12 Crypto-Predictions for 2023

The question I hear most is: What lies ahead for crypto for 2023?

So here are 12 concrete and heavily supported/researched predictions, with crypto-prognostications ranging from the futures of Binance, Tether and SEC Chair Gary Gensler, to crypto-forecasts about what to expect from the Internal Revenue Service, SEC Commissioner Hester Peirce and blockchain itself.

Each specific prediction also has its own theme song (referenced with a link), incorporated not only to enhance the enjoyment of reading each prediction, but also to add fuel to its fire.

Please leave your own predictions, concurrences, dissents, etc. in the comments. Anything goes unless the tone is hostile or nasty -- we can leave the venom and rancor for Twitter.

Prediction #1: There Will Be SEC Enforcement Sweep of Crypto-Intermediaries (Barry McGuire - Eve Of Destruction )

An Enforcement sweep carried out by the U.S. securities and Exchange Commission (SEC) of crypto-intermediaries is clearly coming in 2023. Senior SEC crypto-officials have promised as much too many times for a crypto-sweep not to happen.?

Just read the following recent quotes from the three most important SEC crypto-enforcement officials. In my experience, the SEC does not make idle threats and the "runway" no longer runneth over:

November 15, 2022 : Per SEC Crypto Unit Chief David Hirsch at the SEC Enforcement Forum:

“We want people to come in and register so that investors can decide on what risks they would like to take. There is a runway for crypto intermediaries and exchanges to come in and get registered, but I think that RUNWAY is growing shorter and SEC enforcement is willing to??move forward and bring enforcement actions as appropriate.”?(emphasis added)

December 8, 2022 : Per SEC Chair Gary Gensler on Speaking with Yahoo!:

“I've got one goal is that these platforms, the exchanges, the lending platforms come into compliance. They can do that appropriately working with the SEC. Or we can continue on the course with more enforcement actions. And I would have to say that the RUNWAY is getting shorter.”?(emphasis added)

December 13, 2022 : Per SEC Enforcement Director Gurbir Grewal at the DOJ FTX Press conference:

“Grewal warned investors and customers to remain cautious on crypto platforms, which he said “don’t provide [customers] with the same robust level of disclosures and protections against fraud and conflicts of interest” as SEC-registered platforms do. As Chair Gensler has made clear, the RUNWAY is getting shorter for them to come in to register with us. And for those who do not, the Enforcement Division stands ready to take action.”?(emphasis added)?

December 13, 2022 : Gensler issues a crypto-warning when the SEC announced its civil enforcement action against Sam Bankman-Fried (SBF), saying:

“The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws. Compliance protects both those who invest on and those who invest in crypto platforms with time-tested safeguards, such as properly protecting customer funds and separating conflicting lines of business . . . To those platforms that don’t comply with our securities laws, the SEC’s Enforcement Division is ready to take action."

December 21, 2022 : SEC Chair Gary Gensler, in the press release announcing the Ellison/Wang FTX-related settlements, yet again admonishes crypto-intermediaries, saying:

“Until crypto platforms comply with time-tested securities laws, risks to investors will persist. It remains a priority of the SEC to use all of our available tools to bring the industry into compliance."

Dec. 22, 2022 : Gensler tells the New York Times, warning crypto issuers and exchanges that are not registered with the agency that they could soon find themselves facing enforcement actions, “I believe that securities law is quite robust and covers much of the activity, not only of the tokens but particularly the intermediaries in crypto securities?. . .?The roadway [probably meant to say “runway”] is getting shorter.”

Gensler, Gurbir and Hirsch could not say it any plainer. Fail not at your peril crypto-ecosystem, you are all squarely within the SEC’s sights.?By calling themselves “exchanges,” “brokers,” and “market-makers,” crypto firms co-opt historically powerful nomenclature that implies trust, oversight and consumer protection, etc. This is a material ruse.

It’s like if a drug dealing gang suddenly offered to perform brain surgery for customers, yet had never gone to med school, never done a hospital internship or residency and their only health training consisted of watching a few TikTok videos.

The stark reality is that by hijacking bona-fide regulatory labels, together with flashy super bowl commercials and attractive/sleek customer-interphase and websites, these entities create a counterfeit veneer of assurances, integrity, expertise and regulatory supervision.

The SEC has already alleged that FTT is a security in the Ellison/Wang complaint. This was big news, because ethe SEC now clearly has a broad jurisdictional hook to pursue crypto-intermediaries.?Per the SEC’s Wang/Ellison Complaint :

“1. FTT Was Offered and Sold as an Investment Contract and, Therefore, as a Security.

75. On or about July 29, 2019, FTX launched a crypto asset known as “FTT.” FTX launched FTT as an “exchange token” for the FTX platform (i.e., the crypto asset or token associated with a crypto trading platform).

76. Before launching the FTX platform in or around May 2019, FTX had minted 350 million FTT tokens in or around April 2019. Of the 350 million tokens minted, 175 million were allocated to FTX as “company tokens,” and 175 million were designated as non-company tokens. The company tokens were set to “unlock” (or become available for trading) over a three- year period after a so-called initial exchange offering (“IEO”) of the token.

77. From the time of its offering, FTT was offered and sold as an investment contract and therefore a security.”

For any company doing business in the U.S., the SEC will asphyxiate this grift forthwith by applying its existing robust arsenal of broad statutory weaponry to all crypto-trading firms and facilitators operating in the U.S., including filing enforcement actions for failing to register as 1) an "exchange;" 2) a "broker-dealer;" 3) a "market-maker." or 4) an "investment company."

Failure to Register as an Exchange

Put simply, a securities exchange is a company that creates the opportunity for potential buyers and sellers of a security to come together for trading – and per the SEC, cryptocurrency tokens can be securities.?Hence, the need to register under?Section 6 of the Exchange Act , or operate pursuant to an appropriate exemption (such as an alternative trading system that complies with?Regulation ATS , which requires, among other things, registration as a broker-dealer and filing of a?Form ATS ?with the SEC).?

While crypto platforms often refer to themselves as "exchanges," they bear no resemblance to traditional exchanges like NYSE/NASDAQ and are ripe for SEC regulatory attack.??

The SEC actually began its efforts at policing unregistered exchanges in the cryptocurrency marketplace more than five years ago. Specifically, on?November 8th, 2018,?the SEC settled charges against Zachary Coburn,?the founder of EtherDelta , a digital token trading platform, initiating its first SEC enforcement action based on findings that such a platform operated as an unregistered national securities exchange.

According to?the SEC's order ,?EtherDelta?is an online platform for secondary market trading of ERC20 tokens, a type of blockchain-based token commonly issued in ICOs. The SEC order found that Coburn caused EtherDelta to operate as an unregistered national securities exchange.

EtherDelta provided?a marketplace for bringing together buyers and sellers for digital asset securities through the combined use of an order book, a website that displayed orders, and a “smart contract” run on the Ethereum blockchain.?EtherDelta's smart contract was coded to validate the order messages, confirm the terms and conditions of orders, execute paired orders, and direct the distributed ledger to be updated to reflect a trade. Over an 18-month period, EtherDelta's users executed more than 3.6 million orders for ERC20 tokens, including tokens deemed securities under the federal securities laws.?

