Cryptolaw should be done in the crypto spirit. The 6 lawyers involved here are great but already lobby through other closed opaque orgs, and no 6 people can 'represent DeFi'. DAOs paying millions to non-incentive-aligned biglaw lobbyists is not the cypherpunk way.
to be clear, I am not calling the 6 lawyers who would be in the nonprofit 'non-incentive-aligned biglaw lobbyists', but it certainly sounds like they would be using a chunk of the funds to pay other lawyers, and likely those lawyers would be non-incentive-aligned biglaw lobbyists
Whatever permission you gain by playing legacy games with legacy people is fragile, corruptible & easily lost through regime change. Funding an opaque, closed lobbying org staffed by members and alums of other lobbying orgs--this is not crypto! We need a better way.
By the way, the conflicts of interest here should be abundantly clear. Not all DeFi projects are heavily dependent on traditionally VC-backed technology companies. The people at those companies have different legal risks & incentives than the DAO itself does.
DeFi is not monolithic. It's very possible that more spontaneous, non-VC-backed open dev communities could want a different regulatory advocacy path than companies like Uniswap, & that those two paths present zero-sum dynamics.
It's therefore specious to suggest that any org can 'represent DeFi' or that delegation by many DAO or one DAO of this job to a few people on a trusted non-transparent basis is the right to way to 'advance DeFi'
Many of the people involved in this also work with or for or on the Blockchain Association, which uses the same playbook of saying they 'defend Crypto' when really they defend their donors and members, like Kik.
Again, I have a lot of respect for the 6 people involved here as lawyers and their understanding of and commitment to the tech, but it is not fair or right for 6 lawyers and whatever elite firms they secretly hire to 'represent DeFi' and spend millions lobbying in backrooms.
Ultimately, the purpose of DeFi and blockchain should be to put law back into the hands of the people it governs, not delegate it to D.C. operators who purport to know what the right policy is & propose being trusted with millions to craft it behind closed doors.
Other questions worth asking:

-->do the proposal's supporters have confi knowledge of Uniswap Corporation currently being under gov't investigation and was that part of the impetus for this?
-->to what extent will funds be used to defend Uniswap Corporation & how does that differ from interests of the DAO/community?

-->are VC investors in Uniswap Corp at legal risk, thus benefitting from legal defense funds, and how much of UNI do they retain vs. have dumped?
-->is it appropriate for retail investors who funded exit liquidity for Uniswap Corp VCs by market-buying UNI to also indirectly fund VCs' legal defense costs?
Keep in mind, when there is VC-backed devcorp, there is the potential for radical incentive misalignment even if everyone holds tokens.

B/c employees & VCs hold not only tokens, but also STOCK.

They can fund stock defense from token community.
With the amount of $ sloshing around in this space, you can be damn sure that many devcorps and/or VCs are thinking about double-dipping. First you get your token exit then you get your equity exit (M&A or IPO).
Thus, devcorps and VCs don't only care about regulatory threats to the tech and community--they care about regulatory threats to their equity value.
Post-token-liquidity, once VCs and devcorp team have recouped their initial sweat/$ investment + profit, incentives can shift...they now can subsidize the value of their equity/2nd exit at the expense of the public token-holding community with little downside to themselves.
Would Coinbase love to acquire Uniswap Corp? Absolutely. So would a million other traditional businesses--that money goes straight to equityholders in the company, not UNI holders, and might even adversely affect UNI price.

Be wary. Be skeptical. Ask questions.

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More from @lex_node

28 May
no time to write something long, but don't be fooled by the fact that Bitconnect was a fraud--this case could become a blueprint for action against non-fraudulent DAOs

N.B.--Bitconnect was an "unincorporated association"
in this thread @collins_belton echoes conversations we have been having with DAOs for a while--they need to start thinking about indemnification structures to protect the core devs & others involved with the project

the SEC is smart. . .their theory on this case seems novel & susceptible of being challenged in several ways, but these particular defendants are un-sympathetic & will probably not have top-notch defense counsel; SEC will get a precedent it can then use against DeFi teams...
Read 6 tweets
28 May
How govt should do cryptolaw:

1. autonomous software systems = legal persons

2. tokenholders & miners get qualified limited liability

3. to qualify for #1 and #2, must have insurance pool (token premine or inflation), gov holds keys & can only tap pool with final court order
The insurance pool is sole source of legal remedies for most negative externalities associated with the autonomous software system.

As a legal person, the autonomous software system has rights and is deemed to own this pool--thus entitled to due process before assets seized.
Outright granting legal personhood to autonomous software is better than 'wrapping' it in traditional corporate personhood through e.g. an LLC. Business entities are nexuses of rights & obligations. Autonomous software systems are nexuses of powers & incentives.
Read 8 tweets
21 May
Governance tokens, done right, have a lot of intrinsic value and are a game-changer.

I do worry that 'done right' & intrinsic value also makes them more securities-like utility and MoE tokens but I am also optimistic. Here's why.
People are too quick to apply SEC's utility token guidance to governance tokens and I think this has spawned many misguided regulatory strategies. People need to think more about them in the context of the SEC's DAO Report.
The analogy between network miners or validators and DAO voters to achieve "sufficient decentralization" for regulatory purposes is way too facile.
Read 30 tweets
20 May
I've been thinking about this crypto crash & starting to realize it exposes a deeper issue:

blockchain's fundamental value is 'social scalability' (Szabo)

yet crypto constantly trades counter to the related fundamentals, driving futile boom/bust cycles;

here's what I mean:
when crypto clashes significantly enough with traditional institutions / govts (China ban, Tesla dump, Tether and Binance investigations), this is taken as a 'bear' signal, panic ensues and prices drop
when crypto is embraced by the mainstream (Elon/Saylor, 'enterprise blockchain' announcements by mainstream corps, regulatory safe harbors created, etc.), this is taken as a 'bull' signal, comfort sets in and prices rise
Read 13 tweets
13 May
the reason why Elon crashed Bitcoin is the same reason why he's been sued for breach of fiduciary duties, securities fraud, etc.-he thinks his "mission" (sometimes cloaking his mere whims & lulz) preempts every other concern, & his fawning simps agree
for example, this enabled him to bail out his own failing company (Solarcity) at the expense of Tesla stockholders because it's 'solar power' & therefore green & progressive / important--he is set to stand trial for breach of fiduciary duty over this

abcnews.go.com/Technology/wir…
this enabled him to tweet '$420 funding secured' when Tesla was in crisis, get a stock pump that may have saved the company, and get away with a slap on the wrist from the SEC
Read 15 tweets
11 May
It's a pleasure seeing @BryceWeiner throw down on the 'is XRP a security / part of a securities scheme?' debate in this thread

SEC hasn't done a great job articulating the legally relevant distinctions between BTC & ETH vs. XRP, but they are numerous & meaningful.
I tried to articulate a framework for understanding these issues here:

lex-node.medium.com/defining-decen…
I also recommend checking out @ketsal 's approach, which has a similar flavor to mine:
ketsal.com/wp-content/upl…
Read 4 tweets

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