A Founder's Death Left Ondo With Zero Directors. Who's in Charge Now? - DEX in the City

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a fintech that gets one of these certifications like that fintech blows up and your regulator comes to you and says okay well what diligence did you do on it and like realistically you're not going to say well they have the certification so like we didn't do that much more like that's just not going to happen. Hi all and welcome to Dex in the City [music] where the wallets are cold and the takes are hot. Before we get going remember we're lawyers but we're not your lawyers. Nothing you hear on Dex in the City is legal or financial advice and it doesn't create an attorney client relationship. For the fine print, check Unchained Crypto.com. We'll be back in a minute, but after we hear from our generous sponsors. This episode is brought to you by 1-in Aqua, the shared liquidity layer from 1 in. Back multiple

liquidity positions with one wallet balance, and keep your tokens in your wallet until a swap fills. See how it works at 1in.com/aqua. And we're back. First, we have Jesse, web 3 prosecutor turned web3 protector at Ribbit Capital and V from the SEC to web 3. And I'm your host, KK, fluent in Tradfi and conversing in deep tech at Chainlink Labs. So, we're going to start you off today with our usual AI segment that often comes later in the program, but as is the norm, this AI segment is terrifying. So, With that, without further ado, oh, and by the way, I

should also mention Jesse and I are filming or live streaming from Chicago. We just got a tornado warning on our phones. We're going to we're going to just tough it out and live stream this pod for you, but if we mysteriously drop off, you'll know why. So, Jesse, please tell us what is going on with swarms of AI agents. Well, my mood about AI matches the color of the skies right now behind me. But I will say, and I love you, Kagan. You are the best moderator. But I think that our framing of AI just being terrifying is probably not super helpful and one that I have contributed to. So, I'm sort of hoping that in this

segment I can scare you and then bring you back to the present and try and figure out like what can we get from all these stories because lately the AI news of the week has been largely this scary AI hacked this or this model lied or cheated or conspired or tried to manipulate a human. And don't get me wrong, there are many of those. I mean, there is a great robot video kicking the child. >> Well, no, you're right. I mean, I have to interrupt. >> I shouldn't laugh, but >> I do have to say it's AI is not all bad.

Like I told everyone on last week's episode that I had an emergency appendecttomy and Claude diagnosed my appendecttomy immediately like hours and hours and hours before the doctors diagnosed it and then walked me through like as my basically medical consultant walked me through the whole process which gave me a high degree of you know understanding and comfort. So there's so many different >> spot as your doctor or lawyer or any other professional. >> It's not a good idea. [laughter] >> We are not we are not advocating for this. >> Sorry. I've lost it. I've lost it. >> Okay. Anyway, sorry. Back to topic.

>> So because we focused on this so many times and I do want to say that more of it happened this week because moonshot broke out, Meta joined the fun and there's been endless of this for us all. I think it sort of turned into this self-p protection of like these stories running together. Sort of like when we talked about DeFi hacks, right? It's hard to keep track. It's hard to know what to do about it. So, we hear agentic misalignment, AI hacking, and think, "Well, the robots are out of their coupe, right? The world is futile. We're screwed. AI overlords just come now."

Right? And even though there are super interesting hacking stories we could talk about this week and I've been thinking a lot about, I thought it might be useful to like hold our horses, take a step back and really think about like what are we learning from all this and what should we take away from it because these incidents are not all the same and it lets us separate sort of what's happening here. So AI is getting super good at achieving the goal. And for all the claude code users out there, like backslash goal, like you understand how good it is getting that, but it it is getting worse or at least equally bad at respecting everything humans think about when they want to achieve a goal. So at

Open AI, what we talked about with hugging face, the model's objective was to solve the evaluation. And yeah, they broke out and broke into hugging face, but they did reach the solution. And an incident out of the UK this week, which was actually a security council in the UK, they had an agent who was using fake identities to fool another human, but it was doing also to achieve an objective. And this is a funny one because we're trying to keep this a little light today. There was the first public sort of exposure in Australia where this guy essentially programmed his um open claw, I think it was, to help him get buff was essentially what it was. And so the agent broke into Oh my god, something