The SEC charged that EtherDelta offered trading of various digital asset securities and failed to register as an exchange or operate pursuant to an exemption.?SEC Enforcement co-director Stephanie Avakian noted sternly at the time:

"EtherDelta had both the user interface and underlying functionality of?an online national securities exchange and was required to register with the SEC or qualify for an exemption.”??

Without admitting or denying the findings, Coburn consented to the order and agreed to pay $300,000 in disgorgement plus $13,000 in prejudgment interest and a $75,000 penalty.?The Commission's order recognized Coburn's cooperation, which the Commission considered in determining not to impose a greater penalty.

Along the same lines, in a more recent?SEC enforcement action against Poloniex LLC ,?Poloniex LLC agreed ?to pay more than $10 million to settle charges for operating an unregistered online digital asset exchange in connection with its operation of a trading platform that facilitated buying and selling of digital asset securities.

The SEC’s order found that from July 2017 through November 2019, when Poloniex sold its platform, Poloniex operated a web-based trading platform that facilitated buying and selling digital assets, including digital assets that were investment contracts and therefore securities.?According to the SEC’s order, the Poloniex trading platform met the criteria of an “exchange” as defined by the securities laws because the trading platform provided the non-discretionary means for trade orders to interact and execute through the combined use of the Poloniex website, an order book, and the Poloniex trading engine.?The order also found that notwithstanding its operation of the Poloniex trading platform, which was available to U.S. investors, Poloniex did not register as a national securities exchange nor did it operate pursuant to an exemption from registration at any time, and its failure to do so was a violation of Section 5 of the Exchange Act.?

Said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit at the time of the Poloniex settlement:

“Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange. Poloniex attempted to circumvent the SEC’s regulatory regime, which applies to any marketplace for bringing together buyers and sellers of securities regardless of the applied technology.”

Failure to Register as a Broker-Dealer (BD)

In addition to enforcing federal registration provisions pertaining to exchanges, the SEC also enforces?strict liability ?registration provisions pertaining to broker-dealer activity, an extremely broad and sweeping registration requirement with few, if any, exceptions.

Specifically,?Section 15(a)(1) of the Securities Exchange Act of 1934 ?makes it unlawful for a person to “effect a transaction in securities” or “attempt to induce the purchase or sale of, any security” unless they are registered as a broker or dealer under the rules and regulations of The Financial Regulatory Authority (FINRA), the regulatory organization designated by the SEC to license and regulate broker-dealers. The level of BD activity by crypto trading firms is astounding and for the SEC, these cases will be like shooting fish in a barrel.?

The ramifications for failure to register as a broker-dealer are severe, even criminal.?In addition,?Section 20(e) of the Exchange Act , under which the SEC may impose aiding-and-abetting liability on any person that knowingly or recklessly provides substantial assistance in a violation of the Exchange Act, creates additional potential liability. Finally, merely retaining and permitting an unlicensed intermediary to help facilitate or effect a securities transaction may be a violation of federal and many state laws and may subject others to possible civil and criminal penalties, including imprisonment.??

In accordance with these fairly stringent requirements, crypto firms collecting listing fees, marketing fees, facilitation fees or any other iteration of transaction-based compensation from crypto-funding companies, could trigger broker-dealer registration.

Even if crypto-trading arrangements conceal the true intent of the relationship between any sort of funding company and the cryptocurrency trading platform, payment of transaction-based compensation i.e., a commission or some form of compensation that varies with the size or type of the resulting investment, is treated by the SEC as a nearly-conclusive indication that a person is engaged in the securities business and should be registered as a broker-dealer.?

While the SEC has consistently viewed transaction-based compensation as the “hallmark” of broker dealer activity, there are a?broad range of other kinds of transaction-related conduct ?that can trigger broker-dealer registration. Failure to register under such circumstances can render any related securities offering immediately and irrevocably tainted,?even triggering rescission rights .

By skirting broker-dealer registration requirements, cryptocurrency trading platforms peddling any sort of securities offering are not adhering to a safe and transparent financial services regulatory framework. For instance, broker-dealers are required to “observe high standards of commercial honor and just and equitable principles of trade ” in the conduct of its business, including determining if an investment is “suitable” for its customer and maintaining meticulous records of communications, representations, transactions and other important information. Broker-dealers also are subject to SEC and FINRA examinations together with an exhaustive laundry list of regulations and rules of conduct as well as a rigorous training, testing and certification process.

Digital Wallets

In addition to online trading platforms, the?SEC March 7, 2018 Statement on Potentially Unlawful Online Platforms for Trading Digital Assets ?also raised concerns about companies that offer “digital wallet services” for holding or storing digital assets:?

“Some online trading platforms may not meet the definition of an exchange under the federal securities laws, but directly or indirectly offer trading or other services related to digital assets that are securities.?For example, some platforms offer digital wallet services (to hold or store digital assets) or transact in digital assets that are securities.??These and other services offered by platforms may trigger other registration requirements under the federal securities laws, including broker-dealer, transfer agent, or clearing agency registration, among other things.”

Along these lines, in a?July 8, 2019 Joint Staff Statement on Broker-Dealer Custody of Digital Asset Securities , the SEC and FINRA clarified that entities seeking to participate in the marketplace for digital asset securities must comply with the relevant securities laws, most notably the customer protection rule. The SEC warned that non-registered firms would likely have to register as a broker-dealer before engaging in custodian services related to digital asset securities, noting that:

“The requirements of the Customer Protection Rule have produced a nearly fifty year track record of recovery for investors when their broker-dealers have failed . . . This record of protecting customer assets held in custody by broker-dealers stands in contrast to recent reports of cybertheft, and underscores the need to ensure broker-dealers robust protection of customer assets, including digital asset securities.”

Digital wallets have become a common custodial service offered by an array of cryptocurrency intermediaries. By targeting digital wallet services for SEC registration violations, President Trump could significantly impact the cryptocurrency marketplace, potentially crippling an important access point of cryptocurrency users.

Failure to Register as a Market-Maker

A market maker is typically a FINRA-registered BD that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security.?When a crypto promotion firm shills for a token company or helps facilitate crypto transactions, they?most likely need to register as a market maker .?

The SEC is clearly outraged by the lack of regulation by so-called crypto market-makers. Along these lines, the SEC?not only charged a crypto company for selling unregistered securities, but also charged its so-called “market maker” for its part in the scheme , which allegedly involved placing fake buy and sell orders to jack up their token price as well as the customary charge for failing to register the tokens before doling them out like candy as promotion fees to employees and others.?

In addition to a broad range of market manipulation tactics, token issuer Hydrogen Technology Corp also allegedly worked with Moonwalkers, a self- described crypto asset “market maker,” to manipulate Hydro’s trading price and volume so that the company’s Hydro token sales would be more profitable. Per the SEC, Moonwalkers did so by creating the false appearance of robust Hydro trading and artificially propping up the token’s price.

Entities like Moonwalkers called themselves “market makers,” which was a bold and transparent attempt to feign legitimacy.?So the SEC sprang into action. Said Joseph Sansone, Chief of the Enforcement Division’s Market Abuse Unit about the Hydrogen SEC enforcement action:

“As we allege, the defendants profited from their manipulation by creating a misleading picture of Hydro’s market activity. The SEC is committed to ensuring fair markets for all types of securities and will continue to expose and hold market manipulators accountable.”

