LexLine on RugRadio

On Episode 190 of LexLine, I’m joined by Jake Gallen — a dynamic entrepreneur, podcaster, and thought leader at the intersection of crypto, AI, and digital asset innovation. A Las Vegas native, Jake’s journey has taken him from the heart of the city’s entertainment industry to the forefront of blockchain and NFT technology. He is the CEO of Emblem Vault, a leading platform for cross-chain NFT interoperability, and a driving force behind Agent Hustle, an on-chain AI assistant reshaping how users engage with decentralized finance and digital assets. Jake has not only been an early adopter of crypto, diving into Ethereum back in 2016, but he’s also played a pivotal role in bringing blockchain adoption to mainstream audiences through his work, including helping NFTs break into the traditional art world via Sotheby’s. Whether building tools that enhance blockchain usability or hosting in-depth conversations on his own podcast, Jake brings a unique mix of experience, foresight, and hustle to the rapidly evolving Web3 space. In this conversation, we unpack Jake’s path from nightlife to NFTs, explore how AI is transforming DeFi, and dig into the future of digital assets, decentralized tech, and what’s next for Emblem Vault and Agent Hustle.

In a significant legal development, the court overseeing the SEC v. Coinbase case has granted Coinbase’s motion to certify the court's previous order for interlocutory appeal. This decision not only pauses ongoing proceedings but also signals potential ripple effects for the crypto industry and regulatory clarity. Court’s Order Background The SEC sued Coinbase in June 2023, accusing it of operating as an unregistered broker, exchange, and clearing agency. The crux of the case centers on whether the crypto-assets offered on Coinbase’s platform meet the definition of "investment contracts" under the Howey Test, a standard from 1946 used to identify securities. Coinbase contends that the test is outdated and inapplicable to modern digital assets. Court’s Key Findings In its March 2024 ruling: 1. Howey Test Applied: The court analyzed whether the crypto-assets constituted investment contracts. - Investment of Money: Not disputed. - Common Enterprise: The court agreed with the SEC that the token values depend on ecosystem development (horizontal commonality). - Expectation of Profits: The court found Coinbase promoted the tokens with the expectation of ecosystem-driven profits. 2. Rejection of Contractual Obligation Argument: The court dismissed Coinbase’s argument that a formal post-sale obligation is required for an investment contract, emphasizing the focus on economic realities over formalism. 3. Digital Ecosystems as Distinction: The court noted that crypto-assets rely on their ecosystems for value, unlike real estate or collectibles, which possess inherent value. 4. Legal Implications: The ruling left the SEC’s claims largely intact while partially granting and denying Coinbase’s motion for judgment on the pleadings. Interlocutory Appeal Granted The court recognized the broader legal stakes by granting Coinbase's motion for interlocutory appeal. It highlighted the need for appellate guidance on: - How the Howey Test applies to digital assets. - Whether the SEC's authority should extend to transactions lacking contractual obligations. - The potential for a circuit split with conflicting rulings in similar cases (e.g., Ripple Labs). Why This Matters This case could set a landmark precedent for crypto regulation. If the appeal progresses to the Supreme Court, it might reshape securities laws by clarifying or even redefining the Howey Test for modern financial instruments like digital assets. Next Steps - Proceedings in the trial court are stayed pending the outcome of the appeal. - The Second Circuit's decision could have industry-wide implications and may set the stage for Supreme Court review. Closing Note This case highlights the ongoing tension between traditional securities laws and the fast-evolving crypto industry. Stay tuned as this legal battle could define the regulatory landscape for years to come.

In Episode 187 of LexLine I talked with Tiffany Fong. According to her X bio, Tiffany Fong is a self-described "potato" who interviews criminals and breaks major stories in the crypto world. She is best known for her exclusive scoops on the FTX and Celsius collapses, along with her candid and hilarious takes on crypto culture. On X, Tiffany has built and monetized a massive following, blending humor, insight, and citizen journalism to make her a truly unique voice in the community. In this episode, we discussed her journey from losing all her crypto bags on Celsius to her groundbreaking interviews and coverage of Sam Bankman-Fried (SBF) and the FTX collapse. Recorded April 19, 2024 .

In Episode 186, I sat down and discussed NFTs and Music with Web3 singer/songwritter Violetta Zironi. Violetta is an Italian born and raised singer songwriter and actress. In January 2022, after a decade long independent career, and multiple movies shoots (including trending Netflix original "Rose Island") she dove into the world of music NFTs. In this interview, we discussed Violetta's journey from the traditional Web2 music industry to Web3 and tips for how new artists can do the same.

On Episode 185 I interviewed crypto journalist Eleanor Terrett. Eleanor covers all things crypto for Fox Business news. In this episode we discussed the SBF's 25 year prison sentence as well as other major legal issues in the crypto and blockchain space.

On Episode 184 of LexLine I interviewed Eugene Dorfman. Eugene is crypto and NFT enthusiast and the owner of Pro Player Insurance LLC Sports & Entertainment Insurance in Miami, Florida. Eugene's agency specializes in providing disability and life insurance coverage for high networth professional atheletes.

