Your Privacy, Risks, and Rights Following Tornado Cash Sanctions | Jill Gunter & Michael Mosier

Transcript

hey everyone today we are doing something a little different on empire uh you've all heard santiago and me talk a lot about the u.s treasury sanctions on tornado cache last week that sent ripple effects across crypto from github to circle to a tornado developer being arrested in the netherlands and fiera alchemy d5 front-ends censored related addresses now there is a heated debate to figure out if ethereum can remain censorship resistant well jill gunter and michael mosher from espresso systems hosted an epic twitter space called your privacy risks and rights following tornado cash sanctions on these exact topics jill is a good friend long time friend of block works we've teamed up to get the recording out to a

wider audience it's a massive episode it's almost three hours but it's full of deep insights it has an all-star lineup there were like 15 to 20 people who joined the conversation reid hoffman the founder of linkedin even makes an appearance i highly recommend this episode it gets a little technical if you want to learn more about the recent sanctions and where regulation is headed next if not all good no worries we'll see you next time for friday's roundup [Music] [Applause] [Music] i'm gonna i'm gonna skip here to uh to michael who is i'm calling him my co-host but that's only because i set up the uh the actual twitter space here i think that he is the true host of this event um michael if you to introduce yourself and then and then

kind of formally kick us off here i think that we've got critical mass and i'm going to keep uh keep pulling people up onto the stage as we go thanks joe that's awesome uh i am definitely not anything other than a old nerd uh from the regulatory space so i'm really just here to try to help get any sort of level setting on the regulatory space and the legal space uh coming from justice and from treasury at both fincen uh and sometime at ofac as well on just sort of what how how sanctions have worked in the past and not worked and and some of the ways that they've been treated and why this is i think in many ways an exceptional case uh

and and and also to help to the extent that i can like focus what i think is should be the the appropriate urgency um and if there's other things that that that maybe not might not be the concerns as much people think like some of the criminal enforcement may not be how people how it really works uh to talk through that but i do think it's a it's a really exceptional case and i say that from having worked on these cases and and does raise concerns to me but but i think there's there's a lot of great perspectives here to talk through so i'll uh let me just say a couple quick things and then turn it over but i think one of the key things here for me is just that this is the it's not the first mixer that's ever been designated

by by ofac blender dot io was designated back in may of this year but it's different and and in a pretty meaningful way which is that that was a centralized custodial service and this this and there was an organization named an organization that can appeal that can that can make changes if it needs to to get off the list um all that sort of stuff and here it's just code and i think that raises some really really unique legal and policy issues that that have not been worked through yet um i think there's probably some legal questions too of how a code is a person as defined in the executive order but but we can go down that rabbit hole people if people really want to um and then i think

lastly in these situations in a traditional case you would have extensive analysis of the collateral impacts of a designation um and and like in a bank situation there would be guidance and and general licenses to help people wind down and pay mortgages all that sort of thing and that hasn't happened here yet so uh i think that might be something that that we want to get to immediately and get sort of guidance out there even while working through the hey wait is this really the route we want to go that we're designating code which i think even the executive order didn't didn't contemplate but let me get out of the way and and then and speak when when wanted on something specific

and and i thought it might be really helpful to um i think eri redboard's here from trm and before we get into um some of the other other sort of superstars like rebecca reddick that can help talk through some of the collateral impact pieces further um i thought ari could maybe just give us a quick level set on on things like you know when we talk about these cases it's like well that's a really extraordinary blunt authority to use on something that isn't entirely illicit by any means like forget about even the code piece even if it was our bank and i think helping us level set for a minute on like okay what it what are they really seeing like what percentage of this really was identifiably elicit that sort of thing michael thank you so much uh this is

this is harry redford and really just incredibly honored to to join this group not just the speakers but looking at this list i'm a little overwhelmed and slightly nervous to be addressing a crowd of subject matter experts at this level uh on this topic um people like rebecca and jay and michael and dante these these are the people that i've looked to for guidance um as i've tried to navigate this space over the last several years um look just like like michael said like hopefully a little level setting and maybe giving you a little feel of how treasury was sort of thinking about this uh from my time um as a prosecutor at doj and then from um my time at uh in the office of terrorism and financial intelligence um look i i think that michael used the term over and over exceptional and i think this really is

truly an exceptional uh designation for a number of reasons first um really the size and scale is unprecedented i think what we've seen over the last you know few years really is uh really targeted sanctions enforcement actions and criminal prosecutions in the crypto space to go after very very specific actors so when you're thinking about mixing services really you know the helixes right in the and the bitcoin fogs of the world let's call them sort of the uh dark net advertising mixers right they were charged criminally with conspiring with dark net markets to launder funds because they were advertising as a service to to essentially do just that um you then see sort of uh you know ofac use authorities

to go after what i call sort of non-compliant exchanges in in russia in particular like suex and chad x and garantex you see them go after dark net markets like hydra um alpha bay and and the the intent there is always to sort of take out the illicit actors uh that are really um you know they're that are essentially um making this the overall crypto ecosystem vulnerable um as we're trying to build this is different right this is different because while there was a large amount of illicit activity flowing through tornado cash i think somewhere probably in the 30 to 40 percent category depending on sort of who who you ask uh

there was also a lot of illicit activity and uh i think we see that sort of playing out over the last few days in terms of the collateral damage uh just before i sort of hand things over because there's just some really extraordinary privacy law experts uh that we want to hear from sort of on those on on that side of the house but but to give you sort of a feel for i think how treasury was really looking at this you know michael mentioned you know ronan the attack on ronin was really in my mind a watershed moment we keep using that term but everything is new right in crypto and and as we sort of you know think about these types of issues and i think it really changed the perspective on what hacks were right hacks have always been sort of a bad thing you know people lose

money um you know people can lose their life savings uh you know it could result in the death of a small business but when we saw ronin um and and it was perpetrated by north korea cyber criminals i think the idea was hey look you know hacks are not just a criminal issue to be to be looked at by the fbi and investigated these are a national security issue because those funds are being used not to live a certain lifestyle um you know by a hacker but but to fund weapons proliferation and um and destabilizing activity and i think that is the folk that has been the focus at least since ronin probably before uh from treasury when it's thinking about hacks and i think we saw that play out particularly in ronan you know when i

was i was a treasury for a number of years you know designations of any type of business a financial institution or anywhere else could take months even potentially longer but what we saw really almost in real time is treasury start to use blockchain analytics tools to follow the flow of funds so you know once they realized that it was associated that the original wallet address was associated with north korea they immediately designated that the first ever wallet address associated with lazarus group and then when those funds moved they sanctioned three additional addresses and then finally sort of you watch those funds go into blender and as michael mentioned they designated blender and i think what happened really next is the world sort of said well you

know they're using blender but tornado cash has been the go-to laundering service or the go-to sort of mixer for north korea um you know according to some some work we did at trm we have associated it with the top 10 largest hacks uh from dprk if you're sort of looking to check out a little bit more on this the center for new american security cnos did an excellent report on sort of the pre-ronin hacks and um we we at trm traced the funds and those hacks for the report but it really sort of is a detailed account of how north korea uses mixers to launder funds so really i think that is where treasury was focused and it took some time certainly you know a few weeks after the

blender designation maybe a little bit more actually at this point uh that was in may um and and i think it was because they were trying to figure out how to to sanction a crypto business entity software um we'll get into that i know later um at the size and scale of of uh tornado cash so i i think look i think ronin really moved things from a financial crime issue when it came to hacks to a national security issue and that's the perspective here and um you know i'm gonna i'm gonna end now other than to say this look the conversation we're having today is just sort of you know look at least since 9 11 we've been having this conversation in the national security space about privacy and security and really as the world sort of

moves into this digital battlefield if you will the digital space these conversations that are happening on blockchains and this is really i think the first in many respects of those conversations um and it's extraordinary to have the group uh that we have today uh having it so so michael um jill thank you so much for having me and looking forward to engaging in this conversation thanks so much eric yeah and i'll turn it over in just one second i think that's such a helpful perspective and i do want to note like how exceptional this is in that sense of even if you're looking at on the high end 40 illicit activity that's still 60 percent uh with an enormous number of people with with exceptionally legitimate use

um who are now frozen uh in many ways and beyond just the money that might have come from there it's it's whole wallets that are sort of indefinitely tainted to a degree um and and i think that's the sort of collateral impact that that is not just exceptional because it's in the blockchain space but it is because they're because it's not a person there's not an entity or organization to to engage and say what are the how do we how do we handle this oh by the way there's going to be people that have to pay mortgages can we get a license to wind that down um you know there should be in a bank situation there would be people on planes overnight landing in the country trying to work through that sort of thing and getting general licenses out there that would authorize

people whether they have to file blocking reports or not and making clarify and that's the sort of thing that i think one we want to happen in the media term but the but certainly the the the the more definitive long term is how did we move from people and organizations to to a thing which is code um which which whether it's privacy or whether it's first amendment or whether it's just the fact that this there's no there's no person here that can that can adjust and advocate for people other than all of this group which is phenomenal um but it's exceptional and i do think that collateral impact piece is is is bigger when there isn't a centralized actor so i think i want to turn it over to

rebecca redig because she's done some phenomenal work looking at this uh and talking through the sort of collateral impact that i think we want to channel some of this collective energy towards towards treasury and the government to sort of um see how we can rectify this as fast as possible rebecca uh thanks so much michael and i will say it is certainly daunting both to go after you and arie who have done so much work on the ground with your government experience and also with the group of people not just speaking but also listening in who have both been incredibly active on this issue since monday but also have been active for years uh in defending crypto from a regulatory and political perspective so for everybody here who's been doing that

whether publicly or behind the scenes i will thank you for your work um i have been doing that as well but i will say i'll try to bridge the between software developer perspective and you know government and regulatory perspective as well because i do a lot of that in my day-to-day work because we obviously i'm general for people who don't know i'm general counsel of the ave companies we build blockchain-based software for the web3 world and we've built one of the largest bluechip d5 protocols and we think a lot about compliance and we understand that regulation um and some form of you know understandable consumer protection and and similar type of rules to what we see

in the traditional you know financial world may have to have some application albeit in a new way to the technology we're building um but this certainly this this designation on monday uh by ofac of a piece of software is as both michael and arie said totally unprecedented and it has a lot of ripple effects i will say and i'm sure everyone's seen on twitter and from people they talk to in their day-to-day life that software developers themselves are very concerned about what this means from a long-term perspective i think to talk about the difference between blender and tornado cash one of the most important things to highlight as michael said is you know blender and i believe already said this too blender

was centralized um it basically had a group of people behind it who made decisions who handled the transactions uh and as uh mike and i have talked about uh this week you know that's similar to having a group of people uh facilitating uh illicit or the proceeds of illicit activity through a bank uh and those types of banks have seen sanctions so there's some type of precedence for that one of the most interesting things about tornado cash in addition to the fact that it's solely autonomous code is that there is no administrative key so an admin key for those who may not know although i am sure there is a large group of very crypto

savvy individuals on here um is a piece of the code that allows for changes to the code uh in in some ways gives control over the underlying piece of software um a lot of d5 protocols have admin keys many of which are held by governance or by a dow but other types of code do not which makes it there absolutely no point of centralization and so while there was a dow associated with tornado cash it was not a dow that could anyway change modify control the code in the way that you'd expect or in any way that brought people making decisions about which transactions to push through or not so i

think that's really important to remember and to make sure we keep uh you know a narrative pushing forward as well we can talk about the torn governance tokens and what they allow people to do and not to do sort of later if that's a topic everyone wants to get into i actually think that's very interesting uh because the uh press release that came out on the sanctions talked about ownership of tornado cash and so uh there are definitely torn token holders out there who are thinking about whether that means there's they are an owner of the protocol i'd argue no but i'm sure they're that uh very smart minds can differ on that but i also think the collateral consequences that mike mentioned uh is really important and i'll stop talking after that but happy to answer questions or

you know talk about anything anybody is interested in but the collateral consequences are things that i think both mike and eric sort of started to allude to but there are a number of different uh consequences that go to the 60 i would actually argue it's more than 60 i think there's been some double counting and some potential over inflation of numbers um but putting that aside let's say at the low end it's 60 percent listed activity a lot of that went to putting people's salaries and salaries of people who may live in countries where you're targeted um for receiving money and people want to protect themselves um people's salaries have been stopped and hundreds of thousands

of dollars of salaries haven't been paid both because they usually ran through tornado cash or they previously ran through tornado cash so a lot of times companies would run um you know types of salaries that they were going to pay through tornado cash to ensure that it couldn't be tracked to their developers and the like for no other reason than just financial privacy you know things we pride ourselves on when we're using cash or even you know using banks and things like that where we expect to have some form of financial privacy i think the other thing uh and a very serious unintended consequences is that as far as i understand it the ethereum two staker contracts were run through tornado cache when they were deployed

and so when we're thinking about so that means that the future of proof-of-stake and ethereum has now touched a sanctioned piece of software in the united states now that happened i think something like 667 days ago so well well before there was ever a sanction uh probably even contemplated but um so it's very different but the way that blockchain analytics tools work today and i know companies like trm and others are working to make sure they update uh and really make their tools even more user-friendly and uh we are big fans of trm and i think they do great work um but you know a lot of times the question is today on the unintended consequences is how many hops away is too many if one