Failure to Register as an Investment Company

Section 3(a)(1)(C) of the Investment Company Act? defines “investment company” to mean any issuer that “is engaged or proposes to engage in the business of investing, reinvesting,?owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 per centum of the value of such issuer’s total assets?(exclusive of Government securities and cash items)?on an unconsolidated basis.”?

Section 3(a)(2) of the?Investment Company Act ?defines “investment securities” to include all securities except?government?securities, securities issued by employees’ securities companies, and securities issued?by majority-owned subsidiaries of the owner which are not investment companies and not relying on exceptions set forth in Sections 3(c)(1) or 3(c)(7) of the Investment Company Act.?

In the?SEC's enforcement action against BlockFi Lending, LLC , the SEC charged BlockFi not only with selling unregistered securities but also for failing to register with the SEC as an investment company.?

The SEC determined that loans that BlockFi made to counter parties were considered investment securities under the Investment Company Act. As an issuer holding over 40% of the value of its total assets in investment securities from at least December 31, 2019 to at least September 30, 2021, BlockFi met the definition of an investment company during this time period.

Specifically, BlockFi offered BlockFi Interest Accounts?(“BIAs”)?to investors, through which investors would loan crypto assets to BlockFi in exchange for Block’s?promise to provide a variable monthly interest payment. BlockFi generated the interest paid out to BIA investors by deploying its assets in various ways, including loans of crypto assets made to institutional and corporate borrowers, lending U.S. dollars to retail investors, and by investing in equities and futures.?

After the launch of the BIA, BlockFi pooled the crypto assets it borrowed, and commingled and rehypothecated these crypto assets received from investors in the BIAs with?BlockFi’s other assets, including collateral received from institutional borrowers. As BlockFi took ownership of the loaned crypto assets from investors in the BIAs, BlockFi used the commingled assets to, among other things, make loans to institutional and retail borrowers, stake crypto assets, and purchase crypto asset trust shares and interests in private funds.

Although BlockFi met the definition of “investment company”?from at least December 31, 2019 to at least September 30, 2021, it did not register with the SEC as an investment company, meet any statutory exemptions or exclusions from the definition of an investment company, or seek an order from the SEC declaring that it was primarily engaged in a business other than that of investing, reinvesting, owning, holding, or trading in securities, or exempting it from complying with any provisions of the Investment Company Act or the rules thereunder.?

Although BlockFi has suggested that it was relying on the exclusion from the definition of?“investment company” provided for “market intermediaries” by Section 3(c)(2) of the?Investment Company Act during this period, it did not satisfy the terms of that exclusion. Thus, during the relevant period, BlockFi was required to have registered with the Commission as an investment company.

Clearly, the SEC crypto-regulatory onslaught, which currently stands?at approximately 120 crypto-related SEC enforcement actions ?(without a loss), is poised to grow significantly for 2023.Historically the Sec has taken creative courses of action with other previous crypto-iterations and was victorious every time, such as SEC enforcement actions involving:?Initial Coin Offerings (ICOs) ;?Simple Agreements for Future Tokens (SAFTs) ; and?Crypto-lending programs . 2023 will be the year that the SEC takes on crypto-intermediaries.?

Prediction #2: The Voyager Bankruptcy Judge Will Not Approve Binance’s Acquisition of Voyager (Heart of Glass -- Blondie )

On January 5th, 2023, SDNY Bankruptcy Judge Michael E. Wiles is scheduled to hold a hearing regarding?Binance.US’s acquisition of Voyager. Judge Wiles must approve the transaction before it can take place.?

Binance.US?has?been described ?as a “defacto Binance subsidiary ,” so:

• How can Judge Wiles approve the sale?amid scathing allegations of commingling of customer funds ?of Binance and?Binance.US?
• How can Judge Wiles approve the sale?without seeing audited financials of Binance ??
• How can Judge Wiles approve the sale without?reliable, credible and timely disclosures relating to Binance , including:?basic financial info such as revenue/profit/cash reserves;?the role its coin plays on its balance sheet; Binance’s crypto-margin bets;?Binance’s risk exposure; and?how Binance’s reserves finance withdrawals/leverage??
• How can Judge Wiles approve the sale when Binance’s?so-called auditor just quit ?and disavowed the validity of all of its representations??
• How can Judge Wiles approve the sale?without even knowing where Binance is headquartered ??

The acquisition of Voyager by Binance leaves far too many questions unanswered. No bankruptcy judge can possibly approve it.?

Prediction #3: No Respectable Audit Firm Will Conduct Proof of Reserves Audits and Attestation Audits (I’m Outta Love - Anastasia )

Proof of reserves statements are bogus, sketchy and incomplete satellite snapshots, which do not address liabilities, internal controls or risks and are not bona fide audits in any way, shape or form. They are both ruse and red flag.

SEC Chair Gary Gensler?recently told Bloomberg ?that he had serious concerns regarding with so-called proof-of-reserves reports, which some crypto firms publish to prove they have enough funds on hand to back customer deposits. Gensler said the practice, which has been used by major crypto firms including Binance, falls short of the disclosures needed to protect investors.??“Proof of reserves is neither a full accounting of the assets and liability of a company, nor does it satisfy segregation of customer funds under the securities laws,” Gensler said.?

Along the same lines, SEC’s acting chief accountant Paul Munter?said that investors shouldn't ?place too much confidence in a company holding up a proof-of-reserves audit.?“We’re warning investors to be very wary of some of the claims that are being made by crypto companies,” said SEC’s acting chief accountant Paul Munter in a December 22, 2022 interview with The Wall Street Journal , warning that, “We are increasing our understanding of what’s going on in the marketplace. If we find fact patterns that we think are troublesome, we will consider a referral to the division of enforcement.”

Not surprising that?Mazars has halted ?and disavowed its proof of reserves audits, including engagements with Binance, Kucoin and?Crypto.com ?— and gone so far as to take down its own website that hosted proofs-of-reserves work for crypto exchanges.?

The?same may go for ?“attestations” (such as the attestations relating to Tether), which are similarly troublesome and misleading.?Accounting firm BDO, which recently signed off on reserves reports for Tether,?specifically announced ?that it is reconsidering its work for crypto companies.

“In common with several other professional service firms, we are currently evaluating our approach to this sector and the work we undertake for our clients,” a spokesman for the BDO international network said. The spokesman declined to comment on any individual company. The Tether attestation was undertaken by BDO Italia, the Italian member firm of BDO.

Along the same lines, In the first interview by a leader of the accounting firm Armanino since the collapse of FTX last month,?chief operating officer Chris Carlberg said ?“market conditions” had changed and it would stop providing financial statement audits and so-called proof of reserves reports for the crypto industry.??

This retreat is not at all surprising. How can any investor rely on a proof of reserves audit or attestation? It’s like asking a bank to rely on a home appraisal for a mortgage, when:?

• The appraiser was not allowed to go inside the home;?
• The appraiser was not provided any information about the homeowners debts, liabilities or other liens;
• The appraiser was not provided any information, and made no inquiries pertaining to, the safety, security and foundation of the house; and
• The appraiser had to base their entire appraisal on a Polaroid snapshot provided by the owner.?

Be they “attestations” or “proof of reserves” examinations, these exercises are not “audits,” as?Professor Kelvin low so eloquently explains , they are more aptly names “faudits” – and utterly meaningless for investors and customers. For 2023, audit firm risk committees, audit firm insurers, and audit firm licensing agencies (like the SEC and the Public Company Accounting Oversight Board (PCAOB) will have no more tolerance for?faudits?– and no respected auditing firm will conduct them going forward.

