-diagnosis-payments-b4d99a5d

“Envision Healthcare, a national physician staffing firm, said it is suing UnitedHealthcare, one of the nation’s largest insurers, for denying payment for emergency services the medical group provided. 
Envision CEO Jim Rechtin alleges UnitedHealthcare routinely denied claims for commercial members who were among the sickest and sought care at an emergency room. Rechtin called UnitedHealth’s alleged practice ‘cold, callous and inhumane,’ according to a statement released Friday announcing a lawsuit was filed in a Tennessee federal court.”

https://www.healthcaredive.com/news/envision-sues-united-healthcare-emergency-room/631517/

These are just a few examples. I could have filled thousands of tweets with examples of people who have had coverage denied as being "not medically necessary" by faceless corporate stooges at "health" insurance companies.

Was it right that the former CEO of Unitedhealthcare was murdered? Absolutely not. But, when people are backed into a corner they often take desperate measures. 

Demanding Health Insurance Reform

So you think you missed bitcoin? I really don't think you did. A 🧵...

Let's use a realistic upside considering the upcoming administration's suggestion that it might set up a strategic bitcoin reserve. If that were the case, it makes logical sense that bitcoin might achieve the same total market cap as gold. 

Today, gold has a total market cap of about $17.854 billion. Bitcoin has a total market cap of about $1.902 billion. 

But that's a little misleading, because once fully mined, there will be 21 million bitcoin and there are only around 19,886,000 that are actually in circulation today. There are around 1.113 million bitcoin left to be mined. 

So, instead of looking at the market cap, we need to look at the fully diluted market cap which gives value to the bitcoin that have not yet been mined. The fully diluted market cap of bitcoin is about $2.018 billion.

Let's do the math. $17.854 billion / $2.018 billion = about 8.85. In other words, in order for the fully diluted market cap of bitcoin to reach parity with that of gold, bitcoin would need to increase in price 8.85 times what it is today. This excludes any inflation of gold prices.

The math on a single bitcoin is: $96,110 (current price) x 8.85 (multiple) = hypothetical price of $850,190.48. That's great, but most people aren't going to throw $96k towards bitcoin today; they'll buy small amounts over time. Lets do that math.

I'm going to run this math on $50 purchases per week for 1 year. I have to make a lot of assumptions to do this math, so let me explain my assumptions first.

I am assuming that bitcoin will rise in price by 5% per week for the first 5 weeks, 3% per week for the next 5 weeks, 2% per week for the next 5 weeks, 1% per week for the next five weeks, 0.50% per week for the next five weeks, 0.25% per week for the next five weeks, and 0.125 for the next five weeks, and 0% for the balance of the year. 

Are these assumptions correct? Who knows! But, what they do is front load the increase in price so that the $50 weekly investment buys less bitcoin as the time goes on, and they result in a price of $172,376.17 per bitcoin at the end of the one year investment period.

So what does the math say? If you buy $50 per week of Bitcoin, every single week for one year, you will end up with 0.016896574 Bitcoin (AFTER accounting for the weekly appreciation in price, which means you're buying LESS Bitcoin every week). 

You will have spent $2,600, and assuming that the ending price of Bitcoin is $172,376.17, your investment would be worth $2,912.57 on the date of your last investment.

But let's assume that Bitcoin keeps going up until it reaches parity with gold. What's that $2,600 investment worth then? $25,764.40! 

Is Bitcoin ever going to reach parity with gold? I have no idea, but there are a whole lot of people that believe that it will. How long will it take? No clue. Could be 2 years, 5, years, 10 years, 20 years, or never.

So what's my point? Simple, if you believe that Bitcoin has significant appreciation in the future, making small consistent buys could yield significant gains. If you believe in Bitcoin, the best time to buy was yesterday, but the next best time to buy is today.

Don't let the "amount" of Bitcoin you can afford to buy dissuade you from making the buy if you really believe in an orange future. 

One Disclosure: I own Bitcoin - both directly and through an ETF. If the price of Bitcoin goes up, I stand to profit. 

Bitcoin's Potential Market Cap Compared to Gold

The US government just keeps asking for more and more information about citizens and businesses in the name of fighting terrorism and money laundering. In 2021, Congress passed a law called the "Corporate Transparency Act" on a bipartisan basis.

