When Mircea Popescu David’d the SEC’s Goliath
The recent death of the father of toxic maximalism is reason enough to remember a glorious part of his legacy
One can assume back in 2014 US Securities and Exchange Commission Senior Attorney Daphna Waxman was busy enjoying her comfortable Manhattan office. The phenomenon of money’s future was then only about a half decade old, and few people had any idea what Bitcoin was exactly. Financial regulators were beyond clueless.
Early that year, Waxman fired off an email to Mircea Popescu, founder of Mpex, the first Bitcoin derivatives exchange. It was the place where provably-fair gambling site, SatoshiDICE, was listed, which was being investigated by the SEC.
It’s clear from the outset Waxman believed the mere weight of an SEC email letterhead in the box of a Bitcoiner would be enough to rock its recipient into immediate compliance, engagement. It’s also clear right away Popescu wasn’t in the least phased.
Waxmans of the world rely upon such gravitas to move suspects into “voluntarily” cooperating, saving her agency the icky trouble of warrants and other hindrances involving due process. Why muck around when flashing a badge and smile can often get the perp to hang himself.
Popescu’s subsequent treatment of Waxman in the digital back-and-forth is hilarious to read, especially considering all we now know about SEC enforcement and its potential to slaughter Davids.
She asked to speak via telephone.
He said the best he could do was an obscure IRC network.
She settled for email.
He then uses the insecurity of email communication itself to wonder aloud if Waxman is who she represents herself to be, even requiring the SEC appoint an “authorised Bitcoin liaison”, and create a dedicated PGP key and a Web of Trust membership.
Waxman plays inartfully into Popescu’s hands, and suggests he call the SEC front desk and search the internet to establish her veracity. And his response equates to a verbal back-of-the-hand face-slap. He ends the round with this:
“In the spirit of candor, let me make it perfectly clear that what's being discussed here is nothing else and nothing short of the SEC's ultimate relevancy and importance in the Bitcoin space, and so far I am not particularly impressed. Let us work together to improve upon this shaky basis if at all possible.”
One can hear Waxman’s head exploding back in New York.
She fires off a formal letter of request, which is ignored.
Popescu’s postmortem on the tête-à-tête would serve as a Maximalist battle call for years to come:
“In short : Bitcoin is a sovereign. Accepting this matter of fact is a sine qua non prerequisite for playing. No exceptions.”
For a variety of reasons, Popescu knew he was beyond the SEC’s reach, but, like a driver who passes a speed trap and then signals to those ahead as a warning, he managed to tie up Waxman and the SEC for a few emails. She couldn’t be in two places at once, and any time spent in dealing with Popescu was less energy spent going after their real target, SatoshiDICE’s founder Erik Voorhees.
Voorhees ended up settling with the SEC later that year for $50,000.
The ultimate winner of the whole debacle was absolutely Popescu.
This week Popescu was reported to have drowned off the coast of Costa Rica, at the age of 41. He’s said to have amassed something in the vicinity of a $2 billion Bitcoin fortune, but specifics are hard to come by.
Further insight into Popescu as a fully Bitcoin character can be found in veteran journalist Pete Rizzo’s thoughtful thread.
He was a controversial figure, but one thing is for sure, he was one of the true originals that made Bitcoin's early days so memorable.
Bitcoin’s Point is to Change the Whole Financial System of the Planet
Years and years removed from that episode, Erik Voorhees, now the CEO of ShapeShift, is the closest we have in a Bitcoin elder statesman. In terms of sweat equity and time, not a lot of people in the space can compare to Voorhees. His experience and wide variety of projects earned him respect from every corner of the cryptocurrency world. His latest interview is with Reason Editor-at-Large Nick Gillespie, and well-worth a listen.
"A lot of these assets are not trying to just be different cryptocurrencies... they are trying to be materially different assets that do different things. Part of the decentralization of #Bitcoin is improved when you have multiple assets.”
Default Judgement is a Hollow Victory
@CobraBitcoin, the anonymous co-founder of Bitcoin.org, lost a default judgement this week over copyright claims regarding the Bitcoin White Paper. Rather than forcibly dox himself, Cobra skipped the mandatory hearing, and as a result the court granted a Plaintiff “victory.” Cobra was ordered to take the White Paper down and to pay legal costs to the document’s presumed author. So far, Bitcoin.org maintains the White Paper in a variety of languages and there is no formal acknowledgement of the UK court decision on the site, but the paper has been blocked for people in the UK.
“I don't think you could get a better advertisement of *why* Bitcoin is necessary than what happened today,” Cobra posted in response. “Rules enforced through cryptography are far more superior than rules based on whoever can spend hundreds of thousands of dollars in court.”
Boston Fed Calls Out Tether by Name
This week, Boston Fed President Eric Rosengren worried:
“I think there's a financial stability concern that a future crisis could easily be triggered as these become a more important sector of the financial market, unless we start regulating them and making sure that there's actually a lot more […] stability to what is being marketed to the general public as a ‘stable’ coin.”
He’d get specific in calling out Tether by name in a later interview.
Bitcoin and Ethereum Mining Revenue Plummet in June
Yogita Khatri documented how Bitcoin and Ethereum miner revenue fell 42% and 53% respectively in June. While still above their 2020 numbers, Khatri attributes price drops and lower transaction volumes as root causes. “Bitcoin's hash rate has also fallen by 50% since its peak in May,” Khatri noted, “which has temporarily slowed down the rate of block production until the next difficulty adjustment — potentially also affecting revenue numbers.”
US Senator Suggests Bitcoin be Part of Retirement Investing
Freshman Senator from Wyoming, Cynthia Lummis, told CNBC’s Ylan Mui she “would like to see cryptocurrency, like Bitcoin, become part of a diversified asset allocation that are used in retirement funds and other opportunities for people to save for the future.” Lummis doubled-down, insisting, “whether you’re an employee that has a retirement fund – I’d like to see those retirement funds invested in bitcoin and other cryptocurrencies that are good stores of value – but I’d also like to see individuals be able to use bitcoin and cryptocurrencies of their preference that are safe, that have met the hurdles of anti-money laundering and Bank Secrecy Act.”
By C. Edward Kelso, NBTV Head Writer