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Alright, hello everyone, this is Sandel Podcast number 57.

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Today is February 3rd.

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And today we will be discussing part two of the mini series I've been doing into foundation

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companies, which have been is the backbone of the legal backbone of the sandbox Dow

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Foundation.

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And it's led us down a really interesting, really interesting path.

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We started just with what we thought was sandbox foundation turned out to be foundation company

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legal entity that turned out to be one, one part of the Dow ecosystem.

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And here we are part two, talking with Ernest, the scope of the talk, Metastreet Journal

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in the chat, and I hope you are right on time.

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So the scope of the talk today is an analysis of the facts.

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All these facts are public things that you Google search yourself just right alongside

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us.

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None of this is an accusation or smear campaign of any kind.

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And this is meant to explore the transparency and deliver on transparency goals when it

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comes to what is it that we are participating in our ecosystem and our Dow.

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Ernest and I do not represent the sandbox game or the sandbox foundation.

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You're not your financial legal advisors and nothing we say is to be taken as financial

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or legal advice.

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If we say the word SIP, we mean sandbox proposal.

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We say the word Dow, we mean decentralized autonomous organization.

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And if we say SanFam, we're referring to the sandbox community, those who participate in

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the people, product and purpose of the sandbox ecosystem.

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That ecosystem looks a little bit like this.

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Everything from the people sector, the gamers to the sandbox team, the product side is everything

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from the game client to the Dow.

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The purpose is what's mentioned in the white paper, as well as what's been expounded upon

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by the leadership, Sebastian Bourget, Arthur Madrid, Yeh Su.

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All of that comes together to form the ecosystem.

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Today's episode is squarely on the Dow portion under that blue product sector.

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And today I have with me Ernest Lee, who is a well known figure in the Apecoin Dow.

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And there's a lot of crossover between the sandbox and Apecoin.

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And I met Ernest through Bulls on the Block quite some time ago.

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And he's established himself as someone who is knowledgeable in the legal side, which

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is not at all a coincidence when you find out that Ernest is actually a practicing attorney.

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So Ernest Lee is part of many, many things in the Apecoin Dow.

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Board counsel, board capital, there's a lot of stuff.

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So I'll let Ernest introduce himself.

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Ernest, if you wouldn't mind, tell us a little bit about your background.

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Sure.

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Thanks, Lancer.

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I'm an attorney, like Lancer said.

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I'm also an accountant.

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I run two tax practices.

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I have a law firm that I run.

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And legal, we rebranded from Ernest Lee LLP this year to focus on Web 3.

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That's what we do.

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We do a lot of trademarks, business formations, LLC, partnership agreements, formation of

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DALs, all sorts of things.

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Then I'm also a partner in board counsel, which is a Web 3 consultancy firm that I run

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with Aaron Haber, who's a board ape.

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And Aaron and I met at the Apecoin Dow.

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We were both running for special counsel.

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And we were similarly aligned in our ideas about how the Apecoin Dow should function.

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And so, yeah.

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And then I, like you said, I have a few other businesses.

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I run an investment fund and invest heavily in digital assets.

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And I have a motorcycle company that builds some of the coolest motorcycles on the planet.

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So there you go.

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Used to be a rodeo guy, bull rider.

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Yeah, I was a pickup man in the PRCA for about 12 years.

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So Ernest's background goes far, far and wide.

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Not just a paper pushing tax collecting attorney.

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He's got a long story background.

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I had closed a deal.

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My investment fund, one of the very first things we invested in, we bought used espresso

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equipment from Starbucks and resold it on the market in a company that I funded.

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And I was a partner in.

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And then when that deal closed up, I had some time on my hands.

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I was doing tax for private equity.

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So I had roughly 11 months out of the year that I didn't have to work.

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And so I started working in rodeo, essentially just started showing up to rodeos and they

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put me to work.

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Eventually I got my card to pick up and I started picking up in PRCA and PCA rodeos

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in the southwest or southeast circuit.

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And so yeah, I did that when I lived in Florida.

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But I met one person after another that needed help on their taxes in rodeo.

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And they're a peculiar bunch.

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They don't make a lot.

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I'll just say that.

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But they have a lot of expenses and that's why.

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They have a lot of write-offs for travel expenses that aren't what you ordinarily see in travel

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expenses.

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So I helped them with that.

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I did for a little while, I worked on doing some sponsorships for them.

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But I found my niche doing taxes for rodeo professionals.

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And so we built that practice to a little over 500 clients.

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And then I took one of my staff, I made her a partner in the firm and she runs that firm

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almost autonomously.

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I mean, we talk three or four times a week, but she does a really bang up job out there.

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And so I took one of the staff that we were using at rodeotax.com, rodeotax, and we moved

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him over to Decrypted Tax when I founded Decrypted Tax in 2020, doing taxes for individuals and

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businesses with digital asset exposure.

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Our first client was a kid who was mining Bitcoin in his basement.

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His father was a friend of mine.

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And he said, my son, 16-year-old kid, had made a substantial sum of money, more than

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$50,000 that year, mining Bitcoin on a laptop in 2012.

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And so I helped him figure out his taxes.

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I gave it to Lincoln.

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And I told Lincoln, hey, I don't know what kind of trading cards this kid has, but he's

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made a bunch of money doing it.

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So I need to figure out his taxes.

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And so- And thus it began.

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And thus it began.

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Yeah.

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Yeah.

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Year after year, we got more and more clients in rodeotax that had digital asset exposure,

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because they'll invest in anything.

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I mean, these guys are doing anything they can to get up and down the road.

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If it's selling Monavy or any number of different things they sell, they do whatever they can

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to keep their expenses paid.

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And crypto was one of them.

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And so I just kept giving clients to Lincoln until we developed a book of business big

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enough that we could spin off into its own firm.

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That's what we did.

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In 2020, we spun off there.

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And then I went in pretty deep with investing in Bitcoin primarily, but also a whole bunch

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of other altcoins in 2020.

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But then it'd be about 2021-ish I got out.

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When Bitcoin hit 63, I got out of digital assets and moved that into more traditional

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loans and things that I was investments.

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And then again, in 2023, beginning of, I got back into Bitcoin at, I think my blended average

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is about 27.

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So, I mean, even with this little hiccup we've had here with tariffs, I'm still doing okay.

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So Ernest and I, I think I mentioned now and again when I'm in Sandbox DAO is that I am

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an ape holder as well.

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I'm a fellow monkey JPEG.

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And Ernest and I really didn't really connect until he asked me to be a co-author on an

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AIP.

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So AIP 553 was the reset AIP we came up with.

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So that's where Ernest and I started to connect a little bit more just professionally and

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socially.

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And now when we go to BOTB, Bulls on the Block, which Ernest has recently acquired and is

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expanding.

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So full disclosure there, Ernest and I have that sort of connection to each other being

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co-AIP authors in 8.0.

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Yeah, yeah.

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Lancer was, I really appreciate your help on that because it was a lot of research to

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figure out what we needed to do.

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We saw the revamp coming and we're responding to that a little bit.

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And we saw that there was some things that could be adjusted within revamp.

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We didn't have a lot of context to reach out.

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Well, we did it when we had context to reach out.

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We just didn't feel that we were getting the responses we needed.

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And so we put up our own AIP the way that we thought you, Aaron Haber and I thought

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that it would be better.

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And end of the day, hey, we're bam, reached out.

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We got together and roughly 75%, 80% of the changes we suggested were incorporated in

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the new revamp that just passed.

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Yeah.

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Yep.

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Was it 554, 552 just passed, which is revamp AIP, not to be confused with our reset AIP.

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And so ours is still an admin review.

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Yeah, admin review.

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And so, yeah, I really enjoyed working on that.

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For those of you who are on the SanFam side of the house, our reset AIP that I'm co-author

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on is similar in spirit to the community council, SIP, that we're doing.

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It had a lot of transparency, type role and responsibilities, similar somewhat to what

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the community council would be doing as well.

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Okay, cool.

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Yeah.

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And then everyone, I'm Lancer.

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I'm the podcast host.

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I'm a publisher for Sandbox Game, having put two experiences and one of them made it in

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Alpha season four that just concluded.

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So it's like kind of making it into the Superbowl for the Sandbox.

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I really still can't believe that we made it into that.

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And yeah, I've been doing this mini series on the Sandbox Foundation because of my background

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in business, entrepreneurship.

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I've owned my own corporations for quite some time now.

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And I'm just, I enjoy the business side of things.

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So naturally when I see the Dow and I read that there's a corporate entity behind it,

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that sort of thing intrigues me.

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What is that made of?

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How does that work?

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This is part two of that.

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All the research that we have gone, that we have went through for this mini series is

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contained mostly within the reading of Cayman Island law and those seven different laws

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right there.

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So looking at Cayman Island online tools, looking at their regulations, and then going

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through a lot of expert opinions, blogs, article posts, opinion pieces, and then Google searches.

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Today we went in just a little bit different of a direction.

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Whereas part one, we did a recap of the birth of the Sandbox Dow and we went to our research

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and everything I just went over and we applied that in our regulation stack.

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We looked at what a potential flow chart would look like for creating a foundation company,

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and different terminology comparisons between all the different laws.

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We used different terminology even though sometimes they meant the same thing.

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TLDR and some remaining questions.

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Part two today is a little bit more of a zoom out.

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With Ernest, he's an attorney based in the United States.

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We're going to be looking at some case law.

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Most of the case law that you hear about, sort of stuff that scares Dows right now,

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almost all of it is in the United States and all of it is in one state.

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So we'll go over that.

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One state has been causing all this trouble.

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Yeah, nobody can guess which state that is.

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So we're going to go over where those are right now and what they could mean.

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And that's what will tap into Ernest's thoughts on the matter.

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And then we'll look at what still remains to be decided.

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What are some key facts that could really be some more things that we need to watch

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out for?

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And then last but not least, we'll do a comparison of corporate structures that are similar in

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nature to foundation companies.

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And you can kind of get an appreciation for when I say foundation company that came in

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islands.

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And if you're interested in that, go back to episode 55.

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Right?

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Or 56, excuse me.

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So look there and you'll see the foundation company, the Grand Canyon Islands.

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But here we're going to look at some US entities and then also a non-US entity that we found

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that also has made its appearance in Dows.

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All right, we're going to run through a recap of episode 56, which was foundation company.

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This is not going to take very long, but we're going to recap it.

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So back in episode 34, we did the Sandbox Dow relationship map where we kind of did

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a narrative unearthing of where we thought all of the corporations and legal entities

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played with each other, that they are associated with each other, what role they had in the

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Sandbox ecosystem.

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We also coincidentally led us to the Apecoin Dow by way of the Cartan Group, which was

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involved with the Apecoin Dow from the very beginning.

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It also led us to how the Sandbox company was related to Animoca Browns and the different

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structuring that happened over there.

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And then last but not least, how the different groups, Travers through Alburga, Maples Group,

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International Corp Services Limited, International Protectors and Advisors Limited, Arasakyo,

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perhaps Sleet Collective, although I think maybe I oversold their involvement.

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Maybe they're not as involved as I thought.

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Cartan, how all they played a role in the founding, no pun intended, of the Sandbox

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Dow Foundation.

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So that was one episode.

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And then we went into what all that meant.

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In episode 34, I thought that everyone, what we found out that most of those entities were

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on the same street on the Cayman Islands, right?

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The same street and in some cases, two buildings next to each other.

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So that nice little blue building on the left and then the really teal aqua building on

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the right, that's like most of the Dow for the Sandbox Foundation right there.

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And so at first I thought, we thought that there was something significant about, you

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know, just personal associations.

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It's a small island, kind of like a small town feel.

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That is the business district in Georgetown.

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However, upon closer inspection of the rules, that doesn't seem to be the case.

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It actually seems like it is structured that way because of the requirements by the Cayman

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Islands and their acts and regulations in their law.

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So you have to have in management services, they have to be properly licensed.

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Director has to be properly licensed.

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Attorney has to be in a very specific place.

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Even the way legal counsel is sought after and then management services, all of these

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things have different requirements you have to abide by.

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And so less about, you know, them all being next to each other because maybe they grew

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up together and maybe more about their resume for how they are able to fulfill the positions

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in accordance with Cayman Island law.

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We did a deep dive into that law in episode 56 where we found out our sandbox style foundation

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is an exempted company, specifically an exempted foundation company, which makes it applicable

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to the Companies Act and the Foundations Company law.

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And we looked at page five of our minimum association, which kind of gave us that background.

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And then we went to our liability.

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What does it mean to be a limited liability foundation company by guarantee without any

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share capital?

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And again, we consulted the member of association to give us that, that we were to triangulate

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where we were within Cayman Island law.

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Then we went over in depth the reg stack are also called a law regulation stack.

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Basically how do all of the rules, regulations and laws, how do you stay legal so that when

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the foundation company is authorized to be a foundation company, you know that you've

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done all the things you're supposed to for Cayman Island law.

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So that was the Companies Act, Foundation Companies Law, Companies Management Act, the

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Director's Registration Licensing Law, the Securities Investment Business Law, the Virtual

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Asset Service Provider Act, and the Citations of Act of Parliament Law.

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So that's seven bodies of law that we went through for episode 56.

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And then we said, you know, part two, we would look at case law and then part three would

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look at a professional law firm who is in Cayman Island.

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That'll be part three with Walker's Global.

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And then when you look at all of these documents, now you suddenly can see just what these terms

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mean, Articles Association, Foundation, Foundation Company Limited Blood Guarantee, Exempted,

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Assistant Registrar, Acts and Regulations, Subscriber.

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That was an important term that we found out just how important it really was without any

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share capital.

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All these things we suddenly found when we are reading our own sandbox foundation documents,

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they suddenly had a new meaning for us.

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And then we went through the Foundation Company creation flow chart.

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And that was just me based on what I had read through what I thought was going down.

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And we went through how the Dow wanted to become a, when a Dow wants to become a foundation

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company, all the steps that it took to get to where you were actually Dowing like we

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are right now, like the company is at day to day in the Grand Cayman Islands.

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And this is basically my best guess.

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And this is what we'll go over a little bit more in depth with part three, when we have

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the Walker's Global to kind of fact check everything that I think was going on because

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00:20:37,940 --> 00:20:44,680
there's still that big rectangle of confusion over here over what do these roles, how do

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00:20:44,680 --> 00:20:47,160
they interact with each other on the daily?

287
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And how does the body of law play out in real life with all of these people?

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And then the last one at least was the TLDR.

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00:20:57,440 --> 00:21:02,120
Foundation Company is both the name of our sandbox Dow and a type of company in the Cayman

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00:21:02,120 --> 00:21:03,120
Islands.

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00:21:03,120 --> 00:21:05,480
It's flexible in how it's structured and how it's operated.

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Exempted Company means the company that does business outside the Cayman Islands.

293
00:21:09,280 --> 00:21:12,800
Limited by guarantee means members of the foundation can only lose what they put into

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the company.

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00:21:13,800 --> 00:21:19,800
Without any share capital means no shares, which I explained means units of ownership

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00:21:19,800 --> 00:21:22,360
were created when the company was formed.

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00:21:22,360 --> 00:21:26,700
Articles and memorandum of association, they are the founding documents of a foundation

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00:21:26,700 --> 00:21:30,880
company, both of them together equal the constitution.

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00:21:30,880 --> 00:21:36,720
And memo creates the foundation company and articles will describe how it's to be operated.

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Similar to in the United States, you might refer to as the bylaws, although not the same

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00:21:40,100 --> 00:21:44,920
thing because in the Cayman Islands, there are bylaws and they are not articles.

302
00:21:44,920 --> 00:21:46,320
Bylaws are optional in the Cayman Islands.

303
00:21:46,320 --> 00:21:51,160
And you'll find when we did our comparison with some United States stuff, bylaws are

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00:21:51,160 --> 00:21:55,640
not optional for some of the ones that we looked at here in the United States.

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00:21:55,640 --> 00:21:57,600
Lots of business being done in the Cayman Islands.

306
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There were 900 companies registered in one month alone and there are 121,000 active.

307
00:22:06,100 --> 00:22:11,040
And then subscriber and secretary roles are very important to the founding of a foundation

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00:22:11,040 --> 00:22:12,040
company.

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00:22:12,040 --> 00:22:16,840
Members, directors, officers, supervisors, managers, all seem secondary, although a supervisor

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00:22:16,840 --> 00:22:18,780
is required.

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But the most important role seemed to be the subscriber and the secretary.

312
00:22:24,600 --> 00:22:32,020
So that's the kind of the wrap of recap of episode 56, which was our research into the

313
00:22:32,020 --> 00:22:33,800
Cayman Island law.

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00:22:33,800 --> 00:22:39,640
Today we'll be moving into case law, different sorts of court rulings and opinions that are

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00:22:39,640 --> 00:22:40,640
important.

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00:22:40,640 --> 00:22:46,400
And then you remember when I said that reg stack, that reg stack here, that's case law.

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00:22:46,400 --> 00:22:52,380
Case law is something that you use as interpretation, as guidance, and how the courts will sometimes

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00:22:52,380 --> 00:22:56,740
look at the bodies of law that are in existence and they look at different case law to see

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00:22:56,740 --> 00:22:59,280
how other judges have ruled in disputes.

