Gary Gensler, Satoshi Nakamoto and the Bitcoin Loophole
Bitcoin is an ‘investment’ and should be regulated
An anonymous person named “Satoshi Nakamoto” allegedly invented Bitcoin to be used as a currency in 2008. This use case failed many years ago because Bitcoin cannot be used to buy goods and services. Instead of acting as currency, Bitcoin has evolved into a ‘store of value,’ which is often compared to physical gold. People invest in Bitcoin because they hope to make money in the future – people treat Bitcoin like an investment. The federal government does not regulate Bitcoin like other investments. Bitcoin is not regulated like stocks, bonds and mutual funds. This is because Bitcoin is not considered an “investment” under the Howey-test.[1] This means Bitcoin investors do not receive any protections from the Securities and Exchange Commission.
This is bad for consumers, but good for Wall Street and Silicon Valley. The decision to categorize Bitcoin as a “non-investment” (known as the “Bitcoin Loophole”) was not made by Congress or even judges. It was made by a political appointee, who is as anomalous to America as Satoshi Nakamoto. This political appointee is Chairman Gary Gensler of the United States Securities and Exchange Commission.
[1] The “Howey Test” means the test the United States Supreme Court created in 1946 to help interpret the Securities and Exchange Act of 1934. SEC v. W.J. Howey Co., 328 U.S. 293 (1946). The test is used to determine if new, complex, financial instruments should be regulated. The Securities and Exchange
Gary Gensler explaining the “Bitcoin Loophole”
Did Satoshi Nakamoto Commit Securites Fraud?
Yes. This is what Satoshi said about Bitcoin in 2009:
“I’m uncomfortable with explicitly saying ‘consider it an investment.’ That’s a dangerous thing to say and you should delete that bullet point. It’s OK if they come to that conclusion on their own, but we can’t pitch it as that.” Satoshi Nakamoto to European Bitcoin developer, Martii Malmi, June 11, 2009[1]
The Bitcoin Loophole is fundamentally illogical because people treat Bitcoin like an investment regardless of its strict legal definition. If Bitcoin were a stock, its founder’s identity would be publicly disclosed in filings with the Securities and Exchange Commission. To date, the identity of Bitcoin’s founder and the author of its famous whitepaper are unknown to the public. Satoshi Nakamoto may be an individual or group of individuals.
[1] This email is from a series of emails disclosed to the public in 2024 by a man named Martti Malami, an early developer of Bitcoin. The native file has not been reviewed by the author, but this email is believed to be genuine. The context of the email is described in the preceding paragraphs. All of the emails between “Satoshi” and Mr. Malami can be accessed here: https://mmalmi.github.io/satoshi/
Is Satoshi Nakamoto violating the Patriot Act?
Yes, by not providing KYC information about his Bitcoin wallets, Satoshi Nakamoto is violating the US Patriot Act. After 9/11, our government passed the United States Patriot Act. This law was designed to prevent future terrorist attacks by eliminating dirty money from our financial system. As a result, every single American who opens a Bitcoin wallet must provide their exchange with their driver’s license and social security number.[1] With few exceptions, all American users of cryptocurrency are not anonymous, and their identities can be ascertained through a subpoena. These Americans all own “KYC Wallets.” [2]
Criminals create true anonymous wallets (known as “Non-KYC Wallets”) to steal cryptocurrency and commit other crimes, including state sponsored terrorism. Non-KYC Wallets are modern Swiss bank accounts, but easier to attain. The presence of Non-KYC Wallets makes Bitcoin only a pseudo-anonymous system and not a true-anonymous system.
[1] This is known as “know your customer,” or KYC information. All American users of Bitcoin complete KYC information and therefore have “KYC Wallets.”
Did Satoshi Nakamoto launder Money?
Yes. There is proof that Satoshi laundered money. The proof is contained in the emails that were released in 2024. The emails prove that Bitcoin was an investment scam.
In June 2009, the Bitcoin Creator asked a European man named, Martti Malami, to establish Bitcoin’s first website. The Bitcoin Creator did not want to pay the hosting fees for the website because he was concerned his identity could be disclosed through a lawfully issued subpoena in the United States. To evade U.S. laws, including the United States Patriot Act, the Bitcoin Creator asked another anonymous investor to mail currency, US Dollars, to Europe and directed Mr. Malami to ‘keep the envelope’s origin private.’ This is how Bitcoin’s first website was established.
Satoshi Nakamoto was especially sensitive about referring to Bitcoin as an ‘investment.’ Here are portions of a 2009 email where he discussed outside investors: “[t]here are donors I can tap if we come up with something that needs funding, but they want to be anonymous, which makes it hard to actually do anything with it.”
America is wrong to romanticize Satoshi Nakamoto.
Is Gary Gensler a Lawyer?
No. Mr. Gensler did not go to law school and is not licensed to practice law in any US Jurisdiction. Gary Gensler was appointed by President Joe Biden, he took office on April 17, 2021. Before his public service, Gensler had a long career at Goldman Sachs, where he became a partner. He also worked as a professor at the MIT Sloan School of Management, focusing on blockchain technology, digital currencies, financial technology, and public policy.
Did Sam Bankman-Fried influence Gary Gensler with Bitcoin?
Gary Gensler is personal friends with Sam Bankman-Fried (SBF), the founder and former CEO of the cryptocurrency exchange FTX. Their relationship became a topic of public interest, particularly after the collapse of FTX in November 2022, which led to significant scrutiny and legal action against Bankman-Fried. Before the collapse, Bankman-Fried was a prominent figure in the cryptocurrency industry, and he had interactions with various regulators, including the SEC. Gensler, as the SEC Chair, had met with Bankman-Fried and other industry leaders to discuss regulatory matters related to cryptocurrencies. These meetings were part of Gensler’s broader efforts to maintain the Bitcoin Loophole.