Preston Byrne

The author is “an adjunct professor of law at Fordham Law School in New York City, where [he] teach[es] cryptocurrency law and practice” [1]. The law professor bit is shocking, given the article basically revolves around it making “zero sense for Durov to do any of these things,” as if criminality is always rational. But crypto has broadly come out in support of Durov [2]. [1] https://prestonbyrne.com/ [2] https://www.nytimes.com/2024/08/27/technology/telegram-crypto-industry…

ROTFLMAO Are you serious? You need to establish presence at an exchange meaning you need to scan and send your ID to a company which more likely than not -- does QuadrigaCX ring a bell -- is run by scammers. Then you need to buy bitcoin and store it somewhere... and then send it to someone. The sending costs an unknown amount, takes an unknwon amount of time, the receiver gets something but none of you can predict how much that is actually worth by the time they receive it. If they want to do something with it they need to go through the exchange rigmarole. And you call this very easy to use. Bitcoin was, is always will be nothing more than a novel scam. It's not a Ponzi... it's a novel form of scam. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

FYI Preston Byrne is a longtime blockchain skeptic that crypto bears love to post. He made a big statement that $100 Ethereum was some sort of death knell to the cryptocurrency space, and it's at $185 currently.[0] No one knows if crypto is going up, down, or sideways. But he does make cryptocurrency haters feel good inside. [0] https://prestonbyrne.com/2018/09/08/100-ether-revisited/

I think couple of things need to be repeated from earlier threads. This discussion happened during a Yahoo conference. So, its more like a person's opinion. Unless we get a press release from SEC it is a difficult statement to make whether SEC is all good with ICOs. Secondly, the question of Ethereum being a security is a tricky one. It is a security by definition given in the same speech. So, it started out as a security but then it is not a security any more? That is confusing. A good read on this: https://prestonbyrne.com/2018/06/14/ether-is-not-a-security/

Here's an interesting, worthwhile read on Dai: https://prestonbyrne.com/2017/12/10/stablecoins-are-doomed-to-fail/ "Crypto-collateralized stablecoins are the perpetual motion machines of modern finance."

Some great links in that post: https://prestonbyrne.com/2017/09/01/the-bear-case-for-crypto/ - The Bear Case for Crypto https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ - The Problem with Calling Bitcoin a "Ponzi Scheme" Answer: it's actually a hybrid Ponzi scheme and Pyrmaid scheme with all the strengths and none of the weaknesses of either (weakness in terms of getting caught and blamed when the house of cards comes crashing down). https://medium.com/@yobanjo/ethereum-wont-scale-like-you-ve-been-told-… - Ethereum won't scale like you've been told

Correct, the analysis comes with the disclaimer that I am not a lawyer, and it is not legal advice. I am active in the space and have consulted leading lawyers for my own activities, so I come with some knowledge, but obviously this is a quickly evolving space. For anyone buying tokens and considering SAFT offerings, this is a good read from a securities lawyer, albeit an English one (not US): https://prestonbyrne.com/2017/08/04/thoughts-on-the-saft/ This is also a great post in terms of highlighting pitfalls and challenges: https://medium.com/@twobitidiot/losing-alpha-why-most-new-crypto-funds…

The Wikipedia article on civil liberties in the UK is a good starting point. https://en.wikipedia.org/wiki/Civil_liberties_in_the_United_Kingdom#21… Selections: Criminal Justice Act 2003, abrogated double jeopardy in cases with "new and compelling evidence". Serious Organised Crime and Police Act 2005, created an offence of inciting religious hatred, an advanced notification scheme for protests up to 1 kilometre from Parliament. Terrorism Act 2006, following the bombings in London on the 7th of July, this legislation allows for people suspected of terrorist offences to be detained without charge for up to 28 days. Here's someone's blog post listing things that would be legal in the US but not in the UK, citing the specific laws or constitutional provisions in each that make it so. https://prestonbyrne.com/2016/01/06/the-american-english-civil-liberti…

Bitcoin and blockchain systems are nearly all designed to exploit new users and extract capital from greater fools who are too late to the game and didn't read or understand the rules and fine print. Satoshi's Bitcoin and many of the crypto-currencies that have followed create and distribute the supply that effectively creates a decentralized pyramid-ponzi scheme. Semantically, a more accurate term is needed; Bitcoin is a Satoshi scheme, .. or a "Nakamoto Scheme" https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/ Imagine an economic policy that uses a "limited" amount of pie as "currency". Bitcoin gave half of this pie away to the first few users who arrived in exchange for the least amount of work/effort possible. Any user arriving later will need to waste more hashing power (computational work) in exchange for a smaller sum of newly generation coins for a successfully mined block reward. or the user might be convinced to purchase a previously produced coin from one of the early adopters. Buying a Bitcoin is worse than zero-sum, as money from buyers is exchanged for previously generated coins, the network must increasingly waste computations and energy. Satoshi's economic model creates a system where participation is only beneficial if you can exploit the ignorance of another new user who enters the network after you. Bitcoin effectively relies on psychological manipulation though deceptive marketing claims like "Bitcoin is deflationary" "Bitcoin is rare" …

If you needed to ask the permission of every apparatchik in the world before you said anything online, you wouldn't even be allowed to say "no comment". Glad someone is fighting this and doing so publicly. And the GRANITE act looks interesting: https://prestonbyrne.com/2025/10/18/the-granite-act-how-congress-can-s…

The UK (same as the US) has lots of extra territorial laws. Enforcing them is another matter. It’s easy to make Apple budge because they have money ties to the Uk. This works less well for unsavory websites not complying with UK law. See https://prestonbyrne.com/2025/10/16/the-ofcom-files/

We already have the UK intimating they can exercise parliamentary supremacy over American citizens, so we already have this today. (Reference: https://prestonbyrne.com/2025/10/16/the-ofcom-files/) Without limitations on authority and control, I worry more that the world will devolve into a multilateral legal hellscape, even moreso than exists today. Given how much is dependent on software, you are going to have the governments of pretty much any country with multinational exposure trying this in the next 10 years if recent UK and EU developments are any indicator.

