Tornado Cash developer Roman Storm pleads guilty. And is Peter Thiel the Antichrist? I don't think even he knows as he launches a purpose-built Bitcoin side chain for stable coins. Let's kick it off.
[upbeat music] It just seems to me that when you tell me a story- Mm-hmm...
about the Antichrist coming to power and using the fear of technological change to sort of impose order on the world, I feel like that Antichrist would be maybe be using the tools that you- Yeah. But...
that you were, that you were building, right? Like, wouldn't the Antichrist be like, "Great, you know, we're not gonna have any more technological progress, but I really like what Palantir has done so far," right?
Yeah, but- I mean, isn't that a, isn't that a concern? Wouldn't that be the, you know, the irony of history would be that the man publicly worrying about the Antichrist accidentally hastens his or her arrival?
Uh, they're all... Look, there, there are all these different scenario. I obviously don't think that that's what I'm doing. I, uh, I- I mean, to be clear, I don't think that's- Um...
I don't think that's what you're doing either. And I- I'm just interested in how you get to- Well, but-... a world willing to submit to permanent authoritarian rule. And that's Peter Thiel.
Obviously, his back's up against the wall, but like, [chuckles] he responds- Well, I, I don't think you're the Antichrist.
I'm just wondering, and in what scenario do you s- do, do you, um, do you rape the privacy and autonomy of every single living American? I'm just curious what that looks like. Well, P-Piers Morgan, I mean, Piers, it's a,
it's a, there's different gradiations, you see. Um, [chuckles] so- There is-- That was pretty amazing though, 'cause y-you could tell the...
I don't know who the, the host is of, of Breaking Points, but you- Was it Piers Morgan? No, that's not Piers Morgan. No, Cr- Yeah. Whatever. B- Okay, whoever it was. Yeah.
But, but there's that moment when he's leading into the question, you can see Peter Thiel be like, "Oh, I see where this is going." [chuckles] Yeah.
The guy who's obsessed with the Antichrist i-is, is being charged with being the Antichrist.
Um- Funny, it's that it, like, it never occurred to him when, like, everybody who watches enough Peter Thiel talk, it eventually goes, "Oh, I wonder if he's the Antichrist."
He's like, you know, he talks about it so much. Yeah. So.
Yeah, and you can, you can see sometimes looking at him, you know, you'll like, where people will on, on 4chan or in the, um, bowels of the internet will show photos of politicians and see like, "See?
You can see the reptilian skin. You know, you could see the goiters and stuff underneath their skin that show that they are not of this world."
Um, not saying I see that with Peter Thiel, but I'm just saying- Yeah, not, not saying, I'm just saying... you could see people coming out with that. Other people have said it. Other- Not me. Yeah.
Other people have said it, you know, just, just really curious how you're gonna screw over the average American next. That- So- That's where I'm coming from...
speaking of the average American, we're gonna [chuckles] we, we riffed too long at the beginning. Yeah. We have to get into what we're gonna talk about. We're gonna talk about Roman Storm and the Tornado Cash trial.
There's been some developments.
Uh, you wanna take this one because, again, it's, you know, we're gonna juxtapose some news about Thiel with the more, uh, I would say, top-of-mind news, which is Roman Storm pleading guilty. Yeah.
So apologies for the bait and switch here, y'all, and you're gonna hear me monologue here for a little bit 'cause there's a lot of ground to cover.
Um, Charlie has very aptly named this the Comply or Die episode, and- Comply or Die... and I think that is really important for contextualizing why we chose really...
There's three stories, but Tornado Cash and Samurai, we're gonna be bundling them into one, and then we're gonna juxtapose that with like the perfect foil, which is this weird new, um, stablecoin-focused side chain that Peter Thiel's Founders Fund is launching.
And it really couldn't be more perfectly juxtaposed in the sense that on the s...
at the same time that you have these verdicts coming down for some of the OG CoinJoin and mixing softwares in crypto and Bitcoin, you have, uh, a, a surveillance stablecoin basically being launched by the likes of Peter Thiel.
So let's get right into it.
Um, I'm going to use Tornado Cash as the kind of leading story here, but, uh, we're gonna talk about Samurai a little bit too, because both of these things magically, crazy how this works out, the verdicts came out within a week of each other, basically.
And so for those of you who are not privy, in 2022, I believe, let me see. I have my notes here. Was it in August?
Yeah, on August 8th, 2022, OFAC, the, um, the Office of Foreign, uh, Asset Control, I believe that's, that's right, um, sanctions Tornado Cash.