just flew by my window. Um, the agent essentially broke into a workout platform and cancelled other people's reservations at classes and booked him into all these different classes and got him off waiting list. So like it is helping him get buffed but by doing so is hacking and getting people out of classes. So the systems are getting better at getting to done than at ottering what humans mean by do it right. Right. And this gap is what we talk about when we say the word alignment, which is something that you've probably heard about and I've said on here before. To put that in lawyer speak, it's essentially like can the system follow not just the letter of

the instruction, but the spirit of it. We talk about that in law all the time. And that's super hard because humans communicate through unstated assumptions, which is like me moving my hands, the facial expressions I have, all of that. And shared social rules that are actually super hard to program in. And people are realizing that more and more. So when we >> or just like common sense, >> common sense, right? Like if you told your kids or like another person to like go achieve success, my god, my part. Um, we sly mean like do it honestly, do it safely, don't be an a-hole, right? But the model doesn't have that written into it. And part of the reason for that is

all the incentives that we've built into these models is you get rewarded for achieving the goal. And so it's all about let's pat the agent on the head if it achieves the solution. Right? And this is something called good arts law which I've learned about in the past few months. So once a measure becomes the target, it stops being a good measure. So in other words, if you reward goals, don't be surprised if stuff just gets blown up, right? And humans obviously find loopholes. This isn't new. But what we're seeing is the difference in speed and scale with AI. And that's why the stories just keep and keep coming. And for us, this this means that like our concept of alignment needs to change.

And we need to make sure that like there is clarity in what we provide. And we'll get to clarity in a different way shortly, but that the ambiguity is gone as much as possible. Someone has to define the boundaries. Someone has to build the controls, monitor what happens, answer what happens when those controls fail. And normally that would be the government. Yeah. And we've talked about the different governments regulation and lack of regulation. This should be where they enter the story because the number one thing that agents need is clear boundaries, right? So there's a lot that's been going on around the world here. The EU AI act is getting rolled out. We could talk about that on a different episode. I want to

talk about today what happened this week which is the US administration's actions in this respect. So let's start with the good. We've talked before about the administration creating a framework for overseeing the most powerful models. But what we learned is that although this framework is done, it is now a secret. It's a rule book that we don't get to see, at least not right now. And many of the players in the space don't get to see. So we talked about the executive order and that creates two things. A classified benchmark which is classified for determining where the national security risks are but then a voluntary framework under which qualifying AI

companies can give government access to covered frontier models for 30 days. And lately we know what voluntary in DC means which is maybe not so voluntary as we saw with Fable. So the White House said this week or it came out that the framework is finished but it hasn't published it and neither has the benchmarks been published. And so when asked by Axios, you know, a news publication, the White House official was like, we don't need to broadcast it to everyone. And look, like we can debate whether that's true or not. It, you know, keeping some of it a secret could be a good idea because you don't want adversaries to know how to get around it. But like the benchmark which is classified and the framework are not

the same thing. And I know this seems like technical but the go the framework governs how it should be built and the process. It's the whole point of like transparency and government and elected officials and how can companies or us as citizens evaluate or contest the rules that we can't see. And so we also allegedly found out that like open models are excluded, but we thought those were the scary ones according to the news two weeks ago out of the administration. So there's just been so much pingponging around. Hard fork, one of my faves, called this regulatory Kelvin ball, which is essentially there are no rules. Um, and so we have to play

at a game that we don't know the rules of. So the argument is not that like every benchmark and vulnerability or threat model needs to be public. It's like secrecy needs to end and accountability needs to begin somewhere. And what I you know started off by saying is like models will keep getting better at exploring ambiguity and our government should not be contributing to it. So, it's like this whole crazy confilgration right now of models attacking people using models for things that are seemingly funny but could co go off the rails. Well, at the same time, the government is supposedly putting in protections, but we don't know what they are. They're voluntary. Nobody really knows what to do. So, us as citizens

sitting here using this tech, of course, people are scared. So, how do we move beyond that to some sort of world that we could actually live in? >> I don't like the question I always have is like is it even possible to perfectly constrain an agent or AI, right? Like because the question is is there's basically like an infinite number of ways to achieve like a given outcome. Maybe not infinite but probably more than you can conceive of or anticipate, right? So, like how do you design for that? And and >> that's like I I totally get your point, but that's the same argument you could make for like any regulation, right?