320
00:22:59,280 --> 00:23:04,800
So it's kind of like a dispute resolution reference book.

321
00:23:04,800 --> 00:23:07,680
Ernest, did I describe that?

322
00:23:07,680 --> 00:23:09,720
Okay, you're the practicing attorney here.

323
00:23:09,720 --> 00:23:11,880
Yeah, I'm following along.

324
00:23:11,880 --> 00:23:20,360
I'm going to chime in when I have anything significant to add, but you've nailed it.

325
00:23:20,360 --> 00:23:21,360
Right on.

326
00:23:21,360 --> 00:23:23,680
So now we're going to get into today's episode.

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00:23:23,680 --> 00:23:25,880
Case law is our first one.

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00:23:25,880 --> 00:23:31,680
Then we'll get into our comparison of what we found for Dow LLCs, LLDs, DUNAs, which

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00:23:31,680 --> 00:23:36,760
you've probably heard of, and then TRUS, how those play a part, and then we'll finish.

330
00:23:36,760 --> 00:23:41,520
So case law, our case rulings and opinions, opinions.

331
00:23:41,520 --> 00:23:44,880
Dow's getting sued is pretty much what I'm at when I'm after here.

332
00:23:44,880 --> 00:23:52,920
So the court rulings for Dow's getting sued center around what we could find three court

333
00:23:52,920 --> 00:23:53,920
cases.

334
00:23:53,920 --> 00:23:57,640
There are many, many others, but these are the three that you hear a lot of.

335
00:23:57,640 --> 00:24:01,440
Okie Dow, EZX, and Lido Dow.

336
00:24:01,440 --> 00:24:04,400
Lido Dow is the one everyone's afraid of right now, this moment.

337
00:24:04,400 --> 00:24:12,840
So Okie Dow was sued by a US regulator, the CFTC, commodities futures and trading commission.

338
00:24:12,840 --> 00:24:20,160
They are a US regulator and Okie Dow was sued by CFTC in the state of California for not

339
00:24:20,160 --> 00:24:25,560
registering in accordance with CFTC rules and was ordered by a US judge to shut down

340
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and pay a $643,000 fine.

341
00:24:30,320 --> 00:24:33,440
This was in June of 2023.

342
00:24:33,440 --> 00:24:35,980
It was in the state of California.

343
00:24:35,980 --> 00:24:45,060
And some key things that I pulled out of it, and we'll get Ernest's input here in a second.

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Key thing I pulled out was that a person can be sued as an unincorporated association under

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US California law.

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00:24:52,960 --> 00:24:57,640
And the key phrase was there was could be sued because at the time the judge didn't

347
00:24:57,640 --> 00:25:01,680
exactly say I'm ruling on this because you are.

348
00:25:01,680 --> 00:25:07,080
I am ruling on this because you didn't register in accordance with and I found all these things

349
00:25:07,080 --> 00:25:08,320
to be true.

350
00:25:08,320 --> 00:25:16,180
That a person that can be sued as an unincorporated association, a Dow, excuse me, a Dow can be

351
00:25:16,180 --> 00:25:22,120
a person that can be sued as an unincorporated association under US California law and that

352
00:25:22,120 --> 00:25:29,160
Dow members could potentially be seen as partners in a general partnership and can be liable

353
00:25:29,160 --> 00:25:33,000
for the actions of other members under US California state law.

354
00:25:33,000 --> 00:25:37,240
This statement right here will be very important for numbers two and three that will come up

355
00:25:37,240 --> 00:25:38,520
here later.

356
00:25:38,520 --> 00:25:40,480
Ernest, what do you think?

357
00:25:40,480 --> 00:25:42,320
Yeah, that's about right.

358
00:25:42,320 --> 00:25:49,080
So I mean, back up a little bit, you know, the 50,000 foot view.

359
00:25:49,080 --> 00:25:55,480
Basically, you know, if Lancer and I were to decide we're going to enter into it, we're

360
00:25:55,480 --> 00:25:58,440
not even just going to enter into it, we got a really good idea.

361
00:25:58,440 --> 00:26:01,960
And we're going to start doing things to make money.

362
00:26:01,960 --> 00:26:11,760
And then while we're doing those things, if Lancer were to, let's say if I did something

363
00:26:11,760 --> 00:26:18,080
that didn't work and we got sued, Lancer could be held responsible for the things that I

364
00:26:18,080 --> 00:26:24,640
did because we are entered in a common enterprise for profit.

365
00:26:24,640 --> 00:26:29,380
And so that's basically what they're saying here is that unincorporated association under

366
00:26:29,380 --> 00:26:37,240
California law would be seen as a partnership, a general partnership, and not a limited liability

367
00:26:37,240 --> 00:26:39,360
partnership, but a general partnership.

368
00:26:39,360 --> 00:26:47,000
And absent any other documents, to the contrary, the individuals could be held liable for the

369
00:26:47,000 --> 00:26:53,400
actions of the other members of this general partnership.

370
00:26:53,400 --> 00:26:54,400
And what is it significant?

371
00:26:54,400 --> 00:27:00,840
Because to me, I didn't really, growing up, you hear corporations and LLCs and partnerships.

372
00:27:00,840 --> 00:27:05,920
What is it that's significant about the general partnership that makes it so scary?

373
00:27:05,920 --> 00:27:13,520
Well, general partnerships are scary if you've, I mean, if you're the reason, let's talk about

374
00:27:13,520 --> 00:27:15,960
why you enter into a limited partnership.

375
00:27:15,960 --> 00:27:22,520
If you're just a money partner, or if you're just providing the cash to do something in

376
00:27:22,520 --> 00:27:27,200
a business, you don't want to be responsible for what they do with that money.

377
00:27:27,200 --> 00:27:29,960
And so that's why you have limited partnerships.

378
00:27:29,960 --> 00:27:35,720
Or if you're a services partner, so you're providing a service, let's say a law firm,

379
00:27:35,720 --> 00:27:40,800
law firms are always set up as limited liability partnerships.

380
00:27:40,800 --> 00:27:44,280
Not always, they're generally set up as limited liability partnerships.

381
00:27:44,280 --> 00:27:50,840
And so when you enter into a law firm, you don't want to necessarily be responsible for

382
00:27:50,840 --> 00:27:53,140
what the other attorneys in the firm are doing.

383
00:27:53,140 --> 00:27:57,600
And so you have this structure and you have an agreement that you're only going to be

384
00:27:57,600 --> 00:27:59,720
responsible for certain things.

385
00:27:59,720 --> 00:28:06,360
What they're saying here in the Okudow case is that the individuals don't have an agreement

386
00:28:06,360 --> 00:28:07,600
to say otherwise.

387
00:28:07,600 --> 00:28:13,620
And therefore, they are an unincorporated, and because they're an unincorporated association

388
00:28:13,620 --> 00:28:18,920
under California law, that they're potentially liable for the actions of the others as general

389
00:28:18,920 --> 00:28:22,040
lawyers.

390
00:28:22,040 --> 00:28:25,520
And this was in 2023.

391
00:28:25,520 --> 00:28:31,560
So it was a US regulator up against a Dow.

392
00:28:31,560 --> 00:28:40,640
And at the time, let's just say that the US regulatory outlook on things was, you could

393
00:28:40,640 --> 00:28:42,920
say aggressive, but you could also say scrutiny.

394
00:28:42,920 --> 00:28:46,200
There was a lot of scrutiny.

395
00:28:46,200 --> 00:28:52,360
That didn't stop because there, number two, our second example, BZX Dow.

396
00:28:52,360 --> 00:28:54,280
This was in March of 2023.

397
00:28:54,280 --> 00:28:57,440
So same year, just a little bit sooner than Aoki.

398
00:28:57,440 --> 00:29:05,900
BZX Dow was sued by a Dow token holder after a hacker stole Dow funds and the token holder

399
00:29:05,900 --> 00:29:07,560
was unhappy with the repayment plan.

400
00:29:07,560 --> 00:29:14,200
I believe the terms would take thousands of years to repay was used in the brief.

401
00:29:14,200 --> 00:29:19,960
The legal opinion was issued paving the way for Dows to be construed as a general partnership.

402
00:29:19,960 --> 00:29:25,480
Like I said here, and the Aoki Dow, this was an important point for later.

403
00:29:25,480 --> 00:29:32,320
So this was March, Sarkuni v. BZX Dow also in the state of California.

404
00:29:32,320 --> 00:29:34,960
And it's important to note, I didn't actually know this at the time until I read into a

405
00:29:34,960 --> 00:29:41,120
little bit more, BZX Dow later became Aoki Dow or Aoki Dow.

406
00:29:41,120 --> 00:29:44,320
So one-

407
00:29:44,320 --> 00:29:46,000
Aoki Dow or Aoki Dow?

408
00:29:46,000 --> 00:29:47,120
Aoki Dow, I guess.

409
00:29:47,120 --> 00:29:54,960
I keep saying Aoki, not in any way, shape or form related to the DJ, but Aoki Dow.

410
00:29:54,960 --> 00:29:58,320
So yeah, later BZX Dow became Aoki Dow.

411
00:29:58,320 --> 00:30:04,800
Also they tried to name Aoki Dow in this one, but they seem to be unsuccessful at that part.

412
00:30:04,800 --> 00:30:09,040
But in any case, Aoki Dow got targeted for another reason altogether.

413
00:30:09,040 --> 00:30:14,800
They ended up having to shut down because of the way the ruling happened on CFTC, but

414
00:30:14,800 --> 00:30:17,400
they were sued separately.

415
00:30:17,400 --> 00:30:22,560
Their predecessor was sued separately by one of the token holders who lost money and didn't

416
00:30:22,560 --> 00:30:25,640
like the repayment plan.

417
00:30:25,640 --> 00:30:30,720
Some key phrases I pulled out of here was that, persons may unintentionally create a

418
00:30:30,720 --> 00:30:36,040
partnership where their actions and behavior demonstrate an intent to engage in business

419
00:30:36,040 --> 00:30:37,040
altogether.

420
00:30:37,040 --> 00:30:40,320
I believe the term there was common enterprise.

421
00:30:40,320 --> 00:30:45,280
When you're engaged in a common enterprise, you may unintentionally create a partnership.

422
00:30:45,280 --> 00:30:52,400
And as Ernest was just commenting, that partnership can open you up to liability.

423
00:30:52,400 --> 00:30:59,240
Or if one person goes, takes a $5 million bank note and defaults on a loan, are you

424
00:30:59,240 --> 00:31:03,960
now liable as the partner in that business?

425
00:31:03,960 --> 00:31:11,560
Is that partner acting within the bounds of their legal authority to make that company?

426
00:31:11,560 --> 00:31:12,560
Absolutely.

427
00:31:12,560 --> 00:31:15,560
Otherwise, yeah, you'd be held responsible for that.

428
00:31:15,560 --> 00:31:20,680
That's one of the importance of a well-directed partnership agreement, which is what we do

429
00:31:20,680 --> 00:31:21,680
at Board Legal.

430
00:31:21,680 --> 00:31:22,680
Goodbye laws.

431
00:31:22,680 --> 00:31:23,680
Goodbye laws.

432
00:31:23,680 --> 00:31:29,240
And the last part I took out was that allegations of mere ownership of governance tokens, whether

433
00:31:29,240 --> 00:31:35,040
they were used to vote or not, is sufficient to overcome a motion to dismiss.

434
00:31:35,040 --> 00:31:40,640
The reason why that's notable is you can't just say, well, I just voted once in a SIP.

435
00:31:40,640 --> 00:31:44,080
I'm not going to use the word SIP because we're a foundation company.

436
00:31:44,080 --> 00:31:45,560
We're protection in a much different way.

437
00:31:45,560 --> 00:31:50,720
So you can't just say, because I'm a token holder, I voted once in a proposal that I'm

438
00:31:50,720 --> 00:31:53,440
not, I can't be sued.

439
00:31:53,440 --> 00:31:55,840
That was rejected in this legal opinion.

440
00:31:55,840 --> 00:31:59,000
Well, it was rejected to overcome the motion to dismiss.

441
00:31:59,000 --> 00:32:03,320
I mean, how is that important?

442
00:32:03,320 --> 00:32:06,600
Motion to dismiss is a legal standard.

443
00:32:06,600 --> 00:32:12,900
I mean, the legal standard for a motion to dismiss a state of claim is there is no set

444
00:32:12,900 --> 00:32:21,800
of facts that could be presented to the court that would subject, would, you're typing as

445
00:32:21,800 --> 00:32:23,000
I see it here.

446
00:32:23,000 --> 00:32:24,000
Yeah.

447
00:32:24,000 --> 00:32:29,160
There are no facts upon which the defendant, or I'm sorry, the defendant could be held

448
00:32:29,160 --> 00:32:31,760
liable for the actions.

449
00:32:31,760 --> 00:32:43,300
And so, yeah, so essentially, you know, if I sue Lancer for smiling at me in a weird

450
00:32:43,300 --> 00:32:53,100
way during a podcast and I sue him and we go to court and the court says, you know what,

451
00:32:53,100 --> 00:32:56,680
even if you prove that he smiled at you the wrong way, you're not going to be able to

452
00:32:56,680 --> 00:32:58,680
state a claim.

453
00:32:58,680 --> 00:33:03,320
There's no cause of action for the smile.

454
00:33:03,320 --> 00:33:08,640
And so Lancer would probably successfully be able to put a motion to dismiss for failure

455
00:33:08,640 --> 00:33:12,520
to state a claim and it would be, that's where it would go.

456
00:33:12,520 --> 00:33:17,560
Now, if there's a fact that they could present a problem.

457
00:33:17,560 --> 00:33:22,720
So if I said, you know, he smiled at me in a weird way and he said something about me

458
00:33:22,720 --> 00:33:27,000
that wasn't true, that impugned my reputation.

459
00:33:27,000 --> 00:33:32,360
Well, now, now I've stated a claim.

460
00:33:32,360 --> 00:33:35,480
I mean, it's clearly a defamation claim.

461
00:33:35,480 --> 00:33:41,520
It would be, if it was in relation to my profession, it could be defamation per se.

462
00:33:41,520 --> 00:33:43,760
I wouldn't have to show actual damages.

463
00:33:43,760 --> 00:33:49,760
But at the end of the day, now there are, there is something for the fact finder to

464
00:33:49,760 --> 00:33:55,200
find that to determine whether the facts are, whether he actually did that.

465
00:33:55,200 --> 00:33:59,760
And that would be, that'd be a way we have to get to move forward.

466
00:33:59,760 --> 00:34:06,600
And even though Lancer would want to try to have it thrown out, it wouldn't happen.

467
00:34:06,600 --> 00:34:09,920
Was there anything else about this particular case that stuck out to you?

468
00:34:09,920 --> 00:34:12,800
Or is that, or is that the gist of it?

469
00:34:12,800 --> 00:34:13,920
No, that's the gist of it.

470
00:34:13,920 --> 00:34:18,120
I mean, it was fairly straightforward.

471
00:34:18,120 --> 00:34:19,360
It's an application of old law.

472
00:34:19,360 --> 00:34:21,160
I mean, it's not an application of old law.

473
00:34:21,160 --> 00:34:22,760
I shouldn't say that.

474
00:34:22,760 --> 00:34:24,360
It's an application of the state of the law.

475
00:34:24,360 --> 00:34:29,360
This is the attorney part coming out of him right now.

476
00:34:29,360 --> 00:34:30,360
Yeah.

477
00:34:30,360 --> 00:34:31,360
Yeah.

478
00:34:31,360 --> 00:34:33,200
I, yeah.

479
00:34:33,200 --> 00:34:39,240
It's interesting how California is the one taking up all these cases.

480
00:34:39,240 --> 00:34:49,240
California is a very, I don't know, the jurisdiction is difficult for firms seeking investment.

481
00:34:49,240 --> 00:34:55,000
You got to be really careful if you're dealing in California.

482
00:34:55,000 --> 00:34:56,960
The regulations are difficult.

483
00:34:56,960 --> 00:35:00,800
We've heard about regulations in California for years.

484
00:35:00,800 --> 00:35:04,400
I have anyway.

485
00:35:04,400 --> 00:35:08,120
It's a place that some businesses choose to not even participate.

486
00:35:08,120 --> 00:35:12,680
Some businesses choose to not sell products into California.

487
00:35:12,680 --> 00:35:13,680
Because of that difficulty.

488
00:35:13,680 --> 00:35:21,480
For instance, I for some time, I considered not selling into California because of their

489
00:35:21,480 --> 00:35:23,280
emission standards.

490
00:35:23,280 --> 00:35:28,280
Because their emission standards are a little bit more strict in California than there are

491
00:35:28,280 --> 00:35:30,760
other places in the US.

492
00:35:30,760 --> 00:35:35,040
And so I think it's a pendulum.

493
00:35:35,040 --> 00:35:36,040
It'll swing.

494
00:35:36,040 --> 00:35:41,080
It'll come back as you see with everything.

495
00:35:41,080 --> 00:35:49,200
I mean, in crypto these days, you see a lot more move towards deregulation.

