Bankless - ROLLUP: FTX Contagion | SBF Tweet Thread | Genesis Trading | Gemini Earn | StarkNet Token | Cosmos ATOM 2.0

Starting point is 00:00:00 And this is a 36-hour-long endeavor of people trying to figure out reading SBFT leaves is what the hell he is doing with this tweet thread. Who does this, David? Bankless Nation, happy third week of November. David, what time is it? Oh, Ryan, it's the Friday Bankless Weekly Roll-up. And Ryan, I have never been so intimidated by an agenda that we have to get through today. Is it the content or the length?

Starting point is 00:00:28 It's a little bit of both. Definitely the content, the craziness of the content. yet, Ryan, we persevere into the frontier nonetheless. I know we do. You know what happens when you plug in bankless and Twitter in the search box right now? Oh, my God. Bankless crying is number one. What a week.

Starting point is 00:00:45 What a roll up. How are you feeling this week, David? You're feeling a bit better? Yeah, yeah, yeah. If the theme last week for you was like, this sucks, I'm disappointed. What's the theme this week? What's David Hoffman feeling like? The theme this week, I think, is.

Starting point is 00:01:01 good riddance. Yeah. Good riddance for sure. And like, because this is turning out to not just be like, oh, another drama in the crypto world. No, this is like one of the greatest frauds of all time. Yeah. And I think, like, for better or worse, like, we're going to be able to like move forward

Starting point is 00:01:21 from this in a progressive way. So my, yeah, if there's a theme of the week, it's good riddance. Well, you got to admit when SBF does something, he does it big. He goes all out. not only the number two exchange, but also maybe the number one fraud of all time. Number one fraud of all time. But topics of the week, we're going to be talking about three things. Number one, SBF, number two, FTX, number three, Alameda.

Starting point is 00:01:43 I mean, it's pretty much the agenda, right, Dave? That's the whole thing. There are some other things that happened this week, but we're going to have to wait until the second half of the episode to hear all the normal things that went on. The high level is the fraud that is SBF continues to get bigger. This is kind of Enron. this is Theranos, this is Bernie Madoff. We got it all, a little bit of it all.

Starting point is 00:02:02 So we're going to talk a little bit about how bad the contagion was. David, before we get into the episode, we have a message from our friends and sponsors at Infura. And I think there's really good news coming out of Infura because we need to build this entire space onto centralized rails. This is what we've learned here again recently. It's been reinforced. And Infura is taking a big step towards that.

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Starting point is 00:03:14 So there's a link in the show notes, banklist.c.c. slash infura for you to sign up for the early access of their new decentralized network infrastructure. So go do that. Go click that link. Yeah. It's really cool. we all use in Fiora in our day or not. Yeah, behind MetaMas, behind a lot of the wallets that we use.

Starting point is 00:03:31 Not the only one, but is one of the larger ones for sure. All right, David, let's get to the markets. Bitcoin, what are we looking at on the week after this two-week disaster here? Yeah, Bitcoin is down on the week, down 5%. $17,500, down $5,000, down $1,500 to where it is now at $16,600. Cool. We expected it down. How about ETH?

Starting point is 00:03:51 Down again, 8% on 8%. So Bitcoin down 5%, Eth, down 8%. down 8% ether started the week at 1320 currently at 1270. 1270 you know what um nope it's down 12 to 12 10 my numbers are wrong okay 12 but 12 10 1270 it's been hovering around 12100 yeah I actually am surprised that it's as high as it is yeah some people are saying oh that's a low right like no this given what just happened yeah like the nuclear bomb that just detonated in crypto and we're in the 1200 range um I don't know if that makes me weirdly bullish yeah it's like it doesn't seem to want to go down anymore

Starting point is 00:04:31 is this down resistance maybe we'll talk a little bit about why that is when we get to some of chris berninski's takes but um park that in your mind bankless listener why is eith not down more than um you know then you might think it should be given the sentiment would yes by by the time you hear this we'll have triple digit eth i'm sure tomorrow morning um eve bitcoin what do we'll do we looking at in the ratio. And ratio is down just a little bit. It's down from 0.075 to 0.072. There we go.

Starting point is 00:05:01 Crypto market cap. Down, down from 920 billion to 860 billion. Surprise. 860. Do you remember the lows of, well, the highs of the last bull market? Highs of last, oh, the 2017 bull market? Yeah.

Starting point is 00:05:14 Yeah, it looks like we're a little bit above that right now, but not that much. But the highs of the last in January, 2018, we're about $760 billion. And we're just above the high. highs, but not very much above the highs. That's interesting to take note of. David, let's do some takes on the crypto markets right now. First, maybe a quick scan by Bitcoin miners. I don't think very often about Bitcoin miners, but they're in a lot of pain right now. What's this tweet showing us?

Starting point is 00:05:42 Yeah, so this is a tweet that's showing a new metric that this guy created. It says a free open source indicator, which tracks on-chain data to highlight when Bitcoin miners are selling more of their reserves than usual. So I'm guessing the inputs to this indicator are the Bitcoin price and probably average electrical cost to produce a single Bitcoin. And according to this indicator, we are bad. It's bad. They're not profitable. Bitcoin miners are making less underwater in terms of revenue, a significant percentage of them. I mean, this is just like kind of a global average, but it's basically saying that like it's really hard to be a profitable Bitcoin miner right now. so they are running on reserves, which means they are selling.

Starting point is 00:06:25 I've always wondered about this. So if you're bullish on Bitcoin, like the asset itself, why would you try to get exposure in Bitcoin mining facilities and Bitcoin mining companies? Yeah. Why would that make sense relative to just like purchasing Bitcoin OTC? Yeah, because a single ASIC in theory, a single ASIC is meant to be like a discount on a Bitcoin over the long term. So if you buy an ASIC, it's like you, if you spend like $100, on an ASIC, you get like $150 worth of Bitcoin over the long term. But a ton of variables go into that.

Starting point is 00:06:59 But do you, though, you have energy costs and you have like, you know, ASIC obsolescence degradation. There's all sorts of other things. Anyway, I've not understood it, but I'm not in that space. What is Dylan McClare showing us on Bitcoin miners? What's this chart? Yeah, these are just like the equity prices of all these Bitcoin mining companies. negative negative 10% negative 9% negative 6% negative 13% negative 9%

Starting point is 00:07:23 At least like publicly traded companies Yeah publicly traded Bitcoin minor companies yeah All down bad all down riot iron bin F Mara Hunt S dig hive Interesting Berninski's take on the bottom all right Give us some context for Berninski because I know you had a conversation with him A little bit earlier in the week on Twitter which actually The entire conversation I think it's like a 30 40 minute long conversation

Starting point is 00:07:48 50, yeah, 50 minutes. 50 minutes is available to bankless premium members right now on the RSS feed. We're not releasing that to the regular RSS feed. Chris wanted to keep that a little more private. So just bankless premium members only have access to that. And David, I haven't listened to it yet. You're missing out, man. You're missing a, no, no, no.

Starting point is 00:08:06 I'm not going to be because I'm scheduling this for my weekend. I'm going to be listening because, you know why. It relaxes. Well, well, it's probably relaxing because I think Chris is flipped bullish, is my. understanding my sentiment. And I just want to provide some context for this individual. First of all, this is the individual, probably second to Andreas Antonopoulos, but I actually count him first. They got me into crypto. I read his original book on crypto assets. What did he publish that? 2016, 2017, something like this. Got me really excited about the world beyond Bitcoin.

