Bankless - ROLLUP: $19B Flash Crash | Binance Fee Leak | China L2 on ETH | $14B BTC Reserve

Episode Date: October 17, 2025

Markets just saw a $19B wipeout in a single day. In this week’s Weekly Rollup, we break down the Friday Flash Crash, what really caused it, and whether it signals the end of the cycle or just a reset. We also cover Binance’s leaked listing fees, a major Chinese tech company quietly building on Ethereum, and reports that the U.S. may add $14B in Bitcoin to its strategic reserve. Plus, Democrats renew their push against DeFi, and Larry Fink gears up for BlackRock’s next big crypto play. ------ 📣IMMUNEFI | CRYPTO SECURITY OS  https://bankless.cc/Immunefi ------ BANKLESS SPONSOR TOOLS: 🪙FRAXNET | MINT, REDEEM, EARN  https://bankless.cc/fraxnet 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR L2 NETWORK https://bankless.cc/Mantle 🌳KGEN | REQUEST A DEMO  https://bankless.cc/KGEN-podcast 💠BIT DIGITAL ($BTBT) | ETH TREASURY  https://bankless.cc/bit-digital We’re being compensated by Bit Digital (NASDAQ BTBT) for this segment promoting their company and BTBT. The compensation is paid in cash as a one time payment. You can find additional information about Bit Digital and BTBT on their Investor page at https://bit-digital.com/investors ------ TIMESTAMPS & RESOURCES 0:00 Intro 3:14 Markets https://x.com/sykodelic_/status/1978728444038152542 https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart https://x.com/Pledditor/status/1978783238614126798 https://x.com/NateGeraci/status/1978254468970909820 https://x.com/iamDCinvestor/status/1978227611722486016 https://x.com/Cointelegraph/status/1978800773480825133 https://x.com/RyanSAdams/status/1978441509788590590 https://x.com/growthepie_eth/status/1978460964245631206 https://x.com/RyanSAdams/status/1978549428114882674 https://x.com/jconorgrogan/status/1978563381880582649 https://x.com/Paxos/status/1978565015943950411 https://www.kerrisdalecap.com/wp-content/uploads/2025/10/Kerrisdale-BitMine-Immersion.pdf https://www.strategicethreserve.xyz/ https://x.com/AltcoinDaily/status/1978562431640346760 29:31 Black Friday - (Flash Crash Friday) of 2025 https://x.com/kookcapitalllc/status/1976778625942011964 https://x.com/QuintenFrancois/status/1976906323058213118 https://x.com/KobeissiLetter/status/1976664345435414918 https://x.com/diogenes/status/1976947177520808270 https://x.com/TedPillows/status/1977000112216805431 https://x.com/diogenes/article/1976947177520808270/media/1976938624139841536 https://x.com/0xdoug/status/1976850615621107743 https://x.com/wacy_time1/status/1976772080768368886 https://x.com/lighter_xyz/status/1976855873344749847 https://x.com/Rabby_io/status/1912055838702784639 https://x.com/StaniKulechov/status/1976777483824644454 https://x.com/traderview2/status/1976762799159234661 https://x.com/cobie/status/1976788855006302686 https://x.com/kris/status/1976939942254461094 https://x.com/RaoulGMI/status/1976875434785554831 48:21 Binance listing fees were leaked https://x.com/sjdedic/status/1852049944380932142 https://x.com/cjhtech/status/1978039748565532700 https://x.com/jessepollak/status/1978095944232026236 https://x.com/CryptoDefiLord/status/1978353232838623581 https://x.com/PhilOnChain/status/1978498099493621941 https://x.com/ViktorBunin/status/1978445847235907632 https://x.com/cz_binance/status/1978391907374899379 https://x.com/gregosuri/status/1853219191391650137 https://www.bankless.com/podcast/exposing-binances-listing-fees-cj-hetherington 54:05 MEGAETH VS MONAD TOKENS https://x.com/monad/status/1978525785800495400 https://x.com/megaeth_labs/status/1978449245931012439 https://www.bankless.com/read/news/megaeth-commences-mega-ico-registration-on-cobies-sonar-platform 58:01 Ant Group - Alipay introduced its L2  https://x.com/james_gaps/status/1978350046861984079 https://x.com/Jrag0x/status/1978358112458342697 https://x.com/RyanSAdams/status/1978431508575613213 59:51 Ethereum Phone - dGEN1 left the factory  https://x.com/jessepollak/status/1976710468539715895 1:01:19 US seized 127,000 BTC linked to pig butchering scam https://x.com/zoomerfied/status/1978101347401539638 https://x.com/SilvermanJacob/status/1978121251303334130 https://x.com/business/status/1978122242895630685 https://x.com/tayvano_/status/1978273602719158448 https://x.com/zackbshapiro/status/1978151239796854817 1:06:02 Dems countered the Market Structure bill  https://x.com/jchervinsky/status/1976380118437331425 https://x.com/haydenzadams/status/1976678889909805501 1:08:54 Closing & Disclaimers  ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Bankland Station, it is the third week of October. David, I'm just going to come out and say, I'm not saying October anymore. That word is now banned. It is not October. Yeah, it's not October. That word is banned. Downtown was more up than October was. I feel like we should apologize to everyone for invoking that.

I feel somewhat responsible for saying. For all the people that smashed to the buy button because David and Ryan said October on the first of the week, a month. I'm sorry. Is there a refund coming? But you shouldn't have done that. Anyway, it is time for the bankless weekly roll-up, and we've got to talk about what the heck happened on Friday.

You know, some people are calling this Black Friday. I feel like it's more like Flash Crash Friday. Yeah, Flash Crash Friday. That's annoying to say, but yes. Yeah, flash crash. But the question is, what caused it? Where's this going? Was this Trump?

Or is this the end of the cycle? What else we got? What else we got? A bunch of drama on the timeline from Binance listing fees. There was an individual who sent. a document from Binance about what it would take to have their token listed on Binance. And so we finally have the numbers

because usually they're supposed to sign an NTA. That was not, the NDA part was skipped. So now we know the numbers. We're going to talk about that. Also, a major Chinese tech company building on Ethereum. Which one? Which one's doing it? Which one's building a layer too? We'll tell people later.

Also, is the U.S. about to add $14 billion worth of Bitcoin to its strategic Bitcoin reserve? I mean, kind of, but maybe not in the way we hoped. Also, the Democrats in the Senate, They're going all anti-crypto army on us now and trying to take down the market structure bill. Damn it, dude. But, yeah, I get good news for you, David. None of this is stopping Mr. Larry Fink, who is determined to keep tokenizing all the things.

BlackRock seems like they're up to some new things in crypto. Maybe on Ethereum. We'll talk about all that and more. But before we do, we got some sponsors to shout out. And these are special sponsors because they help with security. Tell us about them. They make our industry look good when we do not lose billions of dollars to hackers. that's Immunify. Security, of course, one of the biggest issues in crypto.

We like property rights at Bankless. That means that we need security protocols to help secure our apps. Immunify, one of the most trusted brands in crypto security with $180 billion in value protected and over $25 billion in hack damage prevented across some of the top of protocols in crypto. Now, they are taking this even further with a security operating system for the on-chain economy. Think of it like a command center, a battle station, that keeps your protocol safe end to end. So there is a link in the show notes.