496
00:35:49,200 --> 00:35:56,120
So for our third example, Lido Dow, that seems to be on everyone's short list of examples

497
00:35:56,120 --> 00:35:57,900
nowadays is Lido Dow.

498
00:35:57,900 --> 00:36:00,320
So what is going on with Lido Dow?

499
00:36:00,320 --> 00:36:08,920
In November, 2024, a person named Samuels sued Lido Dow.

500
00:36:08,920 --> 00:36:12,200
Lido Dow was sued by a non-DOW token holder.

501
00:36:12,200 --> 00:36:13,880
It's an important point.

502
00:36:13,880 --> 00:36:18,280
After he lost money buying and selling the token on Gemini.

503
00:36:18,280 --> 00:36:20,080
Gemini is an exchange.

504
00:36:20,080 --> 00:36:23,880
That case is still ongoing, meaning it hasn't been decided yet.

505
00:36:23,880 --> 00:36:28,520
But what's notable here is that we're talking about a non-DOW token holder.

506
00:36:28,520 --> 00:36:34,240
Someone just trading the token on an exchange.

507
00:36:34,240 --> 00:36:35,240
He lost money.

508
00:36:35,240 --> 00:36:42,640
We sued the Dow, want the Dow to recoup damages.

509
00:36:42,640 --> 00:36:47,920
That is fascinating to me.

510
00:36:47,920 --> 00:36:55,840
So here again, also in California, here I have a few phrases that pulled out.

511
00:36:55,840 --> 00:37:00,080
Dow members are being treated as general partners under California law.

512
00:37:00,080 --> 00:37:09,680
So at this point in time, what some judges opined on in their, what do you call it?

513
00:37:09,680 --> 00:37:10,680
Presidents?

514
00:37:10,680 --> 00:37:11,680
The what?

515
00:37:11,680 --> 00:37:12,680
Presidents?

516
00:37:12,680 --> 00:37:13,680
Sure, sure.

517
00:37:13,680 --> 00:37:18,120
When the judge writes the opinion and decides the case.

518
00:37:18,120 --> 00:37:21,520
Why am I blanking on that word?

519
00:37:21,520 --> 00:37:24,600
The judge writes the opinion, decides the case.

520
00:37:24,600 --> 00:37:25,600
Sure, the opinion.

521
00:37:25,600 --> 00:37:29,960
So whereas originally these first few examples, there was a potential for that to happen.

522
00:37:29,960 --> 00:37:31,600
Now it is happening.

523
00:37:31,600 --> 00:37:41,400
A judge is treating, if you read the case law finding, he is treating Lido Dow members

524
00:37:41,400 --> 00:37:49,000
as general partners under California law and can be held liable for activities of the partnership.

525
00:37:49,000 --> 00:37:53,920
And that activity of the partnership is where things are currently battling.

526
00:37:53,920 --> 00:37:58,080
The activities of the partnership is that even though the...

527
00:37:58,080 --> 00:38:01,440
My little thing keeps jumping all over the place.

528
00:38:01,440 --> 00:38:02,440
Fix that.

529
00:38:02,440 --> 00:38:03,440
Okay.

530
00:38:03,440 --> 00:38:08,800
Even though Lido Dow did not actually sell the tokens to this non-Dow token holder, the

531
00:38:08,800 --> 00:38:15,400
court treated Lido Dow as a statutory seller because they solicited the purchase and they

532
00:38:15,400 --> 00:38:18,800
had a long list of what that solicitated means.

533
00:38:18,800 --> 00:38:21,400
It was how they ran ads.

534
00:38:21,400 --> 00:38:25,920
It was how they kept on saying, you know, hey, buy the token.

535
00:38:25,920 --> 00:38:33,560
So they decided that the judge here said that they adequately alleged, so Samuel's adequately

536
00:38:33,560 --> 00:38:39,760
alleged that Lido Dow did solicit the purchase of the tokens by being a huge enabler of it,

537
00:38:39,760 --> 00:38:41,960
by being a big proponent of it.

538
00:38:41,960 --> 00:38:47,800
And some cases you might say we're stealing it in some common parlance.

539
00:38:47,800 --> 00:38:55,480
So because Lido Dow was a big proponent of the token on Gemini, that's what made them

540
00:38:55,480 --> 00:38:57,960
culpable, suable.

541
00:38:57,960 --> 00:39:01,440
And that's what brought the Dow members in because they're treated as general partners

542
00:39:01,440 --> 00:39:05,520
of the Dow and the Dow is being sued because of its involvement with the token.

543
00:39:05,520 --> 00:39:06,520
Okay.

544
00:39:06,520 --> 00:39:11,760
So if you're still with me in the last part here, Lido Dow was comprehensively involved

545
00:39:11,760 --> 00:39:18,840
in the creation and issuance of LDO token and in efforts to get people to purchase it.

546
00:39:18,840 --> 00:39:22,240
And that I pulled straight out of the text from the judge himself.

547
00:39:22,240 --> 00:39:30,760
It was the same judge, by the way, where here Samuel's likewise pled solicitation because

548
00:39:30,760 --> 00:39:36,240
he alleged that Lido Dow was comprehensively involved in the creation and issuance of LDO

549
00:39:36,240 --> 00:39:39,920
token and the efforts to get people to purchase it.

550
00:39:39,920 --> 00:39:45,200
He alleged that Lido worked to get crypto exchanges to list LDO and then a whole, whole

551
00:39:45,200 --> 00:39:52,160
bunch of listings of stuff after that, that made it a statutory seller.

552
00:39:52,160 --> 00:39:57,880
Okay, Ernest, what do you think?

553
00:39:57,880 --> 00:40:00,680
I read this case.

554
00:40:00,680 --> 00:40:03,040
Maybe I missed it because I just didn't focus on it.

555
00:40:03,040 --> 00:40:07,600
But did the court make a distinction between a non-Dow token holder and a Dow token holder

556
00:40:07,600 --> 00:40:11,680
for a reason?

557
00:40:11,680 --> 00:40:13,560
I don't think they did.

558
00:40:13,560 --> 00:40:18,760
I pulled it out of there because I noticed that this person did not allege that they

559
00:40:18,760 --> 00:40:20,280
were a Dow member.

560
00:40:20,280 --> 00:40:21,280
Okay.

561
00:40:21,280 --> 00:40:25,760
It was to me different than the first two cases where one of them was a Dow member and

562
00:40:25,760 --> 00:40:26,760
this one's not.

563
00:40:26,760 --> 00:40:30,720
And yet both are successful.

564
00:40:30,720 --> 00:40:34,120
Somehow they're both successful in suing a Dow.

565
00:40:34,120 --> 00:40:38,600
But he becomes a Dow member as soon as he takes it out to a wallet, right?

566
00:40:38,600 --> 00:40:41,600
I mean, so...

567
00:40:41,600 --> 00:40:48,560
I think, well, in the actual case earlier, it said that Dow members are those who participate

568
00:40:48,560 --> 00:40:50,560
in the governance.

569
00:40:50,560 --> 00:40:51,840
Right.

570
00:40:51,840 --> 00:40:55,840
And I didn't see anywhere where Samuel's participating in the governance.

571
00:40:55,840 --> 00:40:57,400
I could be off there.

572
00:40:57,400 --> 00:40:59,720
I wasn't looking for it specifically.

573
00:40:59,720 --> 00:41:00,720
Yeah.

574
00:41:00,720 --> 00:41:01,720
Okay.

575
00:41:01,720 --> 00:41:04,520
I was just curious.

576
00:41:04,520 --> 00:41:06,320
There's that lawyer in you again.

577
00:41:06,320 --> 00:41:07,320
Yeah.

578
00:41:07,320 --> 00:41:13,400
So, what is it about this one that is so scary to people, Ernest?

579
00:41:13,400 --> 00:41:23,000
Well, I mean, this one, what is scary about this is that if everyone who owns a token

580
00:41:23,000 --> 00:41:30,920
has participated in a common enterprise, it could cause a lot of problems.

581
00:41:30,920 --> 00:41:37,360
I mean, imagine a fairly decentralized token.

582
00:41:37,360 --> 00:41:41,520
I mean, I'm familiar with the Apecoin Dow, so I'll use that as an example.

583
00:41:41,520 --> 00:41:48,320
They're roughly 80% decentralized, although there are pools of tokens.

584
00:41:48,320 --> 00:41:51,960
The token has been fairly well distributed.

585
00:41:51,960 --> 00:42:01,440
The Apecoin Dow and now the foundation holds roughly 20% of the supply, but they've been

586
00:42:01,440 --> 00:42:04,700
sold out on the market.

587
00:42:04,700 --> 00:42:14,000
And so, if a court in California were to rule that the actions of one Dow member were, I

588
00:42:14,000 --> 00:42:15,000
mean...

589
00:42:15,000 --> 00:42:17,800
Just the actions of the Dow in this case.

590
00:42:17,800 --> 00:42:25,960
The collective Dow promoted its purchasing of the LDO token on an exchange.

591
00:42:25,960 --> 00:42:32,640
And so, on the exchange or down in Vegas with the Apecoin guy walking around?

592
00:42:32,640 --> 00:42:33,640
On the Gemini exchange.

593
00:42:33,640 --> 00:42:35,720
I mean, something like that.

594
00:42:35,720 --> 00:42:40,520
It's just, that's troubling.

595
00:42:40,520 --> 00:42:43,400
Because then it would open you up to like unlimited liability at that point.

596
00:42:43,400 --> 00:42:44,400
Yeah.

597
00:42:44,400 --> 00:42:47,600
Everyone from anywhere is like, hey, I've been damaged.

598
00:42:47,600 --> 00:42:49,920
I've been hurt.

599
00:42:49,920 --> 00:42:50,920
Yeah.

600
00:42:50,920 --> 00:42:54,240
It's a litigious world, man.

601
00:42:54,240 --> 00:43:03,600
I don't take it lightly when I do file a lawsuit against anyone on my own behalf or...

602
00:43:03,600 --> 00:43:08,200
As I have twice in my whole life.

603
00:43:08,200 --> 00:43:10,840
Both times before I became a lawyer, by the way.

604
00:43:10,840 --> 00:43:11,840
Oh, no.

605
00:43:11,840 --> 00:43:15,520
No, once before I became a lawyer.

606
00:43:15,520 --> 00:43:17,920
I did hire a lawyer for the other one.

607
00:43:17,920 --> 00:43:22,560
But yeah, or when I file on behalf of a client, I'm careful about it.

608
00:43:22,560 --> 00:43:29,440
It just seems like this opens up for a whole bunch of attorneys to come out and say, yeah,

609
00:43:29,440 --> 00:43:35,040
this token went to zero and therefore all the Dow members are responsible for this one

610
00:43:35,040 --> 00:43:36,040
guy's loss.

611
00:43:36,040 --> 00:43:41,560
I mean, it hasn't been decided yet, so we'll see.

612
00:43:41,560 --> 00:43:43,160
Hasn't been decided yet.

613
00:43:43,160 --> 00:43:46,560
It's going rough though.

614
00:43:46,560 --> 00:43:50,560
It's a little rough.

615
00:43:50,560 --> 00:43:52,720
I'm taking bets against it.

616
00:43:52,720 --> 00:43:53,880
Are you?

617
00:43:53,880 --> 00:43:57,040
So out of the defendants, there were multiple defendants.

618
00:43:57,040 --> 00:44:01,840
Andreessen Horowitz was one of them, the really well-known VC.

619
00:44:01,840 --> 00:44:04,160
And there were some other VC type firms.

620
00:44:04,160 --> 00:44:08,320
I think there were four or five defendants named by the plaintiff.

621
00:44:08,320 --> 00:44:13,920
One of them successfully was able to show, demonstrate that they had, I don't know if

622
00:44:13,920 --> 00:44:19,480
the word was negligible, but next to no activity in the Dow.

623
00:44:19,480 --> 00:44:23,740
So they were able to get their motion to dismiss granted just for them.

624
00:44:23,740 --> 00:44:28,080
But Andreessen and the other ones, their motions were so far denied.

625
00:44:28,080 --> 00:44:33,800
So they were alleged to have taken part significantly.

626
00:44:33,800 --> 00:44:38,520
And the person listed all sorts of stuff like on Andreessen's website where they had a press

627
00:44:38,520 --> 00:44:44,640
article saying, we did all this stuff in the Lido Dow and trying to show the resume and

628
00:44:44,640 --> 00:44:47,000
the credibility of their activity.

629
00:44:47,000 --> 00:44:50,120
And that was cited as your involvement.

630
00:44:50,120 --> 00:44:51,680
You clearly were involved in the Dow.

631
00:44:51,680 --> 00:44:55,280
Whereas that fourth one was just like, hey, I just developed this little thing.

632
00:44:55,280 --> 00:44:57,440
And can you please not sue me?

633
00:44:57,440 --> 00:45:00,680
And then that motion was granted.

634
00:45:00,680 --> 00:45:01,680
So okay.

635
00:45:01,680 --> 00:45:09,440
But imagine how the state of the law would be if this case were to decide that the individual

636
00:45:09,440 --> 00:45:15,760
token holders that are active in the Dow, like myself or you in the sandbox, I mean,

637
00:45:15,760 --> 00:45:21,640
imagine the Apecoin guy's down in Vegas and he takes a swing at somebody because they

638
00:45:21,640 --> 00:45:27,880
grabbed his butt or something and that guy slips and falls in front of a bus and gets

639
00:45:27,880 --> 00:45:29,960
maimed or killed.

640
00:45:29,960 --> 00:45:34,080
And so now they're going to come after Ernest Lee because he's active in the Apecoin Dow

641
00:45:34,080 --> 00:45:40,520
and he's on a bunch of YouTube channels and podcasts and Twitter spaces talking about

642
00:45:40,520 --> 00:45:41,520
his activity.

643
00:45:41,520 --> 00:45:48,480
And he owns tokens and he votes his tokens and he has a delegation that votes tokens

644
00:45:48,480 --> 00:45:55,360
and saying, we've got both the bulls and the block delegation and it's just, I mean, that's

645
00:45:55,360 --> 00:45:56,360
a mess.

646
00:45:56,360 --> 00:45:57,360
That's a big mess.

647
00:45:57,360 --> 00:46:01,280
I don't think we're going down that road.

648
00:46:01,280 --> 00:46:02,280
That's just my opinion.

649
00:46:02,280 --> 00:46:07,960
Well, good news is the next slide is about opinions.

650
00:46:07,960 --> 00:46:12,560
And some honorable mentions I pulled kind of out of the woodwork from just researching

651
00:46:12,560 --> 00:46:16,380
is five crypto decisions from every 2023.

652
00:46:16,380 --> 00:46:20,240
From 2023, every lawyer should know by Dynamis.

653
00:46:20,240 --> 00:46:24,840
I mentioned there were many, many other different opinion pieces that you could look up or different

654
00:46:24,840 --> 00:46:26,240
court cases.

655
00:46:26,240 --> 00:46:32,040
Compound Dow was sued, Tornado Cash was sued, Dapper Labs was sued, Coinbase was sued, Uniswap

656
00:46:32,040 --> 00:46:33,040
was sued.

657
00:46:33,040 --> 00:46:38,080
And then I listened to BZX but ended up moving them up because of the importance of their

658
00:46:38,080 --> 00:46:40,200
court case.

659
00:46:40,200 --> 00:46:49,000
Also, I kept seeing the SEC's investigative report on July, back in July 2017, excuse

660
00:46:49,000 --> 00:46:55,760
me, concluded that Dow tokens, a digital asset, are securities on the Securities Act of 1933.

661
00:46:55,760 --> 00:46:57,520
I don't think anyone's surprised to hear that.

662
00:46:57,520 --> 00:47:04,920
Chair Gensler, former Chair Gensler has said that quite a bit and that the Securities Act

663
00:47:04,920 --> 00:47:13,200
Exchange Act of 1937, both of those are applicable to Dow tokens by extension and that tokens

664
00:47:13,200 --> 00:47:15,280
meet the Howie Test.

665
00:47:15,280 --> 00:47:20,000
And so you can go to on the SEC's website if you are so inclined and you can look at

666
00:47:20,000 --> 00:47:21,480
the report still there.

667
00:47:21,480 --> 00:47:23,400
It's a cool read.

668
00:47:23,400 --> 00:47:27,340
I read it, but I'm a nerd so I like that sort of stuff.

669
00:47:27,340 --> 00:47:33,320
And also April 2019, a little bit more recent, Framework for Investment Contract Analysis

670
00:47:33,320 --> 00:47:42,400
of Digital Assets, also in SEC, it's on their website, but also in SEC publication.

671
00:47:42,400 --> 00:47:48,480
It's a framework that they put out there for what they call investment contracts, but it's

672
00:47:48,480 --> 00:47:53,560
applicable to like smart contracts and Dow tokens and that sort of thing.

673
00:47:53,560 --> 00:47:56,400
And they go into detail under the Howie Test.

674
00:47:56,400 --> 00:48:01,760
An investment contract exists when there is investment of money and a common enterprise,

675
00:48:01,760 --> 00:48:06,160
that word again, with a reasonable expectation of profits to be derived from the efforts

676
00:48:06,160 --> 00:48:07,160
of others.