Now, Tornado Cash is like the Wasabi or Samurai Wallet or CoinMarket equivalent on Ethereum. It was a mixing service that people would use to de-anonymize their Ethereum and ERC-20 token holdings, right?
A lot of stuff happens in between there. Uh, eventually, the DOJ takes up the mantle and takes, uh, Tornado Cash to court, and specifically its founder, Roman Storm.
And just this week, the jury reached a partial verdict where Roman Storm was found guilty for operating an unlicensed money transmitter business. There was a hung jury.
They couldn't, uh, reach a conviction for conspiracy to launder money, and he was also convicted of being not, or he was, uh, considered not guilty for conspiracy to violate US sanctions.
Now, the first two parts of this, the unlicensed money transmitter business and the money laundering part, I think are the most important, and it's the s- the same charges were brought against Samurai Wallet's co-founders.
Forgive me if I'm pronouncing this incorrectly, Keonne Rodriguez and William La- uh-[laughs] Lonergan Hill, those are the two, uh, co-founders of Samurai Wallet.
Uh, they were also convicted on July 30th of operating an unlicensed money tran-- an unlicensed money transmitter service, but they were not convicted of money laundering.
Um, important distinction there in, in the sense that th-the state is, or at least the courts are kind of saying two things at once.
There's this argument that, well, it doesn't really matter if you never custody the funds, you can still be considered a money transmitter.
But since they're not actually interacting with any, directly with any criminals for laundering money, then they're not considered money launderers, right?
And, and the backdrop for this is there's kind of two things going on here with how these CoinJoin services operate, right?
On the surface, they are privacy tools that do not necessarily need illegal activity to be used, right? Like, it's not predicated on illegal activity that you're using these.
But they're most useful for people using the dark web, people who need to wash their coins if they got it, got them from selling drugs or other services on the dark web, right? Or other black market activity.
So the arguments against being considered a money transmitter are very simple. [lip smacks] Uh, both cases for Tornado Cash with Roman Storm and for Samurai Wallet with Hill and Rodriguez
basically said, "Look, we just published code, and we never custody funds for the people using that code."
This is the code is speech argument and also one of the key arguments for keeping crypto developers out of the eye of the state in terms of being money transmitter businesses, saying, "We never custody the funds," right?
That's very important, and we'll get back to that here in a second. [lip smacks] Um, the most interesting part about this argument is that in the case of, I believe... Let me see. Yes. In the case of Tornado Cash,
uh, Storm, in his defense, the lawyers said, um, you know, "We only published open source code after May twenty twenty.
The smart contracts were immutable and no one, myself included," that being Storm, "could censor or reverse transactions."
And FinCEN's twenty nineteen guidance says publishing and anonymizing software is not money transmission. So the federal government, FinCEN, says that this is not, um, this is not money transmission.
If you're publishing software that involves, uh, you know, uh, decentralized smart contracts and code, then it's not money transmission because there's no one...
Like, they, the developers themselves are not actually taking custody of the funds, right? Yeah.
This has, this has like, um, uh, nineteen nineties, like, cryptography, um, [clears throat] like, battle all over it with like, you know, the famous Adam Back shirt-wearing, uh, is it armaments conversation?
I'll also, like, pause here and say I totally mixed up at the hook at this top where I literally said Roman Storm pled guilty, but he didn't. Tornado Cash or, uh, rather Samurai developer pled guilty.
Roman Storm was found guilty. Different things. I know people are gonna crucify me for this misstatement at the top. Regardless, you're hooked. You made it this far. Uh, we're gonna get...
You know, [laughs] please stay with us. That, that's a good, uh, that, that's a good distinction to make. But they like go... They, they kind-- They really go together.
They're, they're very like kind of complementary stories, and there's... Whether that's intentional or accidental, I think it's, you know- Well, it is very-... it's very good near. Uh, it's, you know...
Is it a coincidence that both these things are coming to a head at once? Maybe that's just the way that the court system... Because they're being prosecuted, right? In, in, in, in different, uh, jurisdictions, I believe.
Yeah. Yeah. Um, uh, Storm was being prosecuted in New York. The Samurai developers were being, uh, prosecuted- In a different place in New York. In a different place in N- [laughs] They're both in New York?
Yeah, both in New York. Oh, wait, hang on. No, yeah, they were both in the Southern District of New York. So anyway- Wait, the same district? Yeah. Oh. Oh my- Yeah, it's- I mean, okay. Wow.