That's important - these constant requests for more information have bipartisan support. The Corporate Transparency Act requires almost every single business entity in the country (there are 29 exceptions, but they probably don't apply to you) to file...

information about their "beneficial owners" with US Department of the Treasury. What does that mean? Do you have an LLC that you use to do contract painting work or a limited partnership that you and your friends used to buy a Lake House? You have to report. 

What do you have to report? The names, addresses, drivers license numbers, and other identifying information of every owner of the entity. Here's the thing though - the government already has most of that info; it's included in your various tax returns.

What's bothersome isn't so much that the government is requiring this info (under penalty of $500 PER DAY in fines), but that our lawmakers continue to use money laundering and terrorism as an excuse to gain more surveillance information about our citizens.

Businesses that open US bank accounts ALREADY have to provide most of this information to their banks prior to opening an account. Those businesses are already undergoing KYC and AML procedures. 

What I'm really afraid of here is the slippery slope. 

It's an easy argument to say that if businesses have to report their beneficial owners to the Department of the Treasury, ordinary citizens should be required to make the same disclosures, or that non-custodial crypto wallets must KYC users, or that any cash transactions must be KYCed.

Then, what happens when there is a breach of these databases? Everyone's information would be public on the internet. These needless laws lead to the erosion of privacy and the normalization of a surveillance state. This simply should not happen in a free society.

Fighting Terrorism and Money Laundering? The Corporate Transparency Act

Some of the older people in the world don't really grok crypto because it's not "backed" by anything. Neither is the US dollar - other than the "full faith and credit of the United States". The fact is nothing is backed by anything - except faith. A 🧵...

Traditionalists are going to say that I'm wrong - equities are backed by ownership in the entities that they represent. For example, they will argue that if you own stock in Berkshire Hathaway, that the value of of your shares are backed by the operations of the business.

But what does that mean to an average investor? Berkshire Hathaway does not pay a divided, so as a shareholder you don't get access to its actual cashflow. Sure, you can vote your shares, but because of the large institutional ownership, you're vote is meaningless.

One of the metrics that we use to measure stock value is the PE Ratio - the price to earnings ratio. It's calculated by dividing the stock price by the earnings per share. 

BRK.B is trading at about $472 and its earnings per share is $49.47, so its PE Ratio is about 9.54. Growth companies tend to have very high PE Ratios (or even no PE Ratio because they are losing money) because investors expect earnings to increase significantly.

So, they are pricing future growth into the price of the stock. Very stable companies like Berkshire tend to have much lower PEs, often around 10 - 20 because they aren't expected to grow quickly.

A traditionalist will point to a PE ratio as proof that people base their investments in companies on those companies' financials. But let's go back to what you actually get as an investor in Berkshire. No divided and an mostly worthless vote. 

You can't go into one of Berkshire's portfolio company stores and say, "I own Berkshire stock, give me a discount" or "I own Berkshire stock, I want to see this store's P&L". 

When you own public company stock, you basically own a receipt saying you own part of the company (sound familiar, NFT friends?). You can't DO much with it other that hold it, borrow against it, or sell it. You can do all of that with crypto too.

Berkshire stock has value because collectively we have all agreed that the receipt that you own means something and has value. It has value because we all have faith that the system will work and that value should accrue to the holders of that receipt. 

This is how crypto works to. Why does Bitcoin, or ETH, or SOL, or PEPE, or PNUT have value? Because we have agreed that they do. Sure, you might have some voting rights or staking rights, but unless you're a whale, those rights are worth about as much as Berkshire voting rights.

This is where people might say: "Ex, you chose a stock that doesn't pay a divided! What about divided paying stocks?" To which I reply, crypto has a corollary - staking rewards. Dividends are a red hearing in the understanding that faith is central to value.

Financial instruments - be they publicly traded equities or crypto - have value because we collectively believe that they do. Right now, there are billions of people who haven't recognized this fact. 

When they do realize that the basis of value for financial instruments is faith, then crypto because obvious; it's easier to trade, faster to settle, and cheaper to exchange than traditional equities. Stock isn't going anywhere, but crypto is rising. 