677
00:48:07,160 --> 00:48:09,520
Again, we're talking about the Howie Test.

678
00:48:09,520 --> 00:48:16,000
And some other things that pulled out from that was that those who have a lead or central

679
00:48:16,000 --> 00:48:21,840
role in the direction of the ongoing development of the network or the digital asset, that

680
00:48:21,840 --> 00:48:24,320
also meets the Howie Test.

681
00:48:24,320 --> 00:48:29,320
And that's also related to, I think, the statutory seller that we're just discussing and the

682
00:48:29,320 --> 00:48:37,400
SEC recognized to the extent a protocol is sufficiently decentralized, as in Ethereum

683
00:48:37,400 --> 00:48:43,560
versus ApecoinDAO versus what name your token.

684
00:48:43,560 --> 00:48:51,140
But they recognize that to the extent a protocol is, in their view, sufficiently decentralized

685
00:48:51,140 --> 00:48:56,280
is such that there is no single identifiable enterprise.

686
00:48:56,280 --> 00:48:58,440
An investment contract is likely to result.

687
00:48:58,440 --> 00:49:00,840
It's unlikely to result.

688
00:49:00,840 --> 00:49:01,840
Yeah.

689
00:49:01,840 --> 00:49:11,320
But I mean, I understand what they're saying, but I think that you're applying these rules.

690
00:49:11,320 --> 00:49:15,080
And I understand concepts are concepts, whether they're 1933 or not.

691
00:49:15,080 --> 00:49:19,920
And regulatory agency is not law, although administrative law, different subject though.

692
00:49:19,920 --> 00:49:20,920
Right.

693
00:49:20,920 --> 00:49:26,000
And so, protocol is sufficiently decentralized.

694
00:49:26,000 --> 00:49:34,420
So I would argue that ApecoinDAO had 80%, 85% coming up is sufficiently decentralized

695
00:49:34,420 --> 00:49:37,080
at that point.

696
00:49:37,080 --> 00:49:39,040
I see some others that aren't.

697
00:49:39,040 --> 00:49:45,920
But then you get, I mean, how does that apply to Bitcoin?

698
00:49:45,920 --> 00:49:54,160
What happens if more and more accumulation happens through these ETFs and other high

699
00:49:54,160 --> 00:49:57,320
net worth companies?

700
00:49:57,320 --> 00:50:03,440
Like BlackRock, all the big funds start getting in and accumulating quite a bit of percentage.

701
00:50:03,440 --> 00:50:11,200
Bitcoin, the gold standard, pun intended, of decentralization could become sufficiently

702
00:50:11,200 --> 00:50:13,960
centralized.

703
00:50:13,960 --> 00:50:21,960
I mean, you have less than 5% of the supply on the exchange, everything else being either

704
00:50:21,960 --> 00:50:24,640
dead or being held by large individuals.

705
00:50:24,640 --> 00:50:30,360
I mean, it could become a problem.

706
00:50:30,360 --> 00:50:32,400
I don't think it will become a problem.

707
00:50:32,400 --> 00:50:36,880
I think if this were the law of the land, it could become a problem.

708
00:50:36,880 --> 00:50:37,880
That's what I meant.

709
00:50:37,880 --> 00:50:38,880
Yeah.

710
00:50:38,880 --> 00:50:44,840
This was the, again, not law by a judge, not law as in California.

711
00:50:44,840 --> 00:50:50,880
It was the Securities and Exchange Commission both issued both the report and framework

712
00:50:50,880 --> 00:51:01,080
to help communicate their stance, their position, which as you can tell in the past eight months

713
00:51:01,080 --> 00:51:07,920
has shifted to a new chairman or chairperson means a new position.

714
00:51:07,920 --> 00:51:11,400
Perhaps we'll see how that develops.

715
00:51:11,400 --> 00:51:18,200
There's my three honorable mentions when it comes to the opinion side of how to approach

716
00:51:18,200 --> 00:51:25,920
this concept of DAOs, structures, getting sued, all the sorts of stuff that liability

717
00:51:25,920 --> 00:51:29,640
sort of stuff that we're talking about.

718
00:51:29,640 --> 00:51:34,720
There's a question in the chat from Metaverse Street Journal.

719
00:51:34,720 --> 00:51:41,640
With David Sacks, President Trump's AI and crypto czar, poised to hold a press conference

720
00:51:41,640 --> 00:51:47,260
from the White House on digital assets in a few hours, what is your expectation?

721
00:51:47,260 --> 00:51:52,440
It says the press conference aims to outline strategies for securing America's leadership

722
00:51:52,440 --> 00:51:54,640
in the digital asset ecosystem.

723
00:51:54,640 --> 00:52:01,120
Yeah, the strategic Bitcoin reserve is coming.

724
00:52:01,120 --> 00:52:09,800
Whether it's coming with this announcement or it's coming later, it'll be there.

725
00:52:09,800 --> 00:52:11,840
Trump talked about it on the campaign trail.

726
00:52:11,840 --> 00:52:15,960
I was there in Nashville when he talked about it the first time.

727
00:52:15,960 --> 00:52:19,240
I was there when R.K.

728
00:52:19,240 --> 00:52:31,480
Jr. talked about a two million Bitcoin reserve, same conference.

729
00:52:31,480 --> 00:52:37,720
It's coming and certainly the move that they made to the executive orders to not sell digital

730
00:52:37,720 --> 00:52:42,800
assets that they currently had that had been seized.

731
00:52:42,800 --> 00:52:45,200
Silk Road and the like.

732
00:52:45,200 --> 00:52:49,840
And so, yeah, it's coming.

733
00:52:49,840 --> 00:52:51,840
And you see it.

734
00:52:51,840 --> 00:52:57,360
Utah committed to putting a percentage of its treasury into Bitcoin.

735
00:52:57,360 --> 00:53:00,280
New York.

736
00:53:00,280 --> 00:53:06,040
All across the country, you got these states and then recently I saw some investment funds,

737
00:53:06,040 --> 00:53:12,960
not investment funds, from retirement funds that are putting a percentage in Bitcoin.

738
00:53:12,960 --> 00:53:15,440
That's coming along.

739
00:53:15,440 --> 00:53:22,160
Internationally, Checklist of Aja announced last week that it was going to start purchasing

740
00:53:22,160 --> 00:53:23,160
Bitcoin.

741
00:53:23,160 --> 00:53:25,360
The Czech Republic.

742
00:53:25,360 --> 00:53:32,560
So I mean, it's a unit of measure.

743
00:53:32,560 --> 00:53:39,240
Not so much a digital currency as much as it is just a store of value.

744
00:53:39,240 --> 00:53:44,720
The Metaverse Street Journal also followed up to say, President Trump signed an executive

745
00:53:44,720 --> 00:53:51,000
order today about a US sovereign wealth fund and it's now live.

746
00:53:51,000 --> 00:53:52,000
Thank you.

747
00:53:52,000 --> 00:53:53,000
Metaverse Street Journal.

748
00:53:53,000 --> 00:53:54,000
And I appreciate your involvement.

749
00:53:54,000 --> 00:53:57,040
Thanks for asking all the questions.

750
00:53:57,040 --> 00:54:03,560
Roxy Miguel, one of our Dow delegates in the Sandbox Dow, asked a question, can a person

751
00:54:03,560 --> 00:54:11,400
buy 5SAND, which is about $2.15 at the moment, that's the minimum to participate in the voting

752
00:54:11,400 --> 00:54:18,120
in Sandbox Dow, and thus become a Dow member and be sued for something regarding LIDO Dow?

753
00:54:18,120 --> 00:54:24,960
That's to say, if we were sued in California court, for instance.

754
00:54:24,960 --> 00:54:31,520
Yeah, I don't see it happening.

755
00:54:31,520 --> 00:54:34,640
And that's tea leaves, understand.

756
00:54:34,640 --> 00:54:36,920
That's 100% tea leaves.

757
00:54:36,920 --> 00:54:41,320
Me just guessing the state of the law, the way that it'll be applied.

758
00:54:41,320 --> 00:54:46,640
No, I don't see that happening.

759
00:54:46,640 --> 00:54:56,600
And that might segue into the bottom portion, which was some things that just weren't working

760
00:54:56,600 --> 00:55:03,240
out in my brain was how is that some of these companies could be sued when they're halfway

761
00:55:03,240 --> 00:55:04,240
across the world?

762
00:55:04,240 --> 00:55:11,080
Like one of the companies that was sued was a German company, BZX, if I recall, was a

763
00:55:11,080 --> 00:55:14,640
German company and they were sued in California.

764
00:55:14,640 --> 00:55:24,720
So how was it possible that the CFTC had the jurisdiction over a German company?

765
00:55:24,720 --> 00:55:29,800
And I started Google searching, you know, chat GBT, Jim and I try and rack my brain

766
00:55:29,800 --> 00:55:33,520
to figure it out ahead of asking you.

767
00:55:33,520 --> 00:55:41,360
And when I landed on, what it landed on was jurisdiction that how do US regulators have

768
00:55:41,360 --> 00:55:43,640
jurisdiction over international entities?

769
00:55:43,640 --> 00:55:49,160
Something called a long arm statute, the Conducts and Effects Test and the Dodd-Frank Act.

770
00:55:49,160 --> 00:55:51,200
Are you familiar with those?

771
00:55:51,200 --> 00:55:52,200
Vaguely.

772
00:55:52,200 --> 00:55:53,200
Okay.

773
00:55:53,200 --> 00:56:04,360
So, yeah, a long arm statute, it essentially gives jurisdiction where the effects of the

774
00:56:04,360 --> 00:56:10,440
actions of an entity or an individual outside of the jurisdiction, outside of the ordinary

775
00:56:10,440 --> 00:56:16,680
jurisdiction, geographical jurisdiction of the state.

776
00:56:16,680 --> 00:56:25,360
In the case of California, which California likes to reach out and touch people.

777
00:56:25,360 --> 00:56:33,960
It's a law that applies California law, for instance, to the actions of your German individual.

778
00:56:33,960 --> 00:56:42,080
And so, I mean, I've had some experience with long arm statutes, but my primary experience

779
00:56:42,080 --> 00:56:47,720
with long arm statutes are tax legislation, especially California.

780
00:56:47,720 --> 00:56:50,880
California likes to tax on a worldwide basis.

781
00:56:50,880 --> 00:56:58,160
So it taxes extraterritorial income the same way that the US would for its citizens.

782
00:56:58,160 --> 00:57:05,200
California likes to reach out and tax the activity of its individual citizens, whether

783
00:57:05,200 --> 00:57:12,000
the activity happened in California or happened in another state or country.

784
00:57:12,000 --> 00:57:19,640
And I think that's because under the Conducts and Effects Test that it affects a lot of

785
00:57:19,640 --> 00:57:24,160
people within their jurisdiction, being California.

786
00:57:24,160 --> 00:57:31,120
And yeah, Conducts and Effects Test, where if it affects enough people, then it's said

787
00:57:31,120 --> 00:57:41,720
that then the US or state can have jurisdiction over that extra entity that it normally wouldn't

788
00:57:41,720 --> 00:57:43,960
have jurisdiction over.

789
00:57:43,960 --> 00:57:50,840
Yeah, the problem with that is it's that is very murky.

790
00:57:50,840 --> 00:57:54,440
And it's just very murky.

791
00:57:54,440 --> 00:57:57,680
You apply that.

792
00:57:57,680 --> 00:58:05,120
How can a company now in Germany situate its affairs in such a way as to not be subject

793
00:58:05,120 --> 00:58:09,360
to California law?

794
00:58:09,360 --> 00:58:13,840
What actions could it take to insulate itself from that activity?

795
00:58:13,840 --> 00:58:21,360
And we get into a lot of this with a lot of these entities.

796
00:58:21,360 --> 00:58:27,600
I set up entities in the Caymans for individuals that had regulatory risk here in the United

797
00:58:27,600 --> 00:58:32,120
States.

798
00:58:32,120 --> 00:58:36,280
I won't mention any of them because they're in business.

799
00:58:36,280 --> 00:58:37,280
They're doing what they do.

800
00:58:37,280 --> 00:58:44,040
Let's just say if someone had a website where they were gambling or doing something that

801
00:58:44,040 --> 00:58:50,760
could be subject to US regulation, either state and local or federal, and they just

802
00:58:50,760 --> 00:58:57,120
say, OK, well, we're going to deny IPs from within a certain country.

803
00:58:57,120 --> 00:58:58,600
And natural property?

804
00:58:58,600 --> 00:58:59,600
Yeah.

805
00:58:59,600 --> 00:59:05,360
Well, I mean, it's just if you do that, now you've got NordVPN or whatever, you can get

806
00:59:05,360 --> 00:59:07,260
around all those things.

807
00:59:07,260 --> 00:59:11,640
And so really, it's just ministerial that you're doing it.

808
00:59:11,640 --> 00:59:18,920
You really can't guarantee that US individuals aren't going to visit your website.

809
00:59:18,920 --> 00:59:24,560
The last thing I found was the Dodd-Frank Act, which as a contract writer and negotiator,

810
00:59:24,560 --> 00:59:27,960
I'd known about the Dodd-Frank Act for quite some time.

811
00:59:27,960 --> 00:59:36,040
But what I didn't know is that in the Dodd-Frank Act, Congress, when they enacted that, Congress

812
00:59:36,040 --> 00:59:43,140
means the US Congress, they amended the jurisdictional provision that said that federal securities

813
00:59:43,140 --> 00:59:51,000
acts clearly indicate that anti-fraud provisions apply extraterrestrially when statutory conducts

814
00:59:51,000 --> 00:59:52,520
and effects tests is met.

815
00:59:52,520 --> 01:00:00,200
So our legislative body, Congress, decided to put it into law then that if conducts and

816
01:00:00,200 --> 01:00:06,080
effects test is met, the long arm statute did hold.

817
01:00:06,080 --> 01:00:10,760
And because we're the United States, we're big bad on the block, who's going to be like,

818
01:00:10,760 --> 01:00:14,120
no, no, no, you can't?

819
01:00:14,120 --> 01:00:18,620
So that to me, I wasn't expecting that sort of intersection with my own professional career.

820
01:00:18,620 --> 01:00:22,880
And the Dodd-Frank Act does get cited quite a bit.

821
01:00:22,880 --> 01:00:31,120
So yeah, that was my foray into how is it possible that the US can draw in a German

822
01:00:31,120 --> 01:00:37,480
company, hold it to account in a California court of law, and then apply a penalty against

823
01:00:37,480 --> 01:00:41,120
them as if they're a US resident.

824
01:00:41,120 --> 01:00:43,760
So very fascinating.

825
01:00:43,760 --> 01:00:51,360
And the connection to Cayman Islands, by the way, I briefly mentioned in episode 56, was

826
01:00:51,360 --> 01:00:57,940
that the Cayman Islands is a British territory, British overseas territory.

827
01:00:57,940 --> 01:01:05,520
And both the Cayman Islands and the United Kingdom has different information sharing

828
01:01:05,520 --> 01:01:07,920
agreements with the United States.

829
01:01:07,920 --> 01:01:13,040
They're mainly centered around tax evasion and breaking of securities laws.

830
01:01:13,040 --> 01:01:19,320
But you can already see the link there for how they could apply that long arm statute

831
01:01:19,320 --> 01:01:24,520
without intruding, let's say, where they would say, hey, you're definitely going to be part

832
01:01:24,520 --> 01:01:28,480
of this suit in California.

833
01:01:28,480 --> 01:01:34,520
They will use preexisting agreements between sovereign nations like Cayman Islands, United

834
01:01:34,520 --> 01:01:41,000
Kingdom, to say, hey, this person was sued in the court system and per the agreement

835
01:01:41,000 --> 01:01:46,560
that we established with you, information sharing and otherwise, you're required to

836
01:01:46,560 --> 01:01:52,640
assist us in discovery and all sorts of legal things needed to convict someone in court.

837
01:01:52,640 --> 01:01:57,400
So that was a fascinating intersection again.

838
01:01:57,400 --> 01:01:59,200
Yeah.

839
01:01:59,200 --> 01:02:09,160
Okay, let's get into last slide on opinions, which for Walker's Global, there is an article

840
01:02:09,160 --> 01:02:14,920
written about how the Cayman Islands Foundation companies are the leading vehicle for wrapping

841
01:02:14,920 --> 01:02:15,920
a Dow.

842
01:02:15,920 --> 01:02:21,480
And here's where we'll start to get into our next phase of comparison with Foundation Company

843
01:02:21,480 --> 01:02:24,840
versus DUNAS versus Dow, LLCs, LLDs, all that.

844
01:02:24,840 --> 01:02:30,160
So this term wrapping a Dow, something that we've heard Coon say before, what does it

845
01:02:30,160 --> 01:02:32,480
mean to wrap a Dow exactly?

846
01:02:32,480 --> 01:02:41,280
So in the article, Walker's Global, they go on to say that unlike conventional companies,

847
01:02:41,280 --> 01:02:44,040
a foundation company does not have to have shareholders.

