Hello Everyone!
2023...wow.
What a year!
I don't think anyone could say honestly, with a straight face, that it was a great year for governments, for education institutions, for honest support in international affairs, or dignified handling of terrorist activities.
In fact, it was a pretty lousy year for the "blind" judge of courts and 3-letter agencies as well.
Bah Humbug! haha...I promise this is going somewhere.
You know, before I continue. Let me just say I treat this blog much more as a conversation I'm having with the reader than a formal attempt at my best writing. So, if it ever seems overly casual of even rambly...that's probably just Gordon doing things the way he'd enjoy it the most. And, to be fair, it IS a one-way conversation since you're not interrupting any of my sentences or anything. Wow, that was weird...
Back to the humbug: It's important to remember in the end Scrooge ended up thankful to be alive and being generous, and the Grinch ends up with a heart growing in similar fashion. There are silver linings even in a year like 2023.
I would say one of those silver linings in the cryptocurrency world, thus far, is that there has been a very small slither of fairness and justice in the courts. It is truly a surprise because I believe this world is headed in a very dark direction, and many countries have BRAVE citizens showing that they are willing to rise up to tyranny, though it's rare. So, when there are hints that some justices exist who are not already severely bought and paid for, is for certain a silver lining.
There are two main areas of focus with judges, and both of them very sensitive so I don't want to be overly positive...I still have a very bad feeling about what comes next...but I WANT to be hopeful. Sometimes it's hard to discern spiritual instinct and discernment from just having very low expectations from a corrupt system. Those two areas of focus are regarding the SEC and Binance.US, and the SEC regarding ETFs.
The truth is, one of the biggest silver linings of 2023 is that Gary Gensler has had a very bad year. For someone who claims themselves to be "technology agnostic" it's hard to imagine someone misusing their position with any more "bah-humbugged" energy than Gary Gnu. I have been of one mind for many years regarding a few key things that always seem to prove true: Bitcoin, Ethereum, Litecoin, and sometimes Bitcoin Cash, and one stablecoin or another, are going to get "a pass" for the most part. There will be bans, followed by ban-lifts. But, that small clump was predetermined years ago, and not on equal grounds.
It's sometimes hard to tell, with all the ESG nonsense that dates back to 1992 but was brewing for 20 years prior, who in US politics specifically, actually has any strong values regarding energy use, sustainability, and carbon credits, and whether it is all just actors playing their roles while grifting the profits along the way. But, Bitcoin plays the villain who's devious plan is to eat all of the energy of the world while poor people suffer, and the E. Warrens of the world play the role of savior, all-the-while knowing that there is no such thing as a constituency that actually worries that Bitcoin's gonna blow out the power of every small village on the planet. Well...someone somewhere believes the rhetoric...it's just hard to imagine.
Gensler has very few on his side within the SEC, and there has been a nice, steady stream of dissent. But, he powers forward with his peppy phrases like "the wild wild west" and "just play by the rules" and there have now been several instances where the judges seem to recognize that the Wizard is a weak little Simpson's character hiding behind the screen in his own twisted production of the Wizard of Oz.
He hasn't done well in regards to Coinbase, he hasn't done well in regards to XRP, he hasn't done well in what we was actually aiming for with CZ and Binance.com, and the judge seems to be seeing through his phony facade in the Binance.US case as well.
Let me be clear: I am not here to defend any person or any platform. But, I have had my eyes glued to the crypto space where it matters most, since 2017. I've likely invested more than a thousand hours studying some of the things I've yapped about here, and in years prior studied extensively in other related fields. What I can tell you with great knowledge, is that how things went down with Binance.com were not as they were being presented from the US govt's perspective. Forcing CZ to admit fault, pay a penance, and step down as Founder, was the wrong move for CZ to make, but hopefully is the one that will ultimately protect the most investors internationally...although the only true protection is to stand up to tyrants that believe anyone who desires privacy is a criminal. THAT, my friend, is the bottom line.