Value Accrues to Faith

When I think about the most abhorrent and reprehensible speech that I can imagine, I come to only one conclusion: Holocaust Denial. To say that the Holocaust did not occur is to deny the suffering and cruel torture and deaths of millions of people and the pain...

that their families endured at the hands of the Nazis. The Holocaust itself shows how deeply dark the depravity of humanity can reach and its denial twists my stomach at how callous man can be. 

But, I truly believe in freedom of speech - even speech that sickens me. That means that although I disagree with Holocaust denial with the very core of who I am, I do not believe that those who espouse it should be silenced. 

I believe that the best antidote to evil speech is good and truthful speech. If society took the position that evil speech should be silenced, the evil is not eradicated; instead, it is cast into the darkness and shadow...

 where it can grow & multiply & spread, like a festering disease, corrupting  those who hear it in hushed tones. To attempt to silence specific speech because of its content is to give reason...

 to those who hear it to ask, "why does the government silence these ideas? Could it be that they are true?" The very act of censorship lends a false legitimacy to the ideas that are censored. 

It is far better to make those who would spread terrible ideas do so in the light of the day where they can be seen and confronted with righteous truth. 

To truly support and believe in free speech is to know that sometimes people will use that right to spread hate and evil and to take on the responsibility of combating that evil with good and just ideas. Evil speech is only conquered through pure and just speech. 

Freedom of Speech is Uncomfortable

So you have a fair bit of crypto and some valuable NFTs and you're wondering the best way to protect your assets? Three words: Create a Safe. 

A 🧵...

Let's start with the basics. What is a safe? A safe is a customizable multi-sig wallet that you can use to store ETH and ETH NFTs. You can also deploy a safe on many ETH L2s to hold your tokens and NFTs on those networks. But safes are a bit different from other wallets that you have used because they don't have seed phrases to backup and you can't execute a transaction with a single action.

Instead, you will have to approve any transactions with a configurable number of other wallets. For example you could set up a safe to require 2 of 3 other wallets to confirm a transaction before the transaction is actually approved.

Those 3 wallets can be any wallets you want. They could all be hot wallets (not recommended), all hardware wallets, or a combination. 

Safes are designed to protect against attacks that steal seed phrases or actual hardware wallets. They will NOT protect you against signing malicious transactions. If you set approval for all and confirm the transaction on your safe, you're just as vulnerable as if you did it on any other wallet.

You've decided that you want to create a safe, so what are the next steps? First, figure out at least 3 wallets that you want to use as signers on the safe. Note that if you're using hardware wallets, you should use DIFFERENT hardware wallets instead of...

 two or three accounts on the same hardware wallet (i.e. the hardware wallets you use should have different seed phrases). A common setup that is secure enough for most people is to use 2 different hardware wallets and a brand new hot wallet that hasn't been used before.

But, if you hold significant amounts of crypto or valuable NFTs, you might want to use 3 or more hardware wallets.

Now that you have the wallets you're going to use, go to safe.global. Safe's X page is @safe. You CAN change your approval wallets later. Note, I strongly recommend doing this on a computer and not a mobile device. The screenshots are from a Mac computer. 

Once you're on the home page, click the "Launch Wallet" button in the top right corner. 

That will take you to this page where you will hit the "Create account" button in the top right. 

Now you're going to be on this screen and we have a few things to fill out. First, make a name for your new safe. This won't be shared or visible to others, so just pick something meaningful to you. 

Next, select the networks you want to deploy your safe on. I recommend starting with just ETH L1; you can deploy on other networks later. 

Finally, if you haven't already done so, you need to connect your first signer wallet to safe. Once that's done, click next. 

That will take you to this page where you add your additional signer wallets and set your signing threshold requirements. To add a signer, simply click the "Add new signer" button, name the signer something meaningful to you and paste the ETH address into the bar.

For purposes of this demonstration, I'm using all hot wallets, but I strongly recommend that you use at least 2 hardware wallets and 1 hot wallet (or 3 hardware wallets for higher safety) with a threshold of 2 of 3. Here's what it will look like when everything is completed.

If everything looks good, hit the next button at the bottom of the page and you will end up on this page. DOUBLE CHECK EVERYTHING! There is a small fee associated with setting up a safe, but you can either pay it now or when you do your first safe transaction. I recommend checking the pay now button. 