848
01:02:44,040 --> 01:02:47,200
That's a key phrase, does not have to have shareholders.

849
01:02:47,200 --> 01:02:53,040
This provides a neutral shareholder free structure that aligns with a decentralized ethos of

850
01:02:53,040 --> 01:02:54,760
DOWs.

851
01:02:54,760 --> 01:02:58,600
And they kept saying wrapping a Dow, wrapping a Dow.

852
01:02:58,600 --> 01:03:00,640
What does it mean to wrap a Dow?

853
01:03:00,640 --> 01:03:05,640
We already talked about how shareholders are units of ownership and director positions

854
01:03:05,640 --> 01:03:11,040
in the United States and Cayman Islands have a fiduciary duty to shareholders, which normally

855
01:03:11,040 --> 01:03:13,780
is interpreted as maximize shareholder value.

856
01:03:13,780 --> 01:03:18,320
So the members of a foundation company are subscribers.

857
01:03:18,320 --> 01:03:21,320
They are not shareholders.

858
01:03:21,320 --> 01:03:27,640
And with the BZX Dow ruling, a person may unintentionally create a partnership.

859
01:03:27,640 --> 01:03:35,800
And my note was that limited liability companies, otherwise known as LOCs and corporations,

860
01:03:35,800 --> 01:03:41,680
mean that shareholders and owners are not personally liable for debts and obligations

861
01:03:41,680 --> 01:03:43,920
of the company.

862
01:03:43,920 --> 01:03:50,280
But in some of these rulings, we're finding that members of these DOWs are being interpreted

863
01:03:50,280 --> 01:03:57,880
as general partners and are in some cases thought to have unlimited liability, unincorporated

864
01:03:57,880 --> 01:04:03,280
associations, all those sorts of stuff we just went over.

865
01:04:03,280 --> 01:04:10,240
So wrapping a Dow has become a key phrase to say protection, to protect your Dow.

866
01:04:10,240 --> 01:04:12,400
You want to wrap it.

867
01:04:12,400 --> 01:04:17,880
And Ernest, let's just start with what is your perception of what people mean when they

868
01:04:17,880 --> 01:04:20,480
say wrapping a Dow?

869
01:04:20,480 --> 01:04:24,800
Well, wrapping a Dow, they mean having a...

870
01:04:24,800 --> 01:04:30,580
So a Dow is a decentralized autonomous organization.

871
01:04:30,580 --> 01:04:39,040
And so wrapping a Dow through having a foundation, having these entities, these individuals within

872
01:04:39,040 --> 01:04:47,840
the foundation company, even though the foundation company doesn't have shareholders, you have

873
01:04:47,840 --> 01:04:52,680
some type of legal structure, more of a legal structure than you do with a Dow.

874
01:04:52,680 --> 01:05:03,000
I mean, I've seen and I've participated in DOWs that were literally just a bunch of guys

875
01:05:03,000 --> 01:05:05,340
that had a multi-sig.

876
01:05:05,340 --> 01:05:11,840
And they didn't have anything filed from any government and they just considered themselves

877
01:05:11,840 --> 01:05:16,960
a decentralized organization.

878
01:05:16,960 --> 01:05:22,640
And so wrapping a Dow like that would be having some type of legal framework like we're going

879
01:05:22,640 --> 01:05:25,600
to talk about.

880
01:05:25,600 --> 01:05:33,480
And where I thought foundation companies, when you start exploring this topic, just

881
01:05:33,480 --> 01:05:39,200
what does it mean to have a type of legal structure underpinning your Dow or protecting

882
01:05:39,200 --> 01:05:41,120
your Dow?

883
01:05:41,120 --> 01:05:45,900
I've come to find out that wrapping a Dow means something specific.

884
01:05:45,900 --> 01:05:47,760
At least I think it does.

885
01:05:47,760 --> 01:05:52,440
And I didn't really understand that until we started doing the comparison of the different

886
01:05:52,440 --> 01:05:55,880
types of Dow structures that there are.

887
01:05:55,880 --> 01:06:00,280
And where they start talking about how the comparison of these different types of structures

888
01:06:00,280 --> 01:06:02,600
give you different types of protection.

889
01:06:02,600 --> 01:06:09,920
So the ones we're going to look into are Dow LLCs, LLDs, DUNAs, and trusts.

890
01:06:09,920 --> 01:06:14,100
Now spoiler alert, some of these are kind of saying the same thing, but they're starting

891
01:06:14,100 --> 01:06:19,140
to evolve into their own separate legal framework, let's call it.

892
01:06:19,140 --> 01:06:20,840
And this is where it gets really fascinating.

893
01:06:20,840 --> 01:06:24,920
And I didn't put foundation company because that was an episode all by itself.

894
01:06:24,920 --> 01:06:30,720
This we're just going to focus on United States plus an extra that we found.

895
01:06:30,720 --> 01:06:33,880
And coincidentally trusts got brought into this.

896
01:06:33,880 --> 01:06:40,400
So a foundation, by the way, a foundation company in the Cayman Islands is those many

897
01:06:40,400 --> 01:06:45,200
articles that I saw and show your research slide.

898
01:06:45,200 --> 01:06:51,760
A lot of them interpreted foundation companies having the very best of a nonprofit, a company,

899
01:06:51,760 --> 01:06:56,960
and a trust taking some of the flexibilities afforded through all three of those types

900
01:06:56,960 --> 01:07:01,800
of structures and then calling it foundation company, which then applied everywhere.

901
01:07:01,800 --> 01:07:04,640
But let's just focus in on these.

902
01:07:04,640 --> 01:07:07,680
I didn't even know that some of these existed before I started Google searching.

903
01:07:07,680 --> 01:07:17,240
So the first one, Dow LOC is kind of like a broad term and it means protection as a

904
01:07:17,240 --> 01:07:19,160
company.

905
01:07:19,160 --> 01:07:25,520
And Dow LOCs are limited liability companies, by the way, not just corporations or S corporations,

906
01:07:25,520 --> 01:07:32,760
C corporations, S corporations, but a LOC can be thought of as protection.

907
01:07:32,760 --> 01:07:40,520
The states that are currently offering some type of Dow LOC, Tennessee, Wyoming, Vermont,

908
01:07:40,520 --> 01:07:41,520
Utah.

909
01:07:41,520 --> 01:07:43,000
Okay.

910
01:07:43,000 --> 01:07:47,040
So this is where we start getting to what is a wrapper versus what is a non-wrapped

911
01:07:47,040 --> 01:07:49,040
Dow or whatever.

912
01:07:49,040 --> 01:07:53,160
Tennessee, Vermont, Utah, Wyoming.

913
01:07:53,160 --> 01:07:57,900
It seemed to me that when I was reading through their laws and stuff, Ernest, that the wrapper

914
01:07:57,900 --> 01:08:01,440
part doesn't make the Dow a legal entity.

915
01:08:01,440 --> 01:08:06,680
It creates an entity that surrounds the Dow in the middle, bunch of people voting with

916
01:08:06,680 --> 01:08:12,040
a legal entity around that Dow that acts as the shield.

917
01:08:12,040 --> 01:08:13,920
So it's like a big moat.

918
01:08:13,920 --> 01:08:20,280
And in the middle you have the castle, which is the Dow, but the moat is not the castle.

919
01:08:20,280 --> 01:08:22,720
And that is what I think they mean when they say wrapper.

920
01:08:22,720 --> 01:08:24,400
What do you think?

921
01:08:24,400 --> 01:08:26,920
Yeah, I agree.

922
01:08:26,920 --> 01:08:36,280
That's a fair statement for the, I mean, especially the Tennessee, Wyoming, Vermont, Dalles themselves.

923
01:08:36,280 --> 01:08:39,280
We'll get into the Utah.

924
01:08:39,280 --> 01:08:40,280
The Utah one special.

925
01:08:40,280 --> 01:08:42,800
We'll get into that one.

926
01:08:42,800 --> 01:08:48,440
But yeah, for the Tennessee, Vermont, Wyoming.

927
01:08:48,440 --> 01:08:50,520
I actually just came up with that right as we talked about it.

928
01:08:50,520 --> 01:08:52,960
So the castle is the Dow.

929
01:08:52,960 --> 01:09:02,160
The moat surrounding the castle is the wrapper, which is not the castle.

930
01:09:02,160 --> 01:09:08,680
That's the important distinction to wrap the Dow doesn't mean the Dow is the wrapper.

931
01:09:08,680 --> 01:09:16,880
And that will bear itself out here when we do these next few slides as to why that matters.

932
01:09:16,880 --> 01:09:20,920
And then I started getting into, I didn't fully understand this one, Ernest, maybe you

933
01:09:20,920 --> 01:09:27,240
know about this member managed versus manager managed versus smart contract managed.

934
01:09:27,240 --> 01:09:32,360
We'll take the first two member managed companies versus manager managed companies.

935
01:09:32,360 --> 01:09:34,920
What's your, what's your understanding of that?

936
01:09:34,920 --> 01:09:40,840
I mean, that's just basically you've got your Dow voters where you, that's member managed.

937
01:09:40,840 --> 01:09:44,000
That's less decentralized.

938
01:09:44,000 --> 01:09:48,400
You know, there are different forms of companies, different forms of governments.

939
01:09:48,400 --> 01:09:56,280
We talk about having a direct vote within DOWs and having that direct vote.

940
01:09:56,280 --> 01:10:03,800
Then I would see that as more member managed, whereas manager managed would be where you

941
01:10:03,800 --> 01:10:09,400
vote on certain things that are implemented by individuals within a Dow.

942
01:10:09,400 --> 01:10:17,640
And so there's an element of manager management or centralization, let's call it, within the

943
01:10:17,640 --> 01:10:18,920
Dow structure.

944
01:10:18,920 --> 01:10:20,240
Yeah.

945
01:10:20,240 --> 01:10:28,520
And in one of them, I saw a smart contract managed and this one was a national, national

946
01:10:28,520 --> 01:10:35,560
law review article by Mr. Jason Finger and Mr. Peter Kramer.

947
01:10:35,560 --> 01:10:41,920
And they opined that, I'm trying to blow it up a little bit so that people can see, read

948
01:10:41,920 --> 01:10:42,920
it.

949
01:10:42,920 --> 01:10:45,320
Here it is.

950
01:10:45,320 --> 01:10:50,680
So in this case, the Dow is the member managed unlike the vending machine, which requires

951
01:10:50,680 --> 01:10:57,360
no human involvement or management if operated properly and is so smart contract managed.

952
01:10:57,360 --> 01:11:01,280
This distinction becomes important because traditionally management powers cannot be

953
01:11:01,280 --> 01:11:07,100
legally vested into a non-human protocol like a smart contract because there is no one to

954
01:11:07,100 --> 01:11:12,260
hold accountable in cases of harmful decisions and no one to handle situations not contemplated

955
01:11:12,260 --> 01:11:15,040
by the smart contract.

956
01:11:15,040 --> 01:11:20,520
So here we see the emergence, at least in my view, we see the emergence of a new concept

957
01:11:20,520 --> 01:11:26,280
of the member managed, manager managed, and now possibly because of Dow's and blockchain

958
01:11:26,280 --> 01:11:29,660
technology smart contract managed.

959
01:11:29,660 --> 01:11:32,520
So something to keep an eye on in the future.

960
01:11:32,520 --> 01:11:38,040
So Dow LOCs, basically limited liability companies.

961
01:11:38,040 --> 01:11:42,320
The reason why that was important was because we just went over a few cases where Dow members

962
01:11:42,320 --> 01:11:49,500
were deemed to be in general partnership, meaning unlimited liability between if someone,

963
01:11:49,500 --> 01:11:53,400
one random member decided they want to go take a loan out against the Dow, then that

964
01:11:53,400 --> 01:11:58,760
suddenly somehow had an effect on the rest of them because they're all partners and they're

965
01:11:58,760 --> 01:12:01,560
all unlimited liability to each other.

966
01:12:01,560 --> 01:12:06,520
Whereas here you create an LOC, you suddenly have created a legal vehicle where you only

967
01:12:06,520 --> 01:12:13,340
are limited the liability that you have voluntarily contributed to the company.

968
01:12:13,340 --> 01:12:15,360
And we're putting that in the confines of a Dow.

969
01:12:15,360 --> 01:12:21,720
So let's get into what I've seen to be the biggest one, the DUNA.

970
01:12:21,720 --> 01:12:28,520
This one is Wyoming's take on a Dow LOC and the DUNA stands for Decentralized Unincorporated

971
01:12:28,520 --> 01:12:31,760
Nonprofit Association.

972
01:12:31,760 --> 01:12:39,080
This is probably what I would say is the quintessential, the poster child for wrapping a Dow in the

973
01:12:39,080 --> 01:12:43,440
United States when it comes to just the branding of it.

974
01:12:43,440 --> 01:12:48,480
The DUNA is a legal entity for Web 3 tech governance.

975
01:12:48,480 --> 01:12:54,000
It offers limited liability protection and identity.

976
01:12:54,000 --> 01:12:59,680
Legal standing, meaning when it gets sued and can be named, it can stand for itself.

977
01:12:59,680 --> 01:13:04,800
Legal existence, meaning it doesn't just expire because of, you know, whatever, 10 days have

978
01:13:04,800 --> 01:13:05,800
passed.

979
01:13:05,800 --> 01:13:08,640
Property ownership, it can own property and assets.

980
01:13:08,640 --> 01:13:12,280
It can convert to different types of structures.

981
01:13:12,280 --> 01:13:16,240
It can merge and it can seek profit.

982
01:13:16,240 --> 01:13:21,120
But for DUNAs, they are technically classified as nonprofits.

983
01:13:21,120 --> 01:13:26,880
So to engage in profit making activities is permissible, but those proceeds must go back

984
01:13:26,880 --> 01:13:29,200
into the nonprofit purpose.

985
01:13:29,200 --> 01:13:36,160
So Wyoming's take seems to be, we're going to treat Dow as a nonprofit under the limited

986
01:13:36,160 --> 01:13:38,200
liability company framework.

987
01:13:38,200 --> 01:13:41,640
What do you think, Ernest?

988
01:13:41,640 --> 01:13:46,640
Yeah, that's, I see what they're doing.

989
01:13:46,640 --> 01:13:51,000
It's going to be interesting how the federal government treats these for US federal income

990
01:13:51,000 --> 01:13:52,000
tax purposes.

991
01:13:52,000 --> 01:13:57,480
But yeah, like will it be, are they allowed to have 501c3 status?

992
01:13:57,480 --> 01:13:59,360
Like the whole, yeah.

993
01:13:59,360 --> 01:14:03,480
Yeah, they'll need to have 501c3 status in order to be nonprofit.

994
01:14:03,480 --> 01:14:07,600
And certainly nonprofits can be engaged in profit making activity.

995
01:14:07,600 --> 01:14:14,400
It's just that they're taxed on those as what's called unrelated business taxable income,

996
01:14:14,400 --> 01:14:15,760
UBTI.

997
01:14:15,760 --> 01:14:16,760
Yeah.

998
01:14:16,760 --> 01:14:23,840
I actually didn't, I didn't understand DUNAs to be treated as nonprofits until I started

999
01:14:23,840 --> 01:14:26,880
delving into the specifics of it.

1000
01:14:26,880 --> 01:14:31,120
I'm surprised that first of all, Wyoming, you know what I mean?

1001
01:14:31,120 --> 01:14:32,120
It's Wyoming.

1002
01:14:32,120 --> 01:14:36,160
When do you ever hear Wyoming in the news?

1003
01:14:36,160 --> 01:14:43,920
But Wyoming took the stance to say, we want to enshrine this a sort of protection status,

1004
01:14:43,920 --> 01:14:49,080
protective status for Dow specifically, Web 3 technology governance.

1005
01:14:49,080 --> 01:14:53,280
We're going to give it legal standing, allow them to be in perpetual existence as long

1006
01:14:53,280 --> 01:15:00,320
as they pay all the fees, they have all the right people, officers and members and bylaws

1007
01:15:00,320 --> 01:15:07,440
and the such, but they're going to be nonprofit and may only be nonprofit if you want them

1008
01:15:07,440 --> 01:15:09,200
to be a DUNA.

1009
01:15:09,200 --> 01:15:12,720
I still don't know quite what to make of that.

1010
01:15:12,720 --> 01:15:16,840
What is it about nonprofits do you think that Wyoming chose to go that route?

1011
01:15:16,840 --> 01:15:19,560
Well, Wyoming is looking to be the new Delaware.

1012
01:15:19,560 --> 01:15:24,520
I mean, they're just looking for everyone to go and register their nonprofit there in

1013
01:15:24,520 --> 01:15:32,320
Wyoming and pay Wyoming taxes and registration fees for registering them.

1014
01:15:32,320 --> 01:15:34,600
They've done the same thing for years with license plates.

1015
01:15:34,600 --> 01:15:40,240
You see all these buses running around, these private buses that people own, and they've

1016
01:15:40,240 --> 01:15:48,040
been registering them in Wyoming and the other states have been arguing that they're improperly

1017
01:15:48,040 --> 01:15:53,320
registered and so there's all this tax competition going on with Wyoming because they're just

1018
01:15:53,320 --> 01:15:57,720
trying to, I mean, they have to, they don't have a lot of economic activity going on in

1019
01:15:57,720 --> 01:16:03,400
Wyoming and so they're just reaching out trying to get some more economic activity and this

1020
01:16:03,400 --> 01:16:06,320
is one way of doing it.

