Thursday, November 2, 2023

The arbitrariness of the SEC's misguided enforcement-driven approach to crypto + federal bank regulators, [& their] State-level counterparts, abusing their supervisory authority to label businesses unworthy of having a bank account and worked in secret to purge disfavored lines of commerce from the financial system

Overdue: Statement of Dissent on LBRY. Commissioner Hester M. Peirce. SEC, Oct 27 2023.

The Commission has brought many troubling crypto enforcement actions, but the LBRY, Inc. (“LBRY”) case has especially unsettled me. A statement on the case is overdue. I did not support bringing the case, but have been unable to speak publicly about my concerns while the case has been in litigation. Last week, after losing in federal district court on the question of whether the sale of LBRY tokens was an unregistered securities offering, LBRY announced that it will not move forward with an appeal of the decision.[1] Instead, the company will shut down and its assets will be placed in receivership and used to satisfy its debts, including the civil money penalty owed to the Commission.[2] Are investors and the market really better off now after the Commission’s litigation contributed to the demise of a company that had built a functioning blockchain with a real-world application running on top of it? This case illustrates the arbitrariness and real-life consequences of the Commission’s misguided enforcement-driven approach to crypto.

One does not have to dig deep to find fraudulent crypto projects that sold tokens with promises that they did nothing to fulfill. This sad reality makes the Commission’s decision to bring a case against LBRY especially puzzling. LBRY’s approach was more conservative than the approach many other projects took.[3]Here, the blockchain was up and running at the time most tokens were sold, and the Commission’s complaint did not allege, and the court did not find, evidence of fraud. LBRY built a blockchain to facilitate data sharing, afford greater control to content creators, and make censorship more difficult. LBRY created a popular platform on the blockchain for sharing videos and other media.[4] The open-source LBRY blockchain was available for anyone else to use.[5] Why go after a company that sold a token for a functioning blockchain with an established use when we could have pursued plenty of other projects that were outright frauds and did not attempt to comply with the securities laws? To make matters worse, the Commission took an extremely hardline approach in this case. For example, after winning on summary judgment, the Commission sought monetary remedies of $44 million and asserted that LBRY’s offer to burn all tokens in its possession was not sufficient assurance that LBRY would not violate the registration provisions in the future.[6] The Commission’s requested remedies were entirely out of proportion to any harm. Indeed, the court stated during the remedies hearing that “the absence of fraud allegations, [and] the fact that there was some measure of uncertainty” regarding the application of the securities laws when LBRY commenced its offering were facts that “should be taken into account when considering a penalty.”[7] After the remedies hearing, the Commission pared its penalty request back to a significantly lower $111,614, which the court approved.[8]

The application of the securities laws to token projects is not clear, despite the Commission’s continuous protestations to the contrary. There is no path for a company like LBRY to come in and register its functional token offering.[9] Even if a company did manage to register its token offering, it would not be a particularly useful effort. Compliance with the securities laws is important because we want to ensure that people buying securities receive accurate and reliable information so they can assess the risks and rewards of an investment. Here, LBRY made significant disclosures outside of the registration process—disclosures that the Commission did not allege were fraudulent or misleading—and there is little to indicate that LBRY’s disclosures did not provide token purchasers with information adequate to assess whether the tokens were a good fit for them.[10] The time and resources we expended on this case could have been devoted to building a workable regulatory framework that companies like LBRY could have followed. Then the market could have decided LBRY’s fate.

Even if, as the judge ruled here, the offering of tokens should have been registered, our scorched earth approach in remedying the violation was completely out of proportion to any investor harm. How does the result in this case protect LBRY investors, who likely would have preferred that the company continue to exist to support the blockchain, which is still in its infancy? The judge did not rule on whether the token itself was a security or on the status of secondary sales of LBRY tokens,[11] which means that the LBRY blockchain may live on, but its path forward is difficult. The Commission’s action forced a group of entrepreneurs to abandon what they built. Our disproportionate reaction in this case will dissuade people from experimenting with blockchain technology, which LBRY aptly describes as “technology that enables dissent.”[12] A government of a free people should welcome dissent and the technologies that enable it.