Starting point is 00:08:40 Not only that, Chris, he's a VC. He's got ethics that I align with in this space. I respect him a lot. He developed a lot of the original kind of on-chain analysis that we see today, and others have carried that forward further. So he's got that piece. Then he's a VC, but somehow he finds a way to, like, call the markets fairly well. And he does it in a different way, not as like a trader. So different than an Arthur Hayes, all right, much, much different than somebody doing TA. He does it based on kind of long-term, I don't know.

Starting point is 00:09:18 know, fundamentals. It's this mix of a thesis, fundamentals, and actually, like, observing the space. And he has been bearish on crypto for, like, over a year. He turned bearish sometime after May of 2021. And he was bearish. And he was bearish even as, like, we hit new all-time highs. And he was, like, saying, this is too. Contrarian. Yeah, he was a big, big, yeah, big contrarian. and he, in my opinion, has just been proven right in fantastic fashion. Well, he was the anti-supercycle. You know, there's this whole, like, super cycle crypto assets, never going to go fully down again.

Starting point is 00:09:55 He was the sober one in the room. No, that's BS. And he actually got more and more, I don't want to say shrill about it, but like loud about it to the extent that others in the space just start, like, in some of the eyes circles that I hang out with, started to get annoyed at him. So why is Chris always bear? Chris bear, Chris bearish again.

Starting point is 00:10:17 Yeah, I was not annoyed by that at all. It's just like, it's his take. And I know Chris is not like thinking he's trying to manipulate markets here, right? He's not just, I think he actually believes it. Anyway, give us the context for the tweet that we're looking at and what Chris's take on the markets is right now. Yeah, so Chris tweets out, it may be a crawl upwards, but I still think the capitulation bottom is in. And so as a result of all of this FTX drama, as a result of all the liquidations, Chris is saying that that was the signal that he's been looking for to confirm to him that the bottom is in.

Starting point is 00:10:51 And I remember him tweeting out after the Three Arrow's Capital liquidation in that event. And he tweeted out something along the lines of the Lehman of Crypto is out there lingering. And I was like, in my mind, I was like, oh, Chris is being bearish again. Well, yeah, it's like, how can we go down even more than that, Chris? and then, but he called it, man. He called it just off of his gut instincts. There's literally a Lehman out there. Yeah, and there was literally a Lehman out there.

Starting point is 00:11:20 It was FTX and Alameda. They just found a creative way to plug the whole temporarily. But that Lehman has been discovered. We are now dealing with that contagion. And now Chris is, one of the conversations that we had in the Twitter spaces was that he just can't find any more big sellers. Genesis is the one that comes to mind in the moment. moment, but we are watching that play out as we speak.

Starting point is 00:11:46 And so... Particularly, and I, again, I'm just, I haven't listened to the episode. So you correct me if I'm wrong. But I'm particularly, he probably means the large cap assets that don't have unlocks, like Bitcoin and Ead. Yeah, Bitcoin. He's going to sell Bitcoin and Heath at this point. Yeah.

Starting point is 00:12:03 So just to kind of preview the conversation with him, he talked a lot about like these indicators that he uses. And I'll actually not tease. I'll not say which one. ones those are. So you have to read the article that comes out of bankless today. But like Bitcoin Indicators, Ether Indicators. Oh, we're doing an article on this too. Yes. It should also come out as an article on the newsletter. Yeah. And comparing and contrasting the turning points of the last bear market, like whatever four sellers we have last. But then also like we talked about

Starting point is 00:12:28 the crypto markets showing strength. We talked about like the merge and how like the ether price is up 50% from the May lows where Bitcoin is down 10%. And we talked about like how he's calling the bottom on crypto. Also with equities. And so equities are down 80% a comparable amount to the dot-com bubble. But these equities, in contrast to the dot-com bubble, are real like money-printing organizations. And so like that he thinks that that's oversold. And then also inflation is turning over.

Starting point is 00:12:59 And so like these aligning of the stars is like convincing him that the bottom is in. But all of those details and more are available in the bankless newsletter. And then if you are a premium subscriber, you get access to the audio for the Twitter space as well. God, you are such a tease. What a tease you are. So is Chris Berninski here. Here's this new Pintweet, bullish from near the bottom. Hope to see y'all at 10 trillion. Remember David and I just read out? We're at 850 billion, 10 trillion? A little 10x here is expecting. Yeah. And we'll see you there. This is the tweet that I retweeted and I said, Chris Berniske flipping bullish. It's like a changing of the seasons for crypto. And this makes me so happy. I actually think that's true.

Starting point is 00:13:38 All right, Hayden Adams. This is some interesting stats. coming out of the FTX collapse of CFI debacle. I tweeted this out early in the week because I think it's true. CFi dead. Cfi dead. Like right now, when you talk about centralized finance, beyond kind of exchanges,

Starting point is 00:13:54 right, centralized lending and borrowing, like, it's down bad. I mean, they're not all going to go out of business and go bankrupt, but like, who's trusting them at this point? The question is,

Starting point is 00:14:06 we're the beneficiaries of that trust. Does it completely flow out of crypto? and back in traditional finance, or does it go somewhere else? And I think Hayden is making the case that maybe it's going somewhere else. We're starting to see some numbers. What tweet are we looking at here? Yeah, so Hayden says, Dex starting to replace centralized exchange, question mark, total ETH, USD volume.

Starting point is 00:14:27 And then he lists off the three biggest exchanges, Binance, Uniswap, and Coinbase, Binance coming at 1.9 billion, Uniswap at 1.1 billion in volume, and Coinbase at 0.6 billion. So Uniswap has now taken the spot of the number to most liquid exchange for ETHUSD. David, that makes me so damn happy.

Starting point is 00:14:44 Very happy. Do you know why? You don't have to give your private keys to uniswap, but we're going to make a trade. Self custody. No one can stop it. It's uncensurable. This is defy. These are the types of exchanges we need to base this entire system on. All right.

Starting point is 00:14:58 Well, we've got a lot more to talk about. I just almost clicked over. Almost all about FTX, the contagion. The Genesis halts. Genesis is a large trading firm. We've got to talk about that. They halted withdrawals. also talking about mainstream media

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Starting point is 00:17:14 Yeah, it started, this was November 13th. So this was, was this Monday night? I don't know, all the days are a blur. There was the 14th, Monday evening. And SBF just tweets at what? What? So SBF always writes a thread. Like he's a thread oar.

Starting point is 00:17:29 It's kind of his meme. And so he always writes these threads with like one parentheses, like, you know, kind of like a bullet fashion, like one parentheses, two parentheses, just to like label the threads. My first tweet, my second tweet. A common thread etiquette to do that. This one was weird because he goes, one, parentheses, what?

Starting point is 00:17:47 And then followed by two parentheses, H. The letter H, followed by three parentheses A. And he is tweeting these out with hours of space. Not in rapid fashion. Not in rapid fashion. You're supposed when you write a thread, you write all the tweets, and then you send them all at once so that people can go through the thread. Like a normal person does.

Starting point is 00:18:07 Like a normal goddamn person. So what he does is he goes one, parentheses, what, waits two hours, three hours, and then goes two parentheses, H, the letter H, three parentheses, three hours later, A. And he ends up spelling over the course of like a 24 hour period, what happened over like 10 tweets. And then the 10th, it goes in parentheses, not legal advice, not financial advice. This is, as I remember it, my memory might be faulty in parts. And then 11, I'll get to what happened. But for now, let's talk about where we are today. And this is a 36-hour-long endeavor of people trying to figure out reading SBFT leaves.