hop is you know my wallet touched tornado cash so now it is a sanctioned wallet uh versus three wallets down for me touch tornado cash and uh is that a sanctioned wallet and so in thinking about the e2 contracts having been deployed through tornado cash um if i am a staker on eth2 when we want to deploy you know proof of stake ethereum have i now been one or two hops away from tornado from tornado cache and what will that mean for my wallet from a long-term perspective so as mike said i think that the the thought process through what all the unanticipated consequences would be was very narrow here uh because it you know seems like a very

severe reaction um to software that is being used for some illicit activity thanks so much rebecca that that's fantastic yeah i think really helpful to think through that there's a lot of nuance and complexity to the the amount of collateral impact here um and so and that's the sort of stuff that we like really need to be engaging as fast as possible i think with the government um and educating him on that because that there's a lot of complexity but there's also a lot of real lives at stake here um so yeah what i'd love to turn it over to in terms of that engagement to folks that have been on that front lines for a long time including the big picture like peter van

valkenberg um so maybe turn it over there and uh and then want to welcome others to just start jumping in and we'll work on it like um nelson rosario and dante and sheila and some others but peter um do you want to jump in and give us a sense yeah sure so we've been um sort of scrambling to work with you know allies folks that we talk to either in the agencies or um congressional staff to just get a clearer picture of what everybody thinks about this and what and and and how they're perceiving it because i think i'm glad we started with you michael um going over sort of like the history of past actions and ari as well um especially sort of so that we can

contrast the blender dot io uh sanction to the tornado cash sanction because that that is that is where there is a big change i don't think you saw a big uh amount of outrage in the crypto community because of the blender sanction because of course it was a custodial exchange i'd add you know these are not just terms that we use in the abstract um as technologists these are terms that in many ways have been used in guidance from finzen uh no less so fincen is of course a different branch of treasury than ofac but in 2019 um mike you know this quite well vincent published guidance that actually clearly defined the difference between an anonymizing software provider

and an anonymizing service provider the service provider being one who has custody or control over the funds during the mixing and fincen said look for our rules which are again the bank secrecy act rules not the sanctions emergency powers rules um but you know a different rule set but a similar issue at least at stake for our rules only custodial only these service providers not software providers are money services businesses and therefore need to register with vincent and identify their customers so this distinction has been in you know in both technical circles where it really matters because we need to know what we're building and we want to build things that are not you know trusted are not are not weak points or choke points

in our infrastructure and they're also distinctions that have been in policy for a long time now the difference between blender and tornado as far as how we now look at this uh sanction against tornado is important but it's also important not to overstate it so i do not think personally although we're still kind of working through arguments and how we're thinking about these things that you can necessarily make a particularly strong argument that you know tornado cash is not an entity or some sort of like unincorporated organization of persons because you know as far as i know blender.io wasn't incorporated in any legal jurisdiction either it was sort of an unincorporated

organization of people working together and obviously there are people who wrote software there's people who did various things and there are in fact people who still retain control of some of the admin keys to some some subset of the ethereum addresses that are listed in the sanctions uh in the in the sanction order and on the sdn list and so you know it's important not to overstate this there's no entity so you can't sanction i think what we're coming around to as we talk with people and we we and jerry and i think about our own thinking on this is we should be very specific there are 45 or so ethereum addresses listed in that in that sdn list and

you know some of them are just donation addresses where you can donate to developers working on on the project those are just you know somebody has a private key can spend those funds and those people are if you were to identify any people the people who would most likely be tornado cash to the extent that entity is liable for anything and therefore deserves sanction i'm not saying that they do but there is an entity there and whoever controls those keys is of course that entity now there are a whole bunch of other addresses and i would say the most deeply consequential addresses to the operation of tornado cash where you can deposit a certain amount of eth or die or usdc get a zero knowledge proof that allows you to then withdraw later

without a link between those two transactions and therefore achieving privacy for any number of reasons for legitimate reasons as well those addresses the deposit addresses their controller or their their operator in the smart contract is set to the zero address so we can know with a great amount of certainty that those addresses the one actually doing the mixing not only are they not under the control of a person they aren't even property and so here's briefly what i mean about that the the iepa which is the statutory basis for the sanctions law allows the president to cite emergencies create an executive order about emergency in this case it's a cyber security order because of north korean hackers and things like

that it actually goes all the way back to the obama administration and then it allows the president to identify persons or entities sanction them and block americans ability or people in the us's jurisdiction their ability to transact with use nullify etc that property and so if we look at this list of addresses after it says tornado cache on the sdn list some of these are the property of some entity called tornado cache like the donation address where there's funds that have been donated to help build a protocol to do things like mixing now i'm not again i'm not saying that that that means that those people deserve sanction for that but in that case there

is an entity and there is property and that address is an alias for that property for the actual ethereum smart contract uh addresses that do the mixing that is not the property of any person we know that because these are these are just a series of ones and zeroes of code running on the ethereum blockchain with no ability to update it to change it to alter it in any way that will respond deterministically to the conditions that it faces in the world you send the right data to it you send the right to it it will do what it's supposed to do and again that controller feature that some or that admin key feature that some smart contracts have is provably set to a null address to the zero address and so

under my reading of the sanctions laws of the iepa i'm not sure it's okay to sanction that thing because that thing isn't property and sanctions are about the property of foreign nationals or persons who've been or entities on the list and that that thing not only is it not property it's not the property or it's not even under the physical control of any sanctioned entity and so it'd be almost like uh you know we we discovered that uh phillips whoever that guy was who invented the phillips head screwdriver uh did something very very bad and we sanction his bank accounts but then we say also you're not allowed to use phillips head screwdrivers anymore

that would be i think unquestionably an overreach of our sanctions authority and i think the argument that we're going to pursue whether it's just in talking with people in washington dc socializing these ideas or possibly one day in a challenge in court is that that's what you're doing you're you're telling people to stop using philips head screwdrivers because phillips did something wrong you're allowed to go after phillips and his bank accounts and you're allowed to tell americans stop paying phillips but you can't tell them to stop using their screwdrivers no thanks peter that that's such a great overview and and i think that's the i mean hopefully that's very compelling to to folks in in dc and i say there's someone in dc um having a lot of these conversations as

much as as fast as possible but i but i but i do think it highlights how this really is different i think there's there's always a measure of controversy about sanctions is in terms of an economic tool and collateral impact but but this really is a different one than anything else and i and i want to first of all this is incredibly overwhelming on on getting choosing between speakers here to get up in as fast as i can because it there's so many great people um so let me let me just actually before i even talk anymore i'd like to ask j ramaswamy real quick to jump in um just because he's done so much legal work in this space as well um jay if you could jump in and all uh and introduce yourself

sure happy too thanks for for letting me speak um first of all i want to make sure you guys can hear me um but um okay great uh so jramaswamy i'm i'm currently the chief legal officer at a16z um before my current role i was at cello as the the chief compliance risk officer um uh for that blockchain protocol and then spent a number of years in financial services um and in the government um working with michael over at the ask for money laundering section but also a prosecutor in the southern district of new york and in the cyber crime section so um uh uh i i have kind of seen some of these issues percolating before and i wanted to pull back for a

moment and maybe put this in a larger context and and then drive the conversation that direction i'm not sure i have the expertise peter or others who have already spoken but i think the context i would put this in is is kind of in the the broader encryption debates that have happened over the past two three decades um and and that i think many are probably familiar with um you know in general the government has historically been very uncomfortable with broad dissemination of encryption tools um and i think what we're seeing here is a clash of two sort of regimes um that are coming to a head in the earlier rounds of of the

encryption debate there wasn't really a set of laws rules and regulations that applied to to allow the government to directly try to regulate encryption and and so what ended up happening was there was different tools that were use there was jawboning there were attempts to pass laws and put in kind of technological backdoors ultimately the comments settled i think on on kind of designating encryption as effectively a munition uh under the ex control laws um and and that debate still kind of goes on now from time to time with law enforcement when there are cases where encryption needs to be cracked but but i

think it's important to see that that larger context because i think what you're now seeing is with the rise of kind of a new cryptographic settlement layer on the internet um those debates are now coming to a head and clashing with what is really an exhibit pre-existing regime that that has existed for a while saying whether it's sanctions whether it's aml whether it's actually kind of facilitating money laundering there's a series of of laws rules and regulations that have existed for the past 50 years and when you start introducing a value layer on the internet and it's no longer just information um

but settlement and property rights and and and currency transactions or financial transactions these two start clashing and i don't think we really know the answer to um how we address that clash you know what what are the rights responsibilities and regulations that that apply when you introduce a value settlement layer on the internet as opposed to a pure information layer and that's where cases like the bernstein case that i'm sure all are familiar with that sort of came down in the late 90s which which made this distinction between source code that was protected speech and that couldn't be um uh uh sort of attacked by the government um and and financial transactions which under these regimes can be um so so i just want to

throw that out there really more as a discussion point for maybe others to take up on and the second thing i'll i'll kind of throw out there is um the other axis to really pay careful attention to is um when it comes to financial surveillance and and the regulations that that are um involved in financial surveillance and sanctions the key thing is that the traditional system actually had property rights uh sorry privacy rights baked into it they may have been imperfect but there are various various privacy protections through the right to financial privacy act um through very strict regulations on whether for example certain information like sars can be disclosed to the public under criminal penalty they were imperfect but they were

attempts to sort of um mediate between surveillance and and privacy rights and but they were all built for a world in which privacy in a sense was the default where things were kept on private ledgers and you had to breach that privacy in order to surveil or to do other things when you move to a world where where actually transparency is the default and that's true on the broader internet but even more so now on on blockchains you actually have to start thinking differently about privacy and very carefully about privacy um where there are potentially technological solutions but the legal frameworks have

to change as well to understand that there are very legitimate reasons in a broad transparent world to have privacy but i don't think the laws have caught up on that side and so i think that as part of this discussion it's important to understand the sort of technical and tactical issues that we're all dealing with now just how do i deal with this sanctions issue how do i navigate through and how do i potentially challenge it but also understand that there's a broader policy context that we're all going to struggle with over the next decade i think to try to understand how does privacy work when one you move to a world of of transparency public ledgers and transparency and and two when you move to a world where um existing

long-standing financial surveillance techniques and regulations clash with an open and permissionless internet um so i i don't think it's very helpful compared to what the other speakers have have said but but i just wanted to throw that perspective out there for discussion thanks jay no incredibly helpful perspective uh i think that's great and i do think actually as you're as you talk about the the sort of encryption wars in history and as well as the sort of open internet um i want to just turn to dante um for a bit because he's he's written on this for years actually um and get his perspective sure um well first of all i hope i can the audio is coming through okay i'm i'm

beaming in because when jill and michael mosher uh called the avengers together then i was honored to be among that group to try to shed some light on these issues so not a lot more to add than what was shared thus far but maybe the perspective i wanted to share was you know at some level to a hammer everything looks like a nail and by the time you know either a technology or an activity hits the raw nerve of national security unfortunately what we're seeing in these ofac sanctions is that the premise of being able to micro target bad actors um perhaps worked too well right the idea that you know there is a cottage industry companies like trm labs and elliptic and many others that can micro target illicit activity

track and trace anybody armed with an internet connected device is a part of that collective witness that makes the net impact of these innovations an exponential improvement in financial crime compliance the same may not be true for the time it hits the national security raw nerve and so i think that's where this case is radically different um and so i think no one on today's conversation and frankly no one in the broader industry wants to see you know these tools being co-opted by uh rogue regimes or nuclear powers that have sort of you know hell-bent intentions on ruining everybody's way of living on the other hand the the point of being able to create a much more

inclusive financial system where privacy innovation inclusion and protecting the integrity of the financial system are not competing objectives is somehow being missed and i think this is being missed for quite a long time right the post 911 financial crime compliance frameworks pre-exist any of the technologies that we're talking about and on the one hand regulators and policy makers talk about this idea of technology neutral activity-based risk-based regulations but what i think anyone on this call who's been in the blockchain domain for a while would understand is that the second you touch on cryptography the sec the second you touch on device-centric banking and software intermediate capital markets d5 and the the the whole domain of

self-hosted wallets and sort of this you know new model for financial services we're breaking a lot of boundaries but in there i think there's also an enormous opportunity and there's also frankly i come from the world of all hope is not lost and that you know in an open letter i put out today and a letter i've sent out to many of you on this call are on this conversation this evening i think this is an enormous important call to action to really underscore that privacy security in a financial life that's device-centric and powered by technology are not trade-offs and we have a window of time in my humble opinion to really drive deep into the legislative conversation that's taking place on capitol hill to the hope and to

the extent that it is an earnest one between chairman waters and ranking member mchenry to get some sensible legislation on what the president's working group has called for on stable coins in there i think there ought to be an absolute um you know protection and enshrined the values of privacy uh in financial life as one of those pillars i also think we shouldn't be completely cynical either and ideally leverage the ongoing work with the executive order and the various rounds of consultations that take place publicly to really underscore the idea that open source technology non-proprietary technology public blockchain infrastructure and software are neutral and you could regulate the

activity down to the endpoint and you could pursue bad actors and give them no place to hide but to effectively ban software would be the equivalent of trying to ban email because you didn't like the message that it conveyed and so we've seen many many cases like this in the past at circle we aim to you know as we've done all along lead from the front try to make this an important part of our policy efforts as we you know go through the balance of this year but that's that's broadly you know i think where i stand and i think the other piece i would just say is the the premise of these innovations is that you could even execute a good transaction in a bad place we've demonstrated this in the past with a well-documented case in the financial times and michael you're

