Unchained Podcast — DEX in the City: How Privacy in Crypto Makes Everyone’s Finances More Secure

Host: Laura Shin (absent; replaced by Katherine "KK")
Guests: Jesse (Web3 prosecutor/protector), Jill (Espresso Systems)
Date: December 18, 2025
Episode: 982

Episode Overview

This episode dives deep into the current and future role of privacy in crypto, both as a technical feature and a human right. The discussion highlights recent positive shifts in regulatory attitudes, specifically through a recent SEC roundtable, practical privacy tools, the nuances of compliance, the challenges and value of permissionless privacy solutions, and even a personal account of how privacy tools can both empower and hurt individuals. The episode concludes with a timely update on crypto regulation and a nod to do-gooders in the space.

Key Discussion Points & Insights

1. Setting the Stage: Industry Engagement with Regulators

• The SEC Roundtable Experience:
  • Jill describes the unprecedented openness at the recent SEC crypto privacy roundtable.
    • Jill: “It is so awesome that the SEC is engaging with the industry in this way… All the staffers were open-minded and positive about us coming in to present. That was just a great feeling.” (06:32)
  • The roundtable had two halves:
    • Builders demonstrating privacy tools (Jill the only woman on the builder side: “We’re gonna do sorority snaps for that.”—Jesse, 04:57)
    • Policy discussion with ex-regulators and diverse viewpoints.
  • SEC’s engagement signals regulatory progress:
    • Katherine (KK): “It’s a baby step to seeing real progress on the regulatory and legislative [front].” (07:26)

2. Privacy as Both Corporate Utility & Human Right

• Privacy Tools for Institutional Adoption:
  • Banks, asset managers, and traditional finance (tradfi) see privacy as “perhaps the most relevant” tool for competitive strategy and market manipulation mitigation (13:23).
  • Jill: “Even those who are really in it for civil liberties… are kind of pragmatic in 2025, saying, okay, we can Trojan horse those values through privacy products built for corporates.” (14:26)
• Privacy as a Right:
  • The evolving consensus: Privacy is not innately suspicious and should be the starting point for innovation.
    • Katherine (KK): “The starting point for privacy is: privacy is okay.” (35:54)

3. Programmable Risk Management: The Middle Way

• Programmable Privacy Tools:
  • Zero-knowledge proofs (ZKPs) and selective disclosure can facilitate compliance without mass data collection.
    • Jill: “We can still meet compliance goals, but with less data collection. If I could tattoo one thing onto the brains of policymakers and regulators, it is that sentence.” (17:32, repeated from 00:00, 31:30)
  • Real-time risk monitoring, encrypted on-chain assets, and identity systems can provide both privacy and regulatory safeguards (19:23).
  • The debate is not privacy vs. regulation, but how both can reinforce each other:
    • Jesse: “Privacy and risk management should not be fighting each other… programmable risk management lets both exist together.” (19:23)

4. The Human Angle of Crypto Privacy

• Notable Quote:
  • Jesse: “If your privacy theory can’t explain how a vulnerable person would get help, restitution, or protection, then it’s not a privacy theory for humans. It’s one for ideology.” (00:14, 23:03)
• Jill’s Hack Experience:
  • Jill recounts losing ~$30,000 from a hot wallet through a vulnerability/hack and watching her funds disappear into privacy protocol Railgun.
    • Notable realization: Privacy tools are essential for freedom but, when abused, are devastating for victims.
    • Jill: “In that moment when you’re the victim, you don’t look at this and say, ‘Huh, that’s a really cool tool of human freedom. I’m so glad that this exists.’ Are you kidding me?” (29:43)
  • Acknowledgment: Industry must openly discuss “black hat” usage, and builders should strive for tools that blend privacy with some accountability.
    • Jill: “We can build privacy tools that do have safeguards built in… Railgun has proof-of-innocence, time delays, KYT. This just missed the safeguards.” (30:18)