Once everything looks good, click the "Create Account" button and your wallet will pop up with a signature. You're going to need ETH for gas and for the fee, but it won't be much. Having around 0.015 should be plenty.  Sign the transaction.

After you sign, you'll get this screen, just wait. 

Then you'll get this screen. Keep waiting.

Then you'll get this popup. Congrats, your safe is now ready to use and this is the address that you'll use to send things to it.

This is your home screen. If you have any ETH  in it, you will see the balance at the top. On the left is the navigation screen. Let's start by clicking the Assets button.

There are two tabs on the Assets page: Tokens and NFTs. They should be self explanatory. Here, you can see the ETH I sent to this address. 

This is the NFTs page. The center of the screen shows a list of your NFTs. I sent 2 NFTs to this safe - 1 1155 and 1 721. YOU WILL NOT SEE YOUR 1155 NFTS ON THIS PAGE, BUT THEY ARE STILL THERE. 

To see our 1155s, we're going to use a safe app. Click the apps button in the nav bar on the left. 

That will take us to the apps home page. Type "NFT" into the search bar and select Zerion. 

This is the home page for Zerion. Click the NFT button at the top. 

Ok, the last thing I'm going to explain today is how to send one of those NFTs. First, click the one that you want to send, then you will be shown a larger version of the NFT. Here's "Born in 2020" featuring mini exlawyer!

Next, click the send button at the top right. 

That will take you to a screen that shows the token being sent and an empty destination. Just type the address into the destination bar (you CAN use ENS names), then hit send.

After hitting the send button, we're presented with the safe transaction confirmation page. This page is very important and shows us exactly what is happening. Moving from top to bottom:

Call: this shows us the smart contract function that is being used

Parameters: this shows us the from and to addresses - you can click the little buttons to the right of the addresses to copy the addresses or view them on etherscan.

Advanced Details: this includes info about the transaction that is beyond the scope of this beginner's guide

Balance Change: THIS IS IMPORTANT - IT SHOWS US EXACTLY WHAT WILL CHANGE IN OUR WALLET. IN THIS CASE, THE SAFE WILL LOSE 1 BORN IN 2020.

Transaction checks: This allows us to simulate the transaction, but is beyond the scope of this guide.

Confirm: Here, we can either sign the transaction with the wallet that is signed in, or add it to a batch. A batch is used to confirm multiple transactions at once - for example, we could send multiple NFTs using a batch transaction.

Finally, the right box shows us the status of the transaction. In this case, we are creating the transaction and no signers have confirmed the transaction yet.

If everything looks good, click the sign button at the bottom right. 

When you click the sign button, your wallet app will ask you to confirm the transaction. Once that's done, you will see this page.  

Even though the page says the NFT was sent, it was not because we have not approve the transaction with enough signer wallets. 

Go back to your safe home page and look at the menu on the left of the screen. Notice the little red 1 next to Transactions. That's our pending send transaction. Click the transactions button.

That takes us to the transaction page where we can see all pending transactions. Here, we see the transaction we just created - a safetransferfrom transaction that was created 2 minutes ago and that has been approved by 1 of the required 2 approvers. 

If you click on the transaction, you can see expanded details. Note that the confirm button is grey. That's because I've already approved the transaction with the wallet that is signed into safe. We need to approve it from a second wallet.

Switch wallets to a second approver wallet and the button will be green. Click the green button to confirm the transaction and you will be taken to the confirm transaction page (next tweet).

The Execute/Confirm section of this page will change depending on which wallet you have connected. If you accidentally connect a wallet that is not a signer, you will get this message. 

If you connect a wallet that is a signer, but that does not have sufficient eth to approve the transaction (the final approval for safe transactions requires gas and will pay the gas for the actual transaction) you will see this message. 

And if you connect a signer wallet with enough ETH, you're greeted with this happy little message. Click Execute!

That will pop your wallet app and ask you to confirm the transaction within your wallet (i.e MM, Rabby, etc.).

Once you do that, you will be taken to this screen which shows the transaction is pending!

Wait a minute or two, and your transaction will be confirmed! Congrats, you've completed your first transaction in your new safe!

To recap: this thread is basics for begginers thread that shows you how to create a safe, where to see your nfts and tokens, how to send an NFT out of your safe, and how to confirm your first transaction. 