one of our best spokespeople for it of using usdc for transactions in venezuela when the government was otherwise in the hands of the wrong actors and so i think that premise of financial freedom the presumption of privacy and financial freedom and the use of non-proprietary technology for these innovations needs to be continuously defended and vigorously defended and it's now hit this sort of new raw nerve um where you know this cannot become a precedent where the technology itself is what's on the docket thanks so much dante eloquent as always um incredible so thank you so much um i'd love to turn actually to to read hoffman who's on um

which is it's great to have you here reed and i think one of the things that might be helpful you know jay mentioned the encryption wars and dante's talked from a historical perspective to getting it to us now as well and i think given your experience um you know back at e-world acquired by aol and then at paypal and linkedin and just being in this space over the course of of time through the internet and software i would love to get your perspective on on where we are and how you see the priorities well i think it's really great that you guys are hosting this conversation i think it's really important and there's obviously a number of people including so for yourself who are more expert

on the specifics around the cases the legality the the legal mechanisms um you know what do those you know all look like um i think part of the reason why it's so important is because what you really want to be kind of driving towards is where technology um can be modified to be part of the solution so for example you know an obvious thing that what's going on here is in part we do need uh governments having financial measures to control you know sustaining illegal behavior you know whether it's terrorism whether it's rogue states whether it's drug cartels et cetera so you need to have

regulatory participation in these things and then you know and to some degree it goes all the way back to you know prohibition um because it was the only way they could really once you had the the the the alcohol you know uh gangs at such a level strength the only way you could actually in fact really bring that kind of activity and illegal forces under control was to do you know income tax and other kinds of things within the financial system as a way of doing it and so that's part of the reason why they you know regulatory system has to be ingrained into you know fundamental uh financial systems on the other hand of course we want a internet um set of financial systems we want software innovation that's not

contained by um you know kind of uh oligarchic you know banking systems we want certain kinds of privacy other kinds of things and so the question is is you know how do you put these puzzle pieces together how do you assemble them um in in an optimal way and i think part of the thing that is that is great about this discussion is trying to think about like well how does technology bring these things together and change the scope of what is possible i think that's part of what we're what we're looking at when we examine these things and part of the the thing that we need to make sure that we're engaging with you know kind of the various government

agencies in the right way is to make sure that they're not trying to close off good futures while they're also trying to close off bad futures and what are the suggestions that we can make about what the shape of what we can do in the shape of what they can do in order to do that the point is is is it's a technological shape to how we can actually change the scope of future possibility and that's the kind of thing that we want to be speaking with some you know kind of group voices to uh to get it and i don't think saying oh it's okay to let the uh north koreans run rampant because that's an acceptable price that's not the universe that's going to play out so

we have to give them spaces in which we you say here's here's where regulation can play a really good well really good role anyway i'll pause there no it's a great point reid and i just want to hand over to to some of the builders who we have in here tor alex um to to talk about how they're thinking about this and approaching it john woo as well from aztec tour take it away oh i i just really wanted to carry forward the prohibition analogy because this is actually something that i had just finished doing a lot of substantial reading about not because i thought that this was going to happen but because i was really interested in drinking uh so first of all thanks everybody for participating in this as a builder versus a legal expert i mean we

really rely on your expert opinions trying to build the right pathways forward from a technology perspective uh i'm with secret network but obviously like i have tons of respect for every single person in the space building privacy solutions researching cryptography etc and uh the prohibition analogy was was the one that stuck with me just for a moment there because i i remember like historically the reason that prohibition happened wasn't just because there was some sort of ground swell of unanimous public support for the idea that we should outlaw drinking a lot of people actually liked drinking including the senators who voted in favor of prohibition who continued to drink during prohibition because they had the means to avoid the laws that had been placed on other

citizens they were able to essentially pay to not comply and they were the famous you know the the dry senators who were secretly wets uh now what ended up happening the reason that this was allowed to happen was because on the other side of the debate the bar owners and the the people who were also the liquor distributors were not aligned the people in the liquor industry wanted the saloons banned because they only sold beer and that would allow them to do better liquor distribution and on the other hand the people in the beer industry were pushing against the the liquor distributors and the liquor distributors retaliated and started you know like it was a whole mess because there was no alignment on the idea that there were

threats actually greater to that industry than just being able to compete directly with one another and it feels like as a builder in the space for the last few years the emphasis has been on internal competition and not on sustainability of the space so to just see the conversation at least start to head in that direction again where we realize there's causes larger than the individual projects if that ends up being one of the net benefits of this conversation being started by these actions of regulatory overreach then i i see that as the only positive maybe we can take away from this and i would love to see this momentum continue past the twitter spaces and pass the headlines as this continues because what tends to happen in the past is it's out of sight out of mind and

people languish in in jail or in the court systems and we sort of forget that there's real people being impacted by this on a daily basis so i'm just going to echo everything that was said earlier about continuing the fight actively in the moment and really understanding the consequences are today regardless of the exercise of whether this will eventually be held up in courts the consequences are now and we can't stop building or coordinating or co-organizing to reach the outcomes network if we want to make sure that these types of empower technologies are are not banned from that's my piece i'm really enjoying this i'm gonna hand it over to everybody else you can take me down from here but thanks again for organizing jill michael tour thanks so much it's great to hear

from from folks like actively building in this space and totally agree like this this is real people's lives these are real people whether it's people getting picked up it's people in under authoritarian regimes like dante was talking about like this this is this needs to be constantly a constant issue of vigilance um because like this like the sanction that happened this week it could happen at any time so i'm really excited that people are getting aligned and engaging on this and i actually want to turn it over to sheila warren who's here from the crypto council for innovation because she's been doing a lot of the global work and and i i while ofac is here in the us um where many of us are i i don't want to lose sight of the

global picture here sheila yeah thanks michael and for those who don't me prior to um joining the crypto council i was at the world economic forum working uh heading up tech policy so talking a lot about cyber security talking a lot about education around issues around encryption as a general matter and privacy um all over the world um including interestingly enough in china which is all separate conversations another time but one of the things i just wanted to mention quickly and i'll echo there's just so many experts here and so much has really been covered so well um is i think it's the expansion to me what's something i'm watching with a lot of interest slash concern depending on the hour of the day and the month um it's just the expansion of what it means to be a us person so so even leaving aside even the global

nature of a lot of these issues the reality is that u.s sanctions are predicated on the assumption that what you're what you're blocking or banning or prohibiting is the engagement of a so-called u.s person with a forbidden entity whatever that looks like and i think we've had some discussion about you know what is that classification but what we're seeing now is an expansion of that definition in my mind and so historically it was pretty clear you need to be a us person you had a designation you were a citizen this that you resided on u.s soil there was some pretty logical nexus to the united states and now what we're seeing as we move away from uh traditionally understood you know a person as a person is a wallet address right the identifiers that we're using

the idea that some folks are able to you know shift residents and that's going to mean that you're not no longer subject to some of these restrictions is is eroding and it's eroding at a pretty rapid pace i think it's something that's not getting enough discussion um now some parts of the government around the world uh kind of welcome that and others find it to be really problematic and as we're discussing this with various folks all over the place we're finding that the attitudes around this the general awareness of this is not pretty high it's not high but the attitudes towards it are highly variable and highly varied in terms of what it means but what it means ultimately that the coordination that has to happen between governments is weakening it's lessening because any individual government

apologies for background noise and the individual government is going to be able to expand its reach and that could be true not just from the u.s to other places but also you know within europe as well now i think also in context you have to look at the fact that there's a lot of regulatory activity and many folks here work closely with us and with others on this in europe you're seeing this all over asean you're even seeing a regulatory model coming out of australia and a lot of that is focused on defining illicit activity defining it relatively relatively broadly and trying to figure out who gets swept within it so again i think we have to focus on a lot of issues um at their principles at a principal level code of speech you know

technology neutrality these things are critically important but on a practical front i think we need to be observing the the slow but steady expansion of the powers of various governments to pull within their jurisdiction those who wouldn't necessarily assume that they were within jurisdiction and i'll leave it there for now but thanks so much for pulling this together thanks so much sheila and and thanks for doing all that work globally too and we get in a bit of a bubble here but but it's it's everywhere i mean there's people everywhere impacted by all this and impacted by what's going on here um and actually to that i'd love to pull in nelson rosario um and we've heard from from a lot of policy folks and and people that are in

the building space and nelson sort of straddles all of them as a as a lawyer that works with a lot of builders in many different spaces through computer into cryptography and and crypto and i'd love to just hear like what you're thinking about and seeing on the ground nelson sure thanks michael um it's great to be talking with everybody here hopefully you can hear me just fine you know this is i don't have a ton to add uh to what's been said so far but i do think we're kind of getting at what i would say is um the meta stage of crypto in the sense that you know at the very beginning it was focused on transactions it was very much a micro game

and then the industry kind of grew up a bit more and now we're kind of playing a totally different game which i would say is this meta game where the rules that you know people had to abide by up to this point are much i don't want to say amorphous but maybe stricter and they're rules that you know nation states play by and that's just a totally different games so you know a couple people uh talked about that and you know i just don't know how that's gonna how it's gonna play out and uh some teams some teams are thinking about this but the entire industry needs to be thinking about it because you know blockchains

are decentralized but people are not um and yeah it's just this is a very interesting conversation and in a certain sense it's kind of the main conversation right but you know we need to we need to be thinking about the game slightly differently than we have up to this point i would say and that's all i have awesome thanks so much nelson that that's really helpful i i do want to since it's you took it in a bit of a philosophical direction and we have zuko here um which i can't i can't believe i'm i'm getting to introduce zuko but uh i feel like i want to get to him and dive into that a little bit and i also just want to encourage zuko i

want i want you to say your part here but then i i just want speakers to start jumping in here john evan henry elena you know you all have great perspectives as well just hop in uh and and feel free to take it in whatever direction but zuko first please uh the legend himself go ahead but but but but what philosophy um one thing that caught my attention at the beginning of this was a couple of folks talked about uh the national security angle and sort of uh war is happening right cyber war is happening and i think that's a big big gap between some people's like focus and their experience in life and others between whether we live in wartime or live in

peace time because you know when when an enemy army is threatening to enslave and murder everyone you know then you have very different social organization but when you have safety then you can have uh innovation you can build you can increase prosperity and opportunity for everyone you can have civil rights in peacetime and um the i i guess there are two different

large-scale long-term transitions happening in the world well maybe three if we count various wars and conflicts and competitions at nation state level but one is globalization where policies and actions taken by one group or person can impact others all around the world and i was thinking about that because of um the allegation that the cyber thieves of the government of north korea were using this tool and i was thinking about zcash users that i know of they're all the ones that i know of uh you know for people who

reach out to me not not that i can tell anything about them if they don't consensually choose to disclose to me but everyone who comes up to me and talks to me which is a lot of people over the years are just like normal law-abiding small-time people who care about their freedom and their prosperity uh the ones in america are just ideological it's just like the the libertarian communities in new hampshire who use zcash and other such tools because that's their community's values and they feel good about doing that with their friends and family in their community and then the ones from other places afghanistan venezuela russia china and

those people need this kind of security because they're being actively targeted in many cases by um not even bad laws also bad laws but also just by like thugs who are protected by the government and who are using their abusing their position in order to uh rob other people you know so okay what's my point a let's be aware that if you think you live in peace time not everyone else thinks that and if you think you live in wartime that's not where everyone else is necessarily living b the world is changing because of globalization and then c the world is changing because of technology let me just say one thing

about that which is that before cryptocurrency or simultaneous with cryptocurrency we've seen a historically unprecedented transition from a world of of resiliency in which one organization or actor exerting power over others was more difficult there was more friction and it costed more the more people they're going to control and only thanks to information technology starting maybe 20 25 years ago have we suddenly transitioned entire populations into a world where

one company or one government organization can monitor everyone all at once like a billion people all at once and the final thing i want to say is that's already bad enough that's already scary because it's it's a very dramatic departure from every successful human society ever uh so that's already a precarious place that we've all found ourselves and we should be cognizant that if this is not normal this is not uh uh like like your your normal old sort of middle of the road conservatism should not be comfortable in this

situation but the final thing i want to say is we're on the verge of another transition driven by technology where uh the combination of a.i and automation means that not only can a billion people simultaneously be observed and surveilled but also they can be manipulated and nudged and controlled by ais by control over their their possessions and their ability to access things both in the real world and online so there's a big picture and

i remain convinced that in the long run these technologies of both encryption and also of decentralized cooperation are going to prove to be actually the um the solution to these vast risks that we've unthinkingly put ourselves in yeah um and if i can just follow up zuko so jill you did tell us to just jump in here so that's what i'm gonna do so hey everyone i'm alex um i'm the ceo of a project called elio but i'm also a veteran of the us army and i think i want to weigh in just based on

what zuko had you know had mentioned and kind of this concept of you know relatively abstract of you know like wartime peace time and i think uh you know it's important to bring this perspective because a lot of times the justification uh for actions like this and and the justification for this sanction in particular often uh invokes a national defense and you know for me this is something that i spent 10 years of my life dedicated to i've been deployed three times overseas i've fought wars uh against people who are are undoubtedly bad people right and you know no one in their right mind would want to enable them with any tools um you know

let alone enable them to you know to raise money to continue their activities that said i think that this idea that this technology is bad for national defense is is completely wrong-headed i actually think it's it's essential that we have these technologies and that we preserve these liberties for our national defense and the reason for that is twofold so one um and maybe the more the more obvious thing is that you know do we want it from a national defense perspective do we want a country or a system where everything is fully public that any potential adversary at any any time can mine the financial data of every single let's just use in this case some american americans um i mean potentially the amount of information you could