So you can learn more about this new operating system, the security operating system from Immunify. Also at X.com slash immunify is where you can follow them on Twitter. I feel like at this point, David, like DeFi protocols, they got to have some sort of system like Immunify set up. Like that's a base expectation because if they don't, it's kind of irresponsible. Yeah, well, I mean, you saw a Vitalik's recent article, which was like, yeah, we have 0.0.0. 2% of TVL was lost in Defi apps due to hacks over the last year. Let's keep that streak going.

Let's keep that streak going. Yeah, because it has been in the, you know, multiple percentage points in previous years. All right. Well, speaking of multiple percentage points, it losses. Do we have to look at the Bitcoin chart? Do we have to?

We do. We do. It's seen dumping at the time of recording. Bitcoin is down 10.5% on the week. We are at, oh my God, it's down even further. I have to update the numbers. I'll estimate down 11 or 12% on the week. It's just free fall right now.

It's free fall right now. $108,000 Bitcoin. Wow. Wow. ETH price doing something similar. You're going to have to refresh the ETH price page so I can get the accurate price. Yeah. At the moment of recording, $3,875.

That is down 9.5% on the week. This is not worse than the lows, though. Yeah. Well, during the flash crash. In September. Yeah. Eiff flashed down to like 3,500 and bounced back up. Right.

But like it sounds like we are still licking some wounds. When people get liquidated, they go risk off. That's what happens. Since like $19 billion got liquidated, we haven't found any dead bodies yet, but they're probably out there. People are probably just at the very least going to be cautious. Hopefully the whole market doesn't roll over because of some stupid flash crash because of a tweet. That would be so dumb. I would be pissed.

I would be so angry at this bull cycle. We had momentum. We had everything. Well, but there's no, look, there's no Doquan. There's no San Bankman-Fried. Yeah. Right? There's no massive Celsius scam.

There's no three hours. Well, maybe there's... You knock on wood right now, sir. You don't know. I don't know. I don't know. I, look, I mean, it seems bad on the week, right? But maybe we'll talk about this later,

whether this is actually the end of the cycle, or whether it's just a Friday flash crash. I know you do these weekly or monthly market reports with Michael Nudeau from the DFI report. I know he's, um, he's bearish. You've told me he's bearish. And, uh, it's, it's different when it's Michael. Yeah, I know. So I'm actually going to talk to him on Monday about his bear case because we got to hear it.

I mean, you just got to hear the contrarian case, but he has swung bearished. I'll hear that. But I'm going to bring the bullish cheer because I don't believe it's over. He's not yet. Uh, anyway. Let's talk about, actually. Goals on an all time high at least. Okay.

Well, you want to talk about that? Actually, one thing before gold, you know, total crypto market cap, 3.8 trillion. That doesn't sound that bad when I put it like that. 3.8 trillion? No, 4 is the happy number. Below 4 is unhappy number, but it's not, this is not pitiful. 3.8 trillion is not too bad. Actually, if you want to see like the sufferers over the last seven days, here's a, you know how we do?

Movers, this is losers of the week, okay? Movers of the week. Movers implies either direction. Yeah, that's good. This week is all down. This is down. Pump, 34% down on the week. Optos, 31% down.

Mantle, which had a great run up until recently. 30% down. What else should I? Pangu, Pangu, Pugges. Athena down 35% down on the week. Seems to be the number to be down on the week. It's basically some of the alts that we're running. You're just like coughing up blood right now.

That's what's happening. but you're right, it's not affecting gold. Gold remains unbothered and is hitting all-time highs. So at the time of recording, right about 4,300 per ounce in gold. It was at like 4,000 last week. These are Ganschuan moves. Yeah, okay. So it added an entire Bitcoin market cap this week.

That's like $2 trillion on the week. That's scary, dude. That's a lot of capital. It's a whole lot of capital. And I'm just worried that gold is going to hit 5,000 before Eft Dusty. Yeah, I saw somebody tweet that out like two weeks ago. And I'm like, that could never happen. Yeah, I was laughing.

I was like, no, it's impossible. No, no. But look at this. Gold is historical highs, of course. When you do adjusted for inflation, it's looking pretty good too. It's like back in the 1970s. This is the debasement trade everybody's talking about. And are you seeing stuff like this all over your timeline, David?

Actually, let's play this clip because you brought this into the agenda and tell us what we're looking at. This is a clip of people outside of a store. A bullion store. A bullion. Is that how you pronounce it? I don't even know that word. Yeah, yeah. They're trying to get their gold.

ABC. People are lining up to buy gold. It's wild, man. It just looks like a new iPhone got released or something. Yeah, yeah, actually. Yeah, doesn't it? It looks kind of like you ever. see that, you know, Christmas movie, It's a Wonderful Life, or there's a run on the bank.

A little bit like that, except people have smartphones and they're all recording what's going on. So what are people doing? They're actually just like waiting in life to go get some gold? I guess people are just really into buying gold right now. Yeah. So much that they're willing to stand out in line. What do they bring cash? I guess you bring. Or are you transfer cash or whatever, but are you walking out with like, I don't know, chunks of gold, little nuggets or like gold barbs? You need a backpack full of gold. At least you're your private keys that way. It's a true bearer instrument that way. Yeah, I hope to get right into a car.

That looks like they're in New York. Some of those people probably took the subway home. I don't think this is New York. I thought a lot of these were from Australia. But I don't know, man. You're in New York. You tell me. I'm in Amsterdam at the moment.

You ever see a Boolean store in Brooklyn? I've ever seen a Boolean store. Well, maybe we're about to. There is some good news here, okay, for crypto, which is, Larry think, he feels like he's getting loud again about crypto and about tokenization. And whenever he gets loud, it means Black Rock is about to launch a product or do something more. Should we play the clip?

Do something crazy. Let's hear it. I do believe we're just at the beginning of the tokenization of all assets, from real estate to equity, the bonds across the board. It's very loud here. But it's good. Capital's at work. You like that. I love capital and work. But there's $4.1 trillion of money in sitting globally in digital wallets. A lot of that money is outside the United States.

If we could tokenize a ETF, you know, digitize that ETF, we can have investors who are just beginning to, you know, invest in markets through, let's say, crypto. They're investing in it, but now we could get them into the more traditional, term retirement products. So we look at that as the next wave of opportunity for BlackRock over the next tens of years as we start focusing, moving away from traditional financial assets by repotting them in a digital manner. And then having people stay in that digital ecosystem, they can have their cash. And we have the largest cash money market fund that's tokenized, It's called Biddle.

You know, our Bitcoin, Ibit is now over $100 billion. $100 billion, I know, from nothing, not that long ago. Two years ago, zero. Yeah, I know. Well, you weren't always a huge proponent of crypto, as we know. I love it now. But I grow and learn. I heard you say that on 60 minutes.

I did. Yeah. I love it now. You hear that? I grow and learn. You know what I hear when I hear this. I hear two things. American exceptionalism

because of the strength of our Wall Street. U.S. capital markets. U.S. capital markets and how U.S. capital markets are moving onto blockchains. And we're going to take the value of Wall Street and now we're going to provide that to the world and everyone's going to be able to buy it

and it's going to be on chain. That's right. Yes. What Larry Fink sees is more capital out there that is untapped, right? We tapped all the capital. Where's the next leg? Well, it's all of these international buyers that don't have easy access to a broker brokerage account, right?