While it may seem daunting at first, using a safe is pretty easy, with some practice, and it is worth the time to properly protect your valuable NFTs and crypto. 

Protecting Your Crypto and NFT Assets

Yesterday, the CFTC (the commodities equivalent of the SEC) issued fines to 3 different DeFi companies for failing to comply with various registration requirements, failing to comply with KYC requirements, and offering leveraged and margined retail transactions.

You can read the CFTC's press release here: https://www.cftc.gov/PressRoom/PressReleases/8774-23

Many of you have read some of my posts taking Gary Gensler and the SEC to task for their "regulation by enforcement" agenda, failing to issue rules requested by the crypto industry, and gross overreach and attempts to expand their jurisdiction.

Let me be clear: The SEC has done all of those things and more and is a government regulator that is out of control. So too is the CFTC. As CFTC Commissioner Mersinger wrote in her dissent:

"I am concerned that the Commission in these cases is taking another step down the path of bringing enforcement actions when we should be engaging with the public. It is important to emphasize that “Enforcement First” has not always been the CFTC’s default position."

She further writes: "[T]hese cases represent another example of the CFTC swinging its enforcement hammer when other, more precise tools would be a better fit for the job, I respectfully dissent."

And most troubling, and correctly, points out:

"The handling of these matters through enforcement obscures that one of the cases before us is not like the others. In that case, the Respondent’s technology enabled users to execute spot trades in thousands of different...

digital asset trading pairs; the CFTC does not have regulatory jurisdiction over such spot trading, which is lawful activity under the CEA. The Commission nonetheless holds this Respondent liable because its protocol also was used to trade some leveraged digital assets...

 issued by unaffiliated third parties, which could be created by utilizing a set of smart contracts designed and deployed by third parties that automatically executes a series of actions on other third-party DeFi lending platforms and decentralized exchanges...

 to generate leverage. This raises questions: If a DeFi protocol is developed for lawful purposes but is used for purposes that violate the CEA, should the developer be held liable?"

You can read Commissioner Mersinger's full dissent here: https://www.cftc.gov/PressRoom/SpeechesTestimony/mersingerstatement090723

Ultimately, the CFTC is engaging in the exact same tactics as the SEC - regulation by enforcement, refusal to engage with the crypto industry, pretending that all technologies are the same, and exceeding its statutorily conferred authority.

In these cases, the Ds have accepted their fines. But, there will be future cases that are litigated, & the CFTC will lose, especially on the point that creation of legal software, that is later used for illegal purposes by third parties, confers liability on its programers.

That is like saying that Microsoft is liable when a crazy person sends a threatening email to the President because Microsoft created Outlook and Exchange. The software itself can be used for legal and illegal purposes; it is the user who is liable, not the programer.

But the point of this thread is not to point out the SEC's and CFTC's failings. Instead, the point is to point out that overzealous regulators will continue to harass the crypto industry until they are replaced. Yes, we will win in court, but that is slow and expensive.

We need to focus on winning in the legislative process and in the agencies themselves and there is only one way to do that: win at the ballot box.

There have been calls for Biden to fire Gary Gensler. But what do you think will happen when/if he does?  Do you think he'll replace him with someone who has completely different policy goals? No. He will replace him with someone who pushes the exact same policies.

Do you think agencies will reverse their positions just because they lose in court? No, absolutely not. They will try to distinguish and differentiate the facts of the court cases to the facts before them to implement their policy goals.

The actions of the SEC, CFTC, and various other governmental agencies are intentional and are designed to implement specific policy goals. In this case, that policy goal is to regulate crypto out of existence, or at least into the shadows.

Why? There are lots of potential reasons. Some "valid" and some not. Some people honestly believe that crypto is used solely for criminal activity and by terrorists and they have a valid interest in limiting those uses cases.

Other people, however, simply want to make sure their donors continue to get their fees (bank and transaction fees would reduce precipitously if intermediaries weren't necessary - as DeFi allows).

The reason for the policy goals don't actually matter. What matters is that at this point there are lots of people who believe the correct policy is to kill crypto, they hold elected office, and you're never going to change their minds.

As I said above, our only option is to win in the legislative process and at the agencies themselves, and the only way to do that is to win elections. Primary season is incoming, so you have a very real & tangible way to help: donate to primary candidates who are pro crypto.