Starting point is 00:18:50 It was what the hell he is doing with this tweet thread. Who does this, David? Who the fuck does this? Like, who does this? Like, why would you do this? What, what, is he trying to get attention? Is he just, like, toying with us? Yes.

Starting point is 00:19:04 I mean, he stole, like, 10 to 16 billion. million dollars worth of our money by our. And he's just like being a meme lord on Twitter, dude. Why? I mean, this can't be. So I had thought, like, another thing a normal person would do is, like, here's my Twitter account, give it to the lawyers, like, PR team. Put me in handcuffs.

Starting point is 00:19:24 No, this is him tweeting this out. Some people, do you hear some of the early speculation? There's always conspiracy theories around this that he was, like, tweeting out some sort of code, Dead Man Switch. which, something that would unlock, I don't know. I don't know. I don't even know. There's so much. I mean, he didn't, let's let crypto Twitter run its imagination as to what he was doing.

Starting point is 00:19:46 I mean, but this is, it's more than what happened. Yeah. And more than tweet number 10, is the rest of this thread worth reading? He goes through 11 to 21. Is there anything here that we really care about? 18 says truth and beauty? What? I do.

Starting point is 00:19:59 It's all weird, man. And like, he says a lot. He says a lot. And all, everyone is like, Kobe is like. Like, dude, shut the F up until you tell us how you lost $10 billion. Like, everyone is saying, dude, just stop. Just shut the hell up. Just like, go away.

Starting point is 00:20:15 He's saying a lot. Yeah. I mean, so like, the other conspiracy was that, like, he's going for an insanity plea. He's like, I'm just going to be insane on Twitter so I can plead insanity later. And then I remember Jake Chravinsky was like, you don't get to plead insanity for becoming insane after you're committed crime. Those lawyers, they'll get you on the technicalities. Okay, so like, this is not the most insane thing that he did. Right.

Starting point is 00:20:42 Did you see the Vox article? I saw some of that. The Vox are, oh my God. Okay, before we get to the Vox article, there's a theory of, like, you know, ego, there's a theory of insanity. Drug use, yeah. I've also read a lot about, you know, pharmacological influence. Amphetamine use, yeah.

Starting point is 00:21:01 Amphetamine use in this whole scenario. In fact, the weightless wrong guy did a whole post about this. And, you know, there's a lot of evidence that not only SBF, but the entire team was on some sort of combination of amphetamines. I'm not talking about meth. I'm probably talking about. Adderall. Yeah. Adderall and stronger versions of Adderall.

Starting point is 00:21:23 Basically. And maybe cocktails of all of the above. And so there can be side effects with meth. I'm sorry with meth. I don't, again, they're not in that. There are side effects with meth. Yes. Don't do meth kids.

Starting point is 00:21:35 Amphetamines, though, which can increase your proclably to shopping sprees and gambling and risk-seeking type behavior. And it doesn't have to turn you into an all-out gambler, but it can kind of move the risk curve even a little bit. And you have to imagine, somebody like SBF, he's a trader in cryptocurrency. He already is pretty far alongside. Well, that's the other thing.

Starting point is 00:22:00 But he's already pretty far on the right side of the risk. curve in terms of the 0.01% of the population who engages in this type of risk-seeking behavior, if you're on this sort of drug influence, maybe it moves you even further, you know, on the side of riskiness. So could that have been a factor? Is that something do you think he's even trying to push as a legal defense? I have no idea. I don't think anyone can think that they can step into the mind of SBF. But also just to double down on that point, like all of that stuff is true. And then also imagine having like your gang of similarly age cronies who are also engaging in that behavior. Apparently like it was common at FTX. So like as for for new new employees,

Starting point is 00:22:46 they would get like, I don't know, indoctrinated into this weird cold. And they would be like, okay, here's like this slew of amphetamines that you can increase performance with. And so it became a part of culture to do amphetamines. And and so like when you were on phatomines all the time, your mind is going to get shifted. But when all of your friends are also doing that too, and that's just like the company culture that you have, like you just totally lose touch with reality. And that's really what's happened here with SBF.

Starting point is 00:23:14 He has just completely lost touch with reality. Yeah, and those around him too, because let's remember he couldn't do this alone. He had to create this kind of cult, this reality distortion field in order to do this. Okay, now tell me about the Vox article. So is this the one with the text back and forth? Yes, yes.

Starting point is 00:23:29 It's a reporter. Yes, okay. reporter at Vox, Kelsey Piper, I guess, is the reporter that SBF was texting with. And, like, no, SBF knows that this person's a reporter for Vox. And SBF just DMs this guy pages and pages and pages of communications, just talking about everything. Kelsey's not a guy, but yes. Oh, pardon me. And so, yeah, DMs Kelsey, like all of these things that you would just, as a lawyer, would not want your client to say.

Starting point is 00:24:02 things like that effective altruism was just like a PR move for example like the number of incriminating things that he gave to this reporter in DMs who then they took the screenshot and then posted them

Starting point is 00:24:18 into the article is insane man it's absolutely lunatic So Kelsey asks SBF this question You said a lot of stuff about how you wanted to make regulations just good ones was that pretty much just PR too. And he goes, this. Yeah, just PR. F regulators. They make everything worse. They don't protect

Starting point is 00:24:38 customers at all. What? He, 11 days, he went on a debate talking about, like, regulators and how much we needed to work with them and go to the table. Like, this is someone who is also a pathological liar quite clearly. Here he's saying to Kelsey, F regulators, that was all just PR. All of my participation was just PR in the whole regulatory fiasco. Kelsey asks, says to Sam, you were really good about talking about ethics for someone who kind of saw it all as a game of winners and losers. And SBF replies, yeah, he-he, I had to be. It's what reputations are made of to some extent. I feel bad for those who got effed by it. By this dumb game, we woke Westerners play where we say all the right, Shibola F, I don't even know what that word is. And so everyone likes it.

Starting point is 00:25:29 basically saying, yeah, the effect of altruism thing was just a front. Yeah, I mean, it continues. You kind of don't believe in, like, doing unethical shit, in quotes, as anything other than a judgment we bestow upon the losers. And then SBF replies and goes, a month ago, CZ was a walking example of don't do unethical shit or your money is worthless. Now he's a hero. Is it because he's virtuous or because he had the bigger balance sheet? And so he won. That's what he thinks.

Starting point is 00:25:57 There's just not a base level of taking responsibility and there's not a base level of ethics. This is not the type of person you want to entrust your money to. So here's one. SBF says to Kelsey, I effed up big multiple times. But you know what was my biggest single F up? He's actually saying the word. And then Kelsey responds, oh, question mark. the one thing everyone told me to do.

Starting point is 00:26:28 I'm trying, and then Kelsey responds, I'm trying to guess, but I have no idea. And then Sam goes, chapter 11. So, of all of his regrets, it was filing for bankruptcy that SPF regrets the most. Also, if you read more of the text messages, he actually still thinks there's a chance.

Starting point is 00:26:42 He's like, I didn't want to go bankrupt because I can still raise $10 billion like right now. I used to be the best. That is lunacy. Yeah, it's lunacy. It's just off, like, it's completely,

Starting point is 00:26:55 cut off from reality. Yeah. Detached. Completely detached from any form of reality. And there's delusions of grandeur there maybe. I don't know. I'm not a psychologist. Dude, that's what we saw with Eric Voorhees.