5. Technical & Ideological Spectrum in Privacy Tools

• Cypherpunk vs. Corporate Needs:
  • Jill maintains value in true cypherpunk tools (“censorship-resistant, permissionless”) especially for those under oppressive regimes (Hong Kong, Venezuela, etc.) (31:45)
  • However, for mainstream and business adoption, privacy tools must include more controls and risk management features.
  • Recent years have shown great innovation—from tornado cash to modern solutions with built-in compliance aspects (proof-of-innocence, KYT, waiting periods, etc.) (33:44 – 35:54)
• Controversies:
  • The principle of “proof of innocence” stirred debate: Should Americans/users have to prove they're not bad actors? (35:54)
  • The risk that shielded privacy pools (like Railgun) can (unintentionally) provide cover for illicit actors, raising legal and ethical concerns for “kosher” users (37:37).
    • Jill: “By virtue of using a tool like Railgun… North Korea is being shielded by my assets by virtue of me using that product.” (37:37)

6. Regulatory Milestones & Do Kwon Sentencing

• Notable shift:
  • For the first time, SEC Commissioners (Atkins, Ueda, Peirce) explicitly support the notion that individuals should use privacy tools “without arousing suspicion” (35:54)
• Do Kwon Sentencing Explainer:
  • Jesse details the legal background behind Do Kwon (of Terra/Luna fame) being sentenced to 15 years, higher than the prosecutors’ ask (42:27 – 48:58).
    • Jesse: “You can’t just look at what the statute says or what the defense and prosecution say… listen to the judge’s decision and then come up with your conclusions.” (47:29)
  • The judge was notably harsh due to the massive scale of victim impact and continued fraud and lack of remorse.
  • Jill’s resource plug: Check Inner City Press for accessible, live-tweeted coverage of such trials (49:18).

7. Crypto For Good

• Shoutout to Save the Children:
  • Launch of a Bitcoin fund that holds BTC long-term and pilots operational uses for disaster relief—showcasing real-world positive crypto utility (52:16)

Notable Quotes & Memorable Moments

• Jill: "We can still meet compliance goals, but with less data collection." (00:00, 17:32, 31:30)
• Jesse: “If your privacy theory can't explain how a vulnerable person would get help, restitution, or protection, then it's not a privacy theory for humans. It's one for ideology.” (00:14, 23:03)
• Jill (on being hacked): “In that moment… you don’t look at this and say, ‘Huh, that’s a really cool tool of human freedom...’ Are you kidding me?” (29:43)
• Jesse: “Privacy and risk management should not be fighting each other.” (19:23)
• Katherine (KK): “The starting point for privacy is: privacy is okay.” (35:54)
• Fun moment: At the SEC roundtable, break-time snacks had a sign reading: “Do not take financial privacy for granted.” (41:25)
• Jill on realpolitik: “Cypherpunk values can be Trojan-horsed in through products built for corporates.” (14:26)

Timestamps for Important Segments

• SEC Roundtable context: 02:14 – 08:46
• Builder vs. policy perspectives on privacy: 04:53 – 15:57
• The privacy/regulation false trade-off: 17:31 – 20:03
• Personal hack story—Jill: 25:30 – 30:36
• From Tornado Cash to today—evolution of privacy tools: 33:44 – 35:54
• Legal & regulatory nuances in privacy pools: 37:37 – 39:06
• Do Kwon sentencing breakdown: 42:27 – 48:58
• Crypto charity shoutout: 52:16

Episode Tone and Language

The discussion was simultaneously technical, pragmatic, and warm—mixing real talk and empathy with measured optimism about regulatory progress. Banter and personal anecdotes (including food, fashion, and “what grinds Jesse’s gears”) humanize dense policy issues, while the guests' expertise brings credibility and nuance.

For Listeners Who Missed the Episode

This episode encapsulates why privacy is both a technical imperative and a human right in crypto, why regulatory discussion is maturing, and how privacy must be stewarded with both accountability and real user needs at the forefront. Not only does it traverse advanced cryptographic concepts—like ZKPs, risk management tools, and shielded pools—but it personalizes the stakes for all participants, delivers clarity on legal developments, and highlights crypto’s positive social impact. The conversation is a must-listen (or, indeed, must-read) for anyone interested in the intersection of technology, finance, and civil liberties.