I'm not going over details about the multiple separate cases against Binance.com and CZ. But, I can tell you that the primary driver for going after him at all, was a personal attack. Gensler wanted to exit the educational institution into Futures, and then move to private equity with Binance. He was turned down by CZ and his position at the SEC has been one of vengeance ever since.
Not to sing his praise at all...not even a little bit, but if one were to lay aside all of his negative attributes, which are many, Gensler absolutely DOES understand crypto. And also, importantly, he understands Bitcoin.
He's not doing what he is doing because he is ignorant. He's doing it because he is on the wrong side of history. That is why it is shocking and dare I say encouraging that the courts have only reluctantly sided with the SEC and other 3-letter US agencies in pace with poor representation on the other end. The bare fact of the matter that hurt CZ and Binance.com as a platform the most, was that they did not make it hard enough for people from...anywhere...to get in the platform up until 2020. When the US govt. drew the line in the proverbial sand, CZ didn't just meander towards conformity, he LEAPED towards it. I know. I was surrounded by people who all still had Binance.com accounts. And, none of them were using VPNs for the first 3 years of use. There was zero, and I mean ZERO, attempt from Binance.com to prevent its use, KYC-free, from US users. But, the very split second that there was pressure from the US government to change that, Binance.com changed the platform rule.
From my position, justice looks like this:
1) Crypto is a new technology.
2) New technologies don't always fit nicely in old-format regulatory frameworks.
3) Some might thing that it is safer to be overly-compliant "just in case", but it is really hard to follow the letter of the law when the law refuses to define it.
4) If there are no hard-set international rules regarding a new technology that mimics the features of commodities, securities, trading platforms, custody, and the like, then in many cases it makes VERY little sense to take on the cybersecurity risks of KYCing tens of thousands of accounts from people with little-to-no value in assets. There are VERY strict regulations from country to country regarding a platform's responsibility with actual sovereign assets, but essentially zero regulatory clarity on "crypto". That has developed more in the past 3 years than from 2009-2020...since Bitcoin became a thang.
It would have been a massive risk to Binance.com to collect and store personally identifiable data on tens of thousands of users and be held accountable in case of a breach...and this isn't just theoretical: a breach actually did occur. And of course, only affected those who has provided KYC and were part of a ransomware attack.
But once again, the important thing is this: The US govt. started flexing stricter regulatory muscles from the NYDFS, SEC, CFTC, and other agencies, at the same rate as other mysteriously corrupt forces were rising to the surface. They were threatening foreign exchanges with action if they were not in compliance. Those words are more threatening when you know the billions of dollars it would cost to do battle with powerful agencies when you KNOW the end game: you cannot defend yourself from a double-negative. They're going to win by wearing you down. And that is what happened. There was no international law being broken. But, the mere question of whether they were too lax in allowing people from anywhere use the platform without identifying themselves...was not worth risking in front of a judge lacking the technical know-how to discern what is true and fiction in crypto.
There seems to have been very little interest in Celsius.
There seems to have been almost no scrutiny in Three Arrows.
There appears to have been zero interest in implicating their own bribes regarding FTX and SBF.
This is the shortest list in a very long lists of scenarios we ALL deserved actual protection regarding. If protecting investors is the game, the govt. is a big fat loser...all the implications of shaming implied lol.
So, the fact that Binance.com is in operation and CZ admitted that he could've made it tougher for people to legally use his platform is considered a big win for the big losers that are the US govt. I hope that you can take from this a really important point: someone chose to admit wrongdoing in something that wasn't illegal. In fact, I'm pretty sure every single one of us has held a fiat coin or paper currency connected to crimes without ever knowing it. Are we all equally guilty? What if you run a business and have had a mobster as a customer and didn't know it? Are you willfully permitting terrorism? Well yeah, kinda! Maybe only $1.27 worth but still lol.
The same govt giving $9B to known terrorist organizations is trying to shut down all online privacy regarding $400K that was tracked to a terrorist (that the same govt. is supporting) using crypto...from wallet addresses that are completely unusable. Why? Because crypto is terrible for crime! It's the greatest form of surveillance ever created since Facebook!