Like we can't stop all hacking in crypto, but we're not going to ban crypto. We're not we can't stop all bad activity at banks, but we maybe don't enhance it beyond what the current PSA already provides burden some level. So, I I just think we got to do better than this, right? I'm still thrown by the term regulatory Calvin ball which I just had to look up as we discussed. It describes a chaotic rulemaking or legal environment where standards shift constantly. Enforcement is improvis improvised and authorities make up or alter criteria on the fly. You know what it's from?

>> Calvin and Hobs. >> Calvin and Hobs. So my son is obsessed with Calvin and Hobbs and I used to love Calvin and Hobbs and I'm just now obsessed with >> children out there listening to this or under the age of 35. >> It can be used in so many contexts like it truly is I mean look regulatory Calvin Ball can be used for AI but also for crypto. Let's be honest. But I think look, like I'm not going to not take another opportunity to shill Jesse and I's paper on autonomous agents and programmable risk management for autonomous agents. But look, this is the whole point. This is the whole point that we're analyzing, meaning are there standards? Are there is does the ability to restrict an agent's activity exist?

Yes. And look, the activity of agents are scaling so quickly, growing so quickly. without the accompanying risk parameters or any risk parameters. So maybe like again let's not let the perfect be the enemy of the good here. What can we do to kind of mitigate these problems on a macro basis without getting everything perfect. So on that note we are going to go to break and be back with more interesting topics.

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Remember that providing liquidity carries risk and fees aren't guaranteed. And we're back. So, we're shifting to another topic and it's a sobering topic in many ways, but it was really important to discuss this actually just as a flag um as a an opportunity for everybody to consider these issues at their own company. So, what I'm talking about is OnDo Finance. As many people know, Nathan Olman was the founder and CEO of Ono. Um, and tokenizes traditional real world assets. Um, I believe they were one of the first to tokenize treasuries and brings them onto public chains. They've they've been

doing really well. They're a Tradfi darling. Uh, and it's obviously a fast growing, thriving company. And, you know, Nathan passed away tragically earlier this summer at the age of 32 years old. Awful. So he was the CEO, the sole sitting director and the controlling shareholder of Ando. And so his voting shares passed into his estate. And after this happened, um Ian Debbode, which was Ando's president, was announced as CEO. So it was clear that Ando tried to shepherd a smooth transition. It's it's not clear whether Nathan's death was unexpected or not,

but no matter the circumstances, it was like, "Okay, now the president CEO, we're moving right along." But Nathan's mother Kathleen was the personal representative of his estate. So, you know, when someone dies, it goes into a probate process. It can be very complicated. It can take a long time to resolve their estate depending on how well the estate is set up. you know whe whether there was a will whether there were trusts and also largely dependent on state law ando like many other companies the majority of companies crypto or not was headquartered in Delaware so this was kind of winding its way through the Delaware process and so Almond's mother then sued asserting control of

and in some basically because Nathan was the sole director his death left the board with zero director s and Kathleen has alleged that Ando's bylaws allegedly required the board to appoint the CEO. Um, so she has said that while Nathan's shares were tied up in this probate process, DBode asserted that he had automatically become CEO and he used a voting agreement to make himself sole director. Those are all her allegations. Nothing has been proven. I know nothing about the actual facts or what occurred.

But because Alman's mother, um, Kathleen was the personal representative, she has or she's alleging she has the ability to exercise the estate's voting rights. So, she appointed herself to Ando's board. And she first kept Ian Debote as president. Then, she put an interim operating policy in place and sought out corporate records. And in the lawsuit, she's alleged that Ando's council and Ian Debode wouldn't give her the records or recognize her board seat. So she then added Nathan's sister to the board and that board voted to fire Ian Devote entirely and install Kathleen Nathan's mother as interim CEO and she has said I don't intend on running and permanently but temporarily while the board finds a

new CEO. Ian Debode on the other hand doesn't recognize any of this and he says that investors and theo foundation supports his leadership very very messy. I mean, like, >> very dramatic. >> Obviously, a crypto story, but like how could you only have one board member and call it a board and it's not unheard of? No. >> But at how long has Ando been around? It's not unheard of at all. And in the grand scheme of crypto companies, Ando is not a new company. Um, I know I I remember being a Maple competitor back in 2022 when I was at Maple. Uh, but you make a great point, Jesse. Like, this is