Earlier this year, LBRY tweeted: “It’s the year 2028, hundreds of thousands of Americans have been jailed for using illegally cryptocurrency instead of CBDCs, and Hester Pierce [sic] is still just writing dissenting memos.”[13] Although I will be tending bees, not writing dissents, in 2028, I think often about the crux of that criticism and ask myself: “What could I do to help prevent another group of people with a big idea for changing the world from going through what LBRY has over the past several years?” I have not come up with an answer to that question; however, I urge people who have suggestions about how the Commission can right its course on crypto and innovation more broadly, to send them my way.[14]

[2]Id. (“LBRY must die, there is no escaping this. It has lost a judgment to the federal government, has several million dollars in debts, and has pledged to shut down.”).

[3] See, e.g., DAO Today with Alexa Mil Podcast (Dec. 27, 2022), at approximately minute 12 (comments of Jonathan Schmalfeld) (“Lots of people looked at LBRY as doing things the right way. They weren’t doing the ICO. When they released the fully developed platform. The tokens were consumptive. There was an actual use for them on release date. They did a traditional investment raise. They brought on shareholders. They used securities and venture investing. And they didn’t sell tokens as part of that. There wasn’t any kind of pre-token rounds as part of that. And then they waited a year until after the platform was actually working and functional and there was a good amount of videos on there.”).

[4]See Odysee, (last visited Oct. 24, 2023). LBRY subsequently transferred this platform to its Odysee subsidiary.

[5] See LBRY, (last visited Oct. 24, 2023) (describing the LBRY protocol). As the district court noted when it granted summary judgment to the Commission, it was “generally uncontested” that “(1) LBC is a utility token designed for use on the LBRY Blockchain, and (2) some unknown number of purchasers of LBC acquired it at least in part with the intention of using it rather than holding it as an investment.” SEC v. LBRY, Inc., 639 F.Supp.3d 211, 220 (D.N.H. 2022).

[6] Commission’s Opposition to LBRY’s Motion to Limit the Commission’s Remedies at 9-11, 13-15, SEC v. LBRY, Inc., No. 21-cv-260 (D.N.H. Dec. 19, 2022), ECF No.94 (requesting $22 million in disgorgement and a $22 million civil money penalty).

[7]Transcript of Motions Hearing Before the Honorable Paul J. Barbadoro at 50, SEC v. LBRY, Inc., No. 21-cv-260 (D.N.H. Jan. 30, 2023), ECF No. 105; see also id. at 17 (“Let’s be fair here. You are not alleging that LBRY engaged in any fraudulent activity, first. Second, although I held that LBRY had fair notice sufficient to allow for the enforcement of the Securities Act against it for those offerings, the fact of the matter is that this was one of the first non-fraud cases that did not involve an initial coin offering . . .”); and id. at 51 (“You have to go back to the time this action was filed. This was relatively early on in the development of the SEC’s position with respect to crypto offerings . . .”).

[8]Commission’s Supplemental Brief on Remedies at 3-4, SEC v. LBRY, Inc., No. 21-cv-260 (D.N.H. May 12, 2023), ECF No. 107 (requesting a $111,614 civil money penalty and withdrawing the request for disgorgement); SEC v. LBRY, Inc., 2023 WL 4459290 *5 (D.N.H. July 11, 2023) (imposing $111,614 civil money penalty).

[9] See, e.g., Rodrigo Seira, Justin Slaughter, and Katie Biber, The Current SEC Disclosure Framework Is Unfit for Crypto (Apr. 20, 2023), (“As we have shown above, the current securities framework was tailor-made to regulate fundraising by centralized legal entities issuing securities, such as a company selling shares to the public in its ‘IPO.’ However, crypto assets differ fundamentally from securities and therefore raise different investor disclosure considerations.”).

