94 / Stoner SEC
SEC advice on which NFTs are securities

The US government and regulatory agencies are tackling digital assets, with the IRS clearly defining NFTs, and the SEC taking aim at projects like Stoner Cats for potentially misleading investors.

Timeline

00:00 Intro
00:36 Break in to DApps
01:49 Pulled over by cop
04:21 Proper logins
12:37 Stick Drippy Crystals
16:03 Stoner SEC
22:44 One weird trick

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Episode notes

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  1. Blog post: review 9 dapp login systems https://twitter.com/fulldecent/status/1702160272180277548
    1. Web2: passwords (should be hashed)
      1. 1:1 relationship – no one else knows you logged in
    2. Dapps: backed by public cryptography
      1. Everyone can know – publicly published and signed
      2. (most dapps are not really distributed)
      3. Issues
        1. What was actually signed?
        2. Do you know what you’re signing?
      4. Proper logins: attestation, entropy, time limitation, signed by customer’s private key
    3. Found several vulnerabilities across big NFT sites
    4. Ulti question: Many blockchain games adding web2 logins, does that affect this?
      1. Nope – still vulnerable
  2. Sec Stoner Cats https://www.sec.gov/news/press-release/2023-178
    1. Great educational case
    2. SEC claims:
      1. Marketed knowledge of crypto projects
      2. Touted price would go up
      3. Took other steps to make investors believe they would profit
    3. “Lighting up the cave”
    4. How did they choose this project?
      1. Complaints likely received
      2. Size of the project
      3. Probably considered people who they can actually “get” in the US
    5. Why did they wait so long?
  3. IRS definition of NFT https://www.irs.gov/pub/irs-drop/n-23-27.pdf
    1. US Congretional Research Office https://crsreports.congress.gov/product/pdf/R/R47189
    2. SEC commissioners going against https://www.sec.gov/news/statement/peirce-uyeda-statement-nft-082823#_ftn1