Prediction #4: For Crypto- Traders, The Tax Man Cometh (Bad Bad Leroy Brown – Jim Croce )

The recently enacted Inflation Reduction Act is primarily aimed at decreasing inflation, improving health care and managing climate change,?but it also contains a proviso that will have a significant impact on the cryptocurrency marketplace : an $80 billion supplemental funding allotment for the IRS.?

While?there is some debate ?as to exactly how much of the $80 billion will go toward IRS audits and enforcement, the supplemental appropriation was promoted as a means to generate revenue, which translates into increased enforcement efforts.?

"By beefing up the IRS's capacity to go after wealthy tax cheats, you're going to be able to collect at least $400 billion of that over the course of the next ten years, and I suspect substantially more," Natasha Sarin, a counselor for tax policy and implementation at the U.S. Department of the Treasury,?told NPR . While not quite as optimistic, increased IRS enforcement could generate $127 billion in new revenue over 10 years, according to the Congressional Budget Office.?

Under any circumstance, the Biden administration is?counting on beefed-up IRS enforcement efforts ?to help offset costs created by the $700 billion Inflation Reduction Act. Thus, expectations around the $80 billion IRS budget boost are high, and the IRS will need to generate revenue — quickly and efficiently.?

And what is the easiest and fastest way for the IRS to boost its revenue? Targeting crypto tax cheats. Armed with an $80B war chest, a clear mandate, strict liability statutes, sweeping investigative authority and powerful fact-finding tools, during 2023 and for many more years, the IRS will be on a high-tech mission to catch crypto tax cheats.?

The genius of it all is that?the IRS is targeting ?crypto-intermediaries, platforms, exchanges, etc. and?crushing them in court . The IRS has clearly studied carefully the raw data collected from each of its crypto-related John Doe summonses and after engaging in some rudimentary data analytics, found compelling evidence of "likely large-scale underreporting of taxable transactions," according to the IRS John Doe petition of sFox, talking about the John Doe petition of Coinbase.?Hence, you don’t need to be Nostradamus to predict that for the IRS, prosecuting crypto-traders for tax evasion will be like shooting fish in a barrel.

Fail not at your peril crypto traders, the IRS crypto-onslaught will be relentlessly expansive and nonstop. In fact, my take is that IRS crypto-enforcement efforts will become more fruitful than any other law enforcement sweep in history.?Undoubtedly, in 2023, the IRS will begin to relentlessly and unmercifully reach out to taxpayers engaged in crypto transactions regarding the reporting requirements, conduct examinations,?issue John Doe subpoenas , seek large penalties, and make referrals to its criminal investigation division.?

Prediction #5: Blockchain Will Remain a Glorified Append-only, Limited-Writer Spreadsheet With No Useful, Real World Applications (The Future – Leonard Cohen )

Blockchain hype remains bunk, always will be bunk and always has been bunk.?Nothing in 2023 will alter that axiom.?

Two celebrated thinkers today published extraordinarily compelling articles along these lines -- and both articles are worth taking the time to read.?

The first article,?written by Paul Krugman , is an article cleverly titled, “Blockchains, What Are They Good For?” (with that 1970s reference, get ready for the “OK Boomer” retorts Paul). Paul notes keenly, “No doubt I’ll hear from many people still insisting that I don’t get it. But it really looks as if there never was an it to get.” My sentiments exactly Paul.

The second article,?written by Professor Kelvin Low ?is also very cleverly titled – perhaps even moreso: ”The (F)utility of Blockchain Asset Tokenization.” Kelvin notes presciently, ”It bears repeating that we have passed the 14th anniversary of Satoshi Nakamoto’s white paper and while the blockchain has promised much, it has delivered little unless we are looking for frauds and scams and consumer harm. It is past time to take blockchain skepticism seriously.” Hallelujah Kelvin.?

As I have?posted on LinkedIn ad nauseam ?(sorry to sound like a broken record btw), “A mere record on a glorified limited-writer, append-only database linked to the solution of a very complex yet entirely meaningless and irrelevant mathematical problem is not, and will never be, a financial and societal panacea. It's mathematical computative blather.

For instance, five years ago,?Australia’s stock exchange ?announced that it was planning to use a blockchain platform to clear and settle trades. But it?canceled the plan , writing off?$168 million ?in losses, in an?extraordinary disastrous ?endeavor. Maersk, the shipping giant, has also?announced ?that it is winding down its efforts to use a blockchain to manage supply chains. Tim Bray, who used to work for Amazon Web Services, explained?in a recent blog post ?why Amazon chose not to implement a blockchain of its own: “It couldn’t get a straight answer to the question,?What useful thing does it do?”

Bray described one meeting he and several AWS colleagues has with a Tribeca New York start-up as follows:

“The key moment was when we got in a room with the CTO of this one startup, in Tribeca I think. When I heard their VC funding number I thought it was the valuation, not the investment dollars. The customer list was blue ribbon and don’t you forget it. These guys were razor-sharp. They presented some of the systems they’d built and yep, we were impressed. Then, with the startup CTO in the room, one of my fellow engineers asked the key question: “All these systems, are there any that wouldn’t work without blockchain?” The guy didn’t even hesitate: “No, not really.””

It's been 13+ years since blockchain became a "thing" and still no beneficial use has come of it. Besides crypto and NFTs, which are essentially just Ponzi schemes and worthless jpegs, there's no real world use case for blockchain.

Along these lines,?1,300+ independent, expert technologists ?have explained that a mere record on a glorified limited-writer, append-only database linked to the solution of a very complex yet entirely meaningless and irrelevant mathematical problem?is not, and will never be , a financial and societal panacea.

Next came?an extraordinary study which analyzed 34 Real-World Blockchain use-cases . 33 are dead, pivoted away from Blockchain, use Blockchain in a (sometimes dangerously) bad way, or are have no real-world utility. The remaining project is used for de-anonymizing and blocking transactions.??

If you’re a criminal , blockchain allows you to secretly commit perilous crimes from ransomware to murder-for-hire; terrorism to drug dealing; sanctions evasion to money laundering; and human sex trafficking to child pornography.?

If you're a grifter , blockchain provides ideal fodder for luring in investors, especially if those investors are the downtrodden. That crypto can expand financial inclusion is an effective, audacious and shamelessly exploitive bogus shill and classic affinity fraud. The big banks touted the same lie in 2007 with sub-prime, just like check-cashing services and payday loans still do today.??

Crypto's not an "investment" ?because there's no regulatory oversight/transparency/consumer protections/insurance/licensure/net capital requirements, and the crypto rug-pull bazaar is so rife with market manipulation, insider trading and fraud, investors stand no chance from the get-go.??

Crypto's not a "currency" ?because the price is too volatile; fees are too high; taxes are too burdensome; risks are infinite; and the list goes on. How can anyone accept crypto as payment when it could be worth a lot less the next day??

Meanwhile, the NFT marketplace?is rigged . Market manipulation of NFTs appears not only?rampant and tolerated , but also encouraged. Fraud not only rewarded, but also taught. The cybersecurity risks alone render NFT markets an absurd choice for any sort of investment.?