Starting point is 00:27:08 Like, that's how I would describe that debate with Eric Voorhees. Detached from reality. But the fact that he still thinks, yeah, at the end of this, that he can still just like save the depositors money. I don't even know if he thinks that. I don't know what he thinks because he doesn't have any ethics. And this could be another PR thing. But all of his tweets recently, David, even this week, have been all about, my number one priority

Starting point is 00:27:31 is saving customers money and protecting the customers and depositors. And so at the end of this, he still thinks he can raise $10 billion. Someone's going to sink $10 billion into this failing ship and this broken empire. So here is a fantastic summary thread from Genevieve. And she tweets out, I read the 30-page FTX bankruptcy court filing. How bad were FTCS's internal controls, question mark? Here are the worst examples. Example, number one.

Starting point is 00:28:00 Employees submitted expense reimbursements over chat. A random manager would accept or reject these reimbursements with an emoji. Number two. Related party loans. Alameda Research, FTC's hedge funds, gave Sam Bankman Freed a $1 billion personal loan. They also loaned Director of Engineering $543 million. They loaned him money? Loaned, yeah.

Starting point is 00:28:22 Three very few records were kept. most decisions were made over chat with the message automatically deleted after a certain time. So apparently, Sam largely communicated with his employees over Signal because you can delete messages and signal. Okay. But go back to that. So they gave SBF a billion dollar personal loan. They just gave them a billion dollars. And one of his director of engineering, half a million dollars.

Starting point is 00:28:47 Yeah. And that's actually not all of it because, and so in this, the picture that Genevieve is tweeting, it says, Related party loans receivable of $4.1 billion at Alameda Research consisted primarily of a loan by two paperbird ink, a loan of $2.3 billion, and a loan to Mr. Bankman-Fried of $1 billion. You know who owns Paperbird Inc? Right. I'm going to guess it's Mr. Sam Bankman-Fried. It's Mr. Sam Bankman-Fried. So actually, it was $3.3 billion that he got a loan from FTC. Well, well-named. It really was a paper bird, wasn't it?

Starting point is 00:29:23 Jesus, dude. Oh my God. What else we got here? FTX, number five, FTX had no cash management system. Management had no idea how much cash was on hand at any given time, or even where their cash was at all.

Starting point is 00:29:36 Number six, FTX did not keep proper records of who they employed. Employees and contractors commingled throughout the different companies without proper documentation of how their time was spent. Certain employees can't be located. Seven, corporate funds were used

Starting point is 00:29:49 to purchase personal use real estate, and employees and executives put their names on homes purchased with company funds. Eight, crypto deposited by customers weren't even recorded on the balance sheet. Presumably all crypto assets went into one central slush fund used for whatever.

Starting point is 00:30:04 What? Nine, the filing makes it clear that Sam Bankman Free does not speak for the company and that his erratic and misleading public statements should be disregarded. Yeah, I guess so. Yeah. So, like, this is just a house of cards,

Starting point is 00:30:16 like sticks and, like, constructed business with a bunch of anphetamine-riddled kids who were like, oh, sweet, we got a billion dollars. Let's do stuff. And like no adults. But you know what's crazy? It's the amount of VCs. Like they raised, was it, two billion dollars

Starting point is 00:30:32 from like notable VC firms this year? Yep. A number of which are coming out and, distancing themselves. Disancing themselves this week. Maybe we'll get to some of that. But the fact that this was going on, I guess shows you the level of,

Starting point is 00:30:46 I don't know, due diligence some of these firms are doing, or the lack of it, or the fact that they are, I think some of these VC firms are just like, they bet on people, they bet on individuals. And so they don't vet the core mechanics of the business. They don't look at the books. They're just making a bet on SBF, and he was able to con them.

Starting point is 00:31:05 Yep. What's this next tweet we're looking at? So this is a threat I thought was pretty interesting from this Petrify TCG Twitter account that documents a lot of Sam Tribuco, who was the former head of Alameda. and Sam Tribuco put a thread together back in 2021, and he kind of just did some forensics. And basically, he documents the going from Alameda at the very beginning of Alameda,

Starting point is 00:31:30 which was a Delta neutral trading hedge fund, which is just like a normal thing, where they just market make, they don't take any risk, they don't take positions in the market. But then they decide to take more risk with, like, defy yield farming, which is more risky,

Starting point is 00:31:44 but you can still kind of control your losses to some extent if you're good and sophisticated. And then as it goes on, they just totally take directional bets on the money on the market. And again, totally fine if you're not using customer deposits, which they were. And so you kind of see the documentation of Alameda going more and more and more risk on as the bull market went on because everyone's a genius, right?

Starting point is 00:32:10 I was a genius in 2021, not as smart in 2022, but I wasn't using customer deposits. So that's fine. It's pretty smart, that. Yeah. And so, like, it's basically, like, you can see the degeneracy of Alameda go higher and higher and higher as the bull market continues. And then just, like, not position themselves at all for the turning around of the market. It sucks.

Starting point is 00:32:32 It's brutal. This is so ugly when you look into this. There's definitely a case. I mean, it's very obvious right now that Sam knew exactly what was going on. It's not even, like, he was, like, new about it. He's, like, he definitely, like, orchestrated it. There was a message. So remember all of those crazy tweets from Sam that we started off with.

Starting point is 00:32:51 Yeah. We saw, there was a leaked photo of the company Slack of FTX that I'll read out. Inside of the company, FTX, somebody says, why is Sam trolling on Twitter as if this isn't a serious situation? Question mark, exclamation point, question mark. Did we not learn that trolling on Twitter got us here? And Sam replies in Slack, I'm sorry, exclamation point. Maybe it's wrong. I took the approach because something needed to break through the model.

Starting point is 00:33:16 mentality, but I'll likely be more straightforward going forward. What mob mentality? Anyways, the employee responds, Sam, respectfully, this is not helping. Nothing broke through the mob mentality. In fact, your tweets just made the people more mad that you had the audacity to tweet something cryptic when people's lives have been destroyed. I don't think anyone understood the cryptic nature of your what happened tweet thread. If there is more meaning behind it, please enlighten us because we are lost.

Starting point is 00:33:41 Your employees lost everything they had on FTX. Wow. FTCX users lost everything that they had on FTCX. everyone that chose, everyone that chose to believe in you lost everything. You tweeting what happened in 10 tweets spread out over 24 hours. It's just piquing everyone's anxiety. In addition to the money that they have lost, I was personally also super anxious after every tweet you sent, hoping for some positive outcome. I request to only tweet if you think you are adding value to your users, investors, employees, and if you have any plans of making us whole, anything else would

Starting point is 00:34:13 infuriate people even more. A lot of us idolized you, Sam, and you have let us down. In my, in my opinion, you don't have anything of value for your users, investors, employees. Please refrain from tweeting. It's just seems that this has to come from an employee of FX inside of Slack. It's sad. It's brutal. Man, good riddins, right? Back to the theme. Thank God this guy is out of here. But it's been a slow train crash, I guess, toward the end. All of last, all of this week felt like this. We're looking at some court documents, I think, and there is a new CEO at the helm. So, of course, FDX goes under bankruptcy chapter 11. That means SBF no longer has power. Governance power of the organization. He has to step aside. Bye-bye. New CEO, John Rayne,

Starting point is 00:35:01 John Ray came in, and he writes some scathing reviews of what was going on. This is somebody who's coming externally and helping to, I guess, organize this company for bankruptcy. And so in these Chapter 11 bankruptcy documents, this new CEO says, I have over 40 years of legal and restructuring experience. I have been the chief restructuring officer or CEO in several of the largest corporate failures in history. I have supervised situations involving allegations of criminal activity and malfeasance, Enron.

