Silicon Valley’s Attempt To Become The New Wall Street
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Welcome back to our series on how Silicon Valley deploys “technobabble” to disguise their machinations. While each industry, and even individual firms, invoke the technobabble defense differently, there are some industries whose reliance on the defense is so intrinsic to their success, so dependent on a patina of technological progress, that they instantly leap to mind when thinking of technobabble. Cryptocurrency is one such industry.
Since the outset of cryptocurrency, its proponents have proselytized its revolutionary potential. It will be the end of fiat currency as we know it. Bitcoin will replace gold as a hedge against inflation. Wall Street is a walking fossil, unaware of how outdated it has already become in the age of crypto innovation. Yet, they have also argued, crucially, cryptocurrency is nowhere near any of these things, instead being more of a curiosity than anything else. Much like the way in which Republican culture warriors live in a self-contradictory world where liberals are simultaneously weak, sensitive snowflakes and evil, violent bullies, cryptocurrency exists in a paradoxical world. Cryptocurrency proponents would have you believe that the technology represents both an existential challenge to the financial status quo, and is also a fragile upstart in need of special regulatory concessions to facilitate its advancement.
This contradiction is obvious when one compares public-facing statements made by cryptocurrency firms to the arguments they make in court. In 2024, the Securities and Exchange Commission attempted to rein in crypto giant Coinbase’s sale of tokens that were functioning as unregistered securities–indeed, tokens which the firm’s own CEO would describe as being part of “the next version of the stock market, and the internet.” Nevertheless, the company’s lawyers argued in court that the tokens did not represent a genuine security, but were instead a collectible item much more akin to a digital beanie baby than an established financial product.
While it is theoretically possible for fiat currency and traditional investments to be replaced by a beanie baby-based economy, the possibility seems rather outlandish. When faced with the threat of regulation, the industry defends itself by describing its activities as little more than a technological curiosity, while also decrying the “innovation” that will be killed by such regulation.
This defense is seen even in clearcut cases of basic corporate malfeasance. In 2025, the CEO of crypto firm Unicorn was charged with fraud for selling investments in crypto assets that were supposedly backed by “billions of dollars of real estate and equity interests in pre-IPO companies.” In reality, the investments were backed by assets “never worth more than a small fraction of that amount.” But this deception was no reason for him to admit guilt. Instead he had made a pre-emptive defense of his firm, appealing to the need to innovate and claiming the SEC was risking American financial hegemony by cracking down on violations of securities law. Experienced in the world of crypto, he knew that an actual defense of the allegations would be an uphill fight. It is far simpler to argue against the existence of the system at all, and feign persecution for daring to innovate. To him, this issue was not about fraud, rather “it’s about the broader question of whether America will remain a global leader in technological innovation.”
The appeal to global competition–particularly in regards to China–is a near-ubiquitous claim from cryptocurrency executives faced with the threat of law enforcement. Thankfully for the United States, the cryptocurrency industry stands alone amongst major corporations for not only being preoccupied with maximizing shareholder value, but also embracing the non-fiduciary duty of preparing the nation for a global competition with the People’s Republic of China. What could be motivating this selfless defense of the nation? Surely nothing more than patriotism.
This concern about US dominance over the digital beanie baby industry is so ingrained in the industry that the Trump administration has even held meetings with the Wall Street Blockchain Alliance on the nation’s progress in “steering crypto innovation toward greater stability and global leadership.” Tragically, the cryptocurrency industry’s benevolent global concern has not extended as far as holding their executives and firms to account for the technology’s money laundering uses. And nor is the Trump Administration taking the actual very real uses of crypto currency (money laundering, crime facilitating, etc…) seriously.