So blockchain's sole two uses - crypto and NFTs -?are a ruse and a plague . And a cadre of expert, independent technologists now report that when it comes to Crypto, DeFi, NFT and other Web3 nonsense, it's time to stop the hustle.

Meanwhile, it has become absolutely undeniable that crypto has?fueled a borderless crime wave of epic proportions , including:?Drug dealing ;?Terrorist financing ;?Human sex trafficking ;?Money laundering ;?Sanctions evasion ; Murder-for-hire ; and?Child pornography . And to make matters even worse, the use of crypto?presents extraordinary challenges for law enforcement to trace and to recover , and requires immense resources, years of doggedness and lots of luck –?and prosecutorial success rarely happens .

And for what? Crypto remains a flawed solution in search of a real problem.?After 14 years , can anyone name one benefit of crypto that is not aspirational? If crypto magically disappeared tomorrow, only Web3 charlatans and their victims would grieve.?Per one software developer and technologist , who specializes in web applications:?

“When I say blockchain is a brilliant fraud, I mean one of its greatest accomplishments is that a huge ecosystem built on what is in reality a simple data structure which is neither particularly novel nor interesting has somehow captured enough hearts that even many knowledgeable, rational minds adjacent to them who aren't necessarily on board with the digital currency side of things will still enthusiastically nod and agree "the technology" will herald some new era of innovation, the future of the internet, even if they can't ever quite pin down the details of what, how or why . . . Just because data is written to a blockchain doesn't mean it can't be hacked (e.g. wallet theft). Just because data is immutable, doesn't mean it's accurate (oops, that airline just wrote the wrong date for your flight to the blockchain). And just because a blockchain might be reasonably secure, it doesn't mean the data written to it is secure (eek, your medical records have just been leaked). Blockchain is no more inherently secure than any other conventional data storage method. It's often less secure, because the decentralization of blockchain means that there are more opportunities, more surface area, for hacks and attacks.”

It is easy to imagine a world without crypto ?and if crypto disappeared tomorrow, nothing would change for anyone except criminals, who would lose their most effective felonious device and instantly suffer immeasurably.?

During the subprime mortgage boom, the daisy chain of leverage involved real world activity like buying a house. But crypto has no reference to tangible economic activity. One after another, projects that have explored crypto’s benefits have come up empty.?

For 2023, expect more of the same blockchain hype, grift and bluster and yet another year with no real world applications for it. As famed software engineer and technologist Stephen Diehl?recently Tweeted ?so eloquently:

“Blockchain is not new tech. The software to build these structures has been around for 30+ years, and outside of crypto assets, its applications are so vanishingly small as to be completely economically insignificant. This is not innovation; it's marketing for crypto gambling.”

Prediction #6: There Will Be More Defendants Added to the SBF SEC/CFTC/DOJ Actions?(Sinnerman, By Nina Simone )

While some of the culprits for FTX may escape justice, a good number of FTX miscreants will not. For 2023, expect FTX-related search warrants, grand jury subpoenas and arrests to remain ongoing and imminent. So is an onslaught of regulatory scrutiny, including SEC/FINRA “for cause” examinations of any registered financial firm having anything to do with FTX or any other crypto contagion, which undoubtedly lead to?the discovery of further inculpatory evidence for a broad range of individuals and entities.?

What never changes after any financial crime is that?gregarious informants and immunity-seeking witnesses undoubtedly abound — each eager to save their own skin and provide law enforcement with a vivid narrative of the crime and detailed roadmap of the crime scene. No doubt that SBF’s legal team are figuring out secrets that SBF can share with law enforcement in order to lessen the blow of his sentencing.?

Both the U.S. SEC and DOJ have made their FTX/SBF plan for 2023 abundantly clear. Per Damian Williams, the United States Attorney for the Southern District of New York:“As I said last week, this investigation is very much ongoing, and it’s moving very quickly.?I also said that last week’s announcement would not be our last, and let me be clear once again, neither is today’s.”?Per the SEC’s Director of Enforcement, Gurbir Grewal, “Investigations as to other securities law violations and into other entities and persons relating to the alleged [FTX] misconduct are ongoing.”).

This week, DOJ announced yet another criminal prosecution, this time against Avraham Eisenberg, the crypto investor whose “highly profitable trading strategy ” drained DeFi trading platform Mango Markets of crypto worth $110 million. Eisenberg was arrested in Puerto Rico, and faces charges of commodities fraud and commodities manipulation, according to?a filing unsealed Tuesday . The self-described game theorist?admitted his role in draining Mango Markets’ treasury shortly after the incident in mid-October, and may now be the first U.S. resident to face charges for his role in manipulating a decentralized finance (DeFi) trading platform .

Clearly, the FTX story and many other crypto tales are only beginning to unfold and 2023 is set to produce many more chapters.

Prediction #7: Big Crypto Will Lose All of Its Nonsensical Lawsuits (Well, Well, Well – Duffy )

Whenever any government law, rule, or regulation gets specific about crypto, crypto lobbying groups protest and file interminable lawsuits challenging the action.?The many frivolous and baseless Big Crypto lawsuits manifest not just hubris and gall but absurdity as well, and are almost as bad of an affliction as the plague of bitcoin itself. Clearly, the only thing these lawsuits will accomplish is to make the lawyers who filed them very rich – because they will all lose in 2023. Some examples:

• The U.S. Treasury Department??imposes sanctions on crypto mixing service Tornado Cash , which has been used to launder over $7B worth of crypto since 2019.?Big Crypto doesn't like that --?so they sued , claiming OFAC's actions were unconstitutional and violated the First Amendment right to free speech.
• President Biden’s Infrastructure Investment and Jobs Act?last year added ?a series of crypto-reporting requirements for retailers and exchanges, in order to shed sunlight on the crypto industry and protect consumers from fraud and chicanery of crypto grifters.?Big Crypto doesn't like that --?so they sued , claiming the Infrastructure Act was unconstitutional in that it violated everyone's right to privacy.
• Earlier this year, the?SEC proposed changes ?to a number of laws — namely, Rule 3b-16 of the Securities Exchange Act, Regulation ATS, and Regulation SCI — that would put more so-called "alternative trading systems" under its purview as exchanges, including crypto trading platforms and exchanges.?Big Crypto?doesn't like that ?-?so they opposed it ?(and will likely sue), claiming that the SEC lacks the authority to define an exchange so broadly.
• The SEC?denied the application by Grayscale ?and many others to offer a Bitcoin ETF, in a meticulously documented and thoroughly explained series of SEC orders, citing, inter alia, the extraordinary lack of critical protections of any invented bitcoin ETF. Big crypto doesn't like that --?so they sued , claiming the SEC's ruling was arbitrary and capricious.?
• In October 2019 ?and?November 2020 , FinCEN proposed applying the?Travel Rule ?and?the Recordkeeping Rule ?(both part of the?Bank Secrecy Act )?to virtual currencies .?These steps were part of a larger initiative by FinCEN to establish an anti-money laundering (AML) regulatory framework for digital currencies comparable to fiat currencies. Big Crypto didn’t like that,?so they mobilized ?with comments and letters, stating, that the FinCEN proposed rule: was 1) procedurally defective; 2) would constitute an unprecedented and untested expansion of the Bank Secrecy Act to include collection of counterparty information; 3) would stymie innovation; 4) would fail to achieve its law enforcement goals; and 5) Implicates important privacy rights and does not account for risks to Americans’ data security.