Starting point is 00:35:31 I have supervised situations involving novel financial structures, Enron and residential capital and cross-border asset recovery and maximization. Nearly every situation in which I have been involved has been characterized by deficits of some sort of internal controls, regulatory compliance, human resources, and system integrity. So that's the, he's setting himself up for a punchline, and here it is. Never in my career have I seen such a failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated, and potentially compromise individuals,

Starting point is 00:36:11 this situation is unprecedented. This is the guy that oversaw the Enron restructuring, saying that this situation is unprecedented. Oh my God. My man's been doing this for 40 years, and he's like, this is the worst I've ever seen in my whole career of seeing terrible things. like Enron doesn't even hold a candle to this. Here's another tweet thread of the Chapter 11, First Day affidavit. This is the affidavit filed by that John J. Ray. Anything we could take from this? It's so bad, Ryan.

Starting point is 00:36:45 Like, we've talked a few about the things already, like the reimbursing with emoji codes. There's some other crazy stuff. Employees were paid through online chat. It's like SBF and Gary Wang controlled all of FTC's digital assets personally using a group email account to share private keys. Oh my God, dude. Like, it's, if you want to read the train wreck, just like the links in the show notes. Well, here's one. Alameda had basically special privileges. They had kind of access of the

Starting point is 00:37:16 FDX exchange. And Alameda, of course, was Sam's private hedge fund DGN trading firm, right? There was a secret exemption. This is from the court documents. The secret exemption of Alameda from certain aspects of FTCX.com's auto liquidation vertical. Alameda was exempt from getting liquidated automatically on FTCS. So Alameda could leverage long on FTCS without fear of liquidation. So basically have no risk. Last in line for liquidation.

Starting point is 00:37:46 Everyone else gets risk. Why would you ever come to this platform to trade? What a terrible... What a terrible... Yeah. It just everything stacked against you. They're literally preying on their users. Now ultimately they've stolen all the monies.

Starting point is 00:38:00 It doesn't surprise me. Well, I think this is like one of the reasons why the whole thing fell through is Alameda took a leveraged long position. Then the market turned over and then they were never liquidated. So who's paying for that hole? Oh, well, it was FTCS, aka customer deposits because they didn't liquidate their own trading firm on their own exchange. Okay, let's get to contagion.

Starting point is 00:38:23 Here's the big story. Genesis. Who is Genesis? And what's happening with Genesis right? now. Okay, Genesis is like the biggest lending and trading desk in all of crypto. They're kind of the heartbeat. And this is, this was the contagion that Chris Berniske was saying that he was looking for, right? And so if Genesis is impacted, then you kind of know we're at the center of things. So Genesis, they tweeted out that they had $175 million in FTX, which is now gone. And as a result of

Starting point is 00:38:49 that, they have had to suspend withdrawals in their lending business. And so they, that their their lending desk is closed. I'm sure they have plenty of money on the table. Do they have all of the money? I think we're still waiting to hear as a result of that. But this, of course, bleeds into Gemini. And anyone else that has like an urn product. So Gemini Earn has paused withdrawals.

Starting point is 00:39:14 And so, of course, this bleeds into anyone that gets yield out of Genesis. Gemini Earn, for example, Gemini Earn has paused withdrawals out of the Gemini team and they say they were working closely with the Genesis team to help customers redeem their funds from the Earn program as quickly as possible. I think they just need to wait for the dust to settle and like see where their accounts are. This does not impact any other Gemini products or services. The Gemini Exchange is responsibly firewalled from Gemini Earned because of you know good common sense and regulation. And I actually withdrew like I had like 0.1 eth on Gemini and I was able to withdraw that yesterday so I can speak from experience here. But

Starting point is 00:39:54 this leads us back to kind of how Genesis was the biggest lending desk in the space. So we'll pull up a tweet from Dylan LeClair here that gave their Q3 market activity snapshot. $8.4 billion in Q3 loan originations, $2.8 billion in active loans, $18.7 billion in derivatives traded, and then $9.6 billion in Q3 spot volume traded. And Dylan continues after putting out some of these numbers and goes, not only does this perpetuate the contagion domino effect, but this also will further the liquidity crunch being felt across the space as institutional players reach for additional financing. And so we don't really know, I don't really know the knock-on effects of this. Yeah. So the bottom line is Genesis paused,

Starting point is 00:40:41 withdrawals pause, which means they're clean out of liquidity. That doesn't necessarily mean they're underwater and their liabilities exceed their assets. It doesn't necessarily mean that, but they've run out of liquidity. We don't know. It doesn't seem super healthy. And because Gemini Earn's program was based on Genesis, essentially, now withdrawals are frozen on Gemini Earn. By the way, David, guess you had some funds on Gemini Earn, too? No way. This guy right here. Wow. All right. I'm collecting all the crypto banks. You've gotten all of them. I haven't missed yet. Wow. And fortunately, a very, very small amount because, again, it's just like me testing these things. But

Starting point is 00:41:22 But yeah. Now, I will say... You've got to collect all those podcasts, man. So Celsius is gone, obviously. I mean, like, dead, right? BlockFi, probably dead, unless it gets a CZ bailout, right?

Starting point is 00:41:37 And that would be sort of the Hail Mary miracle shot. My take on Gemini Earn, I think there's a chance. I think I'm feeling pretty good about that. I get over 50% chance. I think that Genesis going under would be a really big freaking deal. And Gemini, and then the combination genesis going under it, and then Gemini saying,

Starting point is 00:41:58 sorry, all earn customer, like, that would be very damaging for Gemini's business, right? So it feels like they're going to probably find a way or they could. I don't know. I'm giving it like 50, 50 odds. And that is not based on any data or any science. It's just Ryan's gut feeling right now. Having, having been through them all right now, I've got some experience on this. So not good. And of course, this is BlockFi. They sent out an email earlier this week. We were shocked and dismayed by the news regarding FTX and Alameda.

Starting point is 00:42:31 We, like the rest of the world, found out about this situation through Twitter. Isn't that fun? And basically, they're saying they're trying to protect client funds. They have no clarity. Everything's frozen. I don't know what BlockFi is going to do. It's a really bad situation to be in, especially because they're getting double-dunked here, right? They basically went underwater over the summer as a result of, it was a trade.

Starting point is 00:42:57 It was the GDPC trade. When that kind of fell, the floor fell out from that as a result of three hours capital, they got wrecked there. And then they got a bailout, but who did they get a bailout from? FTX, the Ponzi king himself, comes and bails them out, and now they're back underwater again. So pretty brutal situation to be in. I'm not sure that they're going to make it out of this, but maybe there's hope. Well, so I feel bad for Blotify because, like, this, they got bought up and just, like, subsumed into the Ponzi. And so... Why? Why did Sam buy them? It wasn't out of the good graces of his heart, was it?

Starting point is 00:43:32 No, not at all. So this is Autism Capital tweeting out this Twitter account is something else. They did a great job reporting this week. It's despite the name. From a BlockFi employee, the only reason FTX bailed us out was to get our users funds onto their platform to use in their shell game. They applied immense pressure to get Block 5 funds migrated to FTX custody. Employees were told by executives to not ask questions about the move. Wow. Oof. Bad. Yeah, very bad.

Starting point is 00:44:03 Yeah, so this is a Wall Street Journal, again, saying Block 5 prepares for potential bankruptcy as the crypto-contagion spreads. More contagion than that, though. Yeah, I'm not going to call then to the contagion either, even after this week. I think this will take a few, like, a few weeks to pan out fully. Yeah, we're getting close. I think we're getting close to the end. The news will be about this for all throughout 2023. Yeah.