I mean, it's a great, great day to be a privacy journalist. Shout out to The Rage run by Lola Leets and also to David Z.
Morris, a, a journalist, freelance journalist, longtime journalist in, in Bitcoin and crypto, used to write for The Breaker. Really, really sharp guy. Um, great writer. Anyway, they've been covering this on The Rage.
Uh, definitively, I would say they have the best coverage of any other crypto beat publication I've seen.
And if you want, go to their website, therage.co, you will find, uh, comprehensive coverage on both Tornado Cash and Samurai Wallet.
Anyway, back to just a few more housekeeping points before we get on to kind of thoughts and, you know, armchair takes- Mm-hmm... on this before we move on to the Peter Thiel story.
The, the fact that FinCEN is saying that publishing this software, it c- does not make you a money transmitter, but the courts are actively saying actually it does, to me, I mean, this is why we have the...
This is why we have, uh, you know, balance of powers, checks and balances. This is why we have the legal system.
But th-this case really is a watershed one for crypto developers in general, because if you have a precedent that says if you are a software developer,
you, and you created some sort of software that transmitted money and you therefore, your business can be considered a money transmitter business, this opens up-So many risk factors for developers in the United States, and it's going to lead to, if not a brain drain, then a stonewalling of certain innovation.
You know, you're going to eventually have anonymous developers or independent developers who just straight up are not gonna take the risk to build certain things because they don't have an army of lawyers willing to go...
or the army of lawyers that are going to go into court and argue in their favor, right? They can't afford these things. Uh, the, you know,
Roman Storm and the Samurai guys had to have [chuckles] their legal funds crowdfunded. I mean, their legal- Yeah...
uh, uh, you know, counsel crowdfunded because they just straight up didn't have the cash for these long drawn-out procedures. And there were, there was also a similar effort crowdfunding the Samurai Wallet devs.
Like, I think- Yeah... people gave, I think I saw several Bitcoin, uh, at some point, so. One hundred percent. Yeah.
And so the, the, the real fear with this is that you are creating a precedent where developers for these open-sourced protocols are just straight up not going to wanna take the risk to build certain things because now you have court two cases saying it doesn't matter if you never actually control funds,
you will be liable as a money transmitter, and you may e-even be liable for the money laundering that goes on. Neither of them got convicted for that. The jury was hung in the case of Roman Storm's trial.
But they might try again with a similar case down the road. This is also really important when you consider a few years ago,
I believe, I don't remember what the bill was exactly, but Elizabeth Warren and her cronies were pushing for this bill that would've deemed,
um, would, would've deemed anyone running a node or even a, you know, they call it an unhosted wallet, so a non-custodial- Yeah... wallet or Bitcoin miners, they could have been considered money transmitters, right?
So there are aspects of the state, there are actors in the state that actively want anything that exists outside of the custodial bubble to be considered money transmitter businesses or to be considered out of bounds in terms of managing cryptocurrencies and Bitcoin in a self-sovereign way, right?
Which again, that's the entire point of owning Bitcoin to begin with.
If you can't run your own node, verify transactions, send transactions on your own, and hold those coins offline in a wallet that you control, then w- you know, outside of price exposure, there's no reason to own the asset.
So, uh, these two cases are going to be considered, you know, landmark cases, I think, for how the United States legal system approaches open source software developers within the cryptocurrency ecosystem.
Now, the silver lining, um, Roman Storm did not plead guilty. He was, he was, uh...
They, they ruled that he was guilty of operating an unlicensed money transmitter businesses, business, uh, and his, his legal counsel has said, "We are going to appeal this." This will probably make it up to...
I mean, this could go all the way to the Supreme Court. I m- I mean- Man, I would lo-- I, as dumb as it is, I would love a Supreme Court case because I do think that this type of thing needs to be elevated in discourse.
I think we need to argue about it in a much more public way. Roman Storm, again, I, I think he's a very good person to rally around, and he's been a very, very good spokesperson and navigated this pretty well.
Um, [clears throat] yeah, we need more people.
I think you've even seen, um, some of the big boys like, um, maybe not Coinbase officially, but you've seen folks at some of these, like, large exchanges like comment on this saying that they do like wish to see their...
Like they wish to see Roman Storm, uh, not convicted like this. So, um, [clears throat] you...
I think, you know, you see there is like even kind of in the more now institutional crypto level, you do see some voices for like open source development, uh, and independence of this t-type of thing. So.