glean just from that alone is terrifying and this was this kind of came up uh i think before when when there was discussions about encryption like encryptions like if you're if you're if you're if your job is to surveil other people you want encryption to be weak but if you want to send secure messages yourself you want encryption to be strong the thing is you can't really have it both ways and so i think having privacy of our financial transactions assured i think is a critical piece of national defense that i i wish people would consider more and secondly and maybe more philosophically like look there's the thing that makes us as western broadly speaking societies different from the people who you know i was at war with frankly is these values of liberty right these are what makes us different and this is what i think i

believe personally very strongly that you know this is this is what defines our values and if we give up these values to become maybe you know for some short-term gain i think we lose sight of the broader picture of what you know of who we are and i think that's that's a really critical thing because last time i checked there's not people rushing to immigrate to north korea there's north koreans who would love to immigrate to the united states and i think that's largely because of the values that we hold and we maintain and we fight for so that's all i wanted to say amen alex will said uh i know i've had my chance to speak so i don't want to talk for too long at this point but things that both do co and it is a total honor to build off of something you said

and alex said you know we've this conversation has gotten very existential but even to take two points from both of them and bring it back to the practical level you know zuko said so many regular people come up to me when we're talking about the 60 or more percent of illicit transactions that are going on on tornado cache that is with individual users for the most part with self-hosted wallets who value their financial privacy so to take it even back to something that both mike and arie started with to talk about well when sanctions are imposed in banks or on countries or something there's all this um preparation done it's usually preparation to help other types of institutions we've sanctioned bank x and so we need to talk to the you know the

other institutions or large uh financial actors who may be impacted by that but this really comes down to how do individuals have to then think about conducting themselves and i think one of the most important things that we can do now is ask for really practical advice right we all have seen the dusting that happens uh where you know small amounts where each were sent out to people like shaq and jimmy fallon and a lot of people in the crypto you know well-known people in the crypto space and there's little to no guidance on what they're supposed to do now and how this sanction will affect their lives so that's really important i think the other piece that alex brought up is yes there are people who want financial privacy and you do not want to be able

to have every movement you've made tracked but the beauty and something i think we like that i talk about a lot when i'm speaking to regulators and policymakers is this is actually really good for regulators right the transparency of the blockchain is helpful and so for people like tierra for actors like trm labs and other blockchain analytics companies the work that they're doing will allow there to be tracing through tornado cache that otherwise may not be able to be done when you have actors like north korea and other people uh laundering illicit funds or the proceeds from illicit activity um and while tornado cash may make it harder there's a lot that is known already about the way that these actors move including through tornado

cash most of it is through the 100 east pool uh just given the size of a lot of their illicit activity and so if you really spur people like trm labs and other analytics companies to do that work the blockchain you know the the transparency of blockchain enabled technology is going to help us from a regulatory perspective long term too kind of contradicts what alex said previously right so just to branch off of the the point that alex made about transparency and security and privacy actually being important from a from a security point of view i think a really interesting non-blockchain example of that was the the strava incident from a few years ago

where it turned out that you know people would just like go and you know log their run or whatever on strava like normal people except that all of that data was being leaked through the strava website and so there were as a result these like high-resolution gps traces of like all of the pathways through all of the us military facilities all over the world and and that's an example of the way that we have this such a um like an interconnected digital world now that any kind of like we're so far gone on privacy that even these kind of like apparently

trivial casual things can actually provide really really detailed information targeting information to people who have i would say like pretty adversarial and and bad intent um so that's just uh branching off of the point that alex made on the more general point about um the collateral damage i would say that as a as a builder right so i i work on building um a private decks um the approach by regulators of like oh we'll just like you know uh arbitrarily and capriciously sanction all of these legitimate people and all their activity with with no regard to

the consequences really destroys a lot of the the motivation or the belief that like working with um some regulatory agency is actually going to be effective right tornado cash in order to use tornado cash as a person you have to be able to know like okay what did i put in what did i get out right so tornado cash already has and this to give credit where it's due this was originally developed for zcash there's already a viewing capability where you can view all of your own transactions you can take that information you can hand it over to somebody else and say look this is all my activity and that doesn't seem to matter right so then like why would anybody

who's actually building something be interested in trying to do you know try to try to make a regulator's life easier if the actual way that's going to play out it's like oh well as soon as we start building a compliance feature then a regulator will say well how much information can you give us about these users and no matter how much you say it's never going to be enough so i want to jump in here next um so thank you again for hosting this and i do want to highlight some all the builders that are here because we have zuko from zcash henry henry from penumbra john we're from aztec um obviously espresso um we are all building tools for privacy and we're all building it for

obviously not the bad actors we're building up for good people um and you know i myself am working on iron fish which is also privacy protocol and so the question that builders have is you know what are the guidelines and regulations to make this right um so basically what henry said um what like what do we need to build in order to make this right because if you look at um the article that came out with tornado um they specifically called it a mixer and if you kind of look into how tornado was built uh to henry's point you know it took a lot of inspiration from zcash which is not a mixer and it does have u-keys and they have a compliance tool on their website um and so they have actually built

some attempts uh to make it more compliant and i think all the projects that i've listed are also building very similar compliance tools um and to henry's point it's like well that's not enough even though we thought that it was um so from from a builder's perspective you know kind of echoing some of henry's thoughts um it is uh scary or maybe even frustrating um to kind of have no guidelines because we do understand that privacy is important especially in this financial crypto space and yet we're not really given uh like guidelines in in terms of how to make a how to make it right um

and then what alex said previously uh really resonated with me so i'm originally from russia a lot of our users for iron fish are actually russian as well and so when you think about like privacy and how does how does privacy actually shape our society and how does it make it better um you know i can definitely compare and contrast how lack of privacy or privacy in the united states have had really long-term effects on the culture of the country and of the society and you know in the united states we have uh we have security and kind of comfort to be creative and to build great things and to build companies and the united states we have this ability to um you know have have the safety to form a team and build

something ambitious um and if you look at countries like russia china and north korea you know more of the surveillance states um we are lacking that culture right and so you know uh privacy is has these really long-term effects that are incredibly beneficial for for the country and for society um and it's it's really worrisome to see that being thrown away like i think we are entering into this ideological kind of um tension between countries like china where surveillance is like the made the main idea ideology and and then versus you know countries like united states where freedom is the main ideology um and yet you know i think freedom and privacy is

like going hand in hand and yet like through action we're being shown that that's not the case and to me as an immigrant in the united states that is very very concerning so i'll pause here yeah elena wanted to build out that this is john wu from aztec network we're also building a private network i i think i just wanted to underscore the importance of dialogue and nuance and social consensus in this debate because i think a lot of what we've been talking about so far has been focused on this notion that some things are obviously bad and that there's this like balance of harm's framework right like we keep hearing the citation that 60 to 70 percent you know of the volume on tornado cash

was listed and first i'm just not sure that's the correct pragmatic angle with which to attack this problem and i'm not sure there is consensus on what is obviously bad we're building you know out of one side of our mouth we're saying that we're building incredibly neutral technologies but on the other we want these to be widely adopted and commercially successful and that tension is being revealed in this case specifically because neutrality is not positive from a sovereign government perspective something that's credibly neutral to a chinese person is not credibly neutral to a western person and so i think at the risk of us creating these wall gardens where we get freedoms that are you know circumscribed by sovereign governments

i think the principled interests of crypto might be challenged by its commercial ones and to talk about the balance of harms framework you know i don't think that is a a values debate it's not necessarily purely freedom versus surveillance and let me give you two topics that are controversial in the united states from you know a rights and and uh principles perspective abortion and guns right these are fundamentally rights debates who has the right to life a baby or a mother who has the right to like a gun owner or a victim and even within the gun debate i think there's a there's this uh at least democratically accepted notion that uh guns are here to stay but even within that rights debate uh there's uh a consensus settlement on what type of

guns are appropriate for instance you're not allowed to own automatic weapons and there's no there's nothing enshrined you know in the second amendment that says automatic weapons should not be allowed that's just a matter of our pragmatic social consensus and a matter of our democracy having a debate and so i think a lot about practical and neutral deterrence where we need to be able to implement practical deterrences which are always going to be fundamentally freedom restricting from a values perspective right something that's totally credibly neutral like tornado is going to have more utility than tornado with deposit limits for instance right um there's there's nothing uh that says that

um uh that that deposit limits are are the the most free thing that you could possibly do and so i think the values debate is actually much harder to settle on and what we really need is a dialogue and a democratic process and i think that is the great disservice that has been done with this with this uh ofvac conversation which is if you if we think about where it originated it originated because of a practical security failure and that security failure can only be enforced by our social consensus within the ecosystem and maybe to be a little bit more controversial about it upstream regulation you can imagine if regulators did a better job upstream um demanding a certain level of security audit

or disclosure about centralization that the kind of like first moving action here which was the hack of the ronin bridge might not have happened and now we have this over correction by regulators downstream um and so really i think the way to resolve some of these tensions going forward and maybe this is boring to say is to have uh to move away from an us versus that mentality um to go back to democratic processes and conversations about between regulators and builders to make sure we deeply understand the root cause and not end up in a situation where we're on different sides of an irresolvable values debate

otherwise we get a heavily politicized um and frankly uh difficult to resolve issue like some of the primary ones i i discussed previously abortion guns in the united states yeah john um i love everything you just said if i could just jump in here real quick i think something that you alluded to um is is a really important point so as as a maintainer of a privacy protocol my head of course went straight to the implications of this for privacy right but i think the issue is actually bigger than just privacy right the question that is going to have to be litigated and you know mean that literally literally but also in a figurative sense

we're going to have to decide whether digitally neutral tools in particular financial tools but just more broadly digitally neutral tools are going to be permitted by our societies by our democracies even though those tools can and will ultimately be used by uh quote unquote bad actors and i agree that there's a real challenge there about deciding who and what is a bad actor so you know i think that's like the point i would just love to to hear some thoughts from others speaking here on that and in particular i would love to hear you know i get the sense i don't know if this is correct or not but i get the sense that if

if you know north korean hackers or some other entity that is worthy of being sanctioned we're using some other protocol not necessarily a privacy protocol but let's say they were using uniswap or you know using something to earn yield or doing whatever that ofac or the treasury would have gone ahead and banned or you know sanctioned those protocols as well and so i i just think this seems like a broader thing it's not just about privacy it's about whether we're going to be allowed to use digitally um neutral tools and yeah it's uh i'd love to hear other thoughts on on that and if i'm right in thinking that it's it's broader than just privacy and this is gus colabella glad to follow

up on that and michael and jill thank you for for organizing this and especially for having uh founders and devs on and focusing on them i think zooming out one of the one of the things that we have to deal with as us persons which is something that we've been talking about since this guidance came out is that if you're a crypto founder in the united states you don't just uh you can't just focus on building you have to focus on uh you know the ranks that are coming out of the sec the cftc the irs fincen ofac as we've been discussing and 50 plus jurisdictions around the country that also have

something to say about uh crypto so uh the reason i think that all of these people are on this twitter spaces right now is because uh the big dog in the junkyard has made its appearance i mean we have as an industry have been focused on the sec for years uh because they're the loudest and the most active and in some ways the most annoyingly vague uh of these regulators but we know now and peter mentioned the statutes before under iepa and under this executive order that president obama signed the power of the treasury department to do things in the crypto ecosystem

is massive uh and this is the confluence of uh very important uh prerogatives uh including national security and privacy and decentralization so that's why this is such a hard issue i think what's a bit disheartening is that uh the treasury department and michael as an alum uh i hope you'll agree with this has been one of the most lucid uh well-thought-out regulators of the crypto space since uh they started wading into this area long long ago and this action is not that

uh we have uh you know we we we have a situation where this order has uh you know named some addresses cited the executive order but no questions answered about how this works uh in practice and you one interesting thing is ironically in a way the protocol worked as it was intended to work right it's still available on the ethereum blockchain people can use it now u.s persons can't use it don't use it if you're a us person uh but the the principle of decentralization is that you know if a

sort of centralized actor in the ecosystem is gone or attacked the protocol still exists but what the government did here is take out its biggest gun it said we're not taking one player out of the ecosystem we're taking every single u.s person out of this ecosystem which is something that as peter explained before we haven't seen before and that underscores the difference between you know the front end which is down in the smart contract which will presumably live as long as uh the ethereum blockchain uh does i mean the main point that i want to uh make here is that this is dangerous logic that doesn't have a limiting

principle attached to it and we've heard a lot of analogies uh phillips head screwdriver and the like if you look at the or the legal justification of all this there's an executive order that says we have a national emergency and the national emergency is cyber attacks by nation states against the united states and when you have a national emergency the president can ask the treasury department to put people on a list who you shouldn't interact with so north korea lazarus group they are on that list they've committed cyber attacks we've mentioned uh ronan and others but what we haven't seen before

is you know when that attacker uses some sort of software to facilitate the thing that uh that the us government wants to knock down that that software itself is the subject of the sanction and i mean the analogy that i use is you know when you think about this hacking group that may have escaped everyone's mind before guccifer 2 which was backed by russia they stole the dnc's emails and put them up on dropbox the bad actor the cyber the hacker the cyber attacker is guccifer ii that's backed by the fsb the tool they use to disseminate and

