Lynne ₿

The Fraternal Order of Police, the American Bankers Association, former Utah AG Sean Reyes, and Senator Elizabeth Warren are all coordinating to kill Section 604 of the CLARITY Act before Thursday's Senate Banking Committee vote. Section 604 is one provision: if you build open-source software and don't have unilateral control over users' funds, you are not a money transmitter. That's it. Prosecutors can still go after money launderers, drug traffickers, and terror financiers. Chain analysis, block explorers, and subpoenas still work. Nothing changes for law enforcement except the ability to prosecute developers for what their users do, which is the same theory that put the Samourai Wallet developers behind bars. The FOP sent a letter claiming the provision would "strip prosecutors of the statutes used to track and take down criminals using digital assets." Reyes published an op-ed demanding BSA compliance for all crypto "platforms" without ever defining "platform." The ABA sent a letter to bank CEOs urging "immediate engagement" to fight the bill's stablecoin provisions. Over 100 amendments have been filed, including Warren's 40+ proposals and Senator Jack Reed's amendment to ban crypto as legal tender entirely. None of them will answer the obvious question: Is a car manufacturer liable when a drunk driver kills someone? Is a hammer company liable when someone uses their product as a weapon? The principle that tool makers are not liable for what users do with their tools is foundational to free society. It's why we have an open internet. It's why Linux exists. The real tell is the BSA itself. Law enforcement intercepts roughly 0.1% of global money laundering flows through KYC/AML compliance. The system was never designed to stop criminals. It was designed to build a surveillance infrastructure that monitors everyone while mandating the creation of honeypots containing your most sensitive financial data in a world where AI models are finding zero-day vulnerabilities at an exponentially growing clip. Code is speech. The Senate Banking Committee votes Thursday. Call your senator.

🚨🚨🚨There is a major flaw in the BRCA of the proposed Clarity Act: (d) CLARIFICATION OF TREATMENT explicitly states that the protections in subsection (c) DO NOT EXTEND to (or "modify the application of") 18 U.S.C. § 1960(b)(1)(C) for a specific subset of conduct by an "initial person." 18 U.S.C. § 1960 prohibits operating an unlicensed money transmitting business. Subsection (b)(1)(C) covers cases involving the transportation or transmission of funds that the defendant knows are: (1) Derived from a criminal offense (e.g., proceeds of fraud, drug trafficking, etc.); or (2) Intended to be used to promote or support unlawful activity (e.g., funding terrorism, further crimes). This is the exact 1960 subsection now being used to target developers. Every builder and developer knows their tool could be used for nefarious purposes. Under this law, that knowledge alone is enough to send you to prison for years. There is NO PROTECTION for developers in the Clarity Act while this carve out remains.

We experienced an outage at Coinbase last night, which is never acceptable. The root cause was a room overheating in an AWS datacenter when multiple chillers failed. We design our services to be redundant to downtime in any one AWS Availability Zone (AZ), and most of our systems worked this way last night, but not all. Our centralized exchange did not. Exchanges have unique architectures that optimize for latency and co-location of clients. It is possible to make exchanges resistant to AZ failures, but this can introduce latency delays that are not desirable along with breaking customer co-location. Given this incident, we'll revisit these tradeoffs to ensure we're giving you the best possible venue to trade. At a minimum, the duration of an outage should be able to be reduced considerably when an AZ move is needed. Thank you to the AWS and Coinbase teams for working through the night to mitigate the issue. We’ll share the detailed technical summary once it's ready.