1021
01:16:06,320 --> 01:16:13,920
One thing that I found at the very last bullet here is the purpose of a DUNA is to protect

1022
01:16:13,920 --> 01:16:20,240
and support the underlying blockchain network, but like a town council is not itself a business

1023
01:16:20,240 --> 01:16:24,280
and I took this quote from A1Z Crypto.

1024
01:16:24,280 --> 01:16:30,840
They did an article on the DUNA and Oasis for the Dow by Miles Jennings and David Kerr.

1025
01:16:30,840 --> 01:16:36,080
Apologies if I mispronounced that, but here they have a really nice article, some good

1026
01:16:36,080 --> 01:16:42,760
visuals to show where, how Dow's were operating in relation to smart contracts.

1027
01:16:42,760 --> 01:16:50,020
But they opined that they related closely to a town council, I'm not exactly sure how

1028
01:16:50,020 --> 01:16:56,360
town councils are, or maybe they're unincorporated associations, not sure, their legal status,

1029
01:16:56,360 --> 01:17:01,800
but they opined that it's not a business and this is where I started getting tipped off

1030
01:17:01,800 --> 01:17:08,360
about the wrapping, the wrapping of a Dow, where it's the moat, which is not the castle,

1031
01:17:08,360 --> 01:17:13,320
they're two separate, well in one case one is a legal entity that's protected, the other

1032
01:17:13,320 --> 01:17:19,280
one in California state law is apparently a general partnership, it's unlimited liability.

1033
01:17:19,280 --> 01:17:24,120
So I'm still trying to wrap my head around it, but what you've commented on so far is

1034
01:17:24,120 --> 01:17:26,120
really starting to help.

1035
01:17:26,120 --> 01:17:28,520
There's a lot of wrapping going on.

1036
01:17:28,520 --> 01:17:30,080
A lot of wrapping.

1037
01:17:30,080 --> 01:17:31,080
Boxing.

1038
01:17:31,080 --> 01:17:32,080
Go ahead.

1039
01:17:32,080 --> 01:17:34,300
So that's the DUNA.

1040
01:17:34,300 --> 01:17:39,600
Now let's get into the newer kid on the block, the LLD.

1041
01:17:39,600 --> 01:17:42,040
Already that just sounds menacing.

1042
01:17:42,040 --> 01:17:45,360
It sounds like there's something I want to know about that.

1043
01:17:45,360 --> 01:17:51,800
An LLD stands for a limited liability decentralized autonomous organization.

1044
01:17:51,800 --> 01:17:57,520
So it's actually kind of an acronym within an acronym, which is always fun, but an LLD

1045
01:17:57,520 --> 01:18:07,520
is Utah's take on Dow LLCs and specifically they decided to go the for-profit round, so

1046
01:18:07,520 --> 01:18:13,160
the normal LLC corporation round, but instead of creating the LLC, they decided to kind

1047
01:18:13,160 --> 01:18:18,640
of hard fork off of LLC and create LLD.

1048
01:18:18,640 --> 01:18:25,160
So under Utah state law, Dow's are designated as a separate legal entity.

1049
01:18:25,160 --> 01:18:29,880
And this is the part where I'm getting kind of confused because on the one hand, just

1050
01:18:29,880 --> 01:18:33,880
the plain reading of it makes it sound like we're not talking about the moat versus the

1051
01:18:33,880 --> 01:18:34,880
castle anymore.

1052
01:18:34,880 --> 01:18:39,680
We're talking about the moat and the castle is the same thing under an LLD.

1053
01:18:39,680 --> 01:18:44,280
It is, the Dow is the legal entity.

1054
01:18:44,280 --> 01:18:50,680
However, when I was reading the actual, what they call the Dow Act, which is what Utah

1055
01:18:50,680 --> 01:19:00,280
law passed, one little, little line down, down below was, where to go?

1056
01:19:00,280 --> 01:19:02,280
Where to go?

1057
01:19:02,280 --> 01:19:03,280
Here.

1058
01:19:03,280 --> 01:19:07,400
Shall be deemed a legal entity separate and distinct from the Dow members.

1059
01:19:07,400 --> 01:19:12,560
So what I thought was, you know, a Dow was a legal entity, now it kind of looks like

1060
01:19:12,560 --> 01:19:13,560
a rap Dow.

1061
01:19:13,560 --> 01:19:14,720
I'm not sure.

1062
01:19:14,720 --> 01:19:17,080
I don't think so.

1063
01:19:17,080 --> 01:19:24,840
I think they're just saying that the Dow itself, I mean, like an LLC is separate and apart

1064
01:19:24,840 --> 01:19:32,680
legal entity from its individual members, the LLD will be separate and apart from its

1065
01:19:32,680 --> 01:19:33,680
members.

1066
01:19:33,680 --> 01:19:40,080
And this is what I was saying before, some of these cases where they're, you know, California,

1067
01:19:40,080 --> 01:19:50,320
I say they, we'll just say it California, reaching out and trying to hold people liable

1068
01:19:50,320 --> 01:19:54,720
for the actions of a Dow because they're individual members within the Dow.

1069
01:19:54,720 --> 01:20:01,960
These entities, these structures are put in place to insulate those members from the liability

1070
01:20:01,960 --> 01:20:06,120
for the actions of the, of the, of the Dow itself.

1071
01:20:06,120 --> 01:20:13,000
So what then is the significance of wrapping the Dow versus the Dow being the legal entity?

1072
01:20:13,000 --> 01:20:14,400
Yeah.

1073
01:20:14,400 --> 01:20:18,920
So when you talked about the Tennessee, what was it?

1074
01:20:18,920 --> 01:20:27,240
Tennessee, Wyoming, Vermont, DOWs, they're saying that the DOWs themselves are not legal

1075
01:20:27,240 --> 01:20:28,240
entities.

1076
01:20:28,240 --> 01:20:37,480
And so, but at the same time, when we talk about this, this manager controlled DOWs,

1077
01:20:37,480 --> 01:20:43,160
I think, I think we're going to see a little bit more liability in a structure like that

1078
01:20:43,160 --> 01:20:45,640
than you see with the LLDs.

1079
01:20:45,640 --> 01:20:52,480
And I'm actually putting some, I'm in Utah myself, I'm in near St. George, Utah here

1080
01:20:52,480 --> 01:21:01,240
and what they call hurricane, but it's spelled hurricane for everybody else in the world.

1081
01:21:01,240 --> 01:21:09,660
But in Utah here, they have these LLDs and I'm actually working on a few right now.

1082
01:21:09,660 --> 01:21:13,880
And when you say a little bit more liability, were you referring to the DUNA?

1083
01:21:13,880 --> 01:21:14,880
Yeah.

1084
01:21:14,880 --> 01:21:15,880
Yeah.

1085
01:21:15,880 --> 01:21:20,920
I'm referring to the DUNA having more liability because of the structure, the way that, the

1086
01:21:20,920 --> 01:21:32,960
I'm sorry, I was referring to, so these DAL LLCs, when you talked about the Wyoming, Vermont,

1087
01:21:32,960 --> 01:21:39,880
Tennessee structures with the wrapper, you know, you had a member management.

1088
01:21:39,880 --> 01:21:46,200
Do you see those as limiting liability for the members, sorry, the managers?

1089
01:21:46,200 --> 01:21:49,400
Is that what you're saying?

1090
01:21:49,400 --> 01:21:56,720
Yeah, I think that is what I'm saying.

1091
01:21:56,720 --> 01:21:59,760
Let me process that because I didn't make that connection until right then when you

1092
01:21:59,760 --> 01:22:01,440
said that.

1093
01:22:01,440 --> 01:22:11,800
So maybe that's the connection was that DUNAs or no, no, LLDs establish a manager controlled

1094
01:22:11,800 --> 01:22:16,160
DAL, the right connection or is it a member controlled DAL?

1095
01:22:16,160 --> 01:22:22,760
It'd be a member controlled DAL because you have your governance rights in the DAL, but

1096
01:22:22,760 --> 01:22:27,080
you don't have, you know, a limitation of liability.

1097
01:22:27,080 --> 01:22:29,560
The LLD would be the member controlled DAL?

1098
01:22:29,560 --> 01:22:31,160
Yeah.

1099
01:22:31,160 --> 01:22:36,600
And so the DAL LLC would be a manager controlled DAL because it's a separate legal entity from

1100
01:22:36,600 --> 01:22:42,720
the DAL itself and that DAL LLC requires, I mean, managers is like any other for-profit.

1101
01:22:42,720 --> 01:22:43,720
Right.

1102
01:22:43,720 --> 01:22:53,280
Because you would need a registered agent, which a DAL LLD requires, but you don't have

1103
01:22:53,280 --> 01:22:56,200
shareholder responsibilities.

1104
01:22:56,200 --> 01:23:05,040
It's important to note that for the DAL LLD members of a DAL do not have fiduciary duties

1105
01:23:05,040 --> 01:23:06,520
to each other.

1106
01:23:06,520 --> 01:23:16,160
So that's already, like we're already diverging big time.

1107
01:23:16,160 --> 01:23:18,400
What are some other key things I found?

1108
01:23:18,400 --> 01:23:26,720
Member in a DAL LLD, so an LLD in Utah, allows a DAL not registered as for-profit entity

1109
01:23:26,720 --> 01:23:31,680
or nonprofit entity to be a legal equivalent of a domestic LLC.

1110
01:23:31,680 --> 01:23:36,440
So meaning if your DAL isn't already registered as some sort of for-profit or not, not for

1111
01:23:36,440 --> 01:23:42,720
profit, you can now register as an LLD and it will be the legal equivalent of a domestic

1112
01:23:42,720 --> 01:23:43,720
LLC.

1113
01:23:43,720 --> 01:23:44,720
So there it is.

1114
01:23:44,720 --> 01:23:51,520
The DAL is now the LLC, the corporation or the company, excuse me, the company.

1115
01:23:51,520 --> 01:23:56,440
Member means a person who has governance rights and the DAL and excludes involuntary recipients.

1116
01:23:56,440 --> 01:23:58,160
That was a funny thing.

1117
01:23:58,160 --> 01:24:01,640
I'm almost copy pasting here.

1118
01:24:01,640 --> 01:24:09,240
So if you have a governance token, you are a member of an LLD, of the DAL.

1119
01:24:09,240 --> 01:24:15,120
But if you were gifted all these tokens and you didn't ask for it, then you're not automatically

1120
01:24:15,120 --> 01:24:18,960
inducted as a member unless you start participating.

1121
01:24:18,960 --> 01:24:23,040
It has a little comment at the end that says unless you start participating, then okay,

1122
01:24:23,040 --> 01:24:27,560
then you've acceded to the member role.

1123
01:24:27,560 --> 01:24:29,060
That was funny.

1124
01:24:29,060 --> 01:24:31,160
It makes really interesting.

1125
01:24:31,160 --> 01:24:34,800
I feel like they consulted real Web3 people out of this.

1126
01:24:34,800 --> 01:24:35,800
They distinguish pretty clearly.

1127
01:24:35,800 --> 01:24:42,440
I'm not sure when you get into the smart contracts and how the DAL can be just basically a series

1128
01:24:42,440 --> 01:24:49,240
of smart contracts and the decision making can be programmatic.

1129
01:24:49,240 --> 01:24:58,720
I've never seen that as spelled out as it is with the LLD Utah State law.

1130
01:24:58,720 --> 01:25:02,560
It read really very clearly and it's not a very long read.

1131
01:25:02,560 --> 01:25:05,280
We're talking, I think it was like 10 pages maybe.

1132
01:25:05,280 --> 01:25:11,080
So they distinguish between on chain and off chain and even majority chain activity.

1133
01:25:11,080 --> 01:25:18,440
Majority chain like when you hard fork BSV and BTC, BTC remained the majority chain and

1134
01:25:18,440 --> 01:25:23,760
BSV became the minority chain in that instance.

1135
01:25:23,760 --> 01:25:25,560
Now they're their own thing, but whatever.

1136
01:25:25,560 --> 01:25:29,680
So if a DAL hard forks, how is that treated?

1137
01:25:29,680 --> 01:25:36,240
So they would talk about the majority chain, 51% of the governance going toward the majority

1138
01:25:36,240 --> 01:25:38,920
chain.

1139
01:25:38,920 --> 01:25:45,800
They distinguish between blockchain, transactions, forks, smart contracts, token holders.

1140
01:25:45,800 --> 01:25:52,880
They really spell out Web3 framework and then they enshrine that in this thing they call

1141
01:25:52,880 --> 01:25:53,880
the LLD.

1142
01:25:53,880 --> 01:26:00,280
And it seemed they were thinking about snapshot voting.

1143
01:26:00,280 --> 01:26:03,040
You have on chain voting, but you also have snapshot voting.

1144
01:26:03,040 --> 01:26:05,880
I think they're really thinking it through.

1145
01:26:05,880 --> 01:26:06,880
Yeah.

1146
01:26:06,880 --> 01:26:07,880
Yeah.

1147
01:26:07,880 --> 01:26:14,720
I was really pretty excited because this was like a common sense approach here.

1148
01:26:14,720 --> 01:26:18,080
And later on you'll see just how common sense it really got.

1149
01:26:18,080 --> 01:26:19,680
It gets real.

1150
01:26:19,680 --> 01:26:21,720
So it requires a registered agent.

1151
01:26:21,720 --> 01:26:23,040
It requires bylaws.

1152
01:26:23,040 --> 01:26:26,960
So like I said in the very beginning, the foundation company does not require bylaws.

1153
01:26:26,960 --> 01:26:32,160
It required a constitution, which is broken down into your memo of association and your

1154
01:26:32,160 --> 01:26:34,120
articles of association.

1155
01:26:34,120 --> 01:26:38,080
Your bylaws is pretty much your articles of association for foundation company.

1156
01:26:38,080 --> 01:26:44,080
It lays out how you will structure and how your company will be run.

1157
01:26:44,080 --> 01:26:45,880
So same thing.

1158
01:26:45,880 --> 01:26:50,080
You are required to have a legal representative.

1159
01:26:50,080 --> 01:26:56,960
And then I just took it straight from, because it appeared later on way, way down below.

1160
01:26:56,960 --> 01:27:01,240
It first didn't say you have to have a legal representative, but way down below a DAO shall

1161
01:27:01,240 --> 01:27:05,720
retain a legal representative to undertake tasks that cannot be achieved on chain.

1162
01:27:05,720 --> 01:27:10,840
And that to me was another example of differentiating on chain, off chain activities.

1163
01:27:10,840 --> 01:27:14,200
They really thought this one through in my opinion.

1164
01:27:14,200 --> 01:27:16,280
It starts with an organizer.

1165
01:27:16,280 --> 01:27:19,900
Your organizer could become many different things like members and whatever afterwards.

1166
01:27:19,900 --> 01:27:24,480
But you must start with an organizer to kick things off.

1167
01:27:24,480 --> 01:27:28,400
Shall be deemed a legal entity that is separate distinct from the DAO members.

1168
01:27:28,400 --> 01:27:35,520
I'm still kind of fuzzy on how that doesn't make it wrapped, but I believe Ernest, when

1169
01:27:35,520 --> 01:27:37,440
he says there, there's a difference there.

1170
01:27:37,440 --> 01:27:41,480
We talked, he talked a little bit, a little bit earlier about how we might see a little

1171
01:27:41,480 --> 01:27:47,480
bit more liability out of the LLCs, which decided to take the member controlled DAO

1172
01:27:47,480 --> 01:27:55,400
route rather than with LLDs, which are more member controlled route.

1173
01:27:55,400 --> 01:27:59,560
Unless Ernest, you had any more comment there, I'll just leave that one for you.

1174
01:27:59,560 --> 01:28:01,680
Manager versus member control.

1175
01:28:01,680 --> 01:28:03,000
Yeah.

1176
01:28:03,000 --> 01:28:09,560
Later on also says members may only be liable for the on chain contributions that the member

1177
01:28:09,560 --> 01:28:11,920
has committed to the DAO.

1178
01:28:11,920 --> 01:28:18,440
And there is one of the clenchers when it comes to limiting that liability as a token

1179
01:28:18,440 --> 01:28:19,440
holder.

1180
01:28:19,440 --> 01:28:24,720
Roxy, you were talking a little bit earlier about how if you buy a token and become a

1181
01:28:24,720 --> 01:28:27,720
DAO member, can you be sued?

1182
01:28:27,720 --> 01:28:30,520
And you referenced LIDO DAO at the time.

1183
01:28:30,520 --> 01:28:39,580
Well, if you were an LLD, you have legal standing in the state of Utah as an LLD, you may only

1184
01:28:39,580 --> 01:28:44,000
be liable for the on chain contributions.

1185
01:28:44,000 --> 01:28:46,120
So snapshot voting, for instance.

1186
01:28:46,120 --> 01:28:47,120
All right.