cause the harm is dropbox uh it seems to me that this is akin to uh to an order on dropbox uh and uh given that there is no limiting principle uh you know we know that many ransoms and ransomware attacks are facilitated on the bitcoin network uh all of this activity that we're talking about today is on the ethereum network so there needs to be some guidance some line some education i think that we as a as a policy community bring to bear with uh treasury and the rest of the us government

to uh first of all understand what they meant i'm not convinced that given the um the tweet from the secretary of state uh and given the fact that in the order announcing this in the press release announcing this the treasury department said essentially that every dollar that has flown through tornado uh that has flowed through tornado is money laundering both of those things are wrong right uh and that they compared it to blender io and people before uh uh on the call of said you know all the reasons that that's different so i think that uh there's there's a large opportunity for education here

and the main takeaway is that we have to uh you know work ourselves on privacy protecting solutions at the same time that were that were educating the government on ways that they could you know satisfy all of these national security interests including privacy through a more rifle shot approach rather than uh rather than a blunderbuss approach and michael i'll leave it at that sorry if i could just jump in here real quick um so i'm a little worried that we're in a bit of an echo chamber because this entire channel is an agreement that the aggression towards tornado cash is unwarranted and certain

in certain arguments um and so my my i guess open-ended question to maybe some of the other speakers here is um how do we how do we interpret this because it doesn't seem to matter right like like we might have these great uh opinion pieces about like why you can't prosecute code or why it's unfair um but the result is still the same and so i guess my opening question is like how do we go from here well anna thanks i want to jump in here um so my name is jim greco i haven't spoken yet uh i run a quantitative hedge fund we only re we only trade uh cryptocurrencies it's called uh f9 research i also sit on the board of gemini trust company

uh gemini is a u.s regulated exchange by the new york department of financial services i also lead their sort of their risk and compliance committee so a lot of these issues are kind of like near and dear to my heart and um you know ultimately like i think that this is actually a very positive development for the crypto community um i it's certainly painful for certain participants you know particularly for builders or for users but ultimately i think it's going to make a much healthier ecosystem and just to maybe give a little practical background

you know we raise most of our money in f9 from institutions um and once they kind of got comfortable with our quantitative you know trading models and how you know what our strategies were you know they were really interested in like hey am am i going to invest in you guys and are you guys going to end up on the news because like you're helping to launder north korean money um and i think the north korean example was actually specifically mentioned during one of our uh institutional investors due diligence meeting and they're very interested in sort of like what is our compliance program for

how we evaluate new exchanges to participate in how we evaluate new d5 protocols and they're extremely extremely nervous about this because like crypto is it's brand new for them right you know and like the last thing they wanted they're taking a risk by sort of getting involved in this space at a very early stage at least for an institution um and then you know they don't want to blow up in their face um and so they put those requirements on the funds that they themselves sort of invest in and so we you know we i think there's a fun like we think a lot about this and um you know i one thing that i was rather shocked by today is like

when earlier somebody said that 30 to 40 percent of the activity on tornado cash was illicit activity can you imagine the reaction to a bloomberg headline that said 30 to 40 percent of bank of america's activity facilitated terrorism or facilitated money laundering uh the reaction would be insane right there would be you would have people hauled off to jail the following day um if you think about just a you know like one of the examples of this is like hsbc right which was which facilitated

money laundering for the sonola drug cartel it was hundreds of millions of dollars but in like the grand scheme of their flows ever you know every day which is hundreds of billions of dollars of flows like very very small percentage and yet they were like you know this was a huge huge story um they faced significant penalties and if not for i think the british government stepping in probably would have been disbanded as a bank at least in the in the united states and so 30 to 40 percent is a is a very very large number and you know i just because something has legitimate use cases um i think we're

i think we're kind of all fooling our like fooling ourselves if like we think that makes it okay um you know to to be supportive of right like i mean these are you know ultimately like the the organizations that are using tornado cash and other or other products like that these are not like these are not good guys like they're they're laundering hundreds of millions if not billions of dollars to finance uh you know to finance terrorism to finance you know whatever north korea is doing and so like i think that we need to you know we need to seriously think about that if we want this space to grow beyond just a small group of like of

technologists and sort of libertarians if we want blackrock and we want you know goldman sachs to be sort of involved in this ecosystem and we need to figure out a way to ensure that products like tornado cash if they do have legitimate use of cases can filter out a lot of the um a lot of the you know what is the thirty to forty percent of or with activity um so i'll i'll go ahead and stop there but like you know that that's that's sort of uh at least you know my you know as someone who runs a hedge fund who deals with institutions every day

you know this is something that i think has has been top of mind for us for a very very long time and i think we all want this industry to succeed but you know if you know we we need to figure out solutions here for uh for problems like tornado cash so thank you for getting us out of the echo chamber gym sorry let's go back into it with uh with abby maybe no but uh in in all seriousness abby i know that that you and your company have been um kind of at the center of this conversation this week uh from a different angle that i think is important to bring up so let's go over to you but i am also grateful for jim's perspective and and the offer of the institutional perspective here

as well yeah thanks so much um this has been a really great space uh so many thoughts um listening to everybody and it's been great to hear from people who have this institutional and policy perspective i'm coming at it from the builder perspective um i'm working and contributing to the radical project which is its goal is to build a decentralized alternative to code collaboration um and so i can talk about i think i just want to add a couple comments um to bring it back to like what can we be doing now and i think it's very clear that every um crypto organization every dow needs anybody who really uh is building in crypto needs to be proactively strategizing around how they can best

support the development of censorship resistant privacy preserving technology uh because i think uh i think to a lot of people it might seem like crypto is like finally like waking up um we're getting out of our own echo chamber um because uh censorship of free and open source software and privacy preserving technology has been happening um like it's you could consider this tornado sanction similar to how russia um banned tor network uh last year and and how tor has been having to fight against russian censorship um for a while now um even the arrest of the tornado cash developer uh has similarities to um when tor uh exit relay operators uh have

been you know arrested by russian authorities uh for just operating a node in the network and so i think that um the this blunder bro what was this word blunderbuss i forgot who said that but i wrote it down because i love it so much but this like blunderbuss approach that is like misinformed um this misinformed approach to censorship is incredibly dangerous because what we're seeing is we're seeing technologies um uh being attacked we're seeing code being attacked and so there's we've talked a lot more about that so i won't really get into kind of like i guess the philosophy behind this we all agree that this is uh not great um and i think that we really need to be building more resilient tooling um to secure the free and open source web that

uh we all say we're building towards um and so i just wanted to highlight a couple of interesting things that also came out of this is that a way to build resilient technology is uh not just in the technology itself but build more resilient to the build more resilient tooling that you're using to build the technology so um along with the tornado cache sanction we saw the github org and the personal github accounts banned um so developers who were contributing to the development of the project um immediately fell under sanctions um github was acting actually outside of its mandating mandated sanction ruling as we'll see actually a lot of platforms uh not just do the minimum but do the maximum to protect themselves which is we understand um

especially when facing such explicit legal action um but this is the wave that's coming um and we need to be building more resist resistant tooling um around these open source ecosystems that uh you know were were uh trying to build a future around and everything so um i i think that like one thing is investing in the development of more resilient tooling so i mean this is a show for radical because radical is an alternative to github um but also discord was taken down the tornado cache discord was taken down use matrix right discourse was taken down and that one is also really surprising because you can actually self-host your own open source ins uh instance of discourse right what's the solution there and we

actually really need to be actively thinking about how we can build more technically socially and politically resilient open source ecosystems not just the tech itself but also the ecosystems around that and that takes coordination and that takes um you know uncomfortability as well and it takes investing time and using and adopting these technologies um because this is i really think just like the first drop of the waterfall um and also coordinated group effort we keep saying we need to like rally together and all of this um and like a good example that i'd like to pull from um is you know how did the tor network like circumvent like russian censorship when it was banned last year they did an open call to action for community members to

be running tour bridges right um and there was an open campaign that was like well documented well communicated of how uh to rally together to serve you know the citizens who were being uh censored not only in russia but in china iran kazakhstan right um and these community initiatives um are uh can come with technology themselves and this is what we need to be rounding uh uh uh like you know kind of surrounding ourselves with and and uh coordinating within is that you know after the someone said after the twitter spaces and um you know and the hype goes down like we still need to be building the technology um and i'm just like this is like an open ask i know it's what we're doing at radical we're currently kind of like readdressing like where do we need to go

get to um to become truly censorship resistant privacy preserving collaboration software um and i think there's uh this is the time for people to rally together because um i i really don't think it'll stop here so that's my little rant i'll stop there abby thanks that was a great maybe palette cleanser after uh going down the institutional side with with jim and again i think that the personally i think the the work you're doing is super important but i'm just looking on twitter and uh jim the reaction to your perspective is um you've really touched a nerve it seems and so i do want to go back just for a moment to this question of uh you know what what do the needs and wants of

institutionals play what role do they play uh in in terms of the direction that we should be kind of building and going uh you know what are the considerations that that we want to have here um as as we are uh you know moving forward both as builders and policy makers and also what are the risks of kind of over compliance so i suspect that a lot of people have thoughts they want to jump in with on that um so i'll open the floor back up uh i wanted to say i really enjoyed hearing uh uh contrary perspective from jim especially i was interested in the fact that uh the regulated exchange gemini that that you sit on a board of is one of the

strong institutional supporters of zcash i think that's interesting because it points to basically we have conflicting values in in our community and in our in our country and in our world but they're not they're not totally conflicting they're overlapping um the a lot of the more legalistic and constitutional analysis that we heard from these experts early on in this are basically pointing out that the ofac action is not likely to accomplish the the goals of the us government and jim's point is that having

terrorists and uh foreign enemy states and rogue states um uh empowered or benefiting from these tools is not what anyone wants and what i found the most inspiring so far in this conversation is what alex said earlier which is that freedom and uh uh innovation that comes with freedom those are amer that's america's strength that's america's asymmetric advantage versus uh other states and that's also america's values one of the things uh started in

interject but you know i worked at the intersection of both institutional markets and d5 i had the privilege of working with rebecca eritig at harvey on decentralization further but also ave arc which was one of the first institutional focused d5 protocols now i think one of the things that we haven't discussed is the fact that the developer alexey petzer was arrested today in holland and i think that brings a bit of a chilling effect but it also brings up the question of how decentralized our technology is and then further what decentralization really means right so i think hester pierce in her previous speeches has talked about uh decentralized name only or dyno and i think we see a lot of examples of

you know dyno protocols where developers or stakers or significant beneficial owners have quite a bit of influence in decision making on protocols and i think that's that needs to change right so if this chilling effect has a any positive outcome then hopefully it'll lead to further decentralization of the stack we've built right and if you look at ethereum i mean at the end of the day you can build decentralized protocols on it but if you know three u.s based entities have a significant amount of influence on which transactions get included in the blocks then i think we're building decentralized technology on a fairly centralized stack the other thing uh about you know so decentralization has always been a bit

of a legal defense and even before you know there was blockchain and crypto we had napster and we had bittorrent and bittorrent uh changed snapster to remove all the servers right so that there was not one person or entity that you could point at and say okay you are actually you know stealing music or assisting in piracy and i think with blockchains also we need to go there the other thing uh so so yeah let's remove dinos let's decentralize the stack let's you know at some point they'll be piercing of the tower wheel and then the you know potentially significant token holders or developers that have significant influence that are claiming decentralization is legal defense will have personal liability in fact over the last few days what we saw is that you know there was a

bit of a revolutionary approach on twitter and people were saying okay we can just fork uh you know tornado cash but that's probably not sufficient right because i mean if there is personal liability as is the case with the potentially with alexey pizza today then i think that sort of revolutionary approach doesn't work and we have to take this in court and essentially also make sure that our own house is in order and we are actually decentralizing the protocols the last thing i would add is that there is a web three hypothesis right so the web three hypothesis hypothesis is that this is essentially the internet and uh you know this is not actually financialization we are not actually dealing with money here and we should have the same sort of credible neutrality and you know the clinton doctrine uh to blockchains that we have

to the internet but i think this will fact action also opens up the debate about whether we are really dealing with the internet or we're dealing with money and what what that means for web 3. my my summary to all of this would be that you know we really need to decentralize in the same way that tour and with toronto decentralized we need to move away from dinos and that means giving up some of the profits beneficial ownership of tokens and you know some of the some of the abnormal profits that we've seen in the industry but if you're not decentralizing you're not gonna have web three so it's quite you know we need to be honest to ourselves so i'd like to time in on just load that topic a little bit kind of where the mother beats the road for entrepreneurs and

operators so um my name is ryan singer i've been an entrepreneur and investor in the space since i co-founded the first institutional bitcoin exchange uh winklevoss bought bitcoin from me before they started gemiini uh same with pantera and the others uh we were an operating bitcoin exchange at the time the fencing guidance came out in on march 18 2012 or 2013 excuse me and um and it was uh it was kind of a shot out of the blue and i think there are these two approaches that are that we're talking about as being in conflict but uh i think zuko really had a point when he said that a lot of us have a mentality of we've been building in peacetime

and when we're building in wartime we have different goals and different priorities so at trade hill we were a registered vinson money services business we had an aml program we had a koc program we talked to regulators all the time but also we had our server set up in our server cage so that there was a photocell where if you open the door it would cut power to the cage and you would only get encrypted disks and the reason we did that is because we were very aware of law enforcement corruption in the space and we actually did not believe that a third-party warrant would be sufficiently independent sufficiently tested to to be safe with customer funds so we uh so so

