This is Bloomberg Law with June Grosso from Bloomberg Radio. This is Bloomberg Law. I'm Madison Mills in for June Grasso this week. So we were just talking about the fallen leader of FTX, Sam Bankman Freed. I went from having Sam Bankman Fried's name in my mouth a lot when FTX first collapsed in our coverage not so much the case anymore. That's partially because in early June, the SEC filed a pair of lawsuits against those other crypto
trading platforms, among them Finance and Coinbase. The agency says the glory days of crypto business practices are over and that they're also not legal. So here it makes sense of that for us is Hannah Miller, Bloomberg News crypto reporter to discuss. Hannah, thanks so much for getting on with us. Let's start broadly here with where the SEC is at. Talk to me about their overall vibe and feeling towards crypto right now.
So, for years and years, the crypto industry has just been clamoring for what they call regulatory clarity. You know, they've been asking for clear rules and guidelines to be laid out, and they have their answer. Now, the SEC is cracking down. These lawsuits show that they are coming after crypto companies and that they consider many of the tokens that are traded on these platforms to be unregistered securities.
And when you talk about that these crypto firms were kind of itching to have this regulation, how important is that in what the SEC's moves will look like moving forward? Is that is that like a good enough excuse for the practices of these crypto firms.
Yeah, so we've seen them argue, you know that they've been working with regulators that there isn't a clear path for them to register, you know, their tokens of securities. You know that they just haven't been able to get these answers. But now you know, they've gotten their answer and it's not the one they've been craving. So they're they're really, you know, at a loss here. There's a lot of questions about whether crypto can actually survive in
the in the US, never minds thrive. So they're looking abroad. You know, they're eyeing places like the UK, They're looking at Asia. You know, they think that really their best bet is to go overseas.
So is the sense among your sources that that's a pretty likely outcome.
Yeah. I mean everyone's saying, you know, they're pushing us away from the US. And you know the other thing too, is that other countries take signals from the US in terms of how they you know, form their regulations. So the fact that you know the US is cracking down, you know that that could dissuade regulators in other parts of the world from you know, being more accepting of crypto.
So I think, here, what you know, when I'm talking to two people, you know, there's obviously still hope that you know, that these lawsuits will drag on for years and that there could make be changes or you know, more favorable treatment during that time. But you've seen companies like Coinbase look abroad start expanding their operations there and you know, building new hubs in different markets.
So let's talk about coinbase and finance. Starting with Coinbase, which feels like the bigger deal of the two to me. Talk me through the SEC's uh, you know, moves towards Coinbase in particular.
Yeah, so Coinbase is publicly traded, this is a US based company, and you know, they've argued the whole time that they've been working with the SEC that they have these close relationships with regulators. You know that there has been some tension, but you know, ultimately they're trying to
you know, follow the best path they can. However, you know this this lawsuit shows that the SEC does not think that then they think that Coinbase could have done more to you know, work with them, that they could have stepped forward and you know, tried to find a better path for for registering the tokens that they sell. But this lawsuit suit shows that they kind of have put Coinbase in a similar category to Finance, which is you know, does not have the best reputation in the US.
It's actually tussled with regulators around the world. You know, there are these issues that Finance doesn't even have an official headquarters. So to kind of lump these two together is a big step back for Coinbase. Granted, the lawsuit against Finance is way wider. There are more charges here, you know, there are more issues here with Finance.
And when it comes to the crypto enthusiasts themselves, so I know, you spend a lot of time talking with how do they feel about this?
Yeah, so a lot of the crypto enthusiasts I talk to. You know, they're saying, right now there's this transition from money crypto to tech crypto that people are pulling back from, you know, the financial implications of crypto trading things like that, and they're looking at how blockchain technolo can actually benefit
society more broadly. So, you know, there's been a lot of push towards using the term web three, which refers to the centralized version of the Internet that can be built on blockchain, and kind of turning away from you know, these these ties to you know, financial scams, you know, bankruptcies, uh, things like that, and and focusing more on how blockchain can can benefit people.
And you mentioned in your story though that crypto enthusiasts, Uh, we're looking at the SEC listing several of the digital coins, even the ones that uh, you know, uh a person who's not as familiar with crypto might know, like Solana. Uh. How big of a concern is that for people who hold those coins now?
Yeah, so that is a big concern because we've seen you know, top tokens, tokens to people love named in this SEC lawsuit. So you know, you mentioned Salana Kredano's ATA token was another one named, and you know, these are big names in the end of and people are concerned, you know, like, Okay, well what are these tokens? I do have our securities? What are the financial implications of that?
You know? Can I actually trade these? I also talk to a lot to venture capitalists who invest in cryptostartups through UH token purchases. So the fact that they're holding onto these tokens right now, you know that that's given them a lot of uncertainty. And you know, some of these are registered investment advisors, so that gives them a little a little more cushion with them. But this is a this is a huge turning point for the industry in looking at these tokens and seeing them as as securities.
Can they just register them as securities and then we can treat it like you know, any old investment or Is that not going to happen?
You know, that's a great question. I think there's just still a lot of unknowns here, like what the actual process is. You know a lot of these tokens also are like monitored by the centralized foundations and things like that, and it just it brings up a lot of questions here, like how can we actually you know, work with the SEC to get these these tokens registered if they are securities.
Well, and as you know, it's a very complicated topic. Is there a sense from the sources that you speak with that the SEC has the knowledge and understanding of digital assets to even regulate them.
Yeah. So I think when you know, people were initially first excited about Gary Gensler, they're like, oh my gosh, he actually understands this technology. He's taught a course on blockchain at MIT, like he gets it. But I think now there there's some fear and concern that like, Okay, maybe he doesn't actually, you know, see the potential in this technology that he just wants to crack down. So
it's definitely shaken the industry for sure. I mean they've been expecting this for a while, but to actually be faced with the reality of these lawsuits, it's a huge deal. And you know, the qu industries just continuing to reel from scandal after scandal.