And he's coming off of the success of Ibit, which is just printing money for BlackRock. Yeah. And also their ETH ETF and the Biddle Fund. And now he's like, what else can we tokenize? Can we tokenize all of our ETF products? Yes, we can. And we're going to. In fact, there's some rumors about this.

So there was a rumor. Actually, Larry Fink may have said as much that they are developing technology for the tokenization of assets. Some people are calling, like, there's maybe a platform called Synoptic, I believe. I'm not sure what this thing is going to be. There is today, it's supposed to launch today. So at the time we're recording, we don't know yet, BlackRock is going to unveil a Genese Act aligned money market fund designed for stable. coin issuers. So I guess not just their Biddle Fund, but a broader money market fund of some sort, I suppose. So they're just taking these things. They're tokenizing them. They're clearly

going to create some sort of BlackRock operating system for tokenization. What does this mean? I don't exactly know. Will they tokenize everything on Ethereum and public chains? I got to imagine so. Will they do a layer two? Will they launch their own chain? Have no idea. we are actually going to have Robbie Michnik from BlackRock on the podcast sometime in the next few weeks. So these are questions that we'll be asking them. But it's very clear that they see massive opportunity here in tokenizing all of the things that U.S. capital markets have to offer. Yeah. I think that they are just pushing forward on the tokenization of everything movement. And when Larry Fink, who like owns all the assets, hears people say, we're going to tokenize

everything, he's going to be like, I'm going to tokenize everything. Because I own everything. You know how many smile? Yeah. On his face at the end of that interview? Totally. Totally. Do you know how many employees BlackRock has?

Oh, do you want me to take just a wild-ass guess? Totally. Go for it. All right. So like a Wells Fargo has, what, like 130,000 or something like that. Oh, God. That's within the... That's so high.

I'm betting Black Rock is much more lean. So I'm going to say 8,000. 21,000. Oh, okay. Okay. So how many employees do you think are on the digital asset team of BlackRock? 100.50. No, I don't know the answer, but it's somewhere like between like six and 12, dude. It's a very low number of people. It's like a seal team six of people. And that's the story of crypto is very low number of employees. Use Ethereum as your back end. Use team Ethereum as your best employee ever. Do the smart contract as your compliance, have hired no one. Highly profitable.

And makes it highly profitable. And I think that's a part of the story here too. And pass some of those gains back to retail? So your take rate is lower? And sure you're not rent-seeking? Right, David? Sure. Right, David?

Sure. I'm sure that's what Larry Fink thinks. You know what was crazy here is, in terms of real-world assets on chain, I actually saw a treasury estimate. This is the U.S. Department of Treasury. And they were contemplating the question of how much in stable coins could we actually see as a result of the genius bill? You know how people like Secretary Scott Bessent have quoted things like by 2030 will have $3 trillion or so?

Which for context is 70% growth year over year until we get there. Huge. Okay. U.S. Treasury says in final form, look at this number. 6.6 trillion in M1 will leak out of demand deposits and banks. checking deposits and go into stable coins. Because stable coins are in the process

basically unbundling the banks. So banks are depository institutions right now. They collect rent on all of the interest from all of their deposits. They love that business. This is Treasury saying they're no longer going to be able to do that business. It's all going to leak into stable coins. So you can kind of see why the banks are up in arms about this

and they're trying to like, they're freaking out now about the genius bill and what they already signed on to, and the fact that crypto exchanges and defy are able to give customers back their interests because they see 6.6 trillion in potential depository leakage from their systems. So the reason, Ryan, why I'm in Amsterdam right now

is because of Theta Capital, which is one of the bigger fund of funds in crypto, the European Capital in Amsterdam, birthplace of modern capitalism. They have their annual, like, block, chain crypto day and it's like a day of talks not unlike the bankless summit so like a whole day of talks and they bring their LPs and then they bring some of the GPs that they've invested in big money yeah well big money guys coming from old money yeah also crypto GPs so Haseeb is here

Matt Walsh is here uh Robert Leshner is here and everyone's kind of giving their take about like here's the current state of crypto and obviously as you'd expect stable coins huge subject Hasib brought up that whole like 16% of M2 is going to turn into like stable coins. So I'm like crazy downstream of like Scott Besson. So he's talking about this. And everyone is like all kind of putting these pieces together of it's not like we've always gone after the banks. The time is now. The time is right now.

We are watching the banks get unbundled in the next three years. Things are going to have tectonic shifts. We are watching it unfold in real time. It's the first inning of the game actually being played. And like the event in question is European capital. But like the whole world is watching this happen right now. Watching the banks just sink like the Titanic. Took a while.

How long it take the Titanic to sink? Like 12 hours or something? I mean, they're not going to sink, sink. They're just going to be unbundled. So there's parts of banks that are useful and they're providing credit. You know, community banks, credit for, you know, communities. But the depository and payment side, they don't need to be in that. business. Why are they in that business when we have stable coins? We can do it for far cheaper.

I, um, you know though, David, it seemed like we're going to get a shortcut. We have about 300 billion in stable coins right now, 350 billion. And then suddenly, we got 300 trillion minted on Ethereum. Did you see this? Yeah, I did see this. Okay, so this is a PYUSD from PayPal. Minted 300 trillion PYUSD. So we just got an injection of three years. This is on ether's skin. Injection of $300 trillion into, and then it went away. They deleted it. They deleted. They burned the tokens like 25 minutes later because somebody put in three too many zeros,

which like is kind of funny, but then like, okay, now everyone, now in PayPal has to like go through their checks. Why did this happen? Why is this process broken? You know, pay USC uses Paxos. So Paxos actually came clean with it. They were like, okay. This is our bad. Yeah, at 312 p.m. Eastern, Paxos mistakenly minted excess PYUSD.

They don't say how much. $300 trillion worth of PYUSD. 99% excess PYUSD. The reason it doesn't really matter is because those are all kind of IOUs, right? So they didn't really have $300 trillion worth of treasuries that are real. In theory could matter if this was a malicious attack, right? If somebody was maliciously minting PYUSD, they could go and, they could liquidate people's positions.

And Ave, they could disrupt all PYUSD collateralized positions inside a defy. And so that could matter. People were worried a hacker got, you know, so they said no, it was an internal technical. Blame it on the intern, man. Some intern, fat fingered, some number. No, they didn't blame it on the intern. They said it was an internal error. I'm blaming it on the intern.

I know there's an intern somewhere. Maybe listening to this. It is worth noting that this is how the Fed prints money, though. Like, they could do this. So easy. You just fat finger a few digits into a ledger somewhere. Anyway, okay, it's a funny story. So one thing that has been a continuing trend this cycle has, of course, been Tom Lee purchasing Ether, the asset.

And I can tell you, he was not phased by the Flash Crash. So on Sunday? On Sunday, he bought a billion more Eiff. Okay, so he's so fun. A billion dollars, a billion dollars of ETH. Of course. There's not a. bankless listeners know there's not a billion eth in supply in existence.