Related: The Problem with Calling Bitcoin a “Ponzi Scheme” - https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

> The Nakamoto Scheme is an automated hybrid of a Ponzi scheme and a pyramid scheme which has, from the perspective of operating a criminal enterprise, the strengths of both and (currently) the weaknesses of neither. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

Legal Analysis: "You really Shouldn't Record Clubhouse Calls" https://prestonbyrne.com/2020/07/02/you-really-shouldnt-record-clubhou…

The US was founded by people who felt they were oppressed in Britain. There's a handy chart at the bottom of this web page that explains the differences: https://prestonbyrne.com/2016/01/06/uk-us-comparison/

There are several projects exploring different algorithms for managing crypto-collateralized stablecoins; they all involve fairly complex feedback loops. MakerDAO aka Dai is the most prominent one and quite a bit has been written about it. https://medium.com/makerdao/stablecoins-collateralization-types-2a8606… https://medium.com/reserve-currency/our-analysis-of-the-makerdao-proto… https://prestonbyrne.com/2018/01/11/epicaricacy/ https://cointelegraph.com/news/dai-has-been-struggling-to-maintain-its…

https://prestonbyrne.com/2017/10/13/basecoin-bitshares-2-electric-boog… The worst idea in cryptocurrency.

Preston Byrne has a good series on why the DAI and stablecoins in general make unsubstantiated claims and can only work while the price is going up. 1. https://prestonbyrne.com/2017/12/10/stablecoins-are-doomed-to-fail/ 2. https://prestonbyrne.com/2018/01/11/epicaricacy/ 3. https://prestonbyrne.com/2018/03/22/stablecoins-are-doomed-to-fail-pt-…

The author of the OP has an article about DAI too: https://prestonbyrne.com/2018/01/11/epicaricacy/ Doesn't seem so hot to me, and what happens when the bot runs out of capital?

It's not a Ponzi scheme - it's worse. At this point it only makes sense to call it a Nakamoto Scheme. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

It can reasonably be called a headless ponzi, I think. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/

And people who are genuinely concerned: https://prestonbyrne.com/2017/11/26/the-bear-case-for-crypto-part-ii-f… How can this possibly scale of the net value of created bitcoins grows at the rate of $10 billion dollars per day?

Another criticism: https://prestonbyrne.com/2016/08/12/against-crowdsales/ As for DeRose, if he isn't actually an asshat, he's certainly doing a flawless impersonation of one. But many of his points are correct nonetheless. Though do note that as a Bitcoin maximalist he would be making very similar arguments even if he were wrong ;)

Bitshares does not solve the volatility problem: http://prestonbyrne.com/2014/08/17/dont-walk-away-run/

A counter-view to just how awesome Bitshares is (I don't fully agree with the article, and I am not the author): http://prestonbyrne.com/2014/08/17/dont-walk-away-run/

Check out the discussion in the comments here. The article you linked has effectively only one argument: that BitUSD will not maintain the peg in the event of a flash crash in BTSX value. The author and the lead developer of BTSX have a back-and-forth which clarifies the whole situation. http://prestonbyrne.com/2014/08/24/what-goes-up/

Here's a good analysis of the (highly-questionable) economics of BitShares: http://prestonbyrne.com/2014/08/17/dont-walk-away-run/

From https://prestonbyrne.com/2025/10/16/the-ofcom-files/ > consistent with the UK legal doctrine known as parliamentary supremacy, which holds that the UK Parliament has theoretically unlimited power This is also true in Canada for the most part, while in theory with the adoption of the Canadian Charter of Rights and Freedoms as part of the Constitution Act, 1982. This Act prescribes that “the Constitution of Canada is the supreme law of Canada” (s.52), Thus constitutional supremacy replaced Parliamentary supremacy in Canada, in reality, the parliament can invoke s. 33 of the Charter, the notwithstanding clause, allows Parliament and the provincial legislatures to override certain provisions of the Charter, Canadian legislatures are still partially supreme. Which means the law can stand even if it violates those rights. This clause, which can only be used for a five-year term that is renewable, applies to specific sections of the Charter, including fundamental freedoms, legal rights, and equality rights, but not democratic, mobility, or Aboriginal rights.

> Now if dai, usdc or usdt had failed, that would be a big deal. The “Dai” peg did break — both in early 2020 [1], and a few days after launching. DAI’s now 60% backed by Tether like instruments. It’s basically a strictly worse version of Facebook’s Libra, assuming Libra weren’t crippled by state regulators (Libra is now Diem). Every major algorithmic stablecoin has imploded at least once in times of market volatility. Preston Byrne has written a wonderful article explaining why the concept is clearly unsound and theoretically flawed [2]: When you make a “coin” which is in form and substance a repackaged exposure to another underlying cryptocurrency, as Dai is simply repackaged Ether, and Basecoin is simply an abstraction of demand for “Base bonds,” and peg that exposure to some meatspace asset like an ounce of gold or a U.S. dollar, a sudden move against the underlying collateral – in this case, 12% – can trigger a sell-off that breaks that peg, and breaks it hard. It’s perhaps a testament to the frothiness of the cryptocurrency markets — or the sheer number of low information investors — that this concept doesn’t die. No matter how many times the “stablecoin” peg breaks, no matter how many times it costs investors millions of dollars in losses, it just refuses to die. If there were any justice in this world, the concept would’ve been fundamentally discredited years ago. Unfortunately, when stablecoins break, they get propped up by biased…