Starting point is 00:44:25 Gowah Capital had 50% of its funds on FTX. Multi-coin capital lost... A hundred million. That's 50% of their holdings. Yeah. This entire fund got wrecked. Yeah. Multi-coin capital lost 10%.

Starting point is 00:44:37 It was 50% of their assets, not all of their deployed capital, but yeah, 50% of multi-coin assets were lost. Well, they're down. It's not... So I think they got at least 10%, maybe more actually stuck in everything. 10% of the fund, yeah.

Starting point is 00:44:52 So, like, of their liquid assets that they had, it was like 50% of them. But they had a lot of other investments. This 55% number is the drop in the fund's value, including the write down of, like, all the FTT tokens and Seoul and everything else that they had in their fund was a 55% down. Yeah, so pretty brutal. I'm not talking about over the year.

Starting point is 00:45:16 I'm talking about over like the week, like a two-week period, and you're down 55%. Yeah, so Circle also had some contagion with Genesis. I actually haven't been able to, like, get some numbers on this one, but Circle's yield, the yield that you get with Circle goes from 0.25% down to zero because Genesis was one of the few places that they were getting yield in the first place. To be clear, USC is fine.

Starting point is 00:45:40 Do USC is fine. Yeah. So USC is not going anywhere. Yeah. And so like, why was this? I hate not going anywhere. Like, that's hard for me to say right now. Yeah.

Starting point is 00:45:48 I've always figured. that. Yeah. So, like, we have to ask ourselves, like, why was this at the center of contagion? And it kind of was reminiscent of, like, the three-ro's capital, where, like, three-o's capital was just taking loan from anyone that would give it to them. Well, FTC and Sam was kind of in the same position. Everyone was like, Sam, take my money. You're like this money-making God. Please take my money. And so, because he's a sociopath con artist, he would say, yes. So this is Frank Shapiro that said, just spoke with an LP in several crypto funds. He said when he asked funds why they did. lazy due diligence on FTX, they responded with basically, he was on the cover of Fortune magazine, he was a big name. That was why they invested in FTX. And so Frank concludes, there's going to be a lot of lawsuits and a lot of funds will shudder, basically saying that if funds didn't do enough due diligence to investigate what's going on with FTX, then they might get sued.

Starting point is 00:46:44 They just gave them a pass because he had the social proof and he had the credentials. And they just FOMOed right in because everything to that point that Sam had touched turned to money. So they needed to be part of that. That's why they did the lazy due diligence. And Frank, Frank continues with a quote like, it's just like Theranos, but then also responds. Even Theranos had a board of directors, which FTX did not. Absolute insanity. It's like Theranos, but worse. All right.

Starting point is 00:47:12 So what's going on in sort of the legal side of things? A few things. Number one, the U.S. House Committee just announced. that they are scheduling a hearing on the FDX collapse. Great. That hearing is apparently happening in December at some point in time. That will be an eventful hearing, I'm sure. That will be crypto being scrutinized.

Starting point is 00:47:32 I don't expect to see a lot of distinction between CFI and DFI. I don't know. That's going to be an absolute mess, David. We're obviously going to talk about a lot, talk a lot about that as it comes. but I'm not looking forward to that. It's pretty terrible for the industry. Also, what's happening to the influencers who supported FTCS and advertised for them?

Starting point is 00:47:58 Yeah, so Tom Brady, Larry David, a few other supporters, Chef Curry also. Oof, they are, there's a class action lawsuit against other celebrity promoters who promoted FTX, which I kind of like, Larry David was just in the commercial. Like, he was just hired to do a commercial.

Starting point is 00:48:17 Tom Brady? Why is Tom Brady getting sued? Just because he was a paid spokesperson. Tom Brady is the person you trust to do due diligence? I don't really understand this one. But people are mad and they're just trying to sue people. Yeah, I don't know what will happen with these types of lawsuits. But yeah, people are very mad. But don't take Larry David from us. He is a national treasure, please. So there's a bunch of reactions, of course. The entire crypto world is reacting. But I mean, positively. So, Binance has announced that their intent to do a Vitalik Buterin-flavored proof-of-reserves system. So CEO, Binance, CZ reveals plans to implement a new proof-of-reserve system protocol developed by Vitalik Buteran.

Starting point is 00:49:02 So that's a nice, healthy response. Also, in line with Binance, crypto.com also intends to audit their reserves using a proof-of-reserve system as well. And then also, we kind of alluded to this earlier with the Uniswap voles. volumes at all time high, self-custody is at all-time highs. And so NOSIS SAFE saw almost a billion dollars of inflows into the NOSIS multi-sig. Ledger, the ledger hardware wallet sales at all-time high. Trezor hardware wallet sales up 300%. And so this tweet is just saying the flight to self-custody is here. And then, of course, this is Andrew Thurman, who's saying, most DFI protocols are double digits in users and transactions,

Starting point is 00:49:47 while exchanges have huge outflows. Crypto, as measured by on-chain activity, is doing great despite FTX fraud. And he's actually retweeting Joe Wisenthal's tweet that says a lot of, like, Joe Risenthals make in front of crypto being like, oh, yeah, but this isn't real crypto making a claim. Like, yeah, it's not real communism,

Starting point is 00:50:09 which is... He's always so cynical about... Yeah, he's always cynical. He doesn't ever grab the nuance of it, Anyways, we have the data to prove that we are doing the responsible reactions to this event. Cynics won't believe me, but like this is good for crypto. This is healthy. This is good for bankless money systems overall that we detox and get this centralized, you know, flaw in our system out right now.

Starting point is 00:50:34 It wasn't addiction. It really was. All right. So we had some mainstream reporting about this entire situation, some pretty, you know, some pretty, bad mainstream reporting. We also had, we also had Democratic, Democrat influence, of course. So SBF was the number two largest donor to the Democratic Party. And some other folks within FDX organization contributed a great deal to Republicans as well. What tweet are we reading from Ryan Shea? Yeah. So Ryan Shea says, this is crazy. Elizabeth Warren is known for being

Starting point is 00:51:09 the anti-crypto senator, who helped her draft the tax legislation bill in 2013. 16, none other than Joseph Bankman, father of SPF. Here's a reference to the bill on her website where she thanks Joe for the endorsement. This legislation has been endorsed by dozens of law professors and economists, including Joe Bankman of Stanford University. Wow. And then he follows up with a tweet from Elizabeth Warren, and Elizabeth Warren tweets out, The implosion of FTX must be a wake-up call for Congress and financial regulators to hold

Starting point is 00:51:40 this industry and its executives accountable. Too much of the crypto industry is smoke and mirror. it's time for stronger rules and stronger enforcement to protect ordinary people. Hmm. Okay. That's an interesting tie. How about this? So cold-blooded Schiller tweets out, honestly, this headline and write-up is awful from the FT from the Financial Times.

Starting point is 00:52:00 CZ's actions, this is a quote from the article. CZ's actions left Sam Bankman-Fried's FTCs filing for bankruptcy. As in CZ, the consequences of CZ's actions forced Sam to file for bankruptcy. No, it's FBS actions that left FTX and hundreds of more filling, filing for bankruptcy. Yeah, they have to correct that. That's the major. Pointing at the finger at CZ is a weird angle for the media to take. And there's this weird, like, caricature of CZ in a very not gracious illustration of CZ.