we literally we we proved our cage against uh against people coming into the data center with warrants while we were at an active compliance program while we talked to the regulators every day and so i think a lot of people in the space need to think about not just decentralization and architecture decentralization in um and proof of space i actually improve of um of stake but i think just in general if we live in a world where they can take down uh github of politically interesting code and we live in a world where developers are are getting arrested uh we need to

we need to act like we live in that world and uh we need to think about how do we balance compliance and security in wartime and how do we make sure that um that government enforcement actions go through a process that's more like the freedom and rule of law we thought we lived in in the u.s and less like the um the surveillance and rule of thugs that we discussed in the soviet union i think like one one of the things here that gets lost is that you really can't do decentralization i think there's a little bit of a red herring and that's because ultimately what we

care about is the on-ramps and the off-ramps for us dollars and that's always going to be highly highly regulated it's going to happen through centralized exchanges and the reason that like even before this sanctions designated list even before this that like exchanges would not accept dollars laundered through um longer through tornado cash is because like there is this fear that this would happen right that eventually like all these other like everything that the exchange owned would get tainted by some future sanctions actions and so

like i think like is there's only so much you can decentralize and you'll never be able to decentralize the u.s on-ramps and off-ramps um this this the second point i wanted to mention is like there's a few comments about like oh like why do we care about institutions right like we're not building this stuff for institutions and like institutions ultimately at the end of the day like represent or invest on behalf of real people right these are um firefighters pensions these are your 401ks these are even like the etfs that you might buy that represent you know different stocks and so

um there's only going to be a very limited number of people who are going to own their own execution and open their own you know crypto account and put there's only so many assets are going to go through that the vast majority if we fast forward 10 years of assets that are involved in the crypto ecosystem are going to be done through institutions right and we saw this blackrock news just basically we've seen a whole bunch of announcements coming down the pipeline and so like if institutions are going to be involved they're going to be very very concerned about um ensuring that the money that they manage is not involved in

you know like uh facilitating terrorists or rogue states uh actions right and so like you know again this is this is just like i think a problem that we're gonna have to solve if crypto is going to grow beyond sort of the you know what it is today right and i think hey i do my whole career is involved in crypto so it seems like it's everything to me but at the end of the day like we're talking about a market cap of 1.2 trillion dollars across all coins um that's that's less than the size of i think four or five different u.s companies it's a very very small you know small ecosystem and if we you know i personally think like

it's going to be a 20 trillion dollars it's going to be a 30 trillion dollar business in order to get there like you're going to have to get institutions involved and you're going to have to have you know proper aml ky t let's call it know your own token uh you know on the blockchain for it to survive so so if i could jump in for a second i mean i think um i think jim part of the um reaction to what you're saying is that it that you know i think it makes i think it goes against the ethos of the space right the initial um sort of uh cypherpunk ethos of the space but i agree with your point that for um

crypto to really grow and mature it's it's going to have to address and deal with these problems that means at a technical level right like doing what is possible while remaining neutral to prevent um you know illicit use where where it is possible without sacrificing on those values that people in crypto uh hold dear i think the other side of the coin is to convince um the broader public our legislators etc etc that those values are are good and important and to convince them that these that they that they also want these technologies to exist um and that they also need them i wish that we lived in a world where like to zuko's point earlier you know he stated that our kind of like

bottom-up freedoms are what give america and other you know quote-unquote western countries our advantage in a lot of ways i agree with that i wish we lived in a world where we could kind of lay out those principles and people would go uh hey that makes sense and yeah we should we should let these technologies exist because because of that um i'm not sure that's realistic and i'm not sure that those arguments are going to convince enough of the public um and and and you know our lawmakers and whatever to to to make walls that allow these technologies to exist even though there will be to some extent some quote unquote illicit use of these tools i think if we want to get people convinced that they need these tools and

at the severe risk of being too cynical here i think fear is very um i think fear is very motivating and very convincing and very persuasive um and suzuka's earlier point of like wartime versus peacetime for most of the public they're in a peacetime mentality and so they don't see why these tools are valuable if you live in a different regime a different place you might understand that or you almost certainly understand that much more clearly most americans and westerners broadly aren't in that mindset and so but but that doesn't mean that those kinds of bad things don't happen and that these tools aren't valuable to prevent them and so i you know i think it's fair game to try to get people into

that mindset tap into their fears a little bit whether those fears are are reasonable or not because there are things to fear and these tools are important and will be needed i've um i've mostly tried to stay out of the way here and just just let other people talk and just kind of facilitate but i think that one nuance that's being missed here at least from my perspective is that crypto and blockchain products don't need to mean only one thing it doesn't need to just be for institutions it doesn't need to just be a tool for freedom fighters or whoever it is you know there can be a spectrum of products that exist and if there need to be products and

playgrounds that exist for institutions to be able to use and leverage the tools that we're building and i think to john from aztec's point earlier you know if there need to be companies that are putting kind of their commercial interests first and seeking to appeal to whether it's mainstream individuals or as jim is speaking to institutions then that's fine that's great that doesn't mean that we can't also have existing within the crypto ecosystem and and existing on blockchains other products that whose goals are totally different whose goals are not for big institutional players to be using them but are instead tools of actual

freedom and i think that that is a nuance that's being missed here i think that for many of us who've been in this space for many years you know we're used to crypto being a a small niche industry um you know of a few hundred people and have a handful of tools and and we all kind of i think came into it from similar ideologies but we also need to accept that that's not where we are anymore that we've matured away from that and that it's okay for there to be different approaches different things where i will disagree with jim's i think that jim is suggesting that you know it is a healthy move for the industry to uh to be moving in a direction where

it's possible to have just code on on the sanctions list because that makes institutionals more comfortable i think that that is probably misguided um but i do think that it's fine for us to be building tools that are geared towards institutions and on a very personal level you know not speaking on behalf of my company or anything here but like on a personal level i'm also pretty comfortable uh with the tools that are for you know kind of the freedom fighters and are geared towards censorship resistant to also exist um so i just wanted to throw that in but opening up the floor uh to to those who want to hop in i personally would love to hear from amin i know you know you're someone who's again one of

the og's been building in this space for a very long time but anyone who wants to jump in here please hi jill thanks for the intro this is a mean uh i'm the ceo's bank chain and i made molok down co-founded the rye stable coin i also gave tornado their first grant i remember meeting alexi kid that just got arrested and helping them get excited about building this cool new tool to protect personal privacy so i feel uh somewhat remiss and fairly emotional um so uh yeah i have a couple things to add um i see a lot of sympathizers for the regulators um maybe i'm uh maybe there's a few and i'm

just paying more attention to them but i don't necessarily think we in any sense of the word are the good guys i don't think that's a safe assumption to be able to make over a long term i believe that the currency scam that every country imposes on their citizens is getting called into question the dollar ponzi of the last 50 years since we left the gold standard is not american it is an abomination we fight wars like we did in iraq not because of weapons of mass destruction those were never found but instead to prop up the petrodollar so we fight wars and we lie about it in order to prop up the ufc our money is blood money and we're addicted to it none of this uh is like that crazy uh you can see my tweets there's explanations for all this uh but

uh for whatever reason we think that you know we are immune to consequences i saw jim greco's tweet that oh you know you're not uh you decentralize something there's still gonna be consequences well it's like maybe if the guy that you elected that committed war crimes you know or maybe you didn't vote for him maybe you're still gonna suffer some consequences for it you know maybe the rest of the world is going to see our u.s dollar ponzi and the only way it's going to end is uh with a war and maybe if we don't have the political will within our country to end it ourselves then we're sort of asking for it and the way i see everything going is that it's every citizen on the planet every

individual person against every government on the planet uh israel just banned cash above 1500 every country will go this way if we want to preserve our access to permissionless or decentralized finance or financial privacy we have to sue the government uh to protect ourselves and we have to design our systems to survive a u.s sanctions when u.s citizens can't suddenly can't interact with these systems at all this is the inevitable conclusion somebody this nikolai had a great tweet it's like what stops the cia from using your protocol for terrorism and then accusing you of being a terrorist nothing absolutely nothing none of our systems are set up for this and so if we have to uh if we want any chance at being able to use things that are permissionless or decentralized in the

inevitable long-term future we have to fight this today [ __ ] goldman sachs [ __ ] jp morgan [ __ ] the institutions they're never relevant anyway they're just gonna prop up the same us dollar ponzi and fight wars uh to defend it so i don't give a [ __ ] uh thank you for my time coming in so strong okay yeah we've got multiple data points outside of the overton window of this discussion um i was going to say that like radical technologies take society decades to ingest and adapt to and there can be a lot of harm and pain and destruction along the way um

the the thing i'm most concerned about is existential threats to our whole society we have rogue states with nukes um we have the the very it's not even a risk anymore we have not only the risk but the the actuality of the permanent tyranny coming into effect the tyranny that can never be overthrown or can never decay or can never um uh uh what's the word resolve itself reform can never improve because of this new information technology which gives the tyrants sort of infinite and permanent control and we also have this emerging

threat of ai's um performing more and more effective social control on whole populations so what i'm interested in is resilience and the ability for humanity to survive and learn and grow and we need that both at a technological level from encryption and decentralized cooperation and we also need it at a social level from people being able to disagree and learn and to uh do their own things even though they hate and disagree with each other's opinions so thanks jill for giving us an

opportunity for one of those last things right here i'll just jump in here too is that i think that this isn't about bridging the gap i think that this is about preserving the right to develop technology that protects our online rights um and that means um even when it's tough to invest in the resilience of the technology that we're building because sure you might some people might think that there's inherent regulation that will apply to crypto technology if we want to receive the institutional adoption that will make it i'm relevant i'm using air quotes but at the end of the day

the point is that we can't compromise on our online digital rights to develop technology that protects our uh uh digital freedom for the reasons that zuko just laid out is because again this is a drop in the waterfall that will be the way that nation states and institutions wield technology and to enact different forms of social control and if we aren't preserving our right to develop technology that protects us in those situations um as a compromise uh to regulation then we

are not contributing to a future a resilient future that we can exist in and i think it's just uh at every decision ensuring that that need for resilience is being taken into consideration because uh everything will be fighting against it whether that be uh regulators or whether that be venture capitalists and the point isn't like jill i really love what you said there's room for everything in the ecosystem there is room for everything but that means fighting against actions that try to restrict um and ban uh the the right to develop this technology and i honestly think that that's what we're

seeing in the tornado cache sanction um situation quandary right now and um that's where i disagree with this all-in-all approach that um well you know this is gonna happen and so we gotta just find a way around it we need to find a way around it but we need to find a way around it that is has ideological values embedded in the approach to ensure that we're um protecting our digital freedoms um and i'm hoping that this will be a radical turning point for many people who are in this space uh to recommit to that vision um and and do it with intention um because as you said this is like a longer battle that we have out of us hey i'm jack newton

um thanks for hosting this and thanks for everyone's comments this is something very near and dear to my heart uh just a little background on me i worked at wire for two and a half years it's basically you have used their on-ramp it's b2b and so uh we've dealt with a lot of regulators and all of all of this that's happening and i i think you know at this point we see the the cards that the government is playing and we see their hands and i think to talk about solutions and like what we can do to get ahead of this i actually think we have to front run the regulators um and start building compliance that adheres to certain standards of the government but also maintains uh privacy

for for us i think i can't remember who was talking about their data center uh with like a tripwire to basically ghost the data but you know if there's a way you know i've been thinking about this like for basically i think d5 front ends could be regulated right but what the government is doing by sanctioning smart contracts i think that's that's the huge issue here i think i think front ends should be regulated to some degree whether that's a zero knowledge proof um wire was going to do a yes compliance token there's a ton of options but i i think there's going to be some type of on-chain compliance but um the real battle that we have to fight here is is protecting yeah our right to to build uh openly and freely but

um yeah i have lots of thoughts on uh i guess identity and and regulations and if anyone wants to chat about it hit me up but i'll pass it over to henry yeah i i you know counterpoint is that like for me i the idea that the the conclusion from sort of seeing this this totally like nuclear option um sanctions and then seeing the the arrest of a an open source software developer um the idea that the the lesson from that is like oh well we need to to build compliance tools is really incomprehensible to me like we have all of the like

if you just think about what it means to build a useful blockchain tool as part of that a necessary part of that for it to be useful is somebody has to be able to make their own activity legible to themselves and so it's just a basic operational requirement of building a private tool you end up with exactly the accounting information that you would need to hand over to someone to say look this is all of my activity right in exactly the same way that like you know a company can like turn over their books to an auditor and tornado like i feel like i'm going insane because tornado cash already has that

like you can see all of your transaction activity and you can prove that like i didn't commingle any of my funds with north korea and none of that matters right like the regulators don't care they just went and banned everybody including like totally law-abiding us persons who are now like out you know potentially like tens of thousands of dollars or whatever right so the idea of like oh well we'll just like imagine what the requirements of a regulator will be and then we'll like build in like a compliant thing a compliance tool into our protocol based on our imagined idea of like what a regulator might want is like not only you know to me is is a

politically bad move but it also just seems like a really losing strategy because the regulator doesn't like there's there's zero evidence that any of the regulators actually care so why would you like i mean beyond building the tools for an individual person to understand what their own activity is and to be able to do accounting so they can comply with their obligations right like you know i can build a list of all my transactions my trades i can compute my tax obligation and then like you know send the report over to the irs and if they get mad i have some you know documents to demonstrate the idea of like building in protocol