Regarding the SEC and Binance.US, I am absolutely rooting for the exchange. People don't realize just how fragile things are in the US, or maybe they do. But, this is once again a situation where I hope that the exchange hasn't done what they are accused of, but the truth of the matter is that the multi-sided case against them is filled with insinuations and thus far the judge has been calling "BS" on Gary. It IS surprising. The judge flat out questioned their premise for stablecoins, for BNB, and a number of other details, but the first big move was that the SEC wanted to have Binance.US's assets frozen until they were able to collect evidence on their dealings...in case rumors they heard from a few burned ex-employees were true.
The judge saw that the case against Binance.US wasn't an actual case...it was a shut down, and that is not within the reach of the SEC. You can't shut a business down because you suspect if you started to collect evidence on them, that you might find something wrong. You have to have some provable evidence to enter for a judge to see. Now, that is what makes me hopeful. Because, in more politically-charged courts, evidence doesn't seem to matter at all.
In this case, the judge has shown interest in protecting us, the investors, by preventing an unwarranted shutdown, while providing both sides to present proof of their positions.
It would suck if Binance.US was actually guilty of some of the points accused, but there is actually still question as to whether some of those accusations were actually illegal, or just don't sound good on TV.
The truth is, though a tiny slither, justice is still alive and well in 2023: it's just the minority position.
Now, about those ETFs.
If you aren't under a rock somewhere popping out your head for the first time this year, then you're probably aware that there's a mountain of ETF filings underway, and the SEC has been trying to prevent anything that connects crypto and spot trading. Why? Because you can't manipulate it and it involves potentially trillions of dollars of investments. Gary is a "futures" guy. He pretends that futures contracts develop a fair market value that is hard to manipulate. Um...FTX anyone? Yeah.
Spot on the other hand, is the actual present going value for an asset, and an ETF comes with the institution-friendly rules that the real whales want to enjoy. Institutions are terrified of the responsibility of custody for actual assets. They want to bet on value and enjoy certain institutional tax benefits without the risk of custody. ETFs, in case you don't know, are exchange-traded funds. That means that the holder...HODLER of some Bitcoin, lists their assets in the form of a package that can be traded publicly by the likes of Fidelity. A Bitcoin ETF would mean that people can buy and sell "shares" of someone's Bitcoin holdings at the current fill price, and they are equally free to sell at profit.
Every year that Bitcoin doesn't die, is one year more that institutions are aware that the absolute cap on total supply is as close to a sure bet as will exist in our lifetimes, other than trading Nancy Pelosi's portfolio, and that train's left the station lol.
You do know where Gensler was before the SEC, right? Just do a Google search for "gensler" and "futures" and see what comes up.
There's a reason he is anti-spot: because it ISN'T as easy to manipulate as futures. If you've ever bought Bitcoin at $3800 and also at $68,000, then you can understand just how unlikely it is that anyone actually guesses at the fair value of Bitcoin in a few months, or as contracts expire monthly.
So, the fact that the courts are once again calling Gary's bluff is significant, because he is doing as ordered, and it stings. You can tell it stings. Gary is forced into a position to accept the grounds by which these ETFs will or won't be approved, based on actual rules, and no longer due to "bah humbug".
The real thing we should all be asking is whether ETFs are actually a good thing, or are they a trojan horse of sorts? I think it could be both. In truth, anything that helps to seal the deal on Bitcoin being accepted by the more powerful nations is a good balance ahead of the incoming CBDCs. Perhaps the best part of Bitcoin spot futures will be this: Gary didn't want them, but he had to follow the law. I guess it isn't much like his wild wild west as he'd like.
And on that note, I wish you a very blessed Christmas and new year. May 2024 be less like the last 3 years, but if it's not...it's just another example of how biblical everything is in context. Truly prophetic times.
Gordon wishes all of you the very best. And on that note, Crypto Gordon Freeman, the free man, for 2023...and for now...out.