Yeah, one hundred percent. And but there's no hope for that in the Samurai case because they basically- Yeah... took a plea deal. Rodriguez and Hill took a plea deal.
So on July 30th, both defendants changed pleas to guilty, and as a result, they were not charged with the money laundering piece.
It's very hard to prove that they ever had anything to do with any of the criminal entities that would've been using Samurai Wallet to launder funds, but they did plead guilty to operating an unlicensed money transmitter.
So- Yeah... as a res- uh, going forward, uh, it looks like on November 6th, 2025, will be their sentencing. That's when it'll be scheduled.
They are facing a maximum of five years each, and apparently six point three million dollars in fines have to be paid before that date, which is just- Ooh... absolutely crazy. Man. Um, yeah, that's pretty wild.
And Roman Storm is facing similar time in jail, five years, maybe three, depending on if the sentence is, is lighter. But again, Roman will appeal this.
It's going to go to a higher court, and it might get appealed all the way up to the Supreme Court, depending on where it goes. So anyway, that's kind of the TLDR for this. Now, why does this matter- Okay, good...
Charlie? Now, why does this matter? Uh, really, you know, this is just, uh, the, the US government and the powers that be showing us how not to do things. [upbeat music] Hey, Will here with Blockspace Media.
Did you know that we have individual feeds for all our shows? If you're watching the Mining Pod, Bitcoin Season 2, or the Court Show, be sure to check out the individual feeds.
You can find them on your podcast player of choice, whether that be Spotify, Apple, YouTube, et cetera.Just type in Blockspace Media and you'll find all our shows pop up, or just type in the individual show name like The Mining Pod or Bitcoin Season Two.
Be sure to hit that subscribe and give us a five-star rating so we can continue to bring you the best content in Bitcoin. Whereas, uh, Peter Thiel, the, uh, the lizard man at the beginning of this episode,
uh, shows us how we should do things. Um, because in, you know, maybe instead of building really disruptive technology, we should make, uh, fully compliant purpose-built blockchains for stable coins.
So that is what the second part of this is, where I feel that this story did not get as much circulation as I ex-as I expected at the time. But couple weeks ago, um, Peter Thiel and, uh,
Peter Thiel, founders, you know, behind Founders Fund, uh, uh, raised a second round v-very oversubscribed for Plasma.
They raised three hundred and fifty-three million dollars in a very oversubscribed, uh, round a couple weeks ago. And this is actually, um, a classic old school token sale, Colin. There's not-- Like, this is funny.
It's the same old tricks,
um, that we've seen in crypto where we allocate, you know, um, I believe it's like something like a billion XPL tokens, which are the native token of the Plasma side chain, and it's an investor presale for the tokens.
You know, uh, I won't really go into the specific design of the Plasma side chain, but it's gonna anchor on Bitcoin, it's gonna post state updates to Bitcoin.
But most importantly, it's super-duper ultra compliant with all of the things that the US wants a blockchain to be. Contrast that with independent open source developers who build cypherpunk privacy tools,
uh, and this Plasma chain, you guessed it, all transparent. You can turn off and on any account. At some point, you gotta wonder, like, why is this need to be built on any kind of blockchain?
[chuckles] 'Cause like, isn't this just another database? If you're watching, and so if you're listening, you won't see it, but if you're watching, you see, you know, the classic investor token presale pie chart.
And at first blush, this looks just like the low float, high FDV meta, which is they sell a tiny portion of the tokens and the rest are allocated, um, for ecosystem, investors, team.
So you only have a very, a very low amount of liquid tokens. In this case, a public sale of ten percent of the token supply. That'll happen sometime down the road.
The rest is reserved for about forty percent for ecosystem, twenty-five percent for investors, and twenty-five percent for the team.
Now, that three hundred and fifty-three million dollar raise, in addition to their first raise earlier this year of like thirty or fifty million dollars, which brings it close to four hundred million dollars raised for this, uh, investors' twenty-five percent allocation, makes this one of the most successful, like, venture-backed crypto, uh, raises of the year.
And, um, it is, you know, it's a who's who of the business. It's Founders Fund, it's some of the other, um, people who are, uh, kind of adjacent to the PayPal Mafia. They have an emissions schedule.
It's proof of stake, so, you know, there's yet another dimension of conspiracy. Validator network. I mean, it's kinda your like, it's just the same kinda talking points that you'd ex-- uh, you'd expect to see.