In every one of their lawsuits, the?Big Crypto cartel ?demands regulatory clarity, but whenever regulators actually deploy meaningful crypto-regulatory initiatives, the Big Crypto cartel does everything possible to strike down and cancel those initiatives.

The?origin of the saying ?“Be careful what you wish for, because you just might get it” is not from?The Pussycat Dolls , but rather?Aesop’s Fables ,?the notable collection of morality tales. But whatever the saying’s origin, it rings especially true for?Big Crypto ?and its eternal quest for regulatory clarity. For 2023:?Be careful what you wish for Big Crypto, because you just might get it.

Prediction #8: Binance Will Collapse (Red Light – Eddie Murphy )

Everything will be fine at Binance:

• If Binance’s reserve stablecoins?hold their peg ;?
• If Binance can?provide true proof of reserves ?and bona-fide audited financials;?
• If there’s?no bank run ?on Binance; and
• If U.S. DOJ opts not to?file criminal charges against Binance and its officers .?

Those are some mammoth “ifs.” Hence my take is that in 2023, Binance will fall apart and crumble just like FTX did in 2022.

Calling the crypto-ecosystem a Ponzi scheme is not hyperbole -- it's axiomatic. And Binance is in the middle of all of the tricks and shenanigans. As?Frances Coppola explains in a recent Mastodon post : “The entire crypto ecosystem is a Ponzi. The whole thing depends on ever more people parting with their savings and wages to pay the lunatic returns promised by the platforms to people who can provide the liquidity they so desperately need.”

Along the same lines, Binance’s?purported billion dollar bailout fund ?to help prop up (ahem, "rescue") the crypto-ecosystem proves once and for all how big the crypto Ponzi scheme really is.

As famed economist and NYU Stern finance professor Nouriel Roubini?has warned , "Who will bail out Binance when that crappy house of cards collapses? Crypto is the mother of all Ponzi schemes!" N.B. that way back on September 7, 2006, Roubini?famously predicted ?the subprime collapse and?has become an outspoken and ferocious crypto-critic .

Ironically, Sam Bankman Fried himself essentially admitted that crypto was a Ponzi scheme in?an infamous April 25, 2022, interview ?with Matt Levine at Bloomberg, leaving Levine?absolutely stunned .

Binance’s “proof of reserve” report doesn’t address effectiveness of internal financial controls, doesn’t express an opinion or assurance conclusion and doesn’t vouch for the numbers. Having worked at SEC Enforcement Division for 18+ yrs. This is how any SEC lawyer or DOJ prosecutor defines “red flag.

It’s truly astounding. Binance doesn't disclose: basic financial information such as revenue/profit/cash reserves; the role its coin plays on its balance sheet; its crypto-margin bets; its risk exposure; how reserves finance withdrawals/leverage; or even where it's headquarters is based.

Per one report , since 7/2020, one wallet moved $1.4B in Ether/USDT/USDC/MATIC tokens from Binance to Finances and since 8/2021, another wallet moved $1.9B from BinanceUS to Binance. If true, commingling of BinanceUS and Binance funds is yet another epic red flag.

Binance promotes itself as a multi-billion firm but for its “audit,” the auditor doesn’t review credible financial info, doesn’t review risk controls and doesn’t employ agreed upon, acceptable audit procedures. And just a few weeks ago, that auditor, Mazars,?quit and disavowed the integrity, trustworthiness and accuracy of its proof of reserves audit ?of Binance. It seems that all we know for sure about Binance is that we know nothing.

For U.S. SEC-registered companies, whenever an audit firm resigns, is fired or otherwise ceases to audit a public company, it is a huge deal and the company must file a?Form 8-K , explaining the circumstances. The “Changes in Registrant’s Certifying Accountant” line item of an SEC Form 8-K will almost always trigger and SEC enforcement investigation to find out what happened and why. The resignation of an auditor is about as big a red flag as it gets.?

Meanwhile,?per Reuters , during 2022, Binance kept weak anti-money laundering controls, processed over $10B in payments for criminals and companies seeking to evade U.S. sanctions, and plotted to evade regulators in the United States and elsewhere.?

Binance also appears to be hemorrhaging confidence and crypto amid an outflow of deposits and intense scrutiny from all sides.?Per one report , in absolute terms, December 13, 2022, brought about the largest ever flight away from Binance for both bitcoin and stablecoins — “an extremely notable move.”?

For 2023, there are just simply too many red flags surrounding Binance and Binance is too much of a?black box ?to believe that a collapse will not occur at some point, mirroring the same fate as?Terra ,?FTX ,?BlockFi ,?Celsius ?and so many others.

Prediction #9: Tether Will Implode (Nuttin’ But Love – Heavy D )

Tether, a Virgin Islands company, seems another domino likely to fall in 2023.

Stablecoins like Tether face no regulatory constraints. There is no US legal framework for regulating them. There are no requirements on how reserves must be invested, nor any requirements for audits or reporting. This is what those in the business of investigating fraud would tag as a "red flag."

Let’s be clear here. Tether only offers “attestations,” not audits, previously from a random 5-person Cayman Islands firm, and now from BDO Italia, an independent firm of BDO International, who?are currently reviewing ?whether they can even conduct the work that they are contracted to do.

An attestation is not the same thing as an audit — and this kind of “unverified snapshot” would never pass any sort of regulatory muster. Audits are methodically designed to look for potential risks, while attestations only evaluate whether the data being examined by the “attestator” is accurate at that precise moment in time. Attestations are pretty useless as a matter of due diligence.?

Tether’s fundamental business, the essence of everything Tether does, is tied exclusively to Tether’s financial reserves. Yet those reserves remain unaudited, unconfirmed and therefore dubious, leaving Tether's customers to grapple with Tether's remarkably condescending and ineffective public relations blather, hype and bluster.?

Reviewing financial statements and verifying their integrity and authenticity is not rocket science. It’s easy, it’s simple, it’s straightforward and the analysis can be done swiftly, efficiently and with 100% accuracy. All that is necessary to conduct an audit of Tether's financial reserves is a pencil, a piece of paper, access to Tether's financial statements, the use of a telephone to call the sources and a few airplane tickets and a rental car to visit the sources in person.?

If Tether’s books and records are so disorganized, complex and challenging that it takes quarters or even years to make heads or tails of them, that speaks volumes as to Tether’s integrity and trustworthiness.?

If Tether’s internal controls are so lacking that an immediate accounting of its financial reserves – to the penny – cannot be done with the click of a mouse, that speaks volumes as to Tether’s reliability and credibility.?

If Tether’s chief financial officer cannot immediately explain to Tether’s CEO the precise nature, amount and liquidity of its financial reserves at any given moment, that speaks volumes as to the quality of Tether’s personnel.?

Audits are not novel or new. Audits are as fundamental for public companies and financial firms as inhaling oxygen is for the human body.

So why is it so hard for Tether, a $70B company, to do what is a matter of routine and necessity for every single US public company, every single US SEC-registered firm and every single US bank?

In my opinion, the answer is simple: Because Tether is one mammoth house of cards – which will collapse in 2023.

Prediction #10: A General Crypto-Regulatory Onslaught Will Dominate 2023 (Thunderstruck – AC/DC )

If the Crypto ecosystem is not preparing for a U.S. regulatory onslaught then they have got their heads in the sand. Here is a quick recap of U.S. crypto-related regulatory action in the past year:?