[10]See, e.g., Coinbase, Re: Petition for Rulemaking – Digital Asset Securities Regulation at 5-6 (Jul. 21, 2022), (“The SEC disclosure regime has historically focused on ensuring that investors have material information necessary to make an informed investment decision. Current disclosure requirements, however, do not cover a number of features unique to digital assets that would undoubtedly be considered important when making an investment decision. For example, investors would likely find information about the risk of a network attack, what kind of governance rights are embedded in which tokens, who has the ability to change the code underlying the assets or the network, and other features that do not exist with respect to traditional securities to be material. Additionally, investors would benefit from comparable disclosures across each digital asset security to assist in identifying differences among investment opportunities.”).

[11]SEC v. LBRY, Inc., 2023 WL 4459290, *3 (D.N.H. July 11, 2023).

[13]LBRY Inc, LLC (@LBRYcom), X (Feb. 9, 2023, 4:39 PM), Public blockchains eliminate the need for reliance on a central intermediary, which makes censoring information stored on a blockchain more difficult.

[14]Email suggestions to [...].


And before... Operation Choke Point 2.0: The Federal Bank Regulators Come For Crypto. Cooper & Kirk, Layers. Mar 2023.

[As summarized by Alex Tabarrok, Mar 30 2023,]

Recent stories in the financial press have uncovered a coordinated campaign by prudential bank regulators to drive crypto businesses out of the financial system. Bank regulators have published informal guidance documents that single out cryptocurrency and cryptocurrency customers as a risk to the banking system. Businesses in the cryptocurrency marketplace are losing their bank accounts, or their access to the ACH network, suddenly, and with no explanation from their bankers. The owners and employees of cryptocurrency firms are even having their personal accounts closed without explanation. And over the past two weeks, federal regulators have shut down a solvent bank that was known to be serving the crypto industry and, although it is required to resolve banks through the “least cost resolution” to the Deposit Insurance Fund, the FDIC chose to shutter rather than sell the part of the bank that serves digital asset customers, costing the Fund billions of dollars.

This pattern of events is not random, and we have seen it before. This is not the first time that federal bank regulators, working with their State-level counterparts, have abused their supervisory authority to label businesses unworthy of having a bank account and worked in secret to purge disfavored lines of commerce from the financial system. Beginning in 2012, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve System carried out a coordinated campaign to weaponize the banks against industries that had fallen out of favor with the administration—including gun stores, pawn shops, tobacco stores, payday lenders, and a host of other brick and mortar businesses. That campaign was called Operation Choke Point.

Our firm successfully challenged Operation Choke Point, and it was brought to a halt. The current bout of regulatory overreach against the crypto industry is illegal for much the same as reason as its predecessor. Specifically:

• Operation Choke Point 2.0 deprives business of their constitutional rights to due process in violation of the Fifth Amendment. It is well settled that when a federal agency attaches a derogatory label to an individual or business, and this stigmatizing label causes the business to lose a bank account or broadly precludes them from the pursuit of their chosen trade, the agency has violated the Due Process Clause of the Fifth Amendment, unless if first afforded the individual or business a right to be heard. This is precisely what the federal bank regulators responsible for Operation Choke Point 2.0 have done and continue to do by labeling crypto businesses a threat to the financial system, a source of fraud and misinformation, and a risk to bank liquidity.

• Operation Choke Point 2.0 violates both the non-delegation doctrine and the anticommandeering doctrine, depriving Americans of key structural constitutional protections against the arbitrary exercise of governmental power.

• By leveraging their authority over the banks to acquire the power to pick and choose the customers whom the banks may serve, the bank regulators have exceeded their statutory authority. The bank regulators are charged with supervising the safety and soundness of the banks; their effort to anoint themselves the gatekeepers of the financial system and the ultimate arbiters of American innovation and American economic life cannot be permitted to stand.

