0/ Ross Ulbricht shouldn't spend the rest of his life in prison.
If you're wondering why his name keeps coming up on #cryptotwitter, please read this. It's long but important.
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1/ In 2011, Ross created Silk Road, a global marketplace to buy & sell goods, whether legal or not.
Silk Road was perhaps the first use case for #bitcoin: censorship-resistant internet money for an online market that governments badly wanted to censor.
2/ Silk Road hosted many things, including a book club that a lot of us #crypto people would've liked, but the prime attraction for many users was drugs.
By September 2013, Silk Road had thousands of drug listings, including for cocaine, heroin, and LSD.
3/ Ross was arrested in October 2013 & convicted on multiple charges in February 2015. A lot of *deeply* sketchy things went down during the investigation & trial, but I'll leave that for another day.
In May 2015, Ross was sentenced to life imprisonment times two, plus 40 years.
4/ Okay, let's acknowledge the obvious: Ross knowingly profited from the sale of illegal drugs. It's hard to argue he didn't break the law.
But you don't need to think Ross is innocent (or a libertarian hero) to agree it's fundamentally wrong for him to serve a life sentence.
5/ I'll spare you the technicalities re: federal sentencing. Basically the judge could give Ross any sentence she wanted, within statutory limits.
Ross's drug trafficking charge carried a 20-year statutory minimum. By law, he had to serve that long; any more was up to the judge.
6/ In my view, Ross had a compelling case for leniency.
He had no criminal record and his goal was never to run an internet drug cartel. He was an idealist who, perhaps wrongly, wanted to advance personal & economic freedom through an open, unrestricted & neutral marketplace.
7/ Nearly 100 people wrote letters to the judge on his behalf:
- describing him as kind, genuine & humble
- telling stories about all the good he had done
- praising his intelligence & bright future
- expressing shock at his conviction & confidence he wouldn't do it again
8/ As for his crime, it's true Silk Road drugs hurt many people, but:
- most drug sales were for small amounts of marijuana
- the site was *safer* than street deals per @DrugPolicyOrg
- stolen goods & violent content were banned
- Ross wasn't selling any illegal goods himself
9/ Which brings us to the most controversial (& to me most important) part of the story: the murder-for-hire charges.
The government accused Ross of attempting to pay for the murders of several people who'd allegedly wronged him. His trial did *not* include any of those charges.
10/ In fact the charges were dropped last week. Why's that matter?
Because of a core principle of American justice: each person accused of a crime is presumed innocent until proven guilty beyond a reasonable doubt, as decided by a jury of their peers.
This is sacred, full stop.
11/ So, as of his sentencing, Ross had not been convicted on any murder-for-hire charges. Despite this, the judge *alone* found that Ross had commissioned five murders-for-hire.
No jury, no trial. No proof beyond a reasonable doubt. No presumption of innocence.
12/ When she gave him double life plus 40 years, she said the "murders significantly justified the life sentence."
Which means the government convicted Ross of certain (nonviolent) crimes, and then had him sentenced for different, unproven (violent) ones.
This should not be.
13/ Ross appealed, arguing that it's unconstitutional for a judge alone to decide that someone committed a crime. He had one of the best legal teams in the country representing him.
The Supreme Court refused to hear the case. Didn't reject it; just left the question unanswered.
14/ What if Ross were only sentenced for running Silk Road, instead of five unproven murders-for-hire?
Maybe he would've come out like the CEO of Backpage, who was convicted for running a sex trafficking site this year and is already out of jail (on bond awaiting sentencing).
15/ To learn about the *many* other problems with this case:
17/ I'll leave you with a few of Ross's own words.
He wrote the following in a letter to the judge before his sentencing hearing (bit.ly/2Au94Zn). Read it all, if you have a chance. It's a beautiful and heartbreaking glimpse into his character.
He concludes:
18/ "If you find my conviction warrants a sentence that allows for my eventual release, I will not lose my love for humanity during my years of imprisonment, . . .
I will do what I can to make up for not being there for the people I love, and to make the world a better place[.]"
19/ "Even now I understand what a terrible mistake I made. . . .
I know you must take away my middle years, but please leave me my old age. Please leave a small light at the end of the tunnel . . . a chance to redeem myself in the free world before I meet my maker."
0/ A quick summary of today's ruling in the My Big Coin case.
In short, a federal court says *all* digital currencies are commodities & the CFTC has jurisdiction to prosecute fraud & manipulation in crypto. In my view, the ruling is deeply flawed.
My answers to some common questions about the SEC & the approval process for #bitcoin & #crypto ETFs. If you have a question I didn't address, feel free to ask here & I'll add on.
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1.0/ Q: "Who decides whether to approve or deny an ETF?"
The initial decision is made by SEC staff in the Division of Trading & Markets. If the staff denies an ETF proposal, the ETF sponsor can file an appeal, which will be decided by all of the SEC Commissioners.
2.0/ Q: "What's the process & timeline for the SEC to decide on an ETF?"
When a proposal is filed, the SEC publishes it in the Federal Register (the government's official journal) & solicits comments from the public. It then has 45 days to approve, deny, or delay a decision.
0.0/ A lot of #crypto news today from the securities enforcement world:
- DOJ goes to trial on ICO-related securities fraud charges
- SEC charges broker-dealer & hedge fund with securities violations
- FINRA charges broker with fraud & dealing unregistered securities
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1.0/ Let's start with DOJ. Today's news relates to a federal criminal case in the Eastern District of New York: United States v. Maksim Zaslavskiy.
Zaslavskiy was charged in November 2017 on three counts of securities fraud in connection with two ICOs: "REcoin" and "DRC."
1.1/ DOJ says Zaslavskiy lied to investors when he sold these ICOs.
According to the indictment, he told investors that both coins were backed by real world assets: he allegedly claimed REcoin was backed by real estate & DRC was backed by diamonds.
1/ Historically, ShapeShift has enabled users to convert between a variety of digital assets with total anonymity.
The service reflected the principles of its CEO, @ErikVoorhees, a true bitcoiner who speaks passionately about financial privacy & separating money from state.
2/ The thing is, the US government doesn't exactly agree with Erik's point of view.
Modern enforcement agencies rely heavily on financial surveillance. The concept of anonymous crypto exchanges & transactions is a genuine nightmare for regulators & investigators.
2/ But we weren't expecting the SEC to also reject *seven* other derivative-backed ETFs proposed by GraniteShares & Direxion. Those ETFs weren't due for final decisions until September 15 and 21 respectively.
The only ETF left now is the VanEck/SolidX commodity-backed offering.
0/ The SEC's final deadline to approve or deny the two ProShares Bitcoin ETFs is next Thursday, August 23 (sec.gov/rules/sro/nyse…). My thoughts on two questions:
- How will the SEC make its decision?
- Would these ETFs even be good for bitcoin?
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1/ In December 2017, the NYSE Arca exchange filed a proposal with the SEC to list and trade two ETFs issued by ProShares:
- ProShares Bitcoin ETF
- ProShares Bitcoin Short ETF
Both would use derivatives (futures, options, and swaps) to track bitcoin's daily price movements.
2/ These ETFs are important: they're the first ones that the SEC will approve or deny in 2018 & will set the stage for others in coming months.
Of course, nobody knows what the SEC will decide, but we can use their recent statements to figure out what factors they'll consider.