Trump pardoned the former CEO of Binance, Changpeng Zhao in October for his violation of US anti money laundering laws. Explaining the president’s pardon, press secretary Karoline Leavitt stated that Zhao’s prosecution “severely damaged the United States’ reputation as a global leader in technology and innovation” (Zhao’s firm conveniently holds 87% of the supply of the Trump-family USD1 cryptocoin) Earlier this week a Binance employee found that the company’s platform may have been used to move up to $1.7 billion to sanctioned entities in Iran.
Similarly, the industry which promises to revolutionize finance as we currently know it claims that even a whisper of regulatory oversight threatens to topple the fragile businesses that have staked their future on the benefits of blockchain technology. It makes little sense how such a fundamentally revolutionary technology might be permanently hindered by scant oversight at the hands of federal regulators, but this argument is not meant to make sense.
Binance’s run-ins with anti money laundering measures are not the only times in which it has been forced to defend itself with technobabble. In 2023, the firm was charged with operating as an unlicensed securities exchange, broker dealer, and clearing agency and with improper oversight over the platform. The company defended itself by claiming the SEC’s charges “would also stifle innovation and punish our company and industry rather than working to allow American businesses to thrive.” The company also called for the creation of a new, crypto-friendly regulatory regime “that enables businesses like ours to grow, create jobs, and provide American consumers safe access to digital assets.” Unfortunately for Binance, the SEC had eye-popping messages testifying to the fact that Binance employees knew about the company’s wrongdoing, including the company’s Chief Compliance Officer messaging a colleague “[w]e are operating as a fking unlicensed securities exchange in the USA bro.” This may seem to undermine the idea that Binance was operating such an innovative firm that it could not be bound by existing securities law, but the truth is, that doesn’t really matter.
The technobabble defense is not limited to legal proceedings. In fact, it seems as though courts are significantly better at sniffing out the weakness in these arguments, and good judges are not concerned with “protecting American technological dominance” or whatever excuse tech firms are able to conjure. Rather, the technobabble defense is most often aimed at the lawmakers entrusted with the creation of our laws.
SEC chair Gary Gensler’s attempts to reign in an industry he said had “made a calculated economic decision to take the risk of enforcement as the cost of doing business” were met with outrage. A crypto industry association alleged he was “anti-innovation” and bemoaned the fact that the industry was forced to defend against the SEC’s charges that companies were breaking long-established securities law. Instead of being concerned with the rule of law, Gensler should have been worried about the hundreds of millions of dollars crypto firms had spent on lawyers, something that “should serve as a stand in for the considerable opportunity cost of delayed innovation” according to the group.
Even members of Congress adopted this tone, accusing the SEC of stifling innovation. When Gensler requested information from crypto firms like the now-disgraced FTX, crypto’s congressional defenders like Republicans Tom Emmer and Byron Donalds and Democrats Josh Gottheimer, Jake Auchincloss, and Richie Torres all leapt into action, sending a letter demanding Gensler back off, asking if the SEC had conducted “cost-benefit analysis” on its attempts to enforce securities law, and demanding that his investigations “do not stifle innovation.” (note that “cost benefit analysis” is supposed to apply to the writing of new regulations, not the enforcement of laws already written into, well, law)
Clearly the Biden administration’s approach to cryptocurrency did little to threaten the industry’s long-term survival. Even with the collapse of FTX in the fall of 2022 and the failure of multiple cryptocurrency-connected banks in early 2023, the industry grew by nearly three fold from the date of Biden’s inauguration to the date he left office. But that does not mean the industry has stopped crying out.
Even with the Trump administration’s open embrace of cryptocurrency as a tool for open bribery, the industry routinely scare-mongers about the threat its enemies pose to innovation. And with the elusive promise of innovation, ushered in by whatever technobabbly jargon is top-of-mind, crypto firms have been able to subvert the law and construct a parallel track of justice for themselves. While much of the innovation is little more than a mirage based on regulatory evasion, who is to deny the space saving innovations in political corruption. Can you imagine how much larger the new East Wing would have to be in order to accommodate Trump’s bribes were they to take the form of physical beanie babies rather than digital tokens?