Welcome to another episode of the Gary Gensler Roast.
This is part 2.
Let's go ahead put an apple in this pig's mouth.
Alright. First and foremost, I want to shout out ZK shark here on Twitter.
It's @ZK_shark.
So you guys make sure to go follow him.
He's incredible.
He's been breaking down Gary Gensler,
why he sucks,
and putting out all the inconsistencies.
So we got this tweet here.
The below clip is from the Fall 2018 Graduate MIT course called "Blockchain and Money."
Gary Gensler, the current president of the SEC or chairman of the SEC, was a professor.
The hypocrisy speaks for itself.
Let's check out the video.
So we already know in the US and in many other jurisdictions
that three-quarters of the market are not ICOs or not what would be called securities,
even in the US, Canada and Taiwan,
the three jurisdictions that follow something similar to the Howey Test.
Okay. So, right here, you've seen the weight that he puts on the Howey Test,
which later on he says--
or he said stuff since then like,
"Oh, the Howey Test technically isn't the only thing we can use."
And he also says three-quarters of crypto are not securities.
He says it plain as day.
You have to ask yourself the question,
why was he saying that?
And why is he saying the opposite now?
Today, he literally said in a hearing a couple weeks ago,
they believe the majority of crypto is not in compliance,
meaning they're all securities.
It's all about personal financial incentive.
He's getting paid by the big banks to push this narrative.
This Gary Gensler that you're watching now is the non-paid off by the banks Gary Gensler.
Three-quarters of the market is non-securities.
- It's just a commodity, a cash crypto. - There it is! He said commodity.
- He yielded to the commodities. - There's been debates about initial coin offerings,
and what's a security and what's not a security?
Relevant.
Relevant and important debate.
But for three-quarters of the market,
- it's not particularly relevant as a legal matter. - It looks like he's juggling balls.
- As a regulatory matter. - Big balls.
Goldman Sachs' balls.
But you've got to ask yourself the question,
you see, Gary is a wolf in sheep's clothing,
or, in this case, a lizard under the guise of a bald-headed cul-de-sac-looking man.
But you have to ask yourself this question.
If he knows crypto so well,
why is he trying to kill it?
The only possible answer is incentive.
And it's got to be the financial incentive being provided to him by Goldman Sachs.
And I think what we're going to find is we're going to sniff out this money trail
and we're going to find it.
There's a reason why this guy's worth nine--
I believe he's worth nine figures.
I kid you not.
A banker who works in the government worth nine figures.
Do the math yourself.
So, of course, this is going to be Pat Toomey talking to Gary Gensler
about the definition of Bitcoin.
Here's my question.
Briefly and without getting deep into the weeds on this,
and I acknowledge your belief
that most tokens have a large degree of central control, but
Opposite of what you just saw him say.
generally speaking, is it fair to say that a significant factor for you
in whether or not a digital asset is a security is whether it is centrally controlled or decentralized?
Well, I look to the Supreme Court that's often written about this
probably close to a dozen times in 50 years.
And it's amazing, like, he's referring to the Supreme Court,
but I thought you were the ultimate authority, Gary?
And it's whether the investing public is anticipating profits
and that includes anticipating profits from appreciation
as well as from, as you mentioned, rights based upon a common enterprise,
- but the efforts-- - Right.
The efforts of others is what he's going to say.
That's literally everything that makes money in the world.
Every business, every product, every service fits that classification.
That's why Gary Gensler cannot be taken seriously.
So I guess another way to put my question, which you haven't answered, is,
is it possible to have a common enterprise if it's something that's decentralized?
How could it have a common enterprise?
I mean, it doesn't centralize--
isn't centralization necessary to constitute a common enterprise?
It-- it--
you could have some things that are quite open but still have if the public is anticipating a profit
based upon that common enterprise, so
You literally just said that.
That's literally what you just said.
You're just repeating your same talking point over again.
I'm being careful with my words here to be accurate as best I can.
The common enterprise.
Are you relying on a group of individuals?
And look. These are not laundromat tokens.
- There's a group of people that are actually-- - You're not answering my question though.
But you-- so let's put--
let me try it this way.
Unbelievable.
- What is it about Bitcoin that causes you to conclude it is not a security? - Dang it!
Okay. So before he answers this, like, keep in mind,
the long-term goal is they want to make Bitcoin a security.
That's the goal.
So let's hear what he says here.
Here's-- it--
- one is there's no group of individuals in the middle. - Right. It's decentralized.