We all know our supply numbers. Bitcoiners will be like, you could just mint eth out of thin air. But, okay, but here's the thing. He's got a lot of people who are betting against them. I read an entire we're shorting. Short report. BNMR, Bitmine immersion technologies is Tom Lee's company from a company called Carrizale Capital. And their case was basically like, there's no way that Tom Lee's bitmine should have an MNAV

premium. They're not betting directly against EVE, but they're shorting Tom stock. And they're trying to like essentially bet against his MNAF premium being any surplus. In particular, they don't like how he's making these buys, which are basically like issuing more equity and diluting shareholders in order to make these at the market purchases, as we know the mechanics behind these things are. I mean, like the level at which Tom Lee is able to do this is astounding. Anyway, Keras. sales calling their bluff. And I got to think there's a lot of organizations, entities, hedge funds out there that are shorting some of the dad stocks right now. I'm sure micro strategy has a lot of shorts going on. Certainly Bitmind does. Certainly some others. And that could be contributing to these

suppressed MNAF prices. Isn't the whole thesis of BMNR is a long-eath short BNR position anyways? So like take out there shorting it with a dollar. But the whole idea is if the MNAV goes above one, you print Bitmine chairs to buy more ETH, which pumps up the ETH price and suppresses the price of BMNR. So the premise is already long, ETH short BMNR in the first place. The whole dat is short BM&R as it relates to ETH. Depends how much at the market purchasing you're doing

versus other types of funding. And, you know, one of the metrics for these treasuries is obviously increasing ETH per share. It's something that... Yes, that is true. And that kind of goes against the metric that you just said. So, yes, investors want growth and they want volume, but they also want to maximize ETH per share in these entities.

Anyway, the long-term thesis for positive M-NV is basically liquidity premium and yield that EF as a productive asset offers. So long-term, some of these dads have to be trading some positive M-N-N-F premium, but the market is doubting some of this. Did you see this clip, though? This is Michael Saylor commenting on Tom Lee. Tom Lee's impact on Ethereum, yeah. Yeah, yeah.

So let's just play the clip, and I want to get your take on it, and how you read his comments here. So this is Michael Saylor. Tom Lee has emerged as probably the most visible influential spokesperson in the entire Ethereum ecosystem in a matter of months, maybe a matter of weeks. What does that represent? Well, first of all, they have $10 billion of capital.

Second of all, Tom Lee is part of the Wall Street establishment. He was never part of the cryptoic establishment. You saw Wall Street merges with the crypto economy. Capital flows because it trusts Tom Lee. And then the next thing, you know, you have Tom Lee having conversations with the early Ethereum entrepreneurs, with the vitalics of the world and the like. And what's interesting there is that entire movement becomes commercialized, institutionalized, legitimized, rationalized, becomes a bit older, a bit more credible.

Okay, so I took that as bullish. I took that as Michael Saylor giving props to Tom Lee and saying that he's helping to make Ethereum more credible, more legitimate, particularly to Tradify. But we were talking before this episode, and you took this in a totally different way. How did you take this? No, he is firing shots, dude. he is like Tom Lee is a part of Wall Street. He's a part of the system.

Ethereum and Wall Street. These are the system. These are the man. And he's like out grouping for the Bitcoiners. He's talking to Bitcoiners. And he's like, yeah, like they are not the revolution. They are the same old guard, same like new guard, same as the old guard. And like Wall Street comes in and they commercialize it.

They neuter the revolution. That's what he's doing with Bitcoin. That's exactly his play. with Bitcoin. I don't see how he could be criticizing that. Well, I mean, how large is Bitminzer relates to micro strategy? Like, not insignificant. So Tom Lee is soaking up some of his oxygen. And Michael Taylor is feeling threatened.

And so now he's throwing shots about how Ethereum is bending the knee to Wall Street. I don't agree. And Wall Street is like, that's totally what he's doing. No way. No way. This is a negative stance towards Ethereum and Tom Lee. This was negative towards him. Really? Maybe we need to see, like, the full clip.

Okay, so I don't think that's how Tom Lee took it. So I think Tom Lee is like clapping or something, maybe clap tweet. Did I imagine this? I mean, he clap tweets everything, though, so. Oh, love, love, love, love emojis. It's one of those things where you're like, yeah, that's what I'm doing. And that's why it's working for me. But like, then Michael Saylor would be like, yes, like, you guys, like,

And then he goes like, and he points at Vitalik and says, yeah, the Vitalik types are now in association with Tom Lee, who's in association with Wall Street. This revolution is not found here and is not found in Ethereum. Well, Bankless, Slesser, you make the judges of whether this was like a, I guess it may be a backhanded compliment is what you're saying, David. No, no, it's not even backhanded. It's a jab. No way. I actually think this is Michael Saylor, you know, not completely saying. saying Eif is now a legitimate asset class

because he's in front of Bitcoiners, but kind of saying that and giving some credit to Tom Lee. Anyway, bankless listeners can decide how they interpret. Maybe it's the tone for you. I know Michael Saylor has a very, like, kind of like a way he speaks

that is kind of sharp, I suppose. Maybe that's what you were reading. Anyway, bankless listeners can decide and whether Michael Saylor is... I'm pretty sure I'm right here. All right, all right. We'll see. David, what do we have coming up?

Coming up next. We're going to talk about the flash crash on Friday. The biggest liquidation event in crypto, $19 billion got liquidated in about three to four hours. What the hell happened? Why did it happen? And why are we still taking this long to recover

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So we're having these stress tests pretty damn soon here. So what happened? Obviously this got started off from Donald Trump's. Black Swan tweet, I'll call it a Black Swan tweet because no one was prepared for this tweet where he just ramped up the tariff wars one more time saying, hey, on particular goods being shipped in from China, we are adding in 100% tariffs.

And when you add 100% tariff on something, you're almost effectively banning it unless the margins by the producer are so incredibly high they can somehow pay that. It's an effective ban. And so this got sent out Friday after hours. Stock market was closed. You know, people packing up for the weekends,

market makers shutting down their operation for the weekends. I don't know if they do that. But like liquidity is low. But the thought futures were down too, right? Like this was a little similar to what he did in April, which was like, now there's tariffs. Was that, did that happen in April? Yeah, he always does it during the weekend, which sucks because no one can buy or sell equities so they go to crypto and they sell their crypto.

They sell our assets because they do it during the off hours. God. Yeah. Yeah. Yeah. Yeah. United States will impose 100% tariff on China over and above any tariff they are currently playing blah, blah, blah, blah.

When the stock market opened, NASDAQ fell 3.5%. SP in 500 fell 2.7%. Recorded worst day since April. But Bitcoin went down 14%. And Eath went down 21%. ETH went all the way down to $3,500. Okay. Which is bad.

I can see that. But, dude, alt coins, have you ever, you've heard that you're, sometimes you're not in the trenches. Actually, most of the time you're not in the trenches, Ryan. ever heard of the term 9-11 for the trenches? No, it's so disrespectful. Oh, well, this is actually on the cover photo of the article you have. This is truly 9-11 for the trenches in the sense that some alt coins actually went to zero, dude. The order books broke.

Something like Adam, Adam actually went to zero. That's the cosmos. It's so funny. It's like, you know, people talk about, you know, yeah, you know, we're to send whatever token is zero. It's all going to go zero. And it literally went to zero on some of the workabouts. To zero. Now, this was very brief, though, right?

We should say even the 21% Eth fall to $3,500. Was a wick. That was a wick down. This did not last long. I mean, still traded, like, down. But what we're looking at here in all of these alt trades are quick wicks down. But we are looking at, you know, in some cases, a hundred percent down. You didn't think it was possible.