Federal Deposit Insurance Corporation: 4/7/22, the?FDIC issued ?a financial institution letter requiring all FDIC-supervised institutions to notify the FDIC prior to engaging in a crypto-related activity. The FDIC also?issued FIL’s ?to a slew of crypto-firms identifying unlawful use of the FDIC mark to mislead investors.?

Office of the Comptroller of the Currency: 11/23/21,?OCC mandated ?that crypto-asset and related activities require the OCC's written approval, including crypto-asset custody services, holding dollar deposits as reserves backing stablecoins, acting as nodes on a distributed ledger to verify customer payments and engaging in stablecoin activities.??

Department of Labor: 3/10/22,?DOL issued Release No. 2022-01 ,?signaling that advisers ?or related curators of certain retirement plans who recommend any crypto-related investment are not just suspect, but their actions could also amount to a per se breach of fiduciary duty.?

SEC: 3/31/22, SEC issued?SAB No. 121 , regarding the recognition, measurement and disclosure of obligations to safeguard crypto-assets held for platform users and related risks and uncertainties. 5/3/22, SEC?announced the creation ?of a new crypto unit in the division of enforcement, doubling its size and then further adding 33 new positions to be added for 2023.??2/22/22,?SEC announced ?the creation of a new crypto unit in the division of corporations finance. 12/13/22, on the heels of the FTX debacle, the SEC is asking public companies to?detail their exposure?to distressed crypto entities. Per the SEC’s “Sample Letter to Companies Regarding Recent Developments in Crypto Asset Markets ,” there is a list of 16 questions. Which are meticulously drafted, wisely exhaustive and will undoubtedly lead to the discovery of a broad array of interesting and potentially critical data points.?Meanwhile,?the SEC has brought over 120 crypto-related enforcement actions ?and likely has more in the pipeline pertaining to crypto-exchanges.?

The Federal Reserve: On 8/16/22,?Fed issued guidance ?establishing a prior notice requirement for crypto-related activities, emphasizing the need for robust risk management practices and compliance controls for various risks, including safety and soundness, financial stability, and consumer protection, relating to digital assets.?

Internal Revenue Service: Armed with an $80 billion war chest, a clear mandate, strict liability statutes, sweeping investigative authority and powerful fact-finding tools,?the IRS has begun a high-tech mission to catch crypto tax cheats .?

Treasury Department: 9/17/22,?Treasury warns the White House ?that crypto could pose significant financial risks that outweigh their benefits unless the government rolls out major new regulations.?11/16/22, Treasury Secretary Janet Yellen makes “Statement on Recent Crypto-market Developments ,” stating the need for greater regulatory oversight of crypto-related firms and promising to “do what is necessary” to address broader financial systemic stability issues and to protect consumers from the comingling of investor assets, lack of transparency and other crypto-related risks.?

Department of Justice: 9/17/22, DOJ announced the creation of a national network of prosecutors focused on crypto crime. “Developments in digital assets have created a new landscape for criminals to exploit innovation to further significant criminal and national security threats domestically and abroad,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division.?“Through the creation of the DAC Network, the Criminal Division and the National Cryptocurrency Enforcement Team will continue to ensure that the Department and its prosecutors are best positioned to combat the ever-evolving criminal uses of digital asset technology.”

Financial Crimes Enforcement Network: 11/2/2022,?FinCEN announced ?that US banks made $1.2B in bitcoin ransomware payouts in 2021, doubling that of 2020. 75% of the 1,251 ransomware payments were paid to Russian gangs. FinCEN?said its analysis ?“indicates that ransomware continues to pose a significant threat to U.S. critical infrastructure sectors, businesses and the public.”

Of course, Big Crypto will somehow spin all of 2022’s crypto-regulatory developments as?a good thing, perhaps celebrating that the government "finally offers a path toward regulatory clarity." But don't believe it. These actions evidence a robust and relentless U.S. regulatory crypto-cannonade coming for 2023.

Prediction #11:??Gary Gensler Will Remain at the SEC and Begin to Receive the Respect and Admiration That He Rightfully Deserves (Rubber Band Man – Spinners )

It has become somewhat fashionable as of late to pivot to the tired and toothless refrain of berating the SEC after a dumpster fire like the FTX debacle. This is not just a dubious deflection, it's farcical and a flat-out ruse.

It's like Holmes or Balwani blaming the FDA for bogus blood test results from Theranos' counterfeit blood test machines; like Hannibal Lecter blaming the FBI for his killing spree; or like Oswald blaming the US Secret Service for JFK's assassination.

The SEC has been the sole US regulator to battle Big Crypto and lean-in. The SEC, who I have often?criticized , saved millions, perhaps even billions, in investor crypto-losses. Despite mammoth political opposition and rogue defendants with infinite financial resources, the SEC:

• Stopped Telegram ?from defrauding investors with an emergency enforcement action.;
• Stopped BlockFi ?from doing to its investors what Celsius did to theirs (and fined them $100M);
• Stopped Coinbase ?from selling a crypto-lending product;?
• Refused to allow ?US financial marketplaces to peddle bitcoin ETF's to investors;?
• Brought 120+ crypto-cases ?and?won all of them .

With respect to digital assets, never in its history has the SEC so aggressively shared their views through speeches/Investor Alerts/a rare?Section 21(a) Report of Investigation /Congressional testimony/and many SEC statements/proclamations.

Former SEC Chair Jay Clayton?engaged in an unprecedented multi-year crypto-tour , always speaking bluntly/thoughtfully about the dangers in the digital asset marketplace. SEC Chair Gensler then became even more active regarding the perils of crypto, even warning crypto-exchanges that they were squarely within his sights.?

For instance, Gensler gave a speech in late 2022?at the annual SEC Speaks ?securities regulation conference, where he even admonished the lawyers counseling clients engaged in digital coin and token offerings.?

Additionally, Gensler has often spoken about the perils of?crypto lending ?platforms and decentralized finance in his speeches,?warning ?that their failure to register with the SEC may violate U.S. securities laws.?In fact, in an extraordinarily frank interview in March, 2022 with Yahoo! Financial News, Gensler warned crypto exchanges that they are not just on his radar, but they have fallen squarely within his sights,?stating :

“The law is clear, it’s not about waving a wand. Congress spoke about this in 1934 . . . When a [digital] platform has securities on it, it is an exchange, and it’s a question of whether they’re registered or they’re operating outside of the law and I’ll leave it at that.”

Yes, the SEC must do more and has redoubled its efforts, even?creating a specialized crypto unit , which will double or?even triple in size during 2023 .

The criticism of Gensler has become flat-out absurd, straight out of?Alice in Wonderland. For instance, Gensler went on in his now infamous 2022 SEC Speaks crypto-homily to explain in clear and certain terms –– and?ad nauseum?–– how the law works with respect to crypto. And Gensler could not have said it any plainer:

“Investors are following crypto projects on social media and scouring online posts about them. These tokens have promotional websites, featuring profiles of the entrepreneurs working on the projects. It’s not about whether you set up a legal entity as a nonprofit and funded it with tokens. It’s not whether you rely on open-source software or can use a token within some smart contract. These are not laundromat tokens: Promoters are marketing and the investing public is buying most of these tokens, touting or anticipating profits based on the efforts of others.”