In Episode 183 of LexLine I had a conversation with Professor J.W. Verret. J.W. Verret is a lawyer, expert witness and Professor of Law at Antonin Scalia School of Law - Geroge Mason University. We discussed his take on the recent guilty verdict in the Bitcoin Fog federal money laundering trial and what it means for the future of anonymous mixers.

In Episode 182 of LexLine, I had the pleasure to talk with Web3 lawyer and coder Jordan Teague. Jordan is a self-professed “nerd in the basement,” with a passion for merging law and technology to help her clients become more effective, efficient, and forward-thinking.

On Episode 181 of LexLine, I sat down with attorney Pablo Segerra to discuss the current state of the Web3 start up world and the future outlook for NFT brands. Pablo is the founder of www.SideHustle.Law--a law firm focussed on advising emerging technology entrepreneurs, especially those venturing into online businesses and blockchain technology.

In this episode of LexLine I discuss the recent hearing in federal court on Coinbase's Motion to Dismiss the SEC's lawsuit. On January 17, 2024, Coinbase appared in federal court for a landmark legal battle with the SEC, challenging the agency's claims that it operates as an unregistered broker and clearing agency, and that 13 cryptocurrencies on its platform are securities. This case has the potential to redefine the SEC's regulatory boundaries over cryptocurrency markets in the United States. One of the primary issues for the court to address is whether the 13 digital assets mentioned in the lawsuit meet the legal definition of securities under the Howey Test.

In Episode 179 of LexLine, I talked with crypto CPA Cameron Browne to clarify how IRS Sec. 6040i applies to crypto transactions over $10K.

Had a wonderful converesation with the CEO Psychedelica about the future of NFTs and Web3.

In Episode 177 of LexLine, we sat down with the Girl in the Verse to discuss her journey from traditional broadcast journalist to Crypto and Web3 content creation.

Attorney Jason Schwartz is a tax partner & digital assets co-head at the law firm of Fried Frank. On this episode of LexLine we discussed proposed IRS/Treasury digital asset broker reporting regs that, if approved, would essentially require every user to KYC their personal identifying information to any qualifying digital broker asset platform. This proposed reg raises significant privacy and personal user data security concerns. Here's a link for more on these proposed Treasury regs. https://defidefenselawyer.com/images/pdf/guide-to-proposed-digital-asset-broker-regulations.pdf

Could the perceived "worthless" value of NFTs' Ultimately be A Positive Thing for These Collectables? Rolling Stone recently published an article based on a study by dappGambl, suggesting that 95% of NFTs are worthless. The study included 73,257 NFT collections, with 69,795 having a market cap of zero ETH, suggesting 95% of these NFTs are essentially worthless. ,The perceived worthlessness of NFTs could serve as a positive refining mechanism, fostering innovation, sustainability, and enhanced quality in the NFT space. It allows for market corrections and provides entry points for new stakeholders. Furthermore, seemingly “worthless” NFTs have multiple pathways to potentially gain value over time, through factors like scarcity, historical significance, community building, market sentiment shifts, external validation, and utility enhancement. The dynamism and the multifaceted nature of the NFT market hint at a future where value perceptions and applications of NFTs are diverse and ever-evolving.

In this episode of LexLine I discuss LBRY's notice of intent to appeal th court's ruling LBRY's token, LBRY Credits (LBC), is an unregistered security, supporting the U.S. Securities and Exchange Commission (SEC) stance.

In this Episode of LexLine I discussed whether the District Court’s ruling in the Uniswap case may iImpact the DOJ’s prosecution of the Tornado Cash decentralized protocol? https://cryptocriminaldefenselawyer.substack.com?utm_source=navbar&utm_medium=web&r=1px4pf

Court rules in favor of Grayscale and notes that l"To avoid arbitrariness and caprice, administrative adjudication must be consistent and predictable, following the basic principle that similar cases should be treated similarly. NYSE Arca presented substantial evidence that Grayscale is similar, across the relevant regulatory factors, to bitcoin futures ETPs. The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP. In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful. We therefore grant Grayscale’s petition for review and vacate the Commission’s order." https://storage.courtlistener.com/recap/gov.uscourts.cadc.38827/gov.uscourts.cadc.38827.1208547574.0.pdf

The DOJ announced yesterday that it has returned an indictment charging the founders of Tornado Cash with money laundering and sanctions violations. DOJ Press Release Two individuals, Roman Storm and Roman Semenov, have been charged with operating Tornado Cash Service, a cryptocurrency mixer, which allegedly laundered more than $1 billion in criminal proceeds. The U.S. Department of Justice (DOJ) announced the unsealing of the indictment, detailing multiple charges against the defendants, including conspiracy to commit money laundering, sanctions violations, and operating an unlicensed money transmitting business.https://open.substack.com/pub/cryptocriminaldefenselawyer/p/tornado-cash-founders-charged-with?r=1px4pf&utm_campaign=post&utm_medium=web