- There's no group of individuals in the middle - Right.
that are basically-- and you're not--
- in essence, we're-- - So--
the investing public's not "betting"
He can't answer the question
because he knows it's a fallacy.
The question is not relevant
because Bitcoin and a ton of other cryptos out there are decentralized already.
So he's trying to dice words to separate what makes Bitcoin different than the rest,
but he can't do it.
on somebody in the middle or six people in the middle.
So you're choosing not to word, use the term decentralized?
But that's what you're describing it.
It is the decentralized nature of Bitcoin I think is really what you're getting at.
Recently, we just talked about Warren Davidson on my channel.
We actually called his office.
Let's see what Warren Davidson has to say about this from the same hearing.
Let's check this out here.
We like Warren Davidson.
Fundamentally, the SEC is here to help protect the public from fraud,
and that's why Congress painted with a broad brush.
Yeah, thanks for the clarification.
And, unfortunately, Congress didn't create the Howey Test.
The courts did.
The same with the Reves.
And, frankly, we're dependent on this patchwork of regulation by enforcement.
Obviously, there are people that feel that a particular, you know,
token like Ether is treated differently than one like XRP for example
is something a matter that's before you right now
because of the same thing.
Is it centralized or is it decentralized?
Who has control?
And I think that really gets to the issue.
Congress really should clarify.
We've had a bipartisan legislation called the Token Taxonomy Act drafted since 2018.
We can't get a hearing on it.
It would provide a bright line test that would apply a 19, you know, 50s case law,
Howey Test,
to modern digital assets and provide some of that clarity.
There's a reason why they haven't had a hearing on it.
There's a reason why they had it at that point.
Why?
Gary Gensler is standing in their way.
They're trying to prevent Congress from creating regulatory clarity
because Gary Gensler doesn't want clarity.
Nobody's responsible for more people losing more money in crypto than Gary Gensler
by his lack of diligence and his lack of effort at creating clarity,
which is his very job.
But could you, generically speaking, talk about the shortcomings of enforcement actions
or even threatened enforcement actions versus the need for clarity?
Maybe a rulemaking process that would established a bright line.
Because, really, what you referred to as,
"Well, come talk to us in a one-on-one kind of third world way,"
where every individual firm cuts their own deals,
But yet you can't actually do that.
He says that,
but firms who've tried to talk with him has said he will not book a meeting with them.
He's a liar,
which this is the whole thing.
When it comes to Gary Gensler,
understand he met with Sam Bankman-Fried for six months before FTX failed.
And I make this point a lot.
He's got to be either incompetent or a criminal.
Guys, the meter is way over here with criminal.
Why?
Because he outright lies.
Someone who outright lies,
that's not something that covers up incompetence.
It's something that covers up criminality.
What the market really needs is clarity.
Wouldn't that be better than threatened enforcement?
Well, I actually think that the securities laws are pretty clear on this, sir.
You have to be kidding me.
What?
Gary Gensler literally look--
do you guys know that thing, that little clown thing that has a little magnetic,
it's like a glass case or plastic case, and it's got a clown face in it
then you take the little black shard things
and you can move them with magnets under their hair?
That's what Gary Gensler looks like.
And I think that firms should just come in
Somebody draw that man some hair!
and register.
But what's happened over the last four or five years is they've either chosen not to
or they've stood up in Singapore or Malta or Hong Kong or other countries
and offer their services indirectly through a virtual private networks.
Not all of them.
Some of them are here in the US as well.
And I think that our securities laws were written for a reason,
to protect the public, the investing public.
No, that's wrong.
It's protect the elites and keep the common person like you and me
from becoming rich.
That's why we have accredited investing.
They don't want normal people being able to use the financial tools
that the elite use to get rich and stay rich.
Yeah, I think you're right. We should protect the public.
But we need to do it with clarity.
And, frankly, we should do it in a way that doesn't destroy the market.
I mean, you're talking about fintech being the leading innovation.
America has led in market after market after market
in field of technology from the ag revolution, industrial, on up through the internet age.
Why would we want to destroy the fintech revolution
and push it outside the United States when we could foster it?
I refer to your threatened enforcement action on yield products for example.
We should go through a rulemaking process,
or, frankly, Congress should act,
which is why I'm drafting a bill that should be submitted shortly
to clarify yield products and how they should be protected.
Now, you've got to understand that right now at this point,
the fact that we know Warren Davidson is putting together a bill to remove Gary Gensler
that there has to be some stuff that was highlighted
in that individual discourse between the two of them
that now is leading Warren Davidson to feel like this guy's got to be removed.