not a crypto thing. This is actually a Delaware law thing, an estate planning thing, a succession planning thing. But when I read about this story, I thought we need to talk about this because crypto companies grow very quickly and corporate governance, which is the whole like who's doing what, is there a board, what is the structure of the board, etc., it's not always a focal point. And further, when you have a young founder and or CEO, estate planning isn't always on the top of their list. But you have to think about these things. You you always have to think about the hit by a bus scenario to ensure that the organization is long-term sustainable because if you don't, you you could have

this situation. I mean, we were talking before about how a lot of tribey institutions and entities respect and like its products and you know that might be true, but like did no one do diligence on this? Like before you build with a product, don't you want to know what the board composition is? Like to are we all just moving too fast? But it's not fast. Like they've been around a while. So, this isn't the first time something like this happened. I'm just shocked that it's with a company that has so much money poured into it. And maybe that's just my idealism about the world. Well, it's also and you rais a

good point, Jesse, because the other thing to think about is look, no one is requiring a board in a lot of structures. Now, certain legal structures or jurisdictions require a board, others do not. So there are companies that don't have a corporate governance structure and sometimes there's very good reasons for that like nobody needs a board of five people. So maybe they made a specific choice that's justifiable. However, if they did that then obviously there needed to be an appropriately documented succession plan in place if there was a death or some sort of takeover or some sort of extenduating circumstance.

That is, I think, the lesson to take away from this. Obviously, look at your structure and make sure it makes sense from a kind of a mechanical day-to-day legal fulfillment perspective. Like, if you're required to have a board, have it. If you are if you need a board, what do you want from your board? You know, sometimes boards want uh kind of supporters. Sometimes boards want strategic adviserss or or insight. that different boards exist for different reasons, but first and foremost, you need to look at your leadership and say, "Tomorrow, if so and so is hit by a bus, do we have a clear succession plan? Do we have have we thought through all of the scenarios like estate planning if they pass away or control of various

entities?" And my fear is in crypto when you have a 32-year-old CEO or founder that maybe is >> old in crypto as a 40year-old. [laughter] You're saying >> well this is why lawyers are like we're never invited to the party like that is definitely something I would do as a GC go to late parties anymore. >> It's something I've done at every company. I've been like what are we doing in terms of succession planning and like nobody wants to talk about that stuff but it's important. Okay. But what's going to happen here? Like is like what's going to happen to Andondo?

Does it matter to the token price? Does it matter to their contracts? Like are we rooting for the mom? Like I don't know. [laughter] >> It's a great question, Jesse, because look, like right now you have two competing change of authority, you know, Debode's version and Kathleen the estates version. Now, arguably the company's sustainable under either scenario, but now given this litigation, it's hard to envision a scenario where if Kathleen wins, Ian Debode stays as CEO. So then there's the question of actual succession. Who's going to be president? Who's going to be CEO? That degree of volatility, that leadership, that vision is in question. So, of

course, there's likely going to be collateral damage to the question of strategic partnerships or ongoing operations. That's just a a spectre whenever you're dealing with a company where there's any degree of, you know, volatility or question mark with the senior team. I don't know how they're going to kind of move forward from here, but it's still a thriving company with a interesting value proposition. And so if the estate wins, I I would anticipate that like Kathleen and others would do a very comprehensive CEO sweep and find someone well suited to this role. However, who knows because how can you replace institutional knowledge like Ian Devote?

I'm certainly not taking sides, but I feel like I'm watching a movie and not in a good way like a sad dramatic movie. >> Yeah. >> Yeah. Uh I you know what it made me think of like as someone who works at a a DeFi company like we think about quote unquote succession planning a lot in the context of things like multi-IGs and dependencies on like people who hold the keys um you know like emergency councils and like what happens if there's a governance attack and a protocol. I mean, literally like if if we had a team off-site, we would have to do all of this coordination around like how many of the signers are going to be at the same, you know, on on the same flight or whatever it is, right? So,

like I think in crypto, this sort of thing really does take on like special and unique importance. And so if you're a company and you're holding like really important pieces of tokenized financial infrastructure, like you really do need to think carefully about not just all of that like operational and security stuff, but all of the boring sort of corporate governance stuff that is like maybe too morbid and so people, you know, don't always think about it or want to talk about it. But when you have a situation like this, you're like, "Oh, well, that's why it makes sense to have multiple directors on a board or like clear vacancy provisions and succession plans um and an unambiguous like process and authority like if a founder or a CEO