Of course, Gensler was thereafter quickly?thumped with a barrage ?of?OK Boomerisms, condemning him for hindering technological progress and clinging to an antiquated, flawed, and undemocratic financial ecosystem.

Along these lines, Gensler and the entire SEC have fought against crypto-corruptions despite intense political pressure not to do so — and therein lies the rub. For instance, the SEC was apparently investigating FTX in March, 2022, when eight members of the U.S. Congress, now notoriously labeled, “The Blockchain Eight ,” wrote?a letter ?to Gensler,?expressing their concerns ?that the SEC’s actions against crypto firms were “overburdensome, unnecessary, and stifling of innovation.” The Blockchain Eight published their letter online, even though the applicable precedent of?SEC v. Wheeling-Pittsburgh ?specifically prohibits improper political influence upon SEC investigations.

Five of the eight members signing the “Blockchain Eight Letter ” received campaign donations from FTX employees, ranging from $2,900 to $11,600. Rep. Ted Budd (R-NC), one of the signatories,?received $500,000 in support from a Super PAC ?created by FTX Digital Markets co-CEO Ryan Salame.

In a particularly disturbing irony, notoriously crypto-friendly U.S. Representative Tom Emmer from Minnesota directed a virulent criticism at the SEC’s investigation of crypto firms, all in plain view, both as the first signatory of the?Blockchain Eight Letter , and also?tweeting on March 16, 2022 :

“My office has received numerous tips from crypto and blockchain firms that SEC Chair Gary Gensler’s information reporting “requests” to the crypto community are overburdensome, don’t feel particularly… voluntary… and are stifling innovation.”

But after the FTX collapse, Representative Emmer suddenly, once again in plain view,?directed a virulent criticism at the SEC for failing to prevent the FTX ?bankruptcy,?tweeting on November 25, 2022 :

“We are even more concerned now as we’ve seen Gensler’s strategy miss Celsius, Voyager, Terra/Luna– and now FTX.”

So just to review: First, in March, 2022, Emmer leads the war on Gensler, scolding him for the SEC’s aggressive investigations of crypto firms and alleging that?the SEC was violating the Paperwork Reduction Act because its subpoenas for documents are too broad . Now, in November, 2022, after the FTX disaster, Emmer leads a second war on Gensler, this time scolding him for the SEC’s failure to investigate crypto firms. Yes, Emmer’s hypocrisy knows no bounds, but it also bleakly underscores Gensler’s conundrum – no matter what Gensler does regarding crypto, the Big Crypto cartel will condemn him.

But that will change in 2023. Yes, there will always be Gensler naysayers and haters. However,??during 2023, people will begin to understand that Gensler’s SEC crypto-enforcement program and crypto-track record stands out above all others. Moreover, despite the SEC’s function as a mere civil agency, with no criminal authority of any kind, commentators will begin to see that Gensler’s SEC has been remarkably effective in its crypto-enforcement efforts.

Prediction #12: Hester Peirce Will Lessen Her Crypto-Fanaticism (Destination -- Foxes and Fossils ?(Original by?Nickel Creek ))?

SEC Commissioner Hester Peirce?now blames the SEC for crypto's massive collapse and impending doom . That is like the CEO of Marlboro blaming the FDA for lung cancer caused by cigarettes.?

Given her emphatic/persistent crypto-related posture, if the SEC "dropped the ball" on crypto-regulation, Commissioner Peirce is the one who has remained steadfast and relentless in her attempts to smack it from their grasp.

Commissioner Peirce has dissented from, or criticized, just about every SEC?effort to stop crypto-madness, so much so that Big Crypto coined her "Crypto-Mom." For example, Commissioner Peirce:

• Criticized the SEC ?when?they beefed-up crypto-enforcement efforts , which will help stop the fraud and chicanery so prevalent in Web3 investments;
• Criticized SEC enforcement staff ?publicly?for the BlockFi settlement , which probably saved investors from hundreds of millions in losses;
• Dissented from ?a rule to expand SEC registration requirements to clearly include digital asset exchanges, which is a step forward in protecting investors;
• Opposed the SEC case against Poloniex , which chose increased profits over SEC compliance by including digital asset securities on its unregistered exchange; and??
• Speaks almost nonstop ?about the need for a bitcoin ETF and?remains "amazed" ?that a bitcoin ETF has not yet been approved by the SEC despite the obvious dangers that such an ETF would create.

Commissioner Peirce is a brilliant former colleague and old friend of mine for whom I have always had the utmost respect and admiration. She stands up for what she believes and is not afraid to take the heat. In fact, her recent "Dissenting Statement on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure Proposal " was excellent and in my view, spot-on.?

But with all due respect, Peirce’s pro-crypto antics not only place at risk the investors she is sworn to protect, but they also don't pass the straight face test.??

That Peirce now?has the audacity to blame the SEC for the nuclear wasteland ?that the crypto-ecosystem has become is beyond reprehensible. My take? If Peirce is looking for a culprit for crypto investor devastation and the horrific crypto crime wave, Peirce need only look into the mirror for the answer.

During 2022, Peirce became a toxic voice of financial regulation and never ceases to disappoint. In an alarming?Halloween interview with Decrypt , despite massive investor carnage from crypto, Peirce continued her relentless quest for a kinder and gentler crypto-SEC. But the famed “Crypto Mom” did make one comment which is axiomatic, decrying, “Ultimately, you're going to see aspects of this thing called crypto permeating all aspects of our lives.” Peirce is spot-on only for all the wrong reasons. Because after 14 years of hype and grift, no practical crypto use has emerged except one – a killer-app to commit crimes without ever getting caught, which is?perilous for everyone everywhere .?

For 2023, Peirce is not likely to abdicate her "crypto mom" duties and Big Crypto fealty and unite with the?litany of expert computer scientists ?who believe that when it comes to Crypt/DeFi/NFTs and other web3 nonsense, there is no there there.??However, for 2023, she will find herself increasingly isolated, scorned and ridiculed as crypto-related investor carnage continues to dominate headlines and commentaries. Thus, Peirce’s ruthless, irresponsible and?ad nauseam preaching of the gospel of crypto should ease up or in the least , she will move on to other more deserving and less disturbing securities products to promote.

Looking Ahead (Brothers in Arms – Dire Straits )

Well, that’s it. 12 predictions for 2023. Done and done.?

As for my 2023, I predict that the anti-crypto movement will grow stronger, even more unified and even more effective. Crypto-skeptics are a rag-tag fugitive fleet of technology, engineering, law and business experts who share a unique and common bond of fellowship, friendship and support. It has been a privilege working with all of them and witnessing the progress first-hand.?

And the tide has begun to turn. The media’s penchant for crypto-puff pieces has now transformed into tales of woe lifted from the bankruptcy filings of Celsius, FTX and so many others. Congress has also now begun returning crypto-tainted dollars to worthy charities. And a healthy mix of skepticism, distrust, cynicism and scorn now gravitate towards all things crypto, DeFi, NFT, and other Web3 nonsense.?

Thus, for 2023, my work in the crypto-arena will likely conclude and I predict that I will move on to other interests during the coming year – hopefully turning to a subject matter or cause which does not involve waking up each day to frustrating and dehumanizing instances of hatred, vitriol and threats on social media. That will be nice . . .