Starting point is 00:52:30 It's a bad look. It's a bad look. And this is the FT, man. Another one saying bankrupt FTX gave $18.2 million to early COVID researchers who cast doubt on Ivermectin and Hydroqualks the Queen. This is like, I just broached that pronunciation, but this was like these like non-vaccine like solutions that were really supported by the right. And the claim here is that FTX gave $18 million to researchers who were able to cast doubt on like these right conservative aligned solutions to COVID. Dude. And like, there's another one.

Starting point is 00:53:06 I don't understand this. So like go to the next one where where the title is FTCX collapsed, dooms founder's effort to prevent another pandemic. And the subline is flush with crypto cash. Sam Bankman-Fried spent tens of millions of dollars on campaign donations and projects intended to bolster public health. How is he doing this? And track emerging viruses. What? This is what we're focusing on?

Starting point is 00:53:30 How, like, Sam tried to stop the pandemic. Are you serious? I don't even understand, actually. It's because, like, the mainstream media doesn't, is like, he's a darling and they can't. Are you sure? They still? Mainstream media is still reporting out that he's a... Like, I don't consume much mainstream media.

Starting point is 00:53:48 Okay, so go to Belaghi's tweet, because Belaghi's tweet will summarize it pretty well. The net result of FTCS is that billions of dollars was stolen from crypto investors to give to Democrat-aligned politicians, non-profits and journalists. This is why there may be no prosecution. Are you serious? Is there really not going to be... Like, this man should be in a jumpsuit, right? Like, this is very...

Starting point is 00:54:10 The fact that he's not already is insane. Well, this is very clearly, like, this is very clearly, like, fraud, a scam, like the biggest financial heist that we've seen since a Bernie Madoff. And in Bernie Madoff's case, it was investors at least. This is literally the guy stealing from depositors. He's like operating a bank and stealing the savings accounts. And he's not going to go to jail for this. There's not going to be, like, responsibility. I can't believe that's true, David. I hope it's not true, but like some of the takes from mainstream media that missed the ball. Like, CZ triggered FTX's collapse. FTX collapse founder tried to stop the pandemic. Just like some insane headlines, man. It's crazy.

Starting point is 00:54:59 And remember, Belagia always goes after the New York Times for being like woke media. Yes. And so like if FPF is, SBF is donating $70 million to like the woke political party, and all like the woke media don't go after the actual point of the whole thing. I want to give it some more time. I can't believe mainstream media

Starting point is 00:55:18 is coming out on SBF side. How is that even a tenable position in your case? I don't know if they're coming off on SBF side. They're just missing the point. They're missing the point about how he should be in a jumpsuit. Okay. How about this from Brian Armstrong? I'll read this out.

Starting point is 00:55:33 Twitter's broken just about every piece of this FDX story using blockchain analytics while New York Times is writing puff pieces on a criminal. feels like a turning point for citizen journalism and loss of trust in mainstream media. Yeah, I totally agree. The coverage from what I just saw now and have been seeing has not been good. I hope we get, I don't know that I have a lot of hope other than, look, public blockchains give us accountability into financial systems like this. And so anybody on chain can see what's going on and report out. And they're actually doing the work. I mean, individuals are doing the work. They're uncovering where the money is flowing and what's actually happening. And it feels like mainstream media is just off on another planet at, you know, at worst and like three steps behind at best. So Hasco Trade summarizes this nicely where he just says, lost count of the number of mainstream media articles since

Starting point is 00:56:33 recently that have focused on CZ's role in this, SBF's ambitions and also SBF's sleep schedule while failing to address Alameda FTX relations backdoors misuse of customer funds the convenient hack constant lies resolvency like again missing the point David did we even cover the hack we even talk about the hack I don't even know what to do with the hack because like yeah so FTX got hacked we don't know who's got the money it's like now the 30 30th largest heath holder I don't even know what to do with that information so there was some sort of hack that even kind of the new owners chapter 11 owners of the people trying to reorganize, restructure,

Starting point is 00:57:13 FTCS, agree was a hack by some sort of third-party employee insider. I think it was a rogue employee. And we don't know all the details. And how much do they come out with? It's like hundreds of millions of dollars, right? It was like almost a billion dollars, right?

Starting point is 00:57:28 We were seeing this on chain as it was happening. This is earlier in the week, right? And they were converting from like different staple coins and ultimately into ETH. And now they, last I saw, they were like the 36th largest eath holder. And so we don't know

Starting point is 00:57:42 who this hacker is because of all of the mismanagement and the complete utter lack of security at FDX a whole bunch of people could have done this including someone rogue and external from the organization.

Starting point is 00:57:55 So no idea. Remember, they were sharing private keys over email. Oh my God. It could have been anyone. Meanwhile, there is a redemption arc starting from our friends at Three Arrow's Capital.

Starting point is 00:58:06 David, Phyllis here. Yes. Yeah, so like a number of people came out of the woodwork, a number of like destroyed reputations came out of the woodwork in the last like two weeks. So like Doe Kwan showed up on up only. And then both Kyle Davies and Suzu started tweeting again. And so like people are like saying like now is the time that you guys just return to crypto Twitter. Because they don't look so bad relative to Yeah, because there is a bigger somebody lost more money than they did. And so like both Kyle Davies and like three and Suzu are like saying like, oh, like here's my like story.

Starting point is 00:58:40 Like Suzu put this like tweet thread together about this metaphor for surfing then how he like crashed on the waves because he traded. And then like, and everyone was like, shut the hell up. You like lied fraudulently about the state of your balances so you could borrow more money. You know something else. Who does CNBC mainstream media finance decide to put on their show to talk about to comment on SBF and FTX Fiasco. Kyle Davies, three hours capital.

Starting point is 00:59:11 Yeah, wait, but did you hear the question that she asked? I did, yeah. It's okay, let's play it. Andrew, it's Becky. I take it you're not in Bali because of the G20. Are you there because Indonesia is one of seven countries that won't extradite you back to the United States? No.

Starting point is 00:59:30 Well, for one, I haven't lived in the United States for like a decade, I've been in Asia. But for two, no, it's just a good place to be. So, Ryan, why do you think Kyle Davies is in Bali? Well, I think we all know the answer. Like, what I'm shocked at is Kyle appears on TV and he doesn't expect to be asked that question. Right. I'm like, it should not be a surprise. But part of me wonders, do you think CNBC is like, I mean, why would they have Kyle on Davies to comment on this? Do you think that they are actually just mocking crypto? Is this like a simple, let's,

Starting point is 01:00:05 to bring on some of the biggest scammers of 2020 and get these crypto people to comment on SBF to embarrass the industry. So you guys know how to scam, right? Can you comment about like the state of SBF? Yeah, I don't get it. Yeah. So anyway, look, we're still probably going to be talking about this sadly next week. We'd rather be talking about other things. In fact, after we come back, we're not talking about FTC. We're not talking about it. Yeah, for a little bit. Anyway, maybe towards the end, we will again. But coming up next, we want to talk about L2s, because they are coming in hot, still building.

Starting point is 01:00:43 Starkware has a new token, the Starknet token. Also, bankless doing an NFT release. A little something. We are. Not a big one, but a little something. Really cool. I didn't know that. We'll tell you more about that.

