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Consensus 2023 is the very first cryptocurrency conference I have ever attended, and by all accounts, it appears to be a very competently run event.

However, that's not to say that, since I arrived, I haven't had some quite strange experiences.

It started before I'd even made my way inside when, at the entrance to the convention, I had two pieces of paper thrust into my hand by people who didn't appear to be affiliated with the event.

One of these was an advertisement for a meme coin that claimed it was "The premiere low-quality s#!t coin doggo meme token we are the s#!t."

The ad had attached to it a seed phrase from which you can claim your s#!t if you really want to. Though, at this point, I feel it's important to note that this setup is reminiscent of a particular type of scam – you may have had people DM you seed phrases on Twitter.

The scam (and, again, I'm not suggesting that's what's happening here) works like this: The wallet will appear to have something valuable in it – perhaps some tethers – but nothing you can use to pay for gas. So you decide to transfer in some crypto to claim it and boom! The scammers quickly transfer that crypto back out of the wallet and it's gone.

The second piece of paper was an advertisement for 'A Multichain Event' headlined by BitBoy. For some reason, this left a bad taste in my mouth.

Who is BitBoy Crypto and why does everybody hate him?

I can already hear some of you suggesting that it's not fair to judge Consensus based on a couple of shills who decided to camp out near the venue and chance their arm. And you might be right. However, the oddness doesn't end at the front gate.

When you pass through the metal detectors and get inside, you're immediately greeted by a station offering to help you redeem your DESK token.

What is DESK token? Well, it's the official Consensus token that everyone who buys a pass gets, and you can earn more by scanning various QR codes attached to stages and sponsor booths. If you collect enough DESK tokens, you can exchange them for exclusive Consensus merchandise (and at a couple of partners, including food trucks).

DESK is an actual token that exists on Polygon. You can see the contract (and all the holders) here.

For the record, I've not claimed any of my DESK.

Once inside the convention proper, I had to walk past some of the booths dotted around the convention center. Immediately to my right was one advertising how they've created 'Proof of SQL' and how valuable it was in concert with their OpenAI integration. I made sure to grab some marketing details so I can give them a more thorough review in the future, and finally headed towards the main stage.

The very first session I decided to attend was titled 'Remember Why We're Here: Crypto's True Purpose.' Michael Casey of Coindesk led a discussion featuring Caitlin Long of Custodia Bank, Neha Narula of Digital Currency Initiative, and Erik Voorhees formerly of ShapeShift. The session hoped to communicate that the real value of cryptocurrency was distinct from centralized failures of recent memory.

Though at times this message appeared to get muddled. Voorhees at one point talked about how the ICO bubble of 2017 was actually a good thing because it gave us Ethereum (Ethereum was launched in 2015). Long made the claim that right now 8 billion people could download lightning software and transact in sat-backed currencies, though Narula quickly fact-checked her to point out that the network couldn't manage the onboarding of 8 billion users.

At one point, Voorhees also claimed that open-source software was the solution to scams, before Narula again leaped in with a fact-check, pointing out that open-source software requires people to review code changes and that this resource is frequently lacking.

The panel definitely agreed that crypto was important and revolutionary, but seemed to disagree a little on the reality. As Narula pointed out, her last 100 transactions were in fiat, not in crypto.

After this, I decided to stay and watch Brett Harrison and Anthony Scaramucci talk about what happened at FTX. During the talk, Harrison decided to make clear that he'd not really seen any red flags at FTX, and never lost faith in it. More interesting than that though, was what the Mooch had to share about his relationship with Sam Bankman-Fried (SBF).

For one, he talked a little bit about FTX Ventures' investment in SkyBridge Capital, his firm. FTX initially purchased a one-third stake, apparently with an understanding that it intended to buy out the fund. Mooch also wanted us to know that he ended up losing money on all the FTX tokens he sold. Interestingly, he also revealed that he'd purchased that FTT as part of a condition of the deal.

Perhaps even more interesting than that financial entanglement was how Mooch described getting a call from Joseph Bankman, where it was revealed that FTX had an asset-liability mismatch. Upon hearing that FTX was operating with fractional reserve Mooch decided to fly down to the Bahamas to help in any way he could in the 'war room'.

The last time he spoke to SBF was apparently when he left the Bahamas before bankruptcy was declared. I thought it was really interesting that he decided to reveal at this convention that he knew FTX was insolvent days before it declared bankruptcy because he got a call from SBF's dad. For one, it suggests that Joseph Bankman was also heavily enough involved to be aware of the fact.

After finding out some of this new information on FTX, I decided to hang around for the next session: Ian Alison of Coindesk interviewing Philip Davis the prime minister of the Bahamas, and Ryan Pinder, the country's attorney general and former Deltec lawyer.

Davis made clear that they did not regret FTX coming to the Bahamas because it helped put the country on the map (the crypto-friendly offshore regulation regime map, that is). He also emphasized how the DARE Act (the Bahamian crypto regulatory act) was still good, and had helped the Bahamas quickly put FTX in liquidation.

In defense of that act, he also pointed out that sometimes other regulated entities, like Silicon Valley Bank, also fail and we don't blame the regulatory regime for the failure.

Except, of course, I do.

Later, after a drink and snack back at my hotel, I headed into a session I'd been looking forward to titled 'How Web3 Can Help Fix Social Media and Consumer Apps.'

This session was headed by Angie Lau of Farkast Labs who was asking Sriram Krishnan questions about social media and web3, in what Krishnan promised would be the most entertaining thing I experienced this day (it wasn't).