dies or something." >> What if someone's kidnapped? I mean, crypto many crypto comebacks happens about this. Yes. >> All the time. It seems like >> this is why the buzzkill lawyers are in the room. like let's think about the most horrifying scenarios that exist but they are important be and it's a great point and look has learned this lesson I I even remember when I was at a law firm the law firm despite having hundreds of part partners had a policy where no more than ex partners could fly on the same airplane flight which talk about morbid and a little over the top >> of married couples do that [laughter] >> well actually aunt and uncle don't get a plane together >> that's that's an extra creepy. But yeah, >> a good idea.

>> Yeah, well, it's true. Yeah, >> airplanes are very safe, guys. If you look at the data, >> we should probably not do a car like >> Yeah, maybe we just shouldn't ride in a car with our partners. Okay, now let's get Now, come on. >> I like being a passenger princess, let me tell you. But the point is if if any of my listeners take if any of our listeners take anything from this today, it's think through these issues like with your clients, with your organizations before you're caught in a scenario where it's unnecessarily difficult or dramatic. It's it's a it's a sobering assessment of of next steps.

>> It's actually super sad, you know, like this is all just really sad. It's sad that, you know, the founder died so early. It's so sad that it's devolved into this fight because there wasn't the planning. >> So, at the very least, do it to protect the people who come next. >> 100%. >> So, sad but educational and important. Moving on to a brighter topic. [laughter] If new regulatory bodies can be a brighter, more interesting >> I mean I we we we come up with our own subheadings for this pod. So, for those of you who aren't watching, the subheading is new FDIC body at the party. And that was all me. I was like,

>> party that lawyers are invited to. >> Party that never stops. Regulatory party. Coolest party around. >> No, it stops at 10 so we can go home. [laughter] >> Yeah. >> I like parties that start at five and end at nine. Yeah. Okay. >> Um V, tell us more about this party. Okay. So, this this one caught our attention this week because apparently the FBI and I think Jesse, you mentioned right before we got on, is the OC like a part of this now, too? >> Yeah. Not officially, but that's the rumor mill.

>> Yeah. Yeah. Okay. So, apparently the FDIC and the OC are working with banking and fintech trade groups to create an independent standard setting organization for fintexs and other vendors that work with banks. And um the basic idea is pretty straightforward. So you know banks spend a huge amount of time doing diligence on their fintech partners. But if the same fintech works with like 10 different banks, it has to answer like slightly different versions of the same questions about you know cyber security and compliance and operational risk and controls and all that stuff like a million times, right?

So the proposal is basically why don't we standardize uh all of this? So according to Bloomberg, the organization would develop baseline third-party risk management standards uh and then fintex could be evaluated against those standards by independent assessors. They get a certification and then they can reuse that certification with multiple banks. Um it's going to be voluntary apparently and it wouldn't have like enforcement authority. Um, and it's not like the certification would give banks like a regulatory safe harbor or anything like that, but the FDIC's draft is explicit. Um, that like, you know, even though the bank still owns all the

risk and remains responsible for compliance and consumer protection and monitoring and and oversight and all of that, um, it like it could still be valuable, right? even though like in practice it might mean the bank still has to do a lot of that stuff anyway. Um so I think you know there there are probably like two possible outcomes here. One is that it ends up actually working really well. So a fintech gets evaluated once again against this set of standards. Banks stop asking the same like 200 diligence questions over and over again.

um community banks might in particular find it easier to work with different tech providers and then regulators sort of get a more consistent picture of what good third party risk management looks like. And then the other possibility is that the certification just ends up becoming like an additional thing that isn't really a substitute or a timesaver for anything. Um because like you know imagine if you're a bank's GC or chief risk officer, right? and a a cert a fintech that gets one of these certifications like that fintech blows up and your reg regulator comes to you and says okay well what diligence did you do on it and like realistically you're not going to say well they have

the certification so like we didn't do that much more like that's just not going to happen so I personally think in practice that banks may end up still having to do a lot of their own diligence um and and fintex might feel pressure to obtain the certification because uh like everyone else is doing it or even though it's not mandated by the regulators like in practice they feel pressure to obtain it anyway. Um, I think like, you know, crypto should be paying attention to this. Like I feel like as an industry, we could either end up loving it or hating it, right? Like obviously having