level controls beyond that in a in a context where the regulators have already demonstrated that they have no interest in like uh mitigating collateral damage just seems bizarre i wanna i wanna call on michael uh to hop in here because i know michael and i know that he'll just stay out of the way until someone actually calls on him and maybe you can as someone who you know was at treasury or the acting director vincent maybe you can speak to uh you know why we as industry should be motivated to uh be thinking ahead and and um and to be engaging um and and not to just throw in

the towel here and say you know there there's no hope yeah thanks jill i'm happy to jump in sorry there's so many amazing people still in the queue that i'm trying to stay out of the way um but i think it's a lot of great points that henry brought up and i think but but i do want to go back to some of what abby was saying and and jill what you were too about the spectrum of opportunity that we want to be building to out there like there's certainly some really niche command line interface technology out there but i think we want to be able to build to things that that lots of people want and and so that we're and can use like functionally use and not just lose their

value lose your assets lose your money that sort of thing and then and then be in a position where there's an ability to keep building without this sort of fear of sort of the arrest in amsterdam which which i don't know any of the details on so i don't know how related it is or or if it was just pushed forward by by the public listing or what it was i don't want to speculate on that but um but it's regardless it's a chilling effect and it's scary and i and i'm a little like we want to have the spectrum i think of strongly resilient technology that's the whole point of this um is is and that's a security for every individual that's why we have encryption and we've had encryption and to some degree as many

people said this this decision has been made that that encryption is legal and it has to be legal because we need to be preventing victims not just chasing afterwards and and that's the point but we also want to have a spectrum of options and the ability to build and i think to do that yes we can just build go completely decentralized as fast as possible but you see with the arrest like people can be found and we and we shouldn't get into that posture as much as we possibly can other than authoritarian regimes and to do that i think it is getting some alignment with governments around the world and educating them uh and and certainly they have an obligation to be more engaged in learning

i think the sec has recently been a lot tougher to deal with on that but at least from a fincent perspective we were absolutely clear in 2019 like anonymizing software is not an msb it's not an aml issue like we do not regulate you um period that's software and that's developers and i think helping get so i want to also not treat regulators monolithically in the same way we don't treat industry as like every industry is is celsius or or goldman sachs or whatever it is i think it's getting that spectrum of nuance for everybody out there and and educating on that and then also building things that just lots of people can use and want

for whatever their spectrum of comfort is like i think some people are they're in an under an authoritarian regime and need absolute hard coded very difficult to use but difficult to break stuff and and having people that it's more of an ipod and uh and it's and and and there's an option for lots of people to do that and then you're then you're bringing people along and getting creating technology that legislators that want to get elected can't can't be trying to crush if they want to get elected like i think we need the resilience because you can't trust that every system is going to work and a lot of them are frankly not working right now um but we also it can't just be battle mode

like it's battle mode in the planning but it shouldn't it can't be battle mode in the in the in the subsistence long term i'm just gonna jump in and add something about the law and holding it in high regard uh slavery was legal the holocaust was legal uh if you were a good rule following citizen you would have recommended that slaves not run away if you were a good uh law-abiding german citizen you would have helped direct jews to the most you know close uh concentration camp uh there are times that laws go poorly and the only defense is people breaking them uh and a lot of lives get destroyed

in the process and we call this progress it's an aspect of moral entrepreneurship you breaking stale laws is a public good unfortunately we don't reward people for it we punish them all the same but and uh to be absolutely clear i'm not advocating for any us citizens to break any laws uh regarding tornadoes and sanctions and all that we saw how that went with virgil still in jail he's going to be in jail for a while that said i don't see any other ways that this solves because the people who think that we're going to argue with the government to get privacy in our financial system are hopeless that is a futile effort they will mandate that we have to put a back door in every privacy system and if they

haven't yet it's because no one uses it no i think i disagree yeah yeah go for it go for it go for it just the last just the last detail that that it's hopeless i i really disagree north korea will play million dollars into z cash it would be banned tomorrow don't give me that [ __ ] i definitely agree that it's hopeless in china currently uh i don't think it's hopeless in the united states i think we do have rule of law we do have the constitution or at least the first and fourth amendments i think those might be the only two amendments left standing but anyway um and uh the legal experts who've spoken in this conversation really

if you if you listen to the details they know in many cases because they were previously uh on the government side of it there's the interpretation that the sanctions and the arrests are just the government wants to ban privacy i don't think that's necessarily accurate it could be true it's true in china or it could become true in the future um but i don't necessarily think that's the way it's going to go in the united states like said earlier is that freedom and innovation are not only american advantages but they're also american values i haven't seen a single cbdc report that suggests putting privacy and actual

anonymity in to any sort of financial system all i've seen is more and more cash getting banned uh you know uh like used by criminals and when i saw that zca uh not zcash the coin uh electric coin company or which you were the ceo of uh the statement that you guys put out after tornado is basically like distancing yourself from this entire thing saying we're goody two shoes nobody uses z cash for elicit anything uh and that just seemed like the weakest possible response because the second anybody does use zcash for anything provably illicit you're in the exact same boat as tornadoes so welcome to the party if anybody wants to see the statement we

put that it's on electriccoin.com i also think that look i think that we're starting to talk about this here in this conversation and with pretty blunt tools as opposed to getting into the nuance and so i just want to encourage a little bit more nuance here in this because i think that again i'll go back to something that john wu from aztec brought up earlier which is that their ideological incentives and motivations that we all may have and then they're also commercial incentives and motivations that we have to be real now exist within this industry right and i think that it's naive to try to think that we can go back to just being uh this sort of ideologically driven you know band of sort of neo-cypherpunks

right you know the industry has moved past that we are in a place that's beyond that and uh personally i think that it's fine for there to be a diversity of incentives both commercial and ideological that can coexist all leveraging and using this technology i don't think that it's that black and white um i i would like to hear from again some of the the legal folks on stage here maybe on on some of the implications of this and what maybe for those who are more kind of ideologically driven and and less interested with what i'm now going to call the jim greco approach of collaborating and working with institutions and being a little bit

more friendly on that front um you know what can be done what are the actionable things that that we can do to engage government-engaged policymakers to make sure that uh you know the right uh stories are being told here to protect again what i on a personal level will characterize as kind of freedom preserving technologies yeah let me just jump in really quickly jill and then i want to turn it over because there's a lot of other folks but i i think i'm i think i mean we're more aligned than it may seem like i'm not suggesting people go along with slavery laws or anything i'm just suggesting that that we do need to fight these in the legal context not just technologically it's got to be both

um to get the slavery laws overturned or whatever it is and if and we if we peop if the people fighting the early encryption debates that just said well like [ __ ] it let's just give up like it's the government let's just all get in bunkers like we would have lost a lot of innovation and a lot of opportunity for people to build things like zcash or whatever um so i think it's it's a this ties in with jill's comment like i think we gotta we have to do both i agree uh i i guess this the nuance the i'm struggling to understand the nuance because i don't see a like a space in between on the one hand decentralized zk systems that preserve anonymity and on

the other hand zika systems with a back door there's no middle ground there like if you want anonymity you either get full anonymity or somebody has a back door the governments will mandate that we have to put a back door in every system or they will ban it so if we want actual decentralization privacy permissionless finance whatever we have to fight now to defend this here because this is where it is this is uh it's the game right will someone use a thing piece of software that you made for some illicit purpose can you still use it after they do so i don't like maybe i'm wrong maybe there's more nuance happy to hear from other people you know not trying to crowd out discussion but i don't see it no no way too much but go ahead michael oh no go ahead zuko please i've talked

way too much but crypto wars won veteran reporting in for duty sir i was a mere foot soldier in crypto wars 1 in the 1990s but uh all three of the actions were taken by the good guys one was civil disobedience and um making tools that people could use in defiance of bad laws one was policy argument and um persuasion and making society aware of what was going on and the third was commercial expansion which might have been one of the most powerful reasons why we got cryptography which is why we got the internet

starting in the 1990s if the good guys hadn't won that policy battle then we'd be living in a very very different and much worse world in which we never had the internet yeah i mean just take a look at like the list of legal victories by the electronic frontier foundation like policy and litigation um and challenging the government and a legal standing point is just as important as developing the the technology that one could use to circumvent or um fight against and we really can't discount all of that work um and i think it's more important than ever to support everything from olfriend yeah we made donations to coin center and stuff too like we're doing all that

i just i don't see arguing with the government as like i mean we have to do it i think that people have argued with the government and has made many incremental progress towards securing human freedom and while it's not as maybe radical as you believe that we need to be and i agree with you i'm not going to keep my friends out of jail it actually does keep uh people out of jail and getting the tour developer out of jail after being wrongly uh um imprisoned for uh running a tour note so it does and it's about doing that while also developing the radical technologies we are so rich now that we just buy into all of this

crap and like preserve our lofty positions we're like ah we are mature crypto enthusiasts now oh not the renegade you know cypherpunks we once were i get it yes yes put on this dude go to court if i can just briefly jump in one thing i've been thinking about a question the industry should ask themselves is can we survive on our own as in if we're going to have to fight all these battles whether it's through the legal process or whatnot is it enough for the industry to do it by itself without broader buy-in and i think that gets to zuko's point about the importance of commercialization and successful commercialization because that can change and inform the

policy argument which public policy considerations are something you know that judges and regulators and everyone you know who carry a big stick do take into consideration you know they're not dispositive um but you know there's a broader kind of culture war if you want to call it that or or cultural buy-in that needs to occur at a societal level i think to you know further guarantee the industry's survival yeah yeah i agree i agree nelson and and into zuko's point which i think is responding to means which is is it's got to be a multi-prong

attack it can't just be we're just gonna opt out of the system because the system's happening but i'm not saying we should opt into the system it's everything it's fighting it in court fighting by creating the technology that makes it difficult that makes governments have to come and ask um and it's and it's also finding ways to have technology that works for various people in different ways whether it's selective disclosure or zero knowledge that's not backdoors and finding ways that aren't backdoors because there are some people that don't want to transact their house on a cash in a bag sometimes for counterparty risk that has nothing to do with regulations so it's just giving people optionality of it but but i agree i mean it's not about putting on a suit

and and just opting in it's but it's it's got to be a multi-prong attack including including things that everybody wants to use and in different ways so that that the people that make the laws in the congress are also feeling it too i just think it's got to be everything that zuko laid out that that happened in the encryption wars one that needed to be tapped into again this time um and when they overstep like i think they did with this latest designation it's fighting it in court um or if it has to go to that and and i think coin center is ready to do that if need be but but but i think there's some engagement that can happen faster than that hopefully as well but i agree it's constant vigilance i want to try to make

a case for incrementalism which you know because decays are so powerful you can imagine something like a kyc membership tree where you do third-party kyc you get placed into uh an encrypted tree you then have to furnish proof of membership to that tree to interact with a network within the network you have full transaction graph privacy and then when you leave um you know you are definitionally a member of this like kyc entry pool now number one i know for a fact there are many people in this space who hate that idea and they fall on opposite ends of the spectrum people who are compliance first hate that idea because you don't get any uh transaction graph visibility and people

who are completely pro self-sovereignty hate that idea because it requires kyc on the other hand i can easily make the case that that makes the world incrementally a better place everyone who wants to use crypto and its powerful you know potential then get transaction graph privacy um or at least within this kyc subset and i would say that you know 95 plus percent of crypto users belong to that subset anyway i mean how many people do i know deposit into crypto without using a kyc on and off ramp i i hesitate to name you know more than a couple folks um and so i think there's a clear argument to be made that if we want this utility to expand to a large number of people

that some of these compromises have to be considered i wanted to see if um if others in the audience had uh had things that they wanted to uh ask of the people who have been talking um i'd be happy to pull some more people up on stage it's been honestly overwhelming the number of requests so i'm sorry if you have requests and i haven't gotten it to you yet but um i'll go through and uh and start to pull some people up um ben you you just you just came on stage uh i i know you've been pinging me texting me in the background and wanting to wanting to make a couple of points no that's yeah it's okay i've really enjoyed listening and i'm very grateful for all the perspectives that everyone has been sharing uh

um i'm ben fish i'm the ceo of espresso systems and um really thank everyone for for coming to to participate in the discussion today um so i didn't really want to interrupt but uh i i would just want to add the perspective and i think this has already been echoed by what people have said already but um there is value in creating technology that has the ability to protect freedom we're sorely needed but as we see in the train of cash example regulators can still make rules around how people interact with those technologies and so there is value by definition right in working with them to drive a balanced approach i really like the the the incremental um

improvement perspective that was just shared and to convince legislators it's not only important to emphasize our values but to understand their goals this kind of situation is often best solved by understanding the intentions on goals on either side um and we can understand the intention of a government sanctioning a pool of money that has been tainted by bad money say money from the us perspective right if tornado cash has a deposit from like uh north korea or somewhere else right it's now a tanked pool from their perspective and we can understand that and that banning the tornado cash contract address may be necessary for the goal of preventing bad actors those

bad actors from taking their money out and it doesn't need to be banning the code or the software behind it it's a specific pool of money and despite the fact that tornado cash has compliance tools those don't necessarily help for the goal right there they're you have to understand what the goal is and then that also gives you a basis and a foundation for going to the government and pointing out things that they're doing like shutting down github repos or arresting developers that take things too far and not only infringe on freedoms but don't at all help with those goals and so once you establish that that that basis there can be a path forward um such as for example creating exceptions for people to withdraw from tornado cash if they can prove that they're not the