Soul dropped 40 percent, dude. Yeah, that's a lot. Athena dropped 80%. It's just like, okay, so here's what happens when some shenanigans like this happens, especially when it happens on the weekends, is, well, there was a cascade of failure, starting with Binance. So Binance APIs started to not respond, started to just break down. And so liquidity stopped happening on Binance.

Trade stopped happening on Binance. Binance is an oracle for many other dexes, especially some of the perp dexes. They use, like, Binance is used as an Oracle almost everywhere, systemically so. And Binance stopped happening. Marketmakers get scared, so they yoink their books. Marketmakers have agreements with all of the tokens that they do,

that they have agreements with, right? But their agreement is something along the lines of like 99% of the time we will be market making for you. 1%. When you are market making, 24-7-365, you get to just yoink the liquidity for an hour, and you are within your agreement of being a market-maker. And so that 1% of time, we found the 1%

when market makers decided to yonk their liquidity, stop market-making, and then tokens were just in a freefall. And there was no bids. And also the exchanges were broken. And so you couldn't get in order. It was like some APIs on finance, but it did seem like something was going on with Binance specifically. That was where a lot of the chaos kind of started.

but I liked Doug call it's take here, which is basically, yeah, Colquitt, sorry, yeah, Colquette. Sorry, Doug. He said, why was this, and why are we even calling this a flash crash? It's because it's one of those things where it was so amplified because of all of the leverage buildup we had. So we have, you know, Perp. Specifically on Perp Dex's.

Because we do not have that much leverage in the system right now other than Perp Dex's. Not just Perp Dex's. can see that leverage, but even just general perps exchange, like finance perps exchange as well. So all perps, a lot of leverage on perps. So on Perps Dex's specifically, we had open interest near all time high, 26 billion before the crash, global crypto open interest, so sex included, almost 100 billion. This is 10x or higher leverage on these things. So like a lot of the runup has been, or a portion of the run up has been not due to new buyers. We've done. We've done. We've

definitely had new buyers as a company like institutions. But it's also been a lot of existing buyers in crypto levering up. You mean the, particularly in the market, the market everywhere, across the market? In crypto? I mean, a good portion. Because I thought a lot of that leverage, that open interest leverage is people farming, lighter points, people are farming the next hyper liquid air drop, people farming Axiom or they have to take on leverage in order to farm.

But you can go delta neutral. You're going to go dollar neutral. Crypto is levered up at this point in time. Always. Always. Always. And we've seen this like other flash crashes in the past. It's kind of expected.

You mentioned one earlier this year. It wasn't as severe. We had something like this in the summer of 2021. It was the end of this. It was like September 2021. Yeah, dude. Heath price went from like $4,000 down to like $1,800. I don't even remember what ETH price did.

I remember Bitcoin did like almost 14 to 20% kind of went down in September 2021, which seemed crazy. That one scared me. That one scared me. I mean, my like Xerion at the time went down 70%. I'm like, what? Stop. Can you talk about what happened specifically on Perp's decks?

Because it felt like crypto learned about a new term called ADL, which is auto de-leveraging. So if you had a perp open at the time, you may have gotten liquidated on ADL, liquidated when you sort of shouldn't have. or the price didn't dictate that your market. You got your position closed, yeah. Yeah. What is this? And, you know, like, how did this affect traders?

Sure. Yeah. So inherently, in any perp platform, what does a perp platform do? It gives you leverage. It gives you potentially massive amounts of leverage, 50x. So your $1 can turn into $50, either long or short, depending on which way you choose. In the happy case, 99.9% of the time on a perpx, longs and shorts, balance out. And when they don't balance out, shorts just have to pay the longs or longs

have to pay the shorts. And so the perplex by construction equilibriates between a dislocation between too many longs and not enough shorts by making the longs pay the shorts. And that's totally fine. Sometimes when there is a dislocation between longs and shorts, which there always is, and that's fine. And again, the platform just balances out by making one side pay the other. but also if price moves significantly in one direction, while there is also a significant dislocation between longs and shorts or shorts and longs, all of a sudden there is effectively a bankruptcy

in the sense that there's not enough money on the platform to pay the winners from the losers. The losers don't have enough money to pay the winners. And so in order to equitably transfer all the wealth, we need to do an automatic de-leveraging of the winners because they won too much. And so each platform... You say automatic, maybe another term for that

is like forced, basically. Forced, yeah, forced de-leveraging of your position. And so if you say you had a 50x short and then crypto prices went down by 30%, I mean, congratulations, but the platform doesn't have enough money to pay you because the losers didn't lose enough money to pay you how big your winnings were.

And so they need to automatically de-leverage you and everyone else. And there is a... Each PIRPIC Exchange has a... a way to do this, an opinionated way to do this. And so it's a style of de-leveraging who, there's a cue of like, okay, first we're going to de-leverage this person and then that person and then that person and hopefully that clears the books and I'll go down the line.

Many people, especially as we got down into the long tail of alt-coins with very low liquidity, many people just had their positions just stops, just de-leverage because there just wasn't MF capital in the market, which just effed up a lot of people's positions because like I said, they were farming astro points, they were farming lighter points, they were farming hyperliquid. They thought they were delta neutral, but when the platform de-leverages them,

they're no longer delta-neutral, and all of a sudden, they're taking a directional stance on the market that they didn't intend to. In addition to that, lighter had an outage for like a number of hours. Finance had an outage for a number of hours, so both of those platforms are working on compensation plans.

Overall, just very messy and chaotic. Usually when we have cascading liquidations, we don't really have to talk about it other than just like, hey, don't take too much leverage. Now we're talking about it because the market's failed. Truly, the platforms and the infrastructure broke down in a way that is now requiring us to do like manual compensation of people who are harmed.

Not everywhere, though. Primarily on perps exchanges. If you're doing stuff with Spot, you don't have to worry about this. I was up in the mountains, dude. I was like, shit. Like, Heath is down $400. Oh, well. Oh, well.

Oh, well. Yeah. Well, I mean, if you're not on margin, you can kind of do that. So even Binance hit this ADL, so a lot of liquidations there. Binance ultimately paid $280 million in compensation to some of the affected users who were liquidated and lost a certain amount of money. So they're trying to make good. As you mentioned, some of the other purpose exchanges, lighter had its own problems.

It didn't actually hit too much in the way of ADL, but it did have an outage. Hyperliquid stayed up the entire time, but a lot of traders, have some dissatisfaction because they weren't aware of the ADL mechanism and they got liquidated in a way that they didn't feel that they should have. So a whole bunch of platforms had problems. I guess one bright spot is Defi did fairly well. Always does. First I'll talk about some of the wallets.

So unfortunately, Rabby and DeBank stopped working. They must have had some sort of D-U-S kind of outage. Accidental D-D-D-DOS from people trying to save themselves. Yeah. Yeah, something like that. So that wasn't great. but other crypto wallet stayed up. But defy was pretty much fine.

In particular, AVE. So big stress test of AVE, right? It's one of the largest liquidations on record. Actually, the largest in record in an hour, I believe, $180 million. Handled it flawlessly. Love it. 75 billion capital and just ate that $180 million liquidation. Fair and orderly markets.