I mean, he's just a liar, the fact is.
This is a quote from Gary Gensler on a broad brush.
"They don't just resemble securities.
They are securities.
Thurgood Marshall, a Supreme Court Justice,
wrote in an opinion-- and I think it was in the 1970s--
that the Congress painted with a broad brush to protect the public--"
of course, you know, Byron Donalds in a hearing recently,
we'll play this clip here, Byron Donalds talking about the broad brush.
We're not giving you authority.
You're just taking it.
- I think that's part of the issue right now. - No, no, no.
With all respect, Congress painted with a broad brush when they set up the SEC,
and I quote Thurgood Marshall, which is one of the greatest--
Congress painted with a broad brush in 1933 and 1934, not in 2023.
We've not touched that. It's a new industry.
You see, he makes a point,
they had to paint with a broad brush back then because they were tackling such a large space.
Now, where things are very defined
and we know what securities are and what they aren't,
and it should apply to the world of crypto, but it doesn't,
we know we've got to be more specific.
A broad brush should not apply a hundred years later.
You should have been able to fine-tune and dial in what you think about assets by this point.
But he says that "Congress painted with a broad brush to protect the public
when somebody's raising money from the public and the public anticipates a profit.
That's kind of the core.
And, yes, the service providers, if you wish,
the crypto exchanges, the crypto lending platforms,
whether they call them such centralized or decentralized (so-called DeFi),"
"so-called DeFi,"
"they're transacting and providing services to the public.
And they're providing those services around some very small handful of non-security tokens,
crypto non-security tokens.
But the vast majority of these thousands of tokens--"
exact opposite of what we saw in the first clip,
"without prejudging any of them--
meet the standard of being a security, and thus the platforms have an obligation
to come in and register, work with us and find a path forward."
False.
More false.
And even more false.
Okay. So let's go ahead and look at this last clip from Warren Davidson
where he is embarrassing Gary Gensler.
What about Ethereum?
Is Ethereum now a security?
- We had this-- - I heard your exchange.
They've been in place since 2015.
You say in your statements that there's clarity in the market
and the rules are clear.
"Just come on in."
You can't even answer the question!
Unbelievable.
- He's very irritated. - You say XRP is a security?
Well, we're in court in active discussions and litigation on that.
"Wha-- wha-- wha-- wha-- wha-- wha-- wha-- wha-- wha-- wha-- wha-- wha--"
I'll put a lizard tongue in this guy's mouth.
Maybe that's his problem.
He's got a lizard tongue down his throat.
You're in litigation because you do say it's a security.
As you know--
let's move on a little bit.
As you know, qualified custodian banks
would effectively be unable to provide crypto asset-related custody
as a result of punitive capital impact under accounting provisions
in Staff Accounting Bulletin 121.
Do you agree that the Bulletin should be amended?
I think that the staff addressed an accounting issue
and appropriately saw that crypto assets held in custody today are not--
This guy says more "uhs" than Master P.
they are not segregated, are not bankruptcy remote in bankruptcy
and should be appropriately put on public company financials.
I wish I had time to go into the ESG Rule and everything else,
but, Chairman Gensler, your record of failures to protect investors and abuses of power
- make it clear that we need to restructure the Securities and Exchange Commission. - Let's go!
The failures are many, but let me cite some of the abuses.
You average more than two rules proposals a month.
You inappropriately provide inappropriately short comment periods.
You have unworkable and unlawful ESG disclosure mandates on the market.
You have essentially a Hotel California rule for crypto,
where you can check in anytime you like, but you can never leave.
You have endless discovery with no resolution and no clarity for the captives in the market.
You have unworkable proposals for overhauling equity market structure,
a de facto ban on crypto through proposed custody rule.
You have high staff turnover,
unhappy people leaving your office
and unhappy companies and capital leaving our country.
To correct a long series of abuses, I'm introducing legislation
that removes the Chairman of the Securities and Exchange Commission
Yup!
and replaces the role with an Executive Director that reports to the Board,
- where all authority would reside. - Let's effing get it!
Former chairs of the SEC will be ineligible under my proposed bill.
And this isn't just my take.
- It resonates across the political space. - Amen.
The American people want democratic access to capital, retail investor participation.
You can't just exclude retail investors from markets and claim it's for their own good.
Our markets need to function and flourish.
And I yield back.
Boom!
I don't think I've got to say anything else.
Mic drop.
Gary out.