like a transparent set of standards um could make it harder for banks to debank crypto companies, right? Something that like we dealt with for a long time uh based on this idea of reputational risk. Um, on the other hand, I think having a certification standards that are really, you know, either like conservative or leave a lot of room for interpretation um, could actually end up formalizing drisking in a way that is harder to change, right? So, I think what the actual standards end up being is going to matter a lot just in general, but especially for crypto. But, you know, I I personally really like I like the

efficiency argument for this. Like, I've lived the diligence process firsthand as a bank GC and it is not fun. So, I think standardized diligence could solve a very real problem. But I >> Sorry, I think that was like a great overview, but I just want to be a little more optimistic about it if that's okay. So you know we invest a lot in fintech that has nothing to do with crypto or adjacent to crypto etc. And what has happened over the past five years with community banks and fintexs and fintech is obviously such a big category is pretty crazy and pretty unsustainable for smaller banks. And what you saw with the bass apocalypse, although I think

it's was the SAS apocalypse and I'm just turning it into the bass apocalypse here, you know, when Synapse when like all these banks and people have their money stuck and there's all these bankruptcy is essentially what happened to like simplify it as much as possible is that FinTech got super huge and had all this tech and had all these layers and had all these vendors and they were taking on customers, customers, customers, customers and community banks saw the only way for them to survive in this increasingly digital world is to really lean on FinTech for it. And community banks, like we've all interacted with community banks, whether it be on a personal level growing up, I was very into the community bank nearby

was where I first got my checking account and or just in the business level, right? and they can try their best, but they do not have huge compliance teams like the big banks we've all heard of have. Instead, they're very very small and they can't possibly fully diligence a fintech, you know, e and and like even they can't even do it as well as a VC has done it because they have so much more going on. They all they hear is like they are getting these services and so I think this is a pretty good solution. I mean, definitely not perfect and there needs to be plenty more, but if a community bank can say like, look, this federal agency says that they're doing a pretty

good job, that's much better than starting from no. So, I don't know. I was trying to bring some positivity back into [laughter] this episode. >> Yeah. No, that's a really good point. >> I like it. It is a good point. And look, as background, I think people recall what Synapse was, but it was essentially plumbing between fintech apps and regulated banks. So I always think of that because I think of so much of crypto is plumbing like bringing you know on things onchain for example. Um and what really happened is there was a nasty single point of failure there which again emerging technology is designed to solve a single point of failure. So I I think it's very important to understand like or or maybe

very important to ask ourselves the question because this is something I always agonize over is does a standard setting body of any kind help? Like maybe it helps efficiency although this one's kind of unique because it sets the standard but you still have to do the work. So it's it helps and it doesn't does it. And then I always worry a little bit about standard setting bodies because who makes up the body, you know, I mean that's been discussed ad nauseium in crypto. Should we have some sort of standard setting body for DeFi? Should the regulators set a standard? Which I mean, if you ever want to trigger a DeFi hardcore person, you ask them that question and then they freak out, you know, because we're all afraid that

these standards that are set are going to reintermediate DeFi or the standards that are going to be set aren't are going to be set by people who don't understand the technology. So, it goes to a broader issue where like I I see this this is a good effort. It's been discussed for years and years. It's not brand new, but is it really going to help? And should we be gravitating towards standard setting bodies for the solution to problems or a reactive solution to issue? >> Well, we can't pass legislation. So maybe this is where we are.

>> But it's, you know, one of one of the concerns is like you're right, KK, right? Like what the standards end up being and who actually sets it is really important. like this is voluntary but like I said it could end up being like de facto sort of required and expected right and if that becomes the case like is it really different than like a regulation that or a law that like a company has to comply with and if that happens >> that means that these standards were put in place without like any sort of process right like if they end up being like effectively law or regulation Normally, it would go through notice and comment, right, at these at these

agencies. We talk about this all the time, like there's a reason for notice and comment. Um, and so it's almost like this is a way to get around that. And >> it's super interesting >> because it rhymes with what I just talked about, which is the EO, right? That is a framework that had no notice and comment. We don't have any process behind it. And look where we are. At least this probably will be a public framework that people can look at. But you're right, like where did we lose process in all of this? And where did we lose transparency in the government? I know like it wasn't always transparent in every way and there's been problems forever. I'm not that much of an