Krishnan is a GP at a16z, my favorite venture capital fund, and was an informal advisor to Elon Musk on the recent transformation of Twitter.

Twitter is collapsing — and it's hilarious

Krishnan talked about what people want from social media, focusing on how to make money, not get kicked off, and, if you do leave, how to take your following with you. web3 was the solution to these problems, Krishnan hypothesized, because it enabled 'permissionless innovation,' seemingly referring to the fact that anyone can publish these new web3 systems (you know, as long as they are careful to follow all applicable laws and regulations).

This still didn't feel like a particularly satisfying explanation of how web3 was specifically enabling these things, though it was interesting when Lau asked Krishnan a question about the level at which you might want to control what people see. Krishnan clarified that it should be at the app level and not at the fundamental protocol level.

This is often the solution when 'decentralized' social media platforms launch. Anyone can post anything to the protocol, but people will still have a comfortable experience because they can pick an application that will filter it. However, this model has serious issues. Consider for example copyrighted materials, revenge porn, or child sexual abuse materials.

Hosting these things in any capacity represents a legal (and moral) problem for validators, and represents a very meaningful harassment vector. Immutability and permissionless innovation mean that anyone can post anything, and that will always be a double-edged sword.

I wish I had more specific critiques to offer of this session, but there was never any real explanation of how or what web3 will specifically enable so I'm struggling to respond. At one point, he suggested it was the composability that would make it work, and drew an analogy to Linux – namely that many products are built on it and that value accrues to Linux.

At another point, he seemed to suggest inserting financial incentives too early can destroy the ability for social media to scale, which confused me because every web3 social media solution I've seen involved 'money' in the form of a token. I felt the same way I did when I went over a16z's crypto portfolio.

I ended my day with back-to-back sessions from Coinbase and Binance about their regulatory struggles and compliance. Coinbase has been the target of an SEC Wells Notice, and the firm shared its submission.

Coinbase responds to the SEC's Wells notice

Part of this presentation was a video featuring Brian Armstrong and Paul Grewal talking about their experience with the SEC and why they feel this notice is unfair.

Central to the argument from Grewal is that Coinbase isn't a fundamentally different company to the one that filed its S-1 to go public. Grewal even wondered aloud "why in the world" Coinbase was allowed to go public if its business wasn't legal.

Coinbase's S-1 has a few interesting lines in its Risk Factors section including:

"Changes in the legislative or regulatory environment, or actions by governments or regulators, including fines, orders, or consent decrees."
"Regulatory changes that impact our ability to offer certain products or services."
"Adverse legal proceedings or regulatory enforcement actions, judgments, settlements, or other legal proceeding and enforcement-related costs."
"Regulatory or legislative changes and updates affecting the cryptoeconomy."
"These legal and regulatory regimes, including the laws, rules, and regulations thereunder, evolve frequently and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another.

"Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the cryptoeconomy requires us to exercise our judgement as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions. To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of licenses, limitations on our products and services, reputational harm, and other regulatory consequences."

It certainly seems as though Coinbase was aware that there was a risk associated with a change in its perceived regulatory status. It's the 1933 Securities Act that requires it to file this S-1 and that same law also says:

"Neither the fact that the registration statement for a security has been filed or is in effect nor the fact that a stop order is not in effect with respect thereto shall be deemed a finding by the Commission that registration statement is true and accurate on its face or that it does not contain an untrue statement of fact or omit to state a material fact, or be held to mean that the Commission has in any way passed upon the merits of, or given approval to, such security. It shall be unlawful to make, or cause to be made, to any prospective purchaser any representation contrary to the foregoing provisions of this section."

Binance, on the other hand, was far more interested in describing the team of ex-law enforcement and ex-Chainalysis investigators it has built up and how it's been able to use that to kick off the North Koreans trying to launder cryptocurrency for their nuclear program.

Perhaps the most interesting comment to come out of this session came when Danny Nelson asked about people buying citizenships to enable them to trade. Tigran Gambaryan, Binance's head of investigations, kept calling them "fake ids" and suggesting that KYC is only one small part of the company's process. Apparently, this process also involves activity monitoring and address verification. The CFTC lawsuit against Binance suggested 'angels' directed customers to use Palau e-citizenship to maintain access to the platform.

CFTC lawsuit against Binance claims CZ traded against users

I left this session – the last one I could stand for the day – and decided to walk around the convention hall and see what innovative things I'd missed out on. My mind was immediately overwhelmed with buzzwords. AI-enabled trading, exchanges I never heard of claiming three million users, blockchain data exchanges, cryptographically verified rings, photobooths to mint NFTs, enterprise private blockchains.

Did you all know Bullish still exists? Personally, I hadn't thought about the exchange in a long time, at least since its SPAC failed.

Overall, as I walked away mulling the potential of 'Proof of SQL' to revolutionize decentralized data warehouses for smart contracts, I felt exhausted. Even the first panel of the day, which was supposed to remind me of why I was here, saw the panelists unable to agree on what cryptocurrency is even capable of.

Outside the doors were desperate shillers trying to get you to claim shit, and people who think BitBoy is a positive thing for an event to have. Inside, Coinbase railed against the fading of the light while Binance waits for the other shoe to drop. Oh, and a16z has a solution and is ready to sell it for your problem.

Crypto is uniquely good at censorship resistance but it's not really uniquely good at many of the things it's marketed for; which leads to this weird dissonance when you're at a crypto conference focused on marketing, and which at times left me struggling to remember, "Why are we here?"

Anyways, if you're at Consensus, consider stopping by the panel that myself and my colleague will be on.