To print this article, all you need is to be registered or login on Mondaq.com.
Crowell’s Crypto Digest sat down with Jorge Pesok, Chief
Legal Officer at The HBAR Foundation and former Crowell &
Moring attorney.
What is your role at HBAR?
I am the Chief Legal Officer.
How did you come into your current role? How did you
get interested in the digital assets space to begin
with?
I first got into the industry almost six years ago as an
investor. A friend pushed me into it; and I tripled my money within
the first month. I was instantly hooked. Prior to me going down the
“crypto rabbit hole,” I practiced white collar securities
litigation and enforcement defense. It did not take long for me to
spot the similarities between the issues that I was already
focusing on and those I anticipated would become relevant in the
burgeoning crypto industry. As a way to move my practice into the
industry, I started writing and publishing articles related to
legal issues that I thought the industry should focus on. I got
lucky. When regulators started becoming active in the space, my
articles became relevant. That is when I started generating
clients.
I continued to practice in this space at Crowell and later went
in-house at a development shop working on a hybrid-decentralized
exchange, Tacen, Inc. However, when the HBAR Foundation was
created, they reached out to me because they had a Chief Legal
Officer role that they wanted me to fill. Because I had previously
worked with Hedera Hashgraph as outside counsel, I had a
substantial understanding of their technology and structure which
made it an easy decision. So yes, I’ve been in this role from
the beginning. As Chief Legal Officer I manage all of the legal
work for the Foundation.
Tell us about the HBAR foundation, what is their
mission and what is their overall contribution to the crypto
ecosystem?
Hedera Hashgraph is layer one platform. It’s carbon
negative, extremely fast, Asynchronous Byzantine Fault
Tolerant—it’s the future.1 Our role at the
Foundation is to incentivize development and adoption of the Hedera
Network.
What current projects are you excited about or have
been the main focus of your time and energy?
It’s tough to pinpoint one or two projects that I’m
excited about. Since I’ve been at the Foundation, I’ve
worked on over 150 grants, meaning that I am aware of at least 150
projects being developed on the platform. One area that I am
particularly passionate about—and I’m happy to be a part
of an organization that is also passionate about this—is
sustainability. We’ve allocated a significant amount of money
to promote development in the sustainability space. What we are
essentially creating is a marketplace for carbon credits and carbon
offsets that are trackable, traceable and auditable. One of the
current issues with carbon credits and claiming you’re
“carbon negative” or that you’re offsetting your
emissions by purchasing these carbon credits, is that the carbon
credits themselves are not very auditable. There are a lot of
issues with the industry and we’re trying to correct it from
the ground up using the Hedera Hashgraph. If successful, we will
have created an entire marketplace for the trading, buying, and
selling, of carbon credits which I think will lead to a much
greener future.
It’s a daunting undertaking, and we’re working with a
lot of entities because this exchange is being built from the
ground up. We work with grantees that develop the technology,
marketplace, and trading platform, on how these tokens are created,
and how they’re audited. And at the same time, we’re also
working with potential users, participants of the exchange, to
understand what they need, what they want to see, and where the
pain points are. These discussions are happening on a global scale.
We’ll be participating at COP27, if you’re not familiar
with that, I believe it was COP22 or COP23 that led to Paris
climate accord. This conference continues to push the
“green” agenda and how to combat climate change; and, we
now have a seat at the table, along with an international body
thinking through these issues and how to push forward.
Based upon what you’ve done thus far, the
challenges that you’ve faced, and considering your
company’s objectives, were there any lessons
learned?
I think there’s always room for improvement, especially in
this fast-moving industry. When I started at the Foundation, there
was a giant backlog of legal work to get through; and, I was a team
of one at the time. I had to triage the work and address the most
pressing ones first even if it meant that other tasks had to
wait.
Are there interesting projects or grantees that
stick out in your mind? Something that might be a game
changer?
Yes, I just mentioned sustainability, but we have different
funds focused on different verticals. I don’t know if
you’ve seen recently, but LG has announced that now certain LG
TVs are going to come with an integrated NFT marketplace where you
can purchase an NFT and display it on your TV. And that’s all
built on Hedera. That’s really exciting. There’re tons to
be excited about. I’m very bullish for 2023 and on because
right now everybody’s building. In 2023 we’ll see a lot of
the development that is happening now come to market, and I’m
very excited about it.
What specific legal issues have you been grappling
with?
There are many, the crypto industry is filled with legal
uncertainty. And there are a lot of potential
regulations/regulators to think about on a daily basis. You can
take your pick from the cornucopia of acronyms, SEC, CFTC, DOJ,
FinCEN, IRS, and so on. However, I think it is all interesting.
That’s why I love the space. It keeps me on my toes and makes
me stay on top of the recent developments.
Is there any specific area that piques your interest
whether NFTs, DeFi, or other platforms? Or is there some other
particular trend that you are interest in?
So, I’ve been in the industry for a while. What I get
excited about are use-cases coming to market. When blockchain
technology or crypto came about, there were some basic use cases
like remittance—for example, it takes a lot of money to send
funds internationally because you have to go through an
intermediary. It’s a complex process but I believe Distributed
Ledger Technology can fix that. It’s one of those core
use-cases that maybe does not get as much attention as it should.
I’m excited about seeing some of these core issues being
tackled. I also think that there’s a lot of excitement with
regard to the metaverse, a digital world. I think there’s going
to be a lot done with that. However, I think a lot of good can
happen right now just by tackling the basics. For example, why do I
still have to pay a thousand dollars for a title search when I
purchase or sell a property? If it is verified on the blockchain,
super easy.
How do you or would you use outside legal counsel?
How can outside legal counsel help you grow and achieve your
specific goals?
I rely heavily on outside counsel. We have tons of legal issues
for a legal team of now two. There is no way we could cover it all
without relying on excellent outside counsel to support in the
drafting of grants, to support in the structuring of a tax
perspective, to keeping us apprised of all the latest and greatest
in the regulatory space, and so on. I view outside counsel as part
of my team. It expands my team from beyond two to however big the
law firm is, or law firms because I use multiple.
Do you have any predictions for the digital assets
space?
My prediction, at least in the short term, is that the industry
will continue to face a bear market but will come out of it much
more mature and garner more retail and institutional adoption. I
also predict turbulence. But any time you’re creating
disruptive technology or disruptive products, you’re going to
have some turbulence.
Footnote
1 Asynchronous Byzantine Fault Tolerance (ABFT)
is a property of Byzantine fault tolerant consensus algorithms,
which allow for honest nodes of a network to guarantee to agree on
the timing and order of a set of transactions fairly and
securely.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.