• The federal bank regulators are also refusing to perform their non-discretionary duties when doing so will benefit the cryptocurrency industry. State banks that are statutorily entitled to access the federal reserve system are being denied their rights solely because they serve the crypto industry. The federal bank regulators are not free to pick and choose which statutory obligations they duties they wish to perform.

• The federal bank regulators are evading the notice and comment rulemaking requirements of the administrative procedure act by imposing binding requirements on the banking industry through informal guidance documents. This is undemocratic, since it deprives the public of the right to comment on proposed rules, and it also runs contrary to the principle of judicial review, since courts lack the power to review “informal” agency actions.

• Finally, the federal bank regulators are acting in an arbitrary and capricious fashion by failing to adequately explain their decisions, by failing to engage in reasoned decision making, and by failing to treat like cases alike. It is difficult to imagine a more arbitrary and capricious agency action than simultaneously placing a solvent bank into receivership solely because it provided financial services to the crypto industry, while permitting insolvent institutions not tied to the crypto industry to continue operating.

...The persistent unwillingness of the nation’s bank regulators to follow the law and obey the Constitution calls out for Congressional action. Cracks are starting to form in the American financial system as its regulators increasingly abuse their power to achieve aims outside their authority and beyond their competence....We therefore urge Congress to perform its oversight role and hold these agencies to account.

Saturday, October 21, 2023

Tuesday, October 17, 2023

The observed effect sizes of cash transfers on cognitive performance (short-term 2-5 wk, long-term 12-13 mos) were roughly three and four times smaller than suggested by prior non-randomized research

Does alleviating poverty increase cognitive performance? Short- and long-term evidence from a randomized controlled trial

, , , , , , , 

Cortex, Oct 2023.


In this Registered Report, we investigated the impact of a cash transfer based poverty alleviation program on cognitive performance. We analyzed data from a randomized controlled trial conducted on low-income, high-risk individuals in Liberia where a random half of the participants (n = 251) received a $200 lump-sum unconditional cash transfer – equivalent approximately to 300% of their monthly income – while the other half (n = 222) did not. We tested both the short-term (2–5 weeks) and the long-term (12–13 months) impact of the treatment via several executive function measures. The observed effect sizes of cash transfers on cognitive performance (b = .13 for the short- and b = .08 for the long-term) were roughly three and four times smaller than suggested by prior non-randomized research. Bayesian analyses revealed that the overall evidence supporting the existence of these effects is inconclusive. A multiverse analysis showed that neither alternative analytical specifications nor alternative processing of the dataset changed the results consistently. However cognitive performance varied between the executive function measures, suggesting that cash transfers may affect the subcomponents of executive function differently.

Significance Statement

Prior non-randomized studies observed that alleviating poverty can largely improve the cognitive functioning of the poor by unburdening their cognitive bandwidth. Based on that, they also argued that unconditional cash transfers can be effective at breaking poverty traps. We tested this account both in the short- and the long-term in a randomized controlled trial using a one-off cash transfer – equivalent approximately to 300% of the participants' monthly income. Although we observed a small effect of receiving cash transfers both one month and a year after the treatment, cash transfers, in our study, did not significantly increase the cognitive performance of the poor. These findings suggest that the positive effects of poverty-alleviation policies on cognition are smaller than previous non-randomized research suggested.

Several studies that claim heat suppresses economic growth fall apart under scrutiny; but the debunker thinks it is astonishing "that eminent economists, in universities with vast resources available to marshal evidence, chose to ignore [his] critique"

Climate Change and ‘Poor’ South Korea. By David Barker

A study claims heat suppresses economic growth. It falls apart under scrutiny.

The WSJ, Oct. 12, 2023

[Temperature Shocks and Economic Growth: Comment on Dell, Jones, and Olken]

Climate change hurts the economy, according to a celebrated 2012 paper by economists Melissa Dell, Benjamin Jones and Benjamin Olken. That paper is in the top 1% of all academic economics publications by citation count, and it has received glowing coverage in the media. The authors teach at Harvard, Northwestern and the Massachusetts Institute of Technology, respectively, and have received some of the highest awards in the profession. I took a closer look at their study, and it doesn’t hold up.