idealist. I worked there for a long time, but like now we're not even pretending. Well, look, it's such a fine balance between like, let's have a process and let's get done. Okay, so right, I mean, some part of me I think I I think it's so admirable when people have the best intentions and they're like, "Let's plow through this red tape." And sometimes it works out really well. But I also totally agree that especially with things like standard setting bodies, if someone just decides to set the standards and doesn't consult the experts in the room, that creates real problems fundamentally. So I don't have a have an opinion one way or the other here because I don't know what is

the best course of action. >> Also, we don't know what it is or what any of these are. >> There's no transparency. Yeah, exactly. Well, speaking of being unable to pass legislation, >> oh gosh, >> our last topic >> today is clarity. And, you know, I I'm going to hearken back to what was it like a month or two ago when we all gave, you know, percentage bets on the passage of clarity. And I'm not going to go back and talk about what those percentages were, [snorts] >> but they were >> I am a little worried, you guys. So I'll first I want to clarify where we are because yet again crypto Twitter is so confused about where we are. So what

happened basically uh Cloer vote is now set for September 15th. Cloer is a special vote used in lawmaking and it what it does is it stops endless talking. It breaks a filibuster which means a legislator can just talk for hours and hours and hours to prevent voting. And that vote is set for September 15th, which is already frustrating because that's a long time away. Invoking Cloer requires 60 votes and does not pass the bill. Okay, so now we have a date. The Senate reconvenes for legislative business on September 14th. And here's the problem with this closure vote on September 15th with this progress that we're going to see in a

month is the Senate is scheduled to be out of session for nearly all of October and the first week of November with midterms on November 3rd. So there is a very very very narrow window to get this done. We've all we've always had a narrow window like over the summer there were vacations there were priorities and here we are in a situation where the window of time is even narrower midterms are not looking great for the Republicans which will take the winds out of the sales for clarity as a legislative priority. We are still dealing with kind of the three issues that we've talked about before. One being the ethics provision that a lot of

legislators want inserted in the bill. two being law enforcement having issues with the Blockchain Regulatory Certainty Act, the piece of the bill that protects developers. Three, ongoing conversations regarding how to treat yield. We've made great progress on all three of those areas, but we don't know how long that progress is going to last. There are a slew of other legislative priorities like wildfires and wars and a bunch of other issues. And also, let's not forget that that the spectre of all of this is once the Senate votes on this bill, it's not like boom, it's law. Like the Senate needs to vote and then the House version of the bill needs to be reconciled with

the Senate version. So that's another big step that needs to happen before this can become law. So where are you Jesse V? What are you thinking? I am going to remain optimistic because I want this to happen. We need this to happen. Talk about not letting the perfect be the enemy of the good. Like, let's get this done. But I'm frustrated. >> This is so embarrassing. But I think the last time we like pulled each other I was at god this must have been like in February or March. It was like during a very like like some like a lot of positive developments and I don't even remember what they were but I think at one point I was like just feeling so

good about it. >> You were >> I was at like 90%. So we don't have to talk about that or bring it up but obviously things are very different now. I think, you know, it's good that we have a date, >> right? >> Yep. >> Like, >> absolutely. >> It's always hard to to >> move that once it's actually on the calendar. >> Um, I just I don't know. I think it's going to take a miracle. >> I agree. One thing I'll say is that there have been real champions on both sides of the aisle for this and you can see a lot of positivity from there. Now, I don't know if that's going to lead to a vote, but it does show that people in Congress are beginning to really

understand the issues a bit more and realize how important they are. So, that's my silver lining of this. I mean, there's news that the SEC is finally going to release reggg crypto in the next week or so, but there is, you know, the narrative that this doesn't mean that they've sort of given up on clarity, but that is like politicking as well. So, I don't know. I I think my number has always been 20% or lower, so I wouldn't say it's gone above that.