Starting point is 01:00:53 I didn't know that. Right when we come back after these fantastic sponsors that made this episode possible. TrueFi is DFI's largest credit protocol, connecting global lenders with institutional grade lending opportunity. TruFi has completed over $1.7 billion in originations and paid out nearly $35 million to lenders, proving that Defi is ready to take its next big leap into the $8 trillion credit market. Trufai gives lenders, like you, access to sustainable high-yield opportunities backed by real-world investments,

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Starting point is 01:01:50 TruFi.io. If you've been listening to Bankless, you know that we're fans of the modular blockchain thesis. The idea that blockchains will separate execution from data availability and consensus, allowing all three to become the best versions of themselves. Fuel has built the fastest modular execution layer in the industry. By supporting parallel transaction execution, fuel unlocks significantly faster throughput for the Web Free World. Fuel also goes beyond the limitations of the EVM with its own Fuel VM, which is more efficient and optimized, opening up the design space for developers. And lastly, Fuel brings a powerful developer experience with its own domain-specific language, Sway, and a supportive tool chain called Fork.

Starting point is 01:02:29 With fuel, you can have the benefits of smart contract languages like solidity while adopting the improvements made by the rust tooling ecosystem, letting the fuel development environment go beyond the limitations of the EVM. If you want to learn more, there's a link in the show notes to see how you can get involved with a fuel network. We all love tokens, Ryan. I know you like tokens. Did you know that the Starknet token is now deployed on Ethereum?

Starting point is 01:02:50 That is cool. The Starknet token is called STRK, now deployed on Mainnet Ethereum. So I actually haven't even had a chance to kind of look at the price or any of the details around this. Do you have anything that we should know? There is not much. They just have a token. And they said that they are going to work on distribution. All right.

Starting point is 01:03:13 Work on it. Work on that distribution. Businesses can now accept USDC with Apple Pay. That's a pretty big move. Yeah. So USDC now getting into wallets like Apple Pay. It feels like some stable coin saturation here. Yeah.

Starting point is 01:03:29 So waiting on the actual details are like how that actually shows up in my wallet. If I can put USC on my phone and pay with Apple Pay, that is a huge unlock. But I would like to see how that actually gets shown up. Anyways, Salana actually, sadly, is getting USC taken away from it. So this was interesting. Both Binance and OkX have halted USDC and USDT deposits onto the chain. So Binance says temporarily suspended tether and UCC deposits

Starting point is 01:03:58 until further notice. And also, OKX did it too. This is FDX fallout stuff, right? I think so. I think it's because Alameda was the large market maker on Solano using these stable coins. And now since there's no market maker, there's less liquidity.

Starting point is 01:04:15 That's the rumor that I've heard. I don't know why they made this choice. But the fact that both of them made at the same time, it was interesting. Salon is definitely taken a hit. from this. I think they'll recover, but yeah,

Starting point is 01:04:27 it's going to take a while for this wound to heal. Let's talk about some NFT stuff. So Yuga Labs are buying some Beeple stuff? People's getting involved with Yuga Labs? What's this?

Starting point is 01:04:36 So Yuga Labs has acquired Beeple's platform we knew, along with its flagship NFT collection, 10KTF, which I actually didn't know existed.

Starting point is 01:04:46 And Beeple, Mike, aka, will also become an advisor to Yuga Labs. So cool. Interesting development. Didn't see that one coming. Also didn't see this one coming.

Starting point is 01:04:57 Nike swoosh platform to allow users to buy digital wearables and build a community around these digital wearables, aka Nike's. Ryan, you're going to line up to buy a digital Nike? You know, I don't really. I'm not a shoe guy in real life. So I won't be in the metaverse either. And surprise, it's on Polygon. Yeah, Nike and Polygon.

Starting point is 01:05:23 partnership. Biz dev from Polygon continues to absolutely crush it. Sony just got a patent for NFTs and the blockchain. So Sony doing some things. I guess all companies are still doing things in crypto, even despite this bare market. Yeah. So they say the patent is for tracking in-game assets in video games, and it lays out mechanics for tracking changes in ownership, visual appearances, or metadata of digital assets. Kind of seems like it would, it's a skin kind of thing. It's like, oh, yeah, it changes as you wear it. And if you trade it, it goes, I don't know, something like that. That's what I imagined.

Starting point is 01:05:57 We are experimenting with NFTs, too. So we promised this before we cut to sponsors. Bankless is actually doing collectibles for some of our podcasts. So these are sound collectibles. I know you and I, David, have been on a little bit of a kind of a music sound NFT binge where we've acquired some of our own. At least I have. I don't know if you have.

Starting point is 01:06:18 You've certainly been bullish about them. So we thought, why not try our hand at this and convert some of the historic legendary bankless podcasts into collectibles. So we are actually releasing the first mint, the first bankless collectible podcast today. If you were listening to this, I think at 12 p.m. East, it will go live. And the first episode that we're releasing as a collectible NFT, so a sound collectible NFT, is actually the SBF and Eric Voorhees debate. Now, all of the proceeds from this collectible,

Starting point is 01:06:58 we have decided to allocate towards CoinCenter. So it's already tuned up so that any time one of these NFTs is minted or any of the royalties on a resale goes directly, all the proceeds from that go directly to the CoinCenter-Eth address. So if you buy one of these NFTs, or if you sell it, percentage of the transaction fee on the sale of royalty fee will go to coin center and the idea here david is we're going to be doing more collectibles in the future but this episode in particular i mean some people have said this episode sort of almost was the pinprick that popped the the balloon here

Starting point is 01:07:34 it was the start of the fall of the house of cards yeah yeah it helped us uncover everything with with sbf and uh we all know that not only in this in the conversation all of the regulatory actions all of kind of the smoke-filled rooms and meetings that SBF was having with regulators, with lawmakers behind the scenes, he's done a lot of damage to crypto in D.C., particularly, I think, damage to DFI protocols. And, you know, donation to Coin Center, I think, through this NFT can, it's not going to undo the damage overnight, but it can help. It's something. Coin Center is doing fantastic work. They are educating our lawmakers. They are fighting for. are legal rights.

Starting point is 01:08:17 And their jobs are a lot harder now. So we kind of owe it to them. Their jobs just got a whole lot harder. So anyway, the starting price of this, I believe, is 0.05 eith. There's only a hundred of these. And then they're all sold out. So we'll see how this goes. But we're pretty excited about it.

Starting point is 01:08:35 And if you are a holder of 35,000 bank, that price is actually 0.04 ether. We took that snapshot today. And the other cool thing about this is, SBF talked a big game about effect of altruism, Ryan, but with this, it's the donations to CoinCenter are in the code. The money goes from you to them because of the code. And so you don't got to trust us the way it's meant to be. Absolutely. And of course, this is, this is going to be the first of many collectibles. This first, like I said, 100% of the proceeds are going to CoinCenter. We'll be doing more in the future too. So we've got this.

Starting point is 01:09:10 All legendary bankless podcasts. Yeah. This is called the Genesis Collection. So this is the first of four others that will be released. There's five in total in the Genesis collection. We're not going to tell you what the next podcasts will be, but they're some of our favorite. These are the legendary podcast episodes that you can begin collecting. If you're into that kind of thing, it could be a fun way to experiment with NFTs as well. Meanwhile, moving on to different ecosystems, Cosmos, the community has voted on the Adam 2.0 proposal and rejected it, actually. Interesting. But basically, the community has has largely vocalized support for the general direction,

Starting point is 01:09:49 but they wanted more clarity and refinement on some of the finer details. So just taking a little bit back to the drawing board with the Adam 2.0 white paper. They're still going to do it, right? They're still going to improve the monetary economics or pieces of it? General support for the vibe of the white paper,

Starting point is 01:10:05 but they want more specifics. So they vote a no for... Chop it into parts, maybe, something like this. Yeah. And you know how we usually joke about how the Fed is researching CBDCs? Well, the private markets, city group, HSBC, Wells Fargo, Massacard, and a few others have