Yeah. It was very good. The other D5 protocol. falls fared similarly. Actually, Athena had a depegging event on Binance. One of the reasons this did not affect Defi was because most of the Defi oracles peg Athena, the Athena stable coin, Ustead, I believe, with USCT. So they're not using the Binance order book data so much. And so if they had have been, they had kind of their Oracle risk management, configuring a different way, could have caused some problems in defy.

they avoided that. Athena also has some interesting ADL deals that are custom that I didn't know about, right? You know something about this? Yeah, with the centralized exchanges, because you can't really make a deal with a decentralized exchange. So Athena, again, which is a Delta neutral platform, they just make their stable coins by longing spot and then shorting the derivative. And so because they are not like inherently leveraged, they have gone out to Binance, buy bit, okay, X, and just made deal saying, hey, take out, like, preserve us from ADLs. Like, don't ADL us ever. Give us a privileged position when it comes to ADL.

Because ADL is for people who are winning on the platform versus losing. And Athena is Delta neutral. Delta neutral. So it doesn't matter. So it kind of doesn't apply to them. So that deal makes sense for Athena. It's like, well, they're not winning or losing. They're not profiting from the fact that they put in place, though.

Yeah, very good thing. Very smart of them. The day finally came where that deal actually played out in their face. other people are like, this is kind of unfair. Like, I'd like to go negotiate my ADL position. Yeah, I mean, you have to have that kind of size. Yeah, right. Yeah, if you have size, you can make negotiations, yeah.

Guy here, guy from Athena, he's here at the Theta one day event. And he actually talked about this because he was on a fireside chat. I thought he's had something pretty interesting. So, again, Thena, Delta neutral. But when they are shorts, there was, So they are short on derivatives, long spot short derivatives. And in theory, you know, the price goes down and their spot value goes down and their short value goes up and those things equilibrate. But when markets dislocate and are disorderly and when prices go down in this disorderly way, shorts actually make money because it dislocates further away from what it ought to compared to spot.

And so apparently Athena was actually pocketing millions of dollars because their short positions actually profited them more than their spot positions loss. So I thought that was a little fun fact that, like Athena actually walks away. Maybe they'll show up with their token price at some point. It hasn't yet. Some people are thinking this is a coordinated attack, okay? So there's some suspicious timing. Part of the issue was on Binance, and Binance had an Oracle price update

that they had scheduled for October 14th. And during the interim, before October 14th, there was some vulnerability. There was also on different perps exchanges. We saw whales open up billion dollars short positions. You know, like 30 minutes before the Trump tweet, okay? And they were doing this in Bitcoin and Eath. So, I mean, somebody knew what was happening. Now, what's interesting here is like, because these markets are transparent, you actually see it. How often does this go on in

traditional markets? We just don't see it. I mean, somebody knows something and is trading something for sure. Now, I don't know. The question is like, will this continue? You know, is this the end? Kobe said he compared this. He said this was the most severe flush he's ever seen on alts. He said it did remind him a little bit of summer 2021. It's a good reminder to myself

to own things that I'm actually bullish on and not try to shift the momentum. Ralph Paul had a take, which is, this is all noise. The lesson here is don't use leverage, right? So if you weren't using leverage, this is just kind of a pretty bad whip down, but it's not existential.

It doesn't affect you. You're still in the game. He said there's only two questions you need to ask as a long-term holder. Will tomorrow be more digital than today? And has the liquidity cycle and business cycle topped, or is it still rising to finance the $10 trillion that needs to roll in the next 12 months? Raup Paul is betting it's not over because of the liquidity cycle. That's basically it.

Now, there are some who are saying, I don't know. That felt like some weakness. that felt like maybe we've seen kind of the top. One of them is Mike Nato, who I'm going to talk to on Monday. Do you have a take on this, David? Do you think it's over, or do you think we're so good? I know who I am, Ryan, and I'm not going to be the one to call the top. I don't have that skill set.

I don't have that disposition. And so... But good to your head. Is it the top? No, it's not the top. That's the way I feel. Well, we got some stuff coming up next. You got to fill me on the Binance.

Listing fee drama. Also, hopefully it's not the top for the Monad token and the Meghavut token, which are coming out. And we're going to talk about the U.S. Adding billions to its strategic Bitcoin reserve, but like maybe not in the purchasing Bitcoin type way. Talk about all that and more. But before we do, we want to thank the sponsors that made this episode possible, including FRAX, which is our favorite staple coin, some of the best yield in DFI as well. Let's go hear from them right now.

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Bankless is being compensated by Bit Digital for this ad. You can find out more information by clicking the link in the show notes. So there's a tweet. that was heard around crypto Twitter. This comes from Stee-J, who's a founder of a up-and-coming prediction market, price prediction market on base. And the limitless has definitely gained some attention

and some momentum lately because they had a Kido sale, so they were selling a million dollars of their future token and it was super over-subscribed. So they were gaining some momentum. He gets a, apparently, he gets an offer from Binance about what it would take to get their future token listed on Binance. And apparently the intern, we're blaming interns this week.

That's the theme of the week. Blame the interns. Yep. Is the intern forgot to send CJ the NDA of what the deal would look like. So CJ was free to just post the deal on Twitter. And so here's what it would take for CJ to list his limitless token. Limitless is the name of his prediction market on finance.

1% of the token supply for an airdrop on day one. 3% further of the token supply for further airdrop for over 6 months. 4%. 1%? 1% for marketing. at Binance's full discretion. He also has to provide 100% of the TVL for a token pool on pancake swap,

that's a million dollars, a $250,000 security deposit, three more percent of the token reserved for the B&B holder program, and $200,000 worth of tokens for Binance affiliate marketers, and then a $2 million BNB security deposit for spot listing.

That was the fee. Now, I think these numbers are negotiable. That's what CJ said when I interviewed him, that podcast came out on your podcast feed. So in theory, those numbers could be lower. but they can also be higher too. And so we've always known as an industry that there are

egregious exchange listing fees because liquidity is so incredibly valuable. Simon, founder of Moonrock Capital, he put out a tweet that said, I spoke with a tier one project that raised close to nine figures. After wasting a year of due diligence with Binance, they finally received a listing offer.

Binance asked for 15% of their token supply. Imagine paying 50 to 100 million just for a sex listing, Centralized Exchange listing. We have as an industry know that these fees have existed. We've never actually seen an offer before because they get NDA'd. And then also when I was talking to CJ, he talked about like, well, who is really incentivized to actually disclose what these deals are?

Well, finance definitely is not. The market maker deals who also are like kind of privy to this information, the market makers aren't incented to like disclose what the deal is. If the founder signs this deal, they're not. interested in disclosing what the deal is either because it's kind of embarrassing to sign such an egregious deal. So no one really is insented

to release the details of the deal. So it remains like a not so well-kept secret that founders pay for liquidity. Now we actually have one. And it just caused a bunch of rabbling on Twitter. It's like, no, now we actually have the details of a real offer. And it's as bad as we ever thought.

And I guess we're throwing finance under the bus. Other exchanges have charged these fees in the past still due to my knowledge, charge these fees. We don't know what Coinbase's listing process is, for example, or what fees that they charge. I do think, though, that the whole thing feels very stratify and not in the spirit of defy and not in the spirit of crypto, which is you get your asset on a decentralized exchange. There's no listing fee. There's no permission.

It's just there. And so this kind of fee charge of 5% feels anachronistic. It doesn't feel like real crypto. So I get the sentiment there. The other thing I'll say is 5% of token supply, you know, Binance is really juicing the B&B token because that 5% goes primarily to B&B token incentives.