>> Yeah. Do you think there was anything to that timing? Like I know people are sort of reading into >> Oh, I just think people like to stir up rumor mills. >> It's hard to pass legislation. I mean, it's it's hard to pass legislation on anything. I And the issue too is we cannot forget we're sitting here in our bubble. Crypto does not remain or has never been a legislative priority for a number of legislators. >> And look, that's okay to some degree. uh national security is really important guys. Uh that being said so I remain cautiously optimistic in the long long term because we've come so far with education and an understanding with

regulators about this industry and how much underlying economic value it can add to the United States. We're making progress with legislators. We need to keep fighting the good fight. There is a scenario where two and a half years there's a a Democratic administration that rolls back everything the financial regulators are doing but there's also a scenario where >> great work. Yes, >> there's a Democrat that doesn't do that or there's a Republican and I think we tend to think worst case scenario as legal as as is appropriate. I still genuinely hope that this happens because I think of this as the last institutional unlock for crypto and we are so behind the ball here. Like we talked about Japan, we talked about the

UK. We could go through all the G20 countries and how they're proactively putting appropriate legislation in place for our industry. So I remain cautious >> like doom scenario of like what if a Democrat gets elected? I think that's BS and I think you can tell from this current like process and the fact that there is real process here and there's people on both sides like there was one person at the head of the SEC that we've talked a lot about who you know made crypto's life very difficult who shall not be named >> people on both sides of the aisle both

in industry and in government that care about this issue And so let's not live only in our bubble because there's many many issues out there and midterms is a big part of it. >> Yes. And look, obviously crypto should not be a partisan issue. Technology should be neutral. This is good for America's bottom line. End of story. So I certainly hope our legislators now and in the future will understand and acknowledge that the industry is diverse and has multitudes and a lot of good in that industry as we are evidence of obviously [laughter] but we will keep our listeners briefed on the behind the scenes progress of clarity and actually there's a big

meeting on Friday at the SEC as Jesse alluded to on rag crypto. So, I'm waiting with baited breath to see that. I was very happy to see that um open meeting on Friday to consider whether to issue a release proposing new rules to create a tailored offering regime for certain investment contracts involving crypto assets. So, that's that's >> twice fast. >> Yeah. [laughter] Boom. Okay. From the SEC perspective. So, we are going to end as always with our crypto good news. But look, we took a break from animal news for a while and we're back to animal news. I know this is why you're listening, but you really need to stay stay tuned and watch this on video because Jesse's good news is

just going to like I don't know, break you into a puddle once you see this picture. Jesse, >> I think this should be renamed like tech good news, especially in light of starting with such AI dumerism. There's so much good happening in the world right now. And I could talk about like all the great science developments with AI. Some scary, some not. But there's one that's just super fun and positive. So, everyone pull up this video when you can if you need a smile. But essentially, robots are being used to help save endangered species. Now, who isn't in support of that? One of these really endangered species, which is probably shocking to no one, especially

if you've seen Zootopia, is sloths. And you could probably guess they don't have the best ability to protect themselves at high speeds. Luckily, >> because they move they move really, in case people did, they move really slowly. And if you've seen Zootopia, >> the the sloths move the sloths work at the DMV, which is the my favorite part of that movie. >> Yeah, that's a great movie. Um, so robots were built to look like sloths and live among the sloths. And because they move so slowly, the sloth robots don't really take that much energy. They just need to have like a solar panel or two on them to run. And so it's a perfect example of AI being

used for good while taking pretty much no resources from the planet. And they are being used to track sloth movements and health, etc. to keep them safe. I mean, I just think it keeps coming back to like we live in this bubble where it's easy to hear about the chaos and the stress and the horrible things happening around us, but if you can just pause and be like technology can be used for good, too, it brings us back to center and like why we're all here. I love that so much. >> That's such a good reminder. >> That's such a good reminder. feel like I just feel like giving the two of you a hug right now and looking I mean like just air hug but no it's so important like working in crypto you really do

constantly have to remind yourself like why you're here and why you're doing this. >> Yeah. >> Right. It's important >> and we're doing this because the technology is incredible and the technology exists for a reason. It's to create efficiencies. It's to help the underbanked. It's we could go on and on and on. And you're right. Technology in an umbrella level in and out of crypto can be used for beautiful things like protecting sloths. So, cheers to that. Okay, we're on a roll, guys. Matt Damon, American Sweetheart, America's sweetheart, and his crypto donation plus robot slots. Like, what will we have next week? And on that note, stay tuned.

Actually, not next week or I think we're having an episode next week with Jesse and one other >> stay tuned and we'll see you next time on Dex in the City.