It, it doesn't really look too, too interesting at this point. Um,
it is just poetic that Peter Thiel of PayPal origination, who brought the digital dollar to the modern internet, or really to the first, to Web 1.0,
um, is now behind one of the biggest raises, uh, of s- uh, the dig- the digital dollar of Web 3.0. And, and explain what you mean by that with Peter Thiel's involvement with PayPal.
This probably warrants another Mark Goodwin episode. Shout out Mark.
But, um, if you're not familiar with like the how we got to bootstrap commerce on the internet, it is very centered around the emergence of PayPal because we needed a trusted place to trade and settle things and settle them in dollars.
And PayPal really cemented the dollar as the currency of the internet.
And Peter Thiel, uh, part of a group which we call the PayPal Mafia, of which Elon Musk also comes out of, uh, was instrumental in bootstrapping PayPal as these rails. Now, um, it is, it does sound conspiratorial.
Like maybe you like think you guys are crazy if you're listening to this, like, why are you saying this? But like, uh,
you know, if you read enough of this stuff and you see how poetically tends to, uh, uh, when, you know, the freedom devs, uh, go to jail or go, you know, come under fire, the real big boys who promote the expansion of the US dollar tend to show up, uh, kind of as saviors.
And what's funny is like they're kind of heralded as such often by a lot of the corporate and banking, uh, uh, folks.
So yeah, th-there's your Ch-Charlie Spears, uh, soapbox, conspiracy soap- conspiracy soapbox of the week.
The, the, the one thing I wanna say about this that I find to be the icing on the cake, not just, you know, obvi-- Like the, the fact that this is happening around the same time that privacy developers are getting slapped with fines and prison sentences for creating open source code, that itself is too rich and unfortunate, [chuckles] you know?
But the, the- Yeah... the icing on the, on the top of that Sunday for me, uh, is the fact thatThis was a token sale. So this was like- Yeah...
as far as I can tell, the, the, I mean, maybe not the first, but it is one of the first public-facing or major token sales to happen after the SEC changed the rules to actually allow for token sales.
Um- Yeah Or forgive me, I don't believe the SEC changed the rules, but I believe this was a provision in one of the, uh... It was either the Genius or the Clarity Act
th-that allows the SEC to, or allows projects to fund themselves through a token sale as long as there are certain disclosures and stuff like this. Now, obviously it's a change of guard.
I actually think that's a good thing. I think it's good that we can do token sales now, and people don't have to look over their shoulder and think they're gonna get sued. Yeah.
I'm, I'm actually, I'm not-- I don't have an issue with the, with the legislation. I think the legislation is great and foundational, so.
It's just insane that after, you know, probably what, eight years of the SEC playing Whac-A-Mole with random ICOs and crypto companies and token issuers, that you now have one of the most powerful people in the US, or at least his fund, Founders Fund, issuing a token sale after Joe Blow, you know, did a stupid ICO in twenty seventeen and ended up being made an example of, right?
It's just, you know, uh, totally capricious enforcement and [chuckles] regulations with these things. And now that crypto is okay, you know, you just get the likes of Peter Thiel doing, you know, ICOs basically.
So I just found that to be also pretty notable with this. It's just like all of this, all of the cypherpunk narratives are being absorbed by the blob state, so. Yeah. Um, so, uh, we're not making any conclusions.
We'll let you, the listener, make the conclusions for yourself.
But if you would like to go further down the rabbit hole, we recommend, uh, uh, one of our favorite independent publications, The Rage, and we recommend, um, reading, uh, a little bit, but not too much, of Mark Goodwin's, uh, tweets and writings on, uh- On Unlimited Hangout...
websites such as Unlimited Hangout. Yeah. A good place to close, Charlie, would be when someone asks you, "What exactly is the purpose of Peter Thiel's new stable coin side chain?" It's,
it is, um... It's, it's, um... Well, th-th... Let me-- It's-- I, I, I-- There's several different things one could say. It's, uh- [laughs] There you have it.
Have a beautiful weekend, everybody. See you all next week.
[chuckles] The, you know, the irony of history would be that the man publicly worrying about the Antichrist accidentally hastens his or her arrival.
[laughs] I got a, I got a movie, actually, yeah. [laughs] So funny. It's amazing. What a crazy thing to ask, too. Is, is Peter Thiel a Christian? Does he believe? He cl- he kinda claims to be.
He's got kind of a Jordan Peterson-type, like, ambiguity, like, "Oh, I don't know." Yeah. [laughs] Kind of thing.
[laughs] It's impossible to accept what the Bible says is truth if we don't also look at the teleological end of manifest destiny