The study claims that higher temperatures suppress economic growth in poor countries. The claim falls apart when you look at their definitions. The authors study the period 1961-2003 and assign each country a binary designation as “poor” or “rich” based on whether their per capita gross domestic product was below or above the median for countries in 1960.

But some countries faced drastic changes in fortune at the time.

South Korea is “poor,” according to the authors. In reality, it was very poor in the early 1960s and then became very wealthy. When I simply reclassified South Korea as poor from 1961-76 and rich from 1977-2003, the study’s results nearly disappeared. When I allowed classifications of all countries to change when they moved either above or below median GDP per capita, the results disappeared completely. Any study with results that collapse after such a simple specification change shouldn’t be published in a peer-reviewed academic journal.

I also found that unusual economic circumstances greatly influenced countries’ results. Per capita GDP in Rwanda dropped by 63% in 1994, the year of the genocide. That year happened to be warmer than average, tricking the model into showing that high temperatures cause GDP to fall. Dropping 16 unusual country/year observations out of 4,924 eliminated the main effect the study reported. Other seemingly arbitrary aspects of their technique, when changed, weakened or eliminated their results.

I extended their data from 2003 to 2017 and added additional countries to the sample. I found again that correctly classifying countries as poor or rich eliminated their results. Going back to their original data source, I discovered that monthly temperatures are available, although they used only annual temperature data. If high temperatures really reduce GDP growth, it seems likely that this effect would be greatest in the warmest months of the year. I found no evidence to support that hypothesis in the original or the extended data. I also used a completely different set of data on GDP by country and found no effect of temperature on growth.

Climate activists need evidence that high temperatures reduce economic growth to advance their policies. Responsible economists have found that high temperatures have only small effects on the level of GDP. If temperatures rise as the Intergovernmental Panel on Climate Change expects—assuming no CO2 mitigation at all—then according to responsible economists, global GDP in 2100 will be about 2.6% lower than if there was no temperature increase. With normal economic growth, GDP per capita in 2100 will be five times today’s level. A 2.6% reduction in GDP in 2100 would mean GDP growth of 4.9 times instead of 5—hardly a catastrophe. But if researchers claim to show that higher temperatures will affect the rate of GDP growth, then the effects of heat by the year 2100 could be significant. That is why pro-climate researchers are so desperate to find an effect of temperature on growth.

Econ Journal Watch, which published my debunking, contacted the authors and gave them an opportunity to respond to my work. They declined. [Reviewer: Same happened with previous papers in which this author claimed to have debunked other papers]

It is astonishing that eminent economists, in universities with vast resources available to marshal evidence, chose to ignore my critique. But the mainstream media will ignore anything that reveals the weaknesses of climate research, and academic journals will continue to publish shoddy research that confirms the dogma of climate hysteria.

Mr. Barker runs a real-estate and finance company. He has taught economics and finance at the University of Chicago and the University of Iowa and worked as an economist at the Federal Reserve Bank of New York.

Monday, October 16, 2023

Pacifist ChatGPT-3.5 on Christian Wolff's views of civil war. Reflection about corruption of truth.

Question... Summarize Ch Wolff's position on civil war in Jus Gentium

Answer... Christian Wolff, a prominent 18th-century German philosopher, addressed the concept of civil war in his work "Jus Gentium." Wolff's position on civil war can be summarized as follows:


Wolff viewed civil war as a significant breach of the social contract and a breakdown of the rule of law within a society. He believed that the natural state of humanity was to live in a state of peace and that the fundamental purpose of political authority and government was to maintain that peace and order. Civil war, according to Wolff, was a grave threat to this essential objective.