So one thing you can say is like... And who owns BNB? Like, who dominally owns B&B? We talked about last week, potentially 67% CZ, right? Yeah, wow. But they are doing a good job for B&B token holders. Yeah.

Let's say that. The other thing I guess I would say is just like, it's unclear how long that this type of rent seeking can actually last. And I think the power of centralized exchanges starts to diminish as decentralized exchanges gain market share. Which they have been. 20% market share. Which is low, but it's been up only since forever.

Yeah, that's great. I do think also this was an opportunity to do a little bit of Coinbase versus Binance like back and forth because I saw back and forth. You know, and one of them from CZ. Definitely in the replies, yeah. Yeah, and CZ respond, and he was like, okay, like you don't like listing fees. Like, don't pay them. It's a free market.

Do whatever you want. Blah. And by the way, he said, Coinbase doesn't even list the third largest crypto asset, which is B&B. Why don't you ask them why they don't list B&B. And then a day later, Coinbase listed B&B. Yeah. So. I thought it was pretty funny.

hilarious drama. Yeah. There's another conversation of kind of like the PR failure of Binance. as it relates to CJ, the founder of Limitless, because there was definitely some, maybe I'll call it bullying. Back and forth between... They, like, explicitly,

the Binance, the ad-Binance Twitter account explicitly tagged CJ. And it was like false and defamatory statements from this one individual. Oh, wow. And then one of those, one of those, they made like three arguments and they bulleted one.

And like the first one was something like making false claims. And then the third was defamation. And like, well, and, and releasing private info. And I'm like, wait a second. Either the info is false and it's defamation or he was releasing private info. You got to pick one, guys.

You have to pick one of those two things. Yeah, that's fair for sure. I mean, kind of a rough week for Binance, I'd say. Yeah, not great. Not great. Let's talk about MegaEath and Monad. So last week we talked a little bit about the Monad AirDrop,

which is coming up. Now it's open so you can go check if you're eligible. In fact, I think you sort of have to check whether you're eligible for Monad and go claim right now or else, I don't know, you lose your tokens. So we are claiming our Monad tokens, but you don't get your tokens,

you just get them in the future when the Monad blockchain is up and running. Monad is an EVM soon. Yeah, well, end of this year, we don't really know. So like November, December is my guess. Really? I heard October, but no. October's almost, could be, could be, could be.

I mean, the Monad is an EVM equivalent chain. So you're going to use your Ethereum address and your Rabby wallet or your MetaMass Wall or whatever, and you're going to go sign and authenticate your ownership of the wallet. And I would presume that would be the address that would then have the tokens on the monad blockchain. I presume that's how that would work. And so go do that. You have until November 3rd to go claim your future tokens.

So go do all the things. Connect your FARCaster. Connect your Twitter. Connect your Discord. And yeah, make sure you don't miss out on your tokens. You might have them. And so also, since it's happening in the same week, Mega-Eath has their sale.

They are doing a sale on Kobe's platform sonar. And so you can sign up K-Y-C. It takes a bit. So you have to go and, like, you know, do some trad-fi legal document bureaucracy bullshit because of rules. But then once you get through over those hurdles, then you can potentially participate in the Mega-Eath I-CO

if you so choose. Do you know the valuation of what this is going to be? No, details are going to be, detail soon on that. But I'm guessing, understanding Mega-Eath, it's going to be kind of favorable. But people aren't going to be able to have large allocations, though.

From the very beginning, Monad and Megh have been kind of set against each other as competitors. It's interesting that they're going at kind of a similar time. Also, tokens at a similar time. So the design is different, right? This is almost a little bit of a battle of alt-layer 1s and layer 2s as well. So Mon-Ed-

They're both EVM. They're both extremely fast. Right. Monad took four years. is to redesign the EVM to do a parallel execution and really juice it, right? Whereas Mega-Eath is super-juicing their sequencer. They're not decentralized sequencer at all,

but juicing that to the end degree so they can have max TPS, and they'll have more transactions per second than Monad. And so it's kind of a race, and I'm very interested in seeing what the FDVs of these tokens will end up being. Like right now, pre-market, Monad is about $6 billion.

which indicates like a pretty nice L1 premium, let's say. I thought it was higher than that. I saw I saw 13 to like 16 billion. You saw that last week. Not this week, my friend. Oh yeah, that's a good point. This week we're at 6 billion. Okay.

Rout row. Now, I'm not sure. I mean, I guess we could look at like top layer twos. What are those right now? I mean, something like Arbitrum, it's that probably floating at the highest. Yeah. $4 billion, something like that, FTV? Yeah, do you think Mega-Eath comes in above or below that?

I don't know. That's what's going to be really interesting comparing Mega-Eath to Monad because they feel similar. They're both highly-juiced EVMs where you get like, you know, a ton of throughput. Yeah. My take on this is both of those chains are fast enough where being faster doesn't really matter. They're both over the hurdle of like they're so fast that users don't care. And so it's really about the app ecosystem that is the game chain. between Monad.

Monad and Mega-Eath when they go head to head. And Mega-Eath on Twitter is like, we're not competing with Mon-Ed, we're different. I'm like, yeah, okay, sure. It's going to be their app layer that is going to be how these ecosystems

compete, not about the speed. They're both so fast, it doesn't matter. I totally agree. So we mentioned a Chinese company that's building on Ethereum. That company is, and financial, is the parent company of AliPay. This is a big Chinese.

I mean, I would say, AliPay and Alibaba is sort of the Amazon of China, but it's also a kind of a super app as well. So 1.4 billion monthly active users on AliPay. So the Perry company is launching an Ethereum L1 looks to be a ZK roll-up of some time. Player 2, please. Player 2, does I say?

Player 2.m. It's called Jovei. Now, there was some talk, like there's some hype tweets like AlliPay and it's 1.4 billion monthly active users. they just chose the Ethereum layer two. It's not like Allie Pay is actually going to be involved in this, and they're not going to port their 1.4 million monthly active users for payments, not out of the gate.

It looks like what JoyVay is is kind of like a real-world assets blockchain initiative by Ant Digital, which is a financial company, but using some pretty cool tech. So this is going to be ZK Proof Engine. It just goes to show these projects seem like they come out of nowhere but here is like a mega tech company out of China, no radar, like under the radar, no hype. And I said I didn't even know, like,

I don't even know if they talked to anyone at the EF before launching it. And major companies just spilled on Ethereum and we find out about it later. Actually turned out not to be true. Apparently the EF was talking to them. Yeah, I think things happen in Asia that we just don't know about because we don't speak any of those languages. Exactly. So it's like, you know, the West kind of ignores Mandarin at some.

level. Anyway, seems like it could be a big deal, but we'll have to see, and it's all based on traction, what they decided to do with it. David, did you see the Ethereum phone, the Dgen 1? This was a unboxing from Jesse Pollack from base. Do you see this? I have not seen this, no. It's actually kind of cool. So, you know, the DGen one was like this phone. It doesn't look like a traditional smartphone, right? It's kind of like, you know, it looks like something out of, I don't know, it looks like a Game Boy or something. Yeah, that's what I was thinking. And, but like, look at this. So this is Jesse unboxing it. It's kind of, it's kind of cool. Crypto Native. I, I, it's got a laser. What do you do with the laser? It's got an entire app store. It's completely, it's got Uniswap all

integrated. Do you great Pokemon on it? Look at some of these screens. XMTP Messenger. It's got Zora on it. it's actually cooler than I thought. I'm looking at this and I'm like, at $500, this might be something to go test out and try, at least for like the Ethereum enthusiast and hobbyist. Deep enthusiast, yeah. I want to play Pokemon. Excuse me.