1187
01:28:47,120 --> 01:28:51,600
I'm not speaking out of turn there, Ernest, you would look at...

1188
01:28:51,600 --> 01:28:57,800
I mean, I've read that a little bit differently, but I'm going to have to research that one.

1189
01:28:57,800 --> 01:28:58,800
Okay.

1190
01:28:58,800 --> 01:29:06,440
I'm not a lawyer, so I would look to Ernest to kind of override and maybe pull me back

1191
01:29:06,440 --> 01:29:11,120
when I might be interpreting too liberally, let's say.

1192
01:29:11,120 --> 01:29:12,120
Okay.

1193
01:29:12,120 --> 01:29:16,400
And here's just how real it gets.

1194
01:29:16,400 --> 01:29:18,800
Here's the funny part.

1195
01:29:18,800 --> 01:29:26,400
If a DAO refuses to comply with an enforcement judgment, meaning LIDO DAO, or not LIDO DAO,

1196
01:29:26,400 --> 01:29:28,320
was the first one we had.

1197
01:29:28,320 --> 01:29:36,160
It was OKI DAO, where they were required to pay a $643,000 fine by the California judge.

1198
01:29:36,160 --> 01:29:37,160
Right?

1199
01:29:37,160 --> 01:29:42,120
So if you were an LLD, and if OKI DAO was LLD, right?

1200
01:29:42,120 --> 01:29:49,840
And they were required to pay this $643,000 fine, and the DAO decided that it didn't want

1201
01:29:49,840 --> 01:29:50,840
to do that.

1202
01:29:50,840 --> 01:29:51,840
Right?

1203
01:29:51,840 --> 01:29:59,320
If a DAO refuses to comply with enforceable judgment, like OKI DAO, the members who voted

1204
01:29:59,320 --> 01:30:05,280
against may be liable for any monetary payments.

1205
01:30:05,280 --> 01:30:06,480
Right?

1206
01:30:06,480 --> 01:30:15,040
So if you put OKI DAO after that, put up an OKI IP, an improvement proposal, and said,

1207
01:30:15,040 --> 01:30:18,080
hey, should we pay this $600,000 fine?

1208
01:30:18,080 --> 01:30:20,480
And 51% vote, no, we should not.

1209
01:30:20,480 --> 01:30:22,280
And that wins out?

1210
01:30:22,280 --> 01:30:30,960
Well then, the 51% becomes liable for the judgment, not the 49% who said, yes, we should.

1211
01:30:30,960 --> 01:30:32,360
That's funny.

1212
01:30:32,360 --> 01:30:33,360
That's funny to me.

1213
01:30:33,360 --> 01:30:36,040
That to me is thinking that through.

1214
01:30:36,040 --> 01:30:39,960
Even if you disagree with the way they came out, they thought this one through, in my

1215
01:30:39,960 --> 01:30:40,960
opinion.

1216
01:30:40,960 --> 01:30:41,960
Yeah, they did.

1217
01:30:41,960 --> 01:30:44,960
I've never seen that before.

1218
01:30:44,960 --> 01:30:50,840
Well, I mean, an officer in a corporation can be held personally liable for some of

1219
01:30:50,840 --> 01:30:51,840
his actions.

1220
01:30:51,840 --> 01:30:55,680
I mean, I can understand where they're going there.

1221
01:30:55,680 --> 01:31:03,120
And these were saying that the members, those members may be held if they voted to say,

1222
01:31:03,120 --> 01:31:05,680
no, we're not going to pay it.

1223
01:31:05,680 --> 01:31:10,400
And this to me is the adjudication, is the resolution of the question.

1224
01:31:10,400 --> 01:31:15,280
When the DAO disagrees with a court of law, who wins?

1225
01:31:15,280 --> 01:31:16,280
Right?

1226
01:31:16,280 --> 01:31:20,360
And up until this point, the DAOs have been saying, we're so anonymous, you can't find

1227
01:31:20,360 --> 01:31:23,720
us, you can't hold us accountable.

1228
01:31:23,720 --> 01:31:29,000
Now, Utah's saying, we will make you a legal entity where you can fight for your rights,

1229
01:31:29,000 --> 01:31:31,840
you can own property, you can go for profit.

1230
01:31:31,840 --> 01:31:37,000
But you will also be held accountable for when you make poor decisions, saying that

1231
01:31:37,000 --> 01:31:44,600
you're not going to comply with the illegal enforceable judgment because you must be held

1232
01:31:44,600 --> 01:31:52,440
to account, you must pay taxes, all these sorts of things that Wyoming, Utah, Tennessee,

1233
01:31:52,440 --> 01:31:54,560
and what was our other one?

1234
01:31:54,560 --> 01:31:56,600
I don't want to leave them out.

1235
01:31:56,600 --> 01:32:03,120
Wyoming, Tennessee, Vermont, Utah are trying to enshrine for DAOs.

1236
01:32:03,120 --> 01:32:09,240
Yeah, what's going to be interesting with that is, so they say an enforceable judgment,

1237
01:32:09,240 --> 01:32:12,880
and there's something called the full faith and credit clause, the US constitution that

1238
01:32:12,880 --> 01:32:22,360
requires that official acts and records of one state have legal standing, not standing,

1239
01:32:22,360 --> 01:32:24,120
illegally enforceable in the other states.

1240
01:32:24,120 --> 01:32:25,120
And so...

1241
01:32:25,120 --> 01:32:26,880
And what was that called?

1242
01:32:26,880 --> 01:32:27,880
The what?

1243
01:32:27,880 --> 01:32:28,880
Full faith and credit clause.

1244
01:32:28,880 --> 01:32:30,720
Full faith and credit clause, okay.

1245
01:32:30,720 --> 01:32:31,720
Yeah.

1246
01:32:31,720 --> 01:32:35,960
And so essentially, if you get a judgment against you in California, you can enforce

1247
01:32:35,960 --> 01:32:38,040
it in Utah.

1248
01:32:38,040 --> 01:32:50,720
And so it'll be interesting to see with California doing all of its taxation of extra territorial

1249
01:32:50,720 --> 01:32:53,160
income.

1250
01:32:53,160 --> 01:32:59,680
So if California taxes this extra territorial income, even though it doesn't have a property

1251
01:32:59,680 --> 01:33:07,200
there in California, it might be able to reach out and touch the assets of the Dow in Utah

1252
01:33:07,200 --> 01:33:10,240
by operation of the full faith and credit clause.

1253
01:33:10,240 --> 01:33:11,240
That is interesting.

1254
01:33:11,240 --> 01:33:14,320
And that's where that case law is going to come out to play.

1255
01:33:14,320 --> 01:33:15,320
Yeah.

1256
01:33:15,320 --> 01:33:16,320
That's fascinating.

1257
01:33:16,320 --> 01:33:20,040
This is stuff I nerd out on.

1258
01:33:20,040 --> 01:33:25,480
So I can understand not everyone might care about this stuff, but this to me is fascinating.

1259
01:33:25,480 --> 01:33:27,560
What are the rules?

1260
01:33:27,560 --> 01:33:30,760
What are all the things you need to know to play in this arena?

1261
01:33:30,760 --> 01:33:36,240
Because whether or not you know it, if you are a sand token holder, you are a Dow member.

1262
01:33:36,240 --> 01:33:37,680
Gunta says it all the time.

1263
01:33:37,680 --> 01:33:40,540
If you own land or if you own sand, you are part of the Dow.

1264
01:33:40,540 --> 01:33:42,520
You are a Dow member.

1265
01:33:42,520 --> 01:33:47,920
So what is this arena that we are all engaged in, this big grand experiment?

1266
01:33:47,920 --> 01:33:49,960
What are some of the things we need to watch out for?

1267
01:33:49,960 --> 01:33:55,440
Well, apparently full faith and credit clause, something I need to go look up now.

1268
01:33:55,440 --> 01:33:59,040
Just like I looked at the Long-Armed Statute, the Dodd-Frank Act, all that.

1269
01:33:59,040 --> 01:34:00,040
Yeah.

1270
01:34:00,040 --> 01:34:01,520
I mean, the full faith and credit clause.

1271
01:34:01,520 --> 01:34:09,160
I mean, if you go back to 1950s, yeah, 1950s, full faith and credit clause was used a lot

1272
01:34:09,160 --> 01:34:17,560
with arguments for interracial marriages.

1273
01:34:17,560 --> 01:34:22,640
So there were states that had laws against interracial marriages.

1274
01:34:22,640 --> 01:34:24,040
Virginia was one.

1275
01:34:24,040 --> 01:34:32,020
And there were cases on whether they would have to recognize a marriage in another state,

1276
01:34:32,020 --> 01:34:36,840
in their state, even though their state had outlawed the interracial marriages.

1277
01:34:36,840 --> 01:34:37,840
I didn't know that.

1278
01:34:37,840 --> 01:34:38,840
Yeah.

1279
01:34:38,840 --> 01:34:42,260
And then it comes up a lot with, and then that argument comes up a lot.

1280
01:34:42,260 --> 01:34:50,240
And I studied this on undergrad when I was a youngin, with the full faith and credit

1281
01:34:50,240 --> 01:34:53,440
clause applying to same-sex marriages.

1282
01:34:53,440 --> 01:35:00,320
And how, if one state recognizes a same-sex marriage, can they go to another state and

1283
01:35:00,320 --> 01:35:02,800
seek to be recognized that way?

1284
01:35:02,800 --> 01:35:06,240
And the full faith and credit clause is included in the US Constitution.

1285
01:35:06,240 --> 01:35:10,280
So yeah, the answer is yes.

1286
01:35:10,280 --> 01:35:12,800
Right on.

1287
01:35:12,800 --> 01:35:16,000
And I guess the answer would be yes in 1994.

1288
01:35:16,000 --> 01:35:17,040
Yeah.

1289
01:35:17,040 --> 01:35:21,520
But maybe not quite as seen as to be enforced.

1290
01:35:21,520 --> 01:35:28,280
Not until later on when it just became obvious that, yeah, we need to evolve.

1291
01:35:28,280 --> 01:35:31,480
We need to evolve a little.

1292
01:35:31,480 --> 01:35:32,480
Yeah.

1293
01:35:32,480 --> 01:35:37,600
So what I read out of all this was that, while you're not required to have a profit motive,

1294
01:35:37,600 --> 01:35:41,720
nor do you have a fiduciary duty, nor are you required to have a board of directors,

1295
01:35:41,720 --> 01:35:43,960
nor are you required to have shareholders.

1296
01:35:43,960 --> 01:35:50,280
You will ensure that you can be legally represented and called to account as a Dow, and you will

1297
01:35:50,280 --> 01:35:52,340
be taxed.

1298
01:35:52,340 --> 01:35:59,880
You will share in the common expenses of our nation.

1299
01:35:59,880 --> 01:36:03,060
Which leads me to my sponsorship plug.

1300
01:36:03,060 --> 01:36:10,840
So decrypted.tax, if you have digital asset exposure and you're living here in the US,

1301
01:36:10,840 --> 01:36:17,760
you have US taxes to pay, whether it's in Utah or any other state, give us a call.

1302
01:36:17,760 --> 01:36:18,760
That's what we do.

1303
01:36:18,760 --> 01:36:26,180
And then as far as legal representative, yeah, I'm in Utah, board legal, and we are working

1304
01:36:26,180 --> 01:36:32,560
on setting up some of these DALs for individuals, for businesses, and for groups of individuals.

1305
01:36:32,560 --> 01:36:35,880
So yeah, give us a call.

1306
01:36:35,880 --> 01:36:39,760
I have decrypted.tax up here on the main screen right now.

1307
01:36:39,760 --> 01:36:42,560
Everybody take a look.

1308
01:36:42,560 --> 01:36:48,520
I hardly recommend, you know, Ernest has been not only just a voice of reason within the

1309
01:36:48,520 --> 01:36:55,320
Apecoin Dow, but also has turned out to be someone who has forced for good many different

1310
01:36:55,320 --> 01:37:00,680
things, accounting, capital, just a present voter.

1311
01:37:00,680 --> 01:37:05,160
Someone who, if you were an Apecoin Dow, just the other week said, you know, with the new

1312
01:37:05,160 --> 01:37:14,000
changes coming to the AIP with revamp, where it kind of changes the way you go about temperature

1313
01:37:14,000 --> 01:37:20,880
checks and going to vote, you need now delegations a lot more than you used to.

1314
01:37:20,880 --> 01:37:24,600
And Ernest has pledged that if you're having trouble with that sort of thing, getting the

1315
01:37:24,600 --> 01:37:27,960
required number of votes, message him.

1316
01:37:27,960 --> 01:37:34,480
Ask for his support, and he will support you to the maximum extent that he is able.

1317
01:37:34,480 --> 01:37:37,420
But tax season is upon us right now.

1318
01:37:37,420 --> 01:37:48,120
If you are a US resident, and again, that long arm statute, US citizens are taxed globally.

1319
01:37:48,120 --> 01:37:54,320
Now there are some, as I have lived overseas for more than, I think the number is 300 something

1320
01:37:54,320 --> 01:37:59,520
days right now, or if you are overseas for more than X number of days, then you are exempt

1321
01:37:59,520 --> 01:38:01,120
from certain tax provisions.

1322
01:38:01,120 --> 01:38:02,120
Okay.

1323
01:38:02,120 --> 01:38:04,800
But for the vast majority of us, that is not the case.

1324
01:38:04,800 --> 01:38:07,440
So you are taxed globally.

1325
01:38:07,440 --> 01:38:15,320
If you are a US citizen, please, the US government is getting very smart on digital assets, cryptocurrency,

1326
01:38:15,320 --> 01:38:19,660
not just cryptocurrency, but also NFTs, tokens.

1327
01:38:19,660 --> 01:38:25,040
And that being said, I do want to emphasize, at Decrypted Tax, we have software on the

1328
01:38:25,040 --> 01:38:32,520
backend of our website that tracks these activities, similar to Coinledger or Coinly.

1329
01:38:32,520 --> 01:38:36,800
But with our service, what you get is you get individuals that you can call and you

1330
01:38:36,800 --> 01:38:42,200
can have a talk with them and understand what's happening with your return.

1331
01:38:42,200 --> 01:38:47,200
Everyone's had the experience of importing their data into Coinledger or one of the other

1332
01:38:47,200 --> 01:38:52,840
tracking softwares and had 43 missing basis points where they didn't know how much they

1333
01:38:52,840 --> 01:38:54,160
paid for a certain crypto.

1334
01:38:54,160 --> 01:38:58,480
And therefore, when they sold it, they were going to get taxed on the total amount.

1335
01:38:58,480 --> 01:39:03,480
And we've gone all the way back to looking at emails for trade confirmations from clients

1336
01:39:03,480 --> 01:39:09,160
that were on exchanges that were closed up by that point and they couldn't get the data.

1337
01:39:09,160 --> 01:39:12,360
And everyone has those emails that they always receive.

1338
01:39:12,360 --> 01:39:15,080
And a lot of people do what I do.

1339
01:39:15,080 --> 01:39:18,440
And that is when I get a trade confirmation, it automatically shoots that over to a folder

1340
01:39:18,440 --> 01:39:21,800
and then I never look at it again.

1341
01:39:21,800 --> 01:39:26,400
But we've had clients who had those trade confirmations, we were able to use those to

1342
01:39:26,400 --> 01:39:32,080
substantiate their basis and their assets and minimize their tax liability that way.

1343
01:39:32,080 --> 01:39:40,000
So you have individuals, not just computers, not just smart contracts or whatever written

1344
01:39:40,000 --> 01:39:48,720
to to cite for the data, but also I will never charge or defending information that I put

1345
01:39:48,720 --> 01:39:51,400
on a tax return for a client.

1346
01:39:51,400 --> 01:39:53,920
That is you get audited.

1347
01:39:53,920 --> 01:39:54,920
I'm there.

1348
01:39:54,920 --> 01:39:56,760
We go to tax court.

1349
01:39:56,760 --> 01:40:02,040
I'm still there because when I put something on a tax return or when one of my staff put

1350
01:40:02,040 --> 01:40:07,400
them on tax return and I sign it, we're putting it on with the view that if this gets gets

1351
01:40:07,400 --> 01:40:12,080
challenged, I'll defend it all the way to tax court if necessary.

1352
01:40:12,080 --> 01:40:13,080
And at no charge.

1353
01:40:13,080 --> 01:40:21,280
Like I said, force for good.

1354
01:40:21,280 --> 01:40:26,160
The last one that we went over that we're going to go over is the Guernsey Purpose Trust.

1355
01:40:26,160 --> 01:40:30,880
This one came in the very last minute while I was searching and found out that it was

1356
01:40:30,880 --> 01:40:38,280
a DYDX, so DYDX, DAO, which is a which is a decentralized exchange.

1357
01:40:38,280 --> 01:40:42,800
They are their DAO is set up under what's called the Guernsey Purpose Trust.

1358
01:40:42,800 --> 01:40:48,080
And so a trust like like many people, you know, irrevocable or irrevocable trust.