When those candidates win their primaries, donate to them in the general election and, of course, VOTE FOR THEM!

So yes, we will win in Court, but things will be a lot better for us if we avoid Court and just win at the ballot box.

We Have to Win

The most interesting and useful applications for decentralized finance have not even even been created yet and, unfortunately, they will take years to implement due to massive changes in laws and regulations required to make them legally feasible.

The end game of defi is not yoloing into random meme coins, staking tokens for network security and consensus, or even loans collateralized by tokens.

The end game for defi is a decentralized and permissionless version of what happens in real finance every day - buying stocks, borrowing money for a house or car, and lending money to a startup through convertible debt.

To get there, we need massive changes in regulations and law that will enable stock to be tokenized, titles to assets (houses, cars, boats, etc.) to be tokenized, and that kill off or significantly modify our "accredited investors" laws.

The promise of defi and crypto is not an online casino; the promise is equal access to the financial system through permissionless blockchains, low cost transactions, and easy onboarding.

No one should ever be able to limit your access to the financial system because of what you believe, the charities that you support, how your spend your money, which legal businesses you work with, or which political party you support.

Likewise, your access to risky, but high return, investments should be NOT be gated by the size of your bank account, but rather by knowledge.

It should not take days to send money around the world, let alone down the street. You should not be charged for having multiple accounts, and a financial institution should never be able to limit your access to your own money.

All of these problems and more can be solved through the permissionless and decentralized nature of crypto. All of these problems can be solved - today - by blockchains, self-hosted wallets, and permissionless systems.

We do not face a technology problem in making the financial system more fair, less expensive, and easier to use; we face a regulatory problem that stems from laws like the bank secrecy act (requiring overly-burdensome KYC),

the various securities acts (limiting the ability to tokenize stocks due to exchange and custodial requirements), "accredited investor" rules (limiting who can invest in startups, based on bank account size), and a host of regulations implemented by government agencies.

We must continue to fight back against the government creating anti-crypto rules and laws, but more than that - we must push the government to pass laws that enable blockchain technology to truly reach it's potential.

Merely saving crypto from the governemnt will not change the world; we must push the government to embrace crypto and blockchains and the positive systemic changes that they enable.

The Future of Decentralized Finance

1. I keep seeing people complaining about Twitter making some features Blue only. Frankly, this is the right direction for social media. The algos are designed to keep you on site for as long as possible. Why?

2. Social media revenue is based almost exclusively on allowing advertisers to target you and the longer you're on site, the more ads that can be served to you.

3. What's the best way to keep someone on site? Make them angry!  "According to Haugen, Facebook prioritizes engagement above all else. The more people interact with content on Facebook, the more...

4. ...ads they will see. Facebook's algorithms are tuned for this, and it means inflammatory content gets boosted. It's easy to make people angry, and angry people click." https://www.extremetech.com/internet/327855-whistleblower-facebook-is-designed-to-make-you-angry

5.  From another article: "But is Twitter configured to keep the anger flowing? 'I don’t know about intentional design,' says Balick. 'What I do know is that hot emotions...

6. that set hearts racing, such as anger, fear and sex, tend to be more contagious.' If these topics tend to get passed around more, it’s likely that algorithms will exacerbate the contagion." https://www.sciencefocus.com/the-human-body/why-social-media-makes-us-so-angry-and-what-you-can-do-about-it/

7. So, by shifting Twitter to a freemium (it's free, but you have to pay for premium features), Elon is actually doing something that might fundamentally make social better - wean the business model off of advertising which incentivizes algos that keep you on site and angry.

8. If the business model were to shift so that free users got limited use - limited engagement, limited views of tweets, limited DMs, etc. - then eventually the primary revenue stream can move to paying customers instead of advertising.

9. If that happens, then social media sites are no longer incentivized to keep you on site and angry, so they could change the algos to serve you things that make you happy, so that when you walk away you think, "that was a nice experience, I'm glad I'm here" instead of...

10. "I need to login again soon to make sure I correct everyone and fight for what I know is right." Imagine being served puppies instead of bombs. How much happier would you be? How would that affect your mood throughout the day?

11. Remember, if you aren't paying for a service, you're the product. Switching to a freemium model makes social the product instead of you, and I think that's a great thing.