Wolff argued that civil war was a manifestation of a failure of government, where a breakdown in the administration of justice, protection of rights, and maintenance of public order led to internal conflicts. He emphasized the importance of legitimate authority in preventing civil war, and he advocated for the establishment of just and effective legal systems as a means to prevent such conflicts.


In Wolff's view, civil war was destructive not only in terms of human lives and property but also because it hindered the development of human society and prosperity. He believed that societies could only flourish when governed by just laws and institutions, and civil war posed a direct threat to this development.


Overall, Wolff's position on civil war can be characterized as a rejection of such conflicts and a call for the establishment and maintenance of lawful and just governance to prevent them. His ideas were rooted in the broader Enlightenment emphasis on reason, order, and the rule of law as the foundations of a well-functioning society.



More than a bit inaccurate. The breach was in rebellion, a form of unjust war: 1010, "Rebelles dicuntur fubditi, qui arma injufta fumunt adverfus Rectorem civitatis"; also 1011, "rebellio bellum civile non est [...] nec fubditi bellum civil excitantes funt rebelles." But just revolt against the prince was civil war and could be justified: 1011, "Bellum vero civile dicitur , quo jufta arma adverfus Rectorem civitatis fumunt fubditi."

As expected, trash in, trash out.

Sunday, October 15, 2023

[M]any witches she knew were talking about the degree program, announced last week, and were thinking about enrolling

Bad times in several fronts:

Christina Oakley Harrington, a retired academic of medieval history and the founder of Treadwell’s, a London bookstore specializing in literature on magic and spiritualism, said that many witches she knew were talking about the degree program, announced last week, and were thinking about enrolling.

This gal tries to deflect criticism:

“Not because they’re idiots and think it’s going to teach them how to wave a magic wand and do a spell,” Dr. Oakley Harrington said. “They’re people who have just a huge curiosity about the world and the way we perceive the seen and the unseen worlds.”

, but she doesn't succeed, IMHO.

Also, this guy adds:

Magic is sometimes thrown around as a synonym for false thinking, said Prof. Jeffrey J. Kripal, who helped to create the Rice University certificate program. “People have been practicing magical rituals and thinking about the world in magical terms much longer and deeper than the world religions,” Dr. Kripal said.

The pirates at Exeter Univ. even promise careers, "The recent surge in interest around topics pertaining to magic and occultism means that many of these professions have experienced a similar surge in demand for this expertise.":


The New York Times, Oct 13 2023: A U.K. University Will Confer a New Title: A Master’s Degree in the Occult.

The postgraduate degree, to be offered at the University of Exeter starting next year, will focus on the history of magic, folklore and rituals.

The Washington Post & Gavin Schmidt on Sept 2023 temps

1  Honesty at the WaPo...: A sudden spike in global warmth is so extreme, it’s mysterious, Oct 13 2023,

2  but, as expected because of our constitutional glitches, Gavin Schmidt, on this summer's "extreme" (we don't know!!!) temps breaks things with the hind legs:

'“It is indeed hard to give a good and informed answer to why this is happening — possibly for the first time.'

FIRST TIME? You are so good that you didn't have until now a hard time giving a good why? This guy went to the lawmaker for decades, it seems, saying he has good and informed answers to the whys he was working on...

Reminds me of Paul Krugman:

On election night 2016, I gave in temporarily to a temptation I warn others about: I let my political feelings distort my economic judgment. A very bad man had just won the Electoral College; and my first thought was that this would translate quickly into a bad economy. I quickly retracted the claim, and issued a mea culpa. (Being an old-fashioned guy, I try to admit and learn from my mistakes.) [Can the Economy Keep Calm and Carry On? Paul Krugman. The New York Times, Jan 01 2018,]

Check other amusing comments at

Until election night 2016, an economist's record was flawless :-) :-) :-). Amazing.

Gavin, honey, the tenor f your remarks is totally expected, but nauseating the same, n'kay?

Update: as of Oct 16 2023, he didn't update his X/Twitter account with his own contribution to the WaPo.