1359
01:40:48,080 --> 01:40:55,600
But Guernsey, I didn't even know was a country is a country off the off the country of of

1360
01:40:55,600 --> 01:41:00,000
France in between United Kingdom and France, Exeter, Jersey.

1361
01:41:00,000 --> 01:41:05,720
But something that just popped out with another legal structure that you could have as a purpose

1362
01:41:05,720 --> 01:41:10,960
trust is contemplated in the context of DAO grants.

1363
01:41:10,960 --> 01:41:14,840
It specifically creates additional benefits that may not exist for trust and other jurisdictions

1364
01:41:14,840 --> 01:41:20,480
as in flexible trust requirements and favorable rates of taxation.

1365
01:41:20,480 --> 01:41:26,240
And assets are transferred from a smart contract to the DAO control to the purpose trust.

1366
01:41:26,240 --> 01:41:33,040
So from a smart contract, the DAO controls to the purpose trust and one or more trustees

1367
01:41:33,040 --> 01:41:37,520
and enforcer enter into a written agreement, thereby bringing the purpose trust into existence.

1368
01:41:37,520 --> 01:41:45,880
So another another legal framework that you could use that one DAO is using the DYDX Foundation.

1369
01:41:45,880 --> 01:41:49,720
And you'd really be surprised to how many companies there are in that little island

1370
01:41:49,720 --> 01:41:54,960
of Guernsey because they are also a tax haven.

1371
01:41:54,960 --> 01:41:56,760
I did not know that.

1372
01:41:56,760 --> 01:41:57,760
Yeah.

1373
01:41:57,760 --> 01:42:04,040
When I was working in London, there were a lot of investment funds that kept Jersey or

1374
01:42:04,040 --> 01:42:17,040
Guernsey entities in between the the the shareholders in the entities, which I was doing it because

1375
01:42:17,040 --> 01:42:19,040
there were US shareholders.

1376
01:42:19,040 --> 01:42:22,920
And so there's a lot of that a lot of those are set up in Guernsey.

1377
01:42:22,920 --> 01:42:28,640
It's a low tax jurisdiction or no tax jurisdiction that makes its money off of registered companies.

1378
01:42:28,640 --> 01:42:33,640
Like I said, Wyoming setting up self up to be.

1379
01:42:33,640 --> 01:42:35,260
And that's it.

1380
01:42:35,260 --> 01:42:41,960
So today we went over part two, which was a Q&A bit of commentary with Ernest Lee, who

1381
01:42:41,960 --> 01:42:51,760
is a lawyer out of Utah and also is, as you saw, tax tax attorney, tax accountant, holds

1382
01:42:51,760 --> 01:42:59,640
a has a tax accountant practice, is also an attorney, is many things.

1383
01:42:59,640 --> 01:43:04,920
We went over case law, what has been decided in court, went over different legal opinions

1384
01:43:04,920 --> 01:43:12,640
that still remain to be decided with a comparison of DUNAS, LLDs, LLCs and trusts.

1385
01:43:12,640 --> 01:43:17,680
And part three, part four, we will do in the future.

1386
01:43:17,680 --> 01:43:20,040
We did have quite a number of community questions.

1387
01:43:20,040 --> 01:43:23,760
I already went over them ad hoc.

1388
01:43:23,760 --> 01:43:28,160
What had questions from Roxy and from Metastreet Journal.

1389
01:43:28,160 --> 01:43:35,760
Thank you both for participating in that and asking those questions of Ernest.

1390
01:43:35,760 --> 01:43:44,600
If you have any follow follow up questions for me, my Twitter is ErnestLee.com.

1391
01:43:44,600 --> 01:43:48,920
Just look up above me right above above, above Ernest's face and you'll see his Twitter handle

1392
01:43:48,920 --> 01:43:50,200
right there.

1393
01:43:50,200 --> 01:43:51,200
Yeah.

1394
01:43:51,200 --> 01:43:54,640
So shoot me a text or shoot me a message.

1395
01:43:54,640 --> 01:43:59,000
I usually respond within 24 hours.

1396
01:43:59,000 --> 01:44:01,000
Very rare that I don't.

1397
01:44:01,000 --> 01:44:07,320
But yeah, and then you can also go on the website, decrypted.tax and there's a there's

1398
01:44:07,320 --> 01:44:12,680
a spot there where you can book a call with me and literally I have time allotted on my

1399
01:44:12,680 --> 01:44:15,120
schedule every day for calls like that.

1400
01:44:15,120 --> 01:44:17,480
Well, Pax said this is really interesting.

1401
01:44:17,480 --> 01:44:19,720
Thank you so much for Pax and good to see you.

1402
01:44:19,720 --> 01:44:24,880
I know we talked a couple of times on Twitter.

1403
01:44:24,880 --> 01:44:27,880
And open topics, no open topics that we need to go over.

1404
01:44:27,880 --> 01:44:33,280
We will rate someone at the end, someone who was in the sandbox category and we already

1405
01:44:33,280 --> 01:44:35,600
went over the future episodes.

1406
01:44:35,600 --> 01:44:37,760
And last but not least sandbox spaces.

1407
01:44:37,760 --> 01:44:39,540
So where is Sansam gathering?

1408
01:44:39,540 --> 01:44:46,960
So of course, discord, we have our sandbox game discord and we normally talk on hashtag

1409
01:44:46,960 --> 01:44:48,920
Dow discussion channel.

1410
01:44:48,920 --> 01:44:54,120
We also have the sandbox down forums as where the majority was gathering discuss on Twitter.

1411
01:44:54,120 --> 01:45:00,600
You'll see hashtag Sam fam hashtag the sandbox Dow hashtag sandbox game.

1412
01:45:00,600 --> 01:45:04,080
Also you can look at at sandbox down and a rash selective.

1413
01:45:04,080 --> 01:45:12,320
Arash selective does some show us what sand to sand to daily does the the daily floor

1414
01:45:12,320 --> 01:45:20,040
prices for sandbox land and a rash selective does like a newsletter of sorts for sandbox

1415
01:45:20,040 --> 01:45:22,320
has for quite some time on YouTube.

1416
01:45:22,320 --> 01:45:26,560
We have the sandbox Dow has the official digging the sand podcast.

1417
01:45:26,560 --> 01:45:29,280
Sam Sandow podcast is what you're listening to right now.

1418
01:45:29,280 --> 01:45:35,160
It's at lands or YT and Sam fam cafe is kind of like a like a meet and greet place for people

1419
01:45:35,160 --> 01:45:36,800
talk to each other.

1420
01:45:36,800 --> 01:45:46,000
And on the monthly sandbox spaces and I promise this wasn't really planned to begin with.

1421
01:45:46,000 --> 01:45:51,080
But so Bulls on the Block is on Saturdays.

1422
01:45:51,080 --> 01:45:56,200
And that is where as I mentioned, Ernest, I think, and I first met many, many moons

1423
01:45:56,200 --> 01:45:58,520
ago, I guess last year.

1424
01:45:58,520 --> 01:46:01,960
And Ernest is now acquired a Bulls on the Block.

1425
01:46:01,960 --> 01:46:04,240
We did originally interview Bulls on the Blog.

1426
01:46:04,240 --> 01:46:08,160
I think it was episode eight or nine, Crypto Sheep and Anthony.

1427
01:46:08,160 --> 01:46:10,520
And so they were owners at the time.

1428
01:46:10,520 --> 01:46:14,000
And now it's Ernest as of a month or two ago.

1429
01:46:14,000 --> 01:46:17,180
On Mondays we have Mocha Versailles, which is us.

1430
01:46:17,180 --> 01:46:19,720
And Monday through Friday is Coffee with Captain.

1431
01:46:19,720 --> 01:46:23,920
On Tuesdays is Nailu Digital with Whale Members.

1432
01:46:23,920 --> 01:46:27,200
And we'll just circle around very briefly back to Bulls on the Block.

1433
01:46:27,200 --> 01:46:33,000
It is a they cover sandbox, they cover Apecoin Dow.

1434
01:46:33,000 --> 01:46:35,440
What else are you covering nowadays, Ernest?

1435
01:46:35,440 --> 01:46:36,440
SDKs?

1436
01:46:36,440 --> 01:46:39,200
No, we don't cover SDKs.

1437
01:46:39,200 --> 01:46:42,080
We're doing other spaces for that.

1438
01:46:42,080 --> 01:46:47,960
And Bulls on the Block is, you know, that space is run by the Bulls on the Bull Council,

1439
01:46:47,960 --> 01:46:52,040
which is separate and apart from the Bulls on the Block entity itself.

1440
01:46:52,040 --> 01:46:57,080
The Bulls on the Block entity is an LLC here in Utah.

1441
01:46:57,080 --> 01:47:06,440
The Bulls on the Block Bull Council is an incorporated entity that runs those spaces

1442
01:47:06,440 --> 01:47:11,160
there on Saturday mornings.

1443
01:47:11,160 --> 01:47:13,080
I highly recommend Bulls on the Block.

1444
01:47:13,080 --> 01:47:16,240
They are they've been around for a long time, years.

1445
01:47:16,240 --> 01:47:21,600
One of the first mentors, I think, for the Apecoin, or the apes, I mean, excuse me, the

1446
01:47:21,600 --> 01:47:24,160
apes, not Apecoin Dow, but actual apes.

1447
01:47:24,160 --> 01:47:25,160
So the monkey jpegs.

1448
01:47:25,160 --> 01:47:31,680
They've been around for a long time and they are one of not the few, but one of I'd say

1449
01:47:31,680 --> 01:47:37,880
the ones I would highlight as true relationship building, true.

1450
01:47:37,880 --> 01:47:39,520
You come and you discuss.

1451
01:47:39,520 --> 01:47:43,720
It's a great place to learn, to hear different perspectives.

1452
01:47:43,720 --> 01:47:45,160
It's very respectful, very civil.

1453
01:47:45,160 --> 01:47:49,040
It does sometimes get a little spicy, but it's all within the within the confines of

1454
01:47:49,040 --> 01:47:53,920
good taste and just people having differences in opinions.

1455
01:47:53,920 --> 01:47:55,440
It's totally fine.

1456
01:47:55,440 --> 01:47:56,920
Usually when Derek Smart shows up.

1457
01:47:56,920 --> 01:47:57,920
Yeah, yeah.

1458
01:47:57,920 --> 01:47:58,920
When Derek shows up.

1459
01:47:58,920 --> 01:47:59,920
I can give him a green.

1460
01:47:59,920 --> 01:48:00,920
Sometimes when Natalie shows up.

1461
01:48:00,920 --> 01:48:01,920
Natalie shows up.

1462
01:48:01,920 --> 01:48:07,360
I'm sure he had Natalie's great team.

1463
01:48:07,360 --> 01:48:09,040
Great people, great people.

1464
01:48:09,040 --> 01:48:14,200
And I would credit Bulls on the Block with one of the large ways that I was able to expand

1465
01:48:14,200 --> 01:48:19,920
just out of the sandbox where originally when the sandbox foundation, excuse me, sandbox

1466
01:48:19,920 --> 01:48:24,440
Dow was announced on May 28th of last year, most of us, the very first thing we said was

1467
01:48:24,440 --> 01:48:26,160
what in the world is a Dow?

1468
01:48:26,160 --> 01:48:32,680
And it started us all down this path of trying to become self-aware as a Dow.

1469
01:48:32,680 --> 01:48:35,380
What does it mean to run a Dow, to be a part of a Dow?

1470
01:48:35,380 --> 01:48:36,380
What is a foundation?

1471
01:48:36,380 --> 01:48:38,080
And now here we are, part two.

1472
01:48:38,080 --> 01:48:39,080
What is the case law?

1473
01:48:39,080 --> 01:48:41,080
How does it affect us?

1474
01:48:41,080 --> 01:48:44,400
What sort of comparative structures are there and how are they different from the foundation

1475
01:48:44,400 --> 01:48:45,400
company?

1476
01:48:45,400 --> 01:48:52,120
And so this episode is largely a result of some things that I was able to explore in

1477
01:48:52,120 --> 01:48:53,800
Bulls on the Block.

1478
01:48:53,800 --> 01:48:58,480
And this is a great place to be, great place to learn, good friendships and associations

1479
01:48:58,480 --> 01:48:59,480
to make.

1480
01:48:59,480 --> 01:49:03,840
And also if you have a bull or you have a bear or you have a bull Evo, you have one

1481
01:49:03,840 --> 01:49:04,840
vote.

1482
01:49:04,840 --> 01:49:07,680
And so it has a Dow as well.

1483
01:49:07,680 --> 01:49:08,680
Yep.

1484
01:49:08,680 --> 01:49:16,160
So you have your own vote within the Bulls on the Block community and they vote their

1485
01:49:16,160 --> 01:49:17,600
community wallet.

1486
01:49:17,600 --> 01:49:21,920
And as a disclosure, I am a bull owner and I am a bear holder as well.

1487
01:49:21,920 --> 01:49:30,240
So I have seen this firsthand and how they run their snapshot and how that contributes

1488
01:49:30,240 --> 01:49:36,520
to their voting power and they're within the Apecoin Dow and elsewhere and also the sandbox.

1489
01:49:36,520 --> 01:49:41,340
So because they have us as I mentioned with Bulls on the Block episode, they have a six

1490
01:49:41,340 --> 01:49:42,440
by six.

1491
01:49:42,440 --> 01:49:46,360
So a plot of land as this earnest, by the way, by himself.

1492
01:49:46,360 --> 01:49:52,520
I've got a six by six that I'm going to put little spots for each one of my businesses

1493
01:49:52,520 --> 01:49:53,520
in there.

1494
01:49:53,520 --> 01:49:54,520
I think I have enough room.

1495
01:49:54,520 --> 01:49:56,000
You probably do.

1496
01:49:56,000 --> 01:49:57,000
Thirty six plots.

1497
01:49:57,000 --> 01:49:58,000
Yeah.

1498
01:49:58,000 --> 01:49:59,000
Yeah.

1499
01:49:59,000 --> 01:50:00,000
Yeah.

1500
01:50:00,000 --> 01:50:01,000
Should be okay for now.

1501
01:50:01,000 --> 01:50:02,000
For now.

1502
01:50:02,000 --> 01:50:03,000
We're growing.

1503
01:50:03,000 --> 01:50:05,080
And that will conclude episode 57.

1504
01:50:05,080 --> 01:50:08,520
I had six jobs or I had five jobs and I like, wait a second.

1505
01:50:08,520 --> 01:50:09,520
I counted six.

1506
01:50:09,520 --> 01:50:10,520
I'm like, okay.

1507
01:50:10,520 --> 01:50:11,520
Yeah.

1508
01:50:11,520 --> 01:50:12,520
Six.

1509
01:50:12,520 --> 01:50:13,520
Yeah.

1510
01:50:13,520 --> 01:50:14,520
So there you go.

1511
01:50:14,520 --> 01:50:15,960
You have way, way too many hats.

1512
01:50:15,960 --> 01:50:18,440
I still don't know how you do it.

1513
01:50:18,440 --> 01:50:20,280
All these different companies.

1514
01:50:20,280 --> 01:50:24,600
And I know you always tell me you have great people, good team.

1515
01:50:24,600 --> 01:50:25,840
It's all about having good people.

1516
01:50:25,840 --> 01:50:29,920
You get people the tools to do what they do best and you get out of their way and let

1517
01:50:29,920 --> 01:50:30,920
them do it.

1518
01:50:30,920 --> 01:50:31,920
Yeah.

1519
01:50:31,920 --> 01:50:32,920
Right on.

1520
01:50:32,920 --> 01:50:37,120
So I have one on, on the sandbox.

1521
01:50:37,120 --> 01:50:42,120
And there is one person that I will rate that, that I'm good terms, good friendly terms with

1522
01:50:42,120 --> 01:50:44,600
talk to me goose.

1523
01:50:44,600 --> 01:50:52,560
Great person that I have seen around the, the world of things community and talk to

1524
01:50:52,560 --> 01:50:53,560
a goose.

1525
01:50:53,560 --> 01:50:54,560
There we go.

1526
01:50:54,560 --> 01:50:55,560
Okay.

1527
01:50:55,560 --> 01:50:56,560
Great.

1528
01:50:56,560 --> 01:50:58,920
Has started.

1529
01:50:58,920 --> 01:51:02,600
This was Sandow podcast 57 part two with earnest.

1530
01:51:02,600 --> 01:51:08,520
We went over case law, went over the Dow comparative structures of different legal entities that

1531
01:51:08,520 --> 01:51:09,520
are out there.

1532
01:51:09,520 --> 01:51:16,480
We went over over our overarching self-awareness, what it means to be a Dow and earnest.

1533
01:51:16,480 --> 01:51:17,480
Thank you for your time.

1534
01:51:17,480 --> 01:51:18,480
Thank you for being here.

1535
01:51:18,480 --> 01:51:19,480
Anytime.

1536
01:51:19,480 --> 01:51:23,480
All right, everybody have a great day.

1537
01:51:23,480 --> 01:51:24,480
Peace.

1538
01:51:24,480 --> 01:51:45,660
Okay.

1539
01:51:45,660 --> 01:51:52,500
I

1540
01:51:52,500 --> 01:51:53,500
hit.