Well, that was going to be my next question for you, because I've been saying that, you know, the FTX news feels old to me at this point, but obviously that kind of kicked all of this off. To what extent. Is the downfall of FTX sort of the spark that lit this regulatory flame.
Yeah, I mean it was I think a huge catalyst for this. I mean especially because Sam bankf and Fried was just so beloved in Washington, DC that he was working closely with you know, politicians with regulators, and he was he was well known to them and kind of seen as you know, a better alternative to to you know, cz and Binance. So the fact that you know, his his exchange just collapse and set off this you know, tidal wave of issues for the industry. I mean that they're still dealing with them.
And Hannah, in our final kind of forty five seconds with you, you mentioned the investors and and folks in this industry are looking globally for their next steps. Is there any chance of that option getting dwindled as well by the same regulatory issues.
Yeah. I mean we've already seen you know, regulators take pause. I mean like in Dubai for example, you know they've kind of if the uas very much presents it itself as you know, a crypto friendly environment, but you even see you know, Dubai's top regulator crackdown on a new crypto exchange called open x and already having issues there. So it's it remains to be seen, you know, what
will happen in various in various markets. But I think any crypto company should be on their toes, whether they're operating in the US or outside of it.
All right, Hannah, well, thank you so much for joining us. That was Hannah Miller, Bloomberg News crypto reporter, breaking down all the complexities that continue to exist within this space. Again, Hannah Miller with Bloomberg News. I'm Madison Mills in for June Grasso. Coming up next that PGA Live merger will bring you the latest. This is Bloomberg. This is Bloomberg Law with June Grasso from Bloomberg Radio. This is Bloomberg Law. I'm Madison Mills in for June Grasso this week. So
that PGA Live Golf Tour. It's loaded with questions and the latest is how the century centuries old PGA Tour, which is technically a nonprofit, will run once funded by one of the world's biggest sovereign wealth funds. PGA Tour says it plans to keep its nonprofit status, but how are regulators going to feel about that. Joining us to discuss is Bloomberg Intelligence senior litigation analyst Jennifer ree Jen great to speak with you as always. Can they keep their nonprofit status here?
You know, it's a really good question, and I'm not so sure that they can. And I also don't really think for profit or nonprofit will make a difference in terms of the anti trust review of this. I mean, I think right now their biggest obstacle. I mean, we've seen all sorts of issues and senators coming out and worry about national security, but I think right now their biggest obstacle will be anti trust in the DOJ, and
that review won't really matter. It won't really matter whether it's for profit or not for profit.
Okay, So that's interesting. So that's not really something that we need to be looking at in our coverage necessarily.
Well, I think for tax purposes, I think it does make a difference. I'm not a tax expert, so I can't really speak to what I mean. I think there's so many implications to this across many different areas of the law, and because we don't know the details, they don't. They haven't hammered out the details yet, so we don't even know what kind of an alliance this is, whether it's a merger, whether it's a joint venture, whether it's
something else. They haven't even hammered that out yet, and so we don't know either, and the legal implications won't really fully be able to be fleshed out or known until those sorts of details are completed.
Well, that's the thing that's interesting to me and hard about talking about this is I feel like I need to know the number to understand it. How do you think about it without knowing the number? Here?
So, just from an antitrust perspective, the way I think about it is that it almost doesn't really matter what it ends up being. It is two competitors in a very concentrated market coming together to become one, and that is sort of presumptively anti competitive. I mean, we saw the benefits of Live as a new entrant because a lot of golfers got paid a lot of money to come over to Live, and then the PGA also had to start pushing up their prize money in order to
keep the golfers within the PGA tour. That's the essence of competition. A new competitor comes on board, and people are paid more I mean, or you know, prices go down for consumers. But this is a different issue. This is about labor and the payments made to labor, and that will change if they come back together, because once again one entity will be able to determine how much
these golfers are paid. And so you know, no matter what kind of what kind of a transaction it is, I think that it's sort of superficially just clearly has an anti trust issues.
And given that it's coming from Saudi Arabia's public investment fund the money part. Could this be similar ish to what we were talking about with the Microsoft Activision deal, where we see different results in different parts of the world, or is it really going to be decided in the States.
Well, I think that's possible because part of this alliance that they're putting together, whatever it is, is including the European Tour, the DP World Tour I think it's called, and so European regulators may want to look at it as well. It's kind of rare for the big global antitrust agencies across the world to actually come out differently
on a deal. What happened with Microsoft Activision was kind of a rarity, and I don't you know, I don't think that they would here because it's also not in my mind, it's not quite as complicated as the Microsoft activision deal is in terms of looking at how it could harm a market. I mean, it seems to be clearer.
This is a This is basically a.
Combination of horizontal competitors, and I just think it's more likely that the agencies would be more aligned on that, and so the European regulators may want to look at this too.
In our final thirty seconds, what do you think is going to be the next big reveal that we get about this? I guess I'm going to call it a murder, even though that may not even be the right rule work.
We don't know.
Yeah, well, I think we're going to have to. Senators are really popping up now talking about concerns about national security or the tax issue that the nonprofit and for profit tax issue you raised. The DJ started an investigation, so I think, you know, it could be along any of those lines that we could hear about the next event.
All right, well, I am certain I'm going to be asking you a lot of questions along the way. Jennifer Ree Bloomberg Intelligence senior litigation analysts. Thanks so much for joining us. This is Bloomberg Law. I'm Madison Mills in for June this week. Stick with us for more throughout the week on Bloomberg Law. This is Bloomberg