target of sanctions we have the tools we have zero knowledge proofs and things like that that would enable people to to do that without revealing their identity and that's not a backdoor i think we need to be very clear that this is a war on crypto it's not a war on foreign enemies because you can prove as a us citizen that you didn't use the tech for illicit activities it's our freedom in our privacy that's under attack and when criminals use tools for illicit activity you don't make the tools illegal we don't make cash illegal because people use it for illegal things we don't make cars legal because they're used for as big gateway vehicles and we shouldn't be making blockchain privacy tools illegal because hackers use them it's like it's unconstitutional unconstitutional and undemocratic and we

do have a right to free speech and and privacy and not to mention it's very impractical right like you can send you can send money to anyone and and then you can be associated with this and so for me like there does need to be a lawsuit and we as the industry we need to show damages and you know there are over 700 people listening today thank you all for listening and if you haven't if you haven't donated to coin center please do so um and i would love to kind of shift this conversation to talk about those specific calls to action we can all take now so i think there are a lot of like restrictions on the use of cash in the in the ecosystem for example sorry jim

with all due respect last time elena came in asking for a call to action you also uh avoided that possibility so i'd love to hear from someone else in terms of what the calls to action can be i mean i mean if you want to shut down the conversation that's fine uh maybe i can contribute a few points i've been listening to for a while now and appreciate everybody here on stage sharing their impressions we're all obviously shocked by the events and it feels really like a uh yeah like a new a new era is starting and how we define the relationship between this community and governments um i just want to share my perspective a little bit i'm a

lawyer in the space since 2014 i i know a lot of the people on stage met them or other people and i think one important question to ask with tornadoes specifically and software like it i guess is is there a legitimate dual use use case so can it be argued that it's as much a legitimate software for privacy preserving purposes as much as it can unfortunately also be used for illegitimate purposes and this exact question of dual use we know it from copyright since you know 20 years and so software for ripping dvds for example has long been you know controversial because well if you if you actually and in certain countries you're allowed to

make um you know a digital copy of a dvd that you bought in other countries you can't and so countries dealt with it differently when it comes to money laundering i think um it touches one of the most you know sensitive uh aspects of where governments are active and so i i expect it to be a really hard fight in courts to make this argument i do think that even if we don't win this fight which of course i hope we will win but if we don't there should still not be arrests of open source developers obviously based on you know charges we don't even know at this point but it should actually there should be an orderly takedown

procedure for protocols that clearly violate some rule that you know unfortunately we have to accept is currently there and then um you know only if this orderly takedown procedure is you know continuously violated you know maybe governments have to think about arrests but it it cannot be done in a way where suddenly you know you're being held hostage almost by a government that seems ridiculous um i just want to also pinpoint uh something that is not as drastic but gonna be almost even more you know impactful uh in terms of regulation that is upcoming to me is this question whether is decentralized governance of protocols

real or will governments pretend that they are the same as centralized entities that actually a form of governing something decentralized as infrastructure is it a real thing or not and um we currently are not at least in europe where you know i'm i'm active with the european crypto initiative it's not completely clear that actually um the eu will accept that decentralized services are fundamentally different than centralized services and i think you know a point of action for everybody here could be um to understand what can we do to actually improve and really decentralize

the governance systems behind be it blockchains or be it protocols on blockchain speed defy services or whatever it is um if this is not really there we have to expect that in the next few years it will be regulated completely like centralized financial infrastructure and this will have an even broader impact on many people um building code in this space um and just maybe one last um it just hasn't been mentioned while i was in this space is the role of the financial action task force because a lot of the i would say bad policies that we see both in europe but outside also are actually transpositions

of recommendations made by the fatf which is a non-democratic sort of weird collective that makes these recommendations and i think this is also a point of action for this space with you know the amazing network and influence that many people have in here is to try to create pressure to make whatever the fatf does much more transparent and accountable because this is where the origin of a lot of these policies actually are this is where we need to start to get active as well so interested to hear people react to this thank you yeah just just jump in with reactions please i i kind of wanted to uh thanks for hosting this by the way jill this is an

awesome space i definitely want to go back to something tegan hit on i think she's spot on it's a war on crypto um ben uh from espresso basically said we need to understand the goals behind people who make these sorts of decisions and take these actions and i don't necessarily disagree but i guess my question someone rhetorically is like what's the what's the goal like limiting criminal behavior that's that's possible without the actions that were taken um so maybe the goal is general compliance well with this specific example of tornado cache those tools already exist so again like recent actions were totally unnecessary um and i agree with almost everything henry and amin have been saying like

over hostile reactions these sort of overreaches from us or from the industry aren't necessarily the winningest strategy um but i mean i sort of advocate they definitely have their place and i think the value of the industry posture that seems to be strongly advocated here of just listen and learn is uh in my opinion uh significantly overplayed since everyone we should be listening to has shown minimal interest at best to you know listening and learning from us um now having said that michael's point that like monolithically categorizing regulators is definitely sort of an inaccurate uh characterization but speaking in broad strokes like these regulars have not shown much interest in constructive dialogue and those that

have are notable because they're exceptions um so it's definitely a war on crypto like understanding the goal is important but no matter how you slice it in my perspective the goal isn't really easily discernible and doesn't sort of have any logical uh framing um i'll just end it there those are my reactions i'm curious as to why people think that regular readers haven't been responsive haven't been engaging in the process because that's actually not at all what we've seen from the new york department department of financial services which is very early on with the license that's not what we've seen from the sec

uh and the cftc the cfcc in particular which claim bitcoin and ethereum for its own and so i actually think that right like regulators have been very uh you know have been very engaged on this because of how important this is to the the population and i think that like you know some of the points that john wu came up with and um about incrementalism it's very very valid here right at least my interpretation of a lot of the conversation here is not that we think as an industry that regulators aren't engaging but the regulators are maybe engaging in a haphazard non-uniform

way that might come down to even the political ambitions of the individuals in involved in these offices um and i think that it's it's that feeling that this may be political in nature as opposed to a question of sort of um you know regulating in a way that is working within existing frameworks around rights constitutional rights uh you know prior precedent and so forth i think that's that's the problem that i think many of us are are trying to speak to um and then also i would add it to that actually just the lack of clarity in general right the fact that

you know based on the arrest today uh based on you know this action uh just in terms of the unprecedented nature of putting a smart contract on an sdn list the fact that this has just software developers like living in fear like i can tell you even like within our own company like there's real fear amongst people about what the implications of this might be that's the problem it's not a problem of like oh regulators aren't paying any attention to us um it's it's the lack of clarity and also again the haphazard kind of way of going about this i am going to end the space at 2 pm but i hope that there's demand to do this again um and to have more conversations like this i know that i would be happy

to participate i i think that we can get michael to come back and host um and i want to let a few more voices jump in here in the last 15 minutes or so so i'll get out of the way again but thank you again to everyone i would love to jump in my name is chris boscolo i'm actually a builder in the space and building privacy enhancing communication is like core to what we're doing and i want to talk a little bit about actually a word that zuko mentioned maybe 25 minutes ago which is overton window and there was a question about what's our call to action and i think um one of our calls to action for everybody

should be to promote privacy preserving technology as normal because i was a builder back in the 90s when it was um we had to actually ship encryption software with 56-bit keys overseas because it was deemed ammunition and today like we would laugh at that right the whole world sees encryption software is just totally normal and that part of that is the shift in perspective of people that people have towards the technology because people like us talk about it and its uses outside of criminal use cases you know in the 90s encryption technology was only used by terrorists now it's used by everybody in

the world so i'm hoping that in 2030 everybody's using zcash because it's normal not because they're trying to funnel money to north korea so that's my call to action for this group um so i just want to say something um as someone that was warning you canada i'm working on crypto these fears of sanction are something not mean to me that's been going on for like since before i was born um and i want to say like when the community talks about the kyc and the gateways so we should consider kyc is the western thing and like more than 25 countries are in the gray list so and also like any other international

students and only iranian internationals in canada which are working they're living here but because their only valid id is a uranium passport they get rejected from kyc right away so you're taking out all those people from any protocol that you want to implement kyc on and also it's kosc's know your customers they are not your customers they are the protocol users and they should not be considered the same as um paypal's users i just want to put this out there so because kyo is being torn out here and there as a solution but it's a western solution it's not like a global solution and we're trying to like remove the physical borders and have a global digital nation i'm just going to add that

nate i see i see you've been been raising your hand wanting to speak here for a while let you jump in thanks jill and i really appreciate you hosting this this has been a phenomenal call i wanted to speak to tegan's call to action i see three general ways forward there's the roll over and let the regulators do what they want and force us to change what we're doing in the crypto space then there's the try to i think then there's the the most important one i want to talk about is the the way we move forward without without giving anything to them i think there's the second way is the legal route we try to fight it with

policy think tanks like coin center and try to fight on their terms but i think the third way is doing it in the face of attack and and i i use these strong words because i think that's really what we're looking at this is the crypto wars 2.0 and i think the only way to fight this battle is to create strong systems with with very robust incentives and so we we've been starting to describe that as tokenomics that's that's what i do i build tokenomics frameworks specifically for hyperstructures these protocols that we want to deploy and have exist forever we want blockchain applications to outlast us and to do that they have to

have strong enough security they have to have incentives built in the protocol to not only keep the protocol running and reward investors of the protocol but to reward users of that protocol and so i think the third way to you know the call to action that i would make is for us to start considering how these systems operate without us and it to me that is the essence of tokenomics is the alignment of incentives between users investors all participants in a protocol such that these protocols will continue to exist without human input i think that's really the only way forward for us as crypto if we want to go into this with

um with as much force as we possibly can yeah jill uh this is david mccarthy just to follow up on that last point i think you know that is definitely one path going forward for devs but i think that is actually the reality for tornado cash as it is still in use it's still available for people to use but as an entity they have no standing to argue in court that there are constitutional rights here at risk and they don't have any standing to come in and argue that freedom and privacy are american values they don't have any ability to say that look attorney client confidentiality privileged information limited liability corporate shields first and fourth amendment rights these are all things that should protect us from being shut down and the other thing

is they don't have the ability to talk about some of the facts that are out there that show that cryptocurrency transactions are by far cleaner than traditional finance when it comes to money laundering and i think you know these avenues are shut down for devs and programmers who are working on privacy tech if they don't have a u.s entity that can come in and argue for them so i think the call to action that i would put forward to people is prepare to legally defend yourself and your devs or go full unon djan and just recognize that you're not going to have any chance to argue in court but thank you very much for this space it's been great listening thank you thanks so much to to all of you and and um yeah you know the the thanks for this

space really goes to the speakers and all involved and all all fighting for this and and uh and you know on on behalf of the the crypto community even those who are kind of you know bringing a more institutional perspective i think it's important to remember are fighting on behalf of of the crypto and blockchain space as a whole um and so again really credit goes to everyone here both on the stage and in the audience um just in the last few minutes here i know michael you had some thoughts again on kind of the actionable takeaways here i want to pass it back to you before we wrap this up and uh i'm gonna go spend the next several hours trying to figure out if i can recover

this as a recording so that we can um you know share all of the takeaways and the conversations because i really think that it has been productive and again i really hope that all of you both in the audience and and on stage and who participated in in many different ways will be up for doing this again in the future so with that michael over to you thanks to everybody um for for jumping in and particularly for the for challenging each other because i do think that's that's how we get to a better spot on this and i appreciate everybody with opposing viewpoints like really speaking up and and not just being an echo chamber the whole time because as we we need to create our own resilient system around all of this um and i think to some of that

from my perspective it's it's there's been a lot of different opinions about how best to do it and i think it's a mix of us aligning but also people working to their strengths so you know folks talking about nate talking about building resilient and incentivized systems like go for it and i think it's it's gonna in the end be like zuko's uh encryption war one where it's gotta be a multi-pronged approach but not everybody has to do every prong so um you know i'm committed on the legal perspective and working with coin center and blockchain association and and crypto council for innovation and everybody else defy education fund miller's doing some incredible work um educating and aligning people from a

pure d5 perspective which is so important so i i think you know it's educating regulators and if you don't agree with that then that's not a good use of your time and and others of us will work on that um because i because i just think there's too much at stake here for the resilience of our rights um and and so many people fought so hard in the first encryption wars to make sure that there was an ability to have privacy and security and and to to find some sort of dynamic tension that's probably going to be forever but but the tension only remains if we if we keep pulling uh in appropriate ways so from here i think i think i'd love to continue the conversation when folks can

in whatever way but i'm i'm here and very reachable and happy to help on on legal uh including so people aren't over complying or if they're fighting in court um overreaches anything like that just as a just for to get aid the the system not looking for clients um but um and i know there's a lot of other people are too so so i just encourage people to to all be in touch and and uh and jill or whoever else keeps this going would be wonderful but but please stay engaged on it certainly beyond the twitter space and thanks to everybody thanks so much michael and yeah someone brought up earlier you know what happens when the twitter spaces end well first

and foremost let's not let the conversation drop um we're already talking about trying to host another one of these maybe next week this is an ongoing issue this is not over today this isn't even over when the dust settles on tornado cache this is an ongoing conversation that we as an industry as a community and as a society need to have so if you enjoyed this or if you want to be involved in the next one if you were involved in this one and want to participate again please ping me dm me on on twitter email me if you have that information um and we'll we'll keep making the conversation happen so thank you again to everyone who took time out to listen today to participate let's keep the conversation

going and thank you especially to michael uh i know he's trying to pretend like this was uh myspace but again really this wouldn't have happened without him and he's the true host here so thank you all go keep fighting the good fight and we'll see you next time [Music] you