That's what I want. It's not going to replace your phone though, right? That's the thing. It's got to be some sort of side companion type of thing for the Ethereum enthusiast. Cool thing is the entire operating system is open source completely. It's built hardware, everything,

by a 3% team. obviously they outsource the manufacturing but like pretty impressive so dude those are going to be huge shit at DevConnect I bet you I see a handful of those at DevConnect I bet you will yeah right so you know the Bitcoin Strategic Reserve that we now have that has like

hundreds of thousands of Bitcoin in it yes we have the United States has 127,000 more Bitcoin this week than it had last week how did it acquire that much Bitcoin where did that Bitcoin come from? They didn't buy it

they did not buy it it. They got it the way they got the rest of their Bitcoin, which is asset forfeiture. They seized it. They seized it from criminals. So this is a report coming out of the Justice Department that the U.S. seized 127,000 Bitcoin. So that's about 12 to $15 billion worth of Bitcoin from scammers, from pig-butchering scammers. You remember the pig-butchering thing, which is like the idea that you have to fatten up your victims, you become friends with them, you just like fatten up the pig for slaughter. and then you'd like defraud them, then you take all their money. Apparently there was a massive operation that's been going on for the past five or more years run by a guy named Chen Zai.

He's a Chinese national who leads a group in Cambodia who's doing this. They used forced labor to actually carry out these scams. So people who had extortion over, they're trafficking victims. These were some of the scammers. They were actually forced into this. And they basically stole money. from all sorts of crypto investors and crypto users, you know, $127,000 worth of Bitcoin.

So they've been charged with fraud. Apparently the main guy behind this, Chenzai, he faces up to 40 years in prison. They haven't found him yet. So he's somewhere out there still, but they do have the Bitcoin. And what's interesting about this is people like Taylor Monaghan have been doing some on-chain sleuthing

as far as how the U.S. government actually seized the Bitcoin. And this is a tweet from her. She said, it looks like maybe someone in the U.S. government cracked weak entropy wallets three years ahead of anyone else and kept quiet about it. Whether that's the U.S. government, a private industry partner, or something else entirely, they beat open source security researchers. She's got a whole thread on this with all of the receipts and facts that you can go scan. Wait, that's a different story.

And also way bigger. The government hacked wallets, Bitcoin wallets. So the government at the DOJ, like Justice Department is not going to tell you how they got 127,000 Bitcoin, right? They just say they seized it. But Taylor Monaghan is doing some on-chaise. And she's seeing these addresses that she's calling weak entropy addresses. That means when they were set up, there was something like with the way they generated

the seed phrases. Yeah, it was just with like weak cryptography. Yeah, yeah, yeah. Yeah, they used like, I don't know, something that wasn't some random number generator that kind of could be hacked or was susceptible to brute force. But then somebody in the U.S. government has some advanced, like, weak entropy address cracking magic that allowed them to go like joink 127,000 Bitcoin. That's what Taylor is saying could have happened here, which is wild to me. I'm sorry. How does that connect to the pig butchering scandal?

Oh, that's just how they seized the 127,000. and Bitcoin. I thought they seized it because they cracked the wallets. Yeah, that's how they seized it. Exactly. And it just happened, the wallace happened to be owned

by this scammer. Yeah, yeah. They're not going around and going and seizing all of the weekend. So they identified that there's his scammer. They identified that he owned these wallets and they're like,

well, these wallets are weak so we can steal them. They didn't arrest him? Oh, they're trying to arrest him too. But again, he's somewhere out there. No, they're doing both. Wait, wait. They just went around and they just like,

okay, this Bitcoin belongs to a scammer, therefore we can steal them by hacking the safe. That's what it looks like. That's what it looks like. That's crazy, dude. That is crazy. How do you see, think about it practically. How do you see his private keys?

By arresting him and making him at gunpoint. At gunpoint, okay. I mean, there's like laws against this. I mean, does the government actually wrench attack people, that kind of thing, right? But anyway, it looks like that's not the case. Taylor is saying non-chain evidence. It looks like they don't.

It looks like they don't. use some brute force magic to go attack the weak entropy wallets and you're like the funds. It's some tech that the U.S. government has that seems pretty advanced more than what we thought they had potentially. That is extremely ominous. Yeah. Well, don't worry. I'm sure like, no one listing has weak entropy wallets. But yeah, because they all own ETH. Look, man, governments can do scary stuff. Governments can do scary stuff. Let's just read at that. Speaking of scary stuff, governments are doing. Looks like the Democrats are shooting down the market structure bill right now, Democrats in the Senate.

So the Clarity Act went through the House, bipartisan support, we had a good Republican draft in the Senate of Market Structure Bill, which is kind of a derivative of the Clarity Act. And then Democratic senators, they spit back something that basically makes Defi illegal, David. Defi protocols, they would all be seen as digital asset intermediaries, defy websites, they'd be financial brokers. Do you remember when Sam Begman-Fried was proposing basically, this back in like 2022 before he crashed out. Yeah.

He's, you see Sam Bankman Fried is, he has his appeal, this sentencing appeal this week. So we, hopefully he's going to like appeal is 25 million, or 25 million, 25 year sentence.

And his claim is that it was the hostile Biden administration, the hostile Democrat administration. That is the reason why he got such a terrible sentencing. Never mind that he was the largest donor to Joseph Biden. Not only that, I've seen stories where he's basically, like there was an interviewer went to prison, got his side of the story. Sam Begbred was saying, I did nothing wrong.

If you look at the bankruptcy, there shouldn't even have been a bankruptcy. All the creditors were made whole. There was never any missing funds. I think that's true, actually. Do not let him rewrite history. He was completely, he was stealing customer funds. He was stealing customer funds. But then he made some banger investments, dude.

He invested into the anthropic seed round. Yes. You can't steal customer funds and invest in risky assets and then hope that pays off. And you know what Sam Bangman, he wouldn't have stopped there. Have he gotten away with this? The dude would have just done more and more in risk. He's trying to rewrite history. The money was not there.

He stole customer deposits and he invested in them just because he invested in Anthropic and it was like a hundred X bangers. And Robin Hood at like $9 and now was at $150. Okay. Like, he actually made a fuck done of money, dude. So he should have been a freaking VC. He shouldn't have been running a custodial crypto exchange. You're totally right.

Anyway, I'm not arguing with that. He needs to stay in jail and Trump needs to not pardon him. Probably be super pissed. And anyway, end of Rand. And anyone who glorifies Sam Bankman-Fried on Twitter is, I'm going to bonk them. You're going to shun them? Bunk. Bunk them?

Just like, okay. hit him on the head with a bat. I don't know, from my desktop. You really made that week, or maybe that was me. I don't know, whatever. We'll bong people. Gotta end with this, of course.

You know, none of this has been legal advice or crypto advice or financial advice. Certainly not this week. We've been wrong. You could lose what you put in. We're headed west. This is the frontier.

It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot. So I got 14 days to turn down tober into uptober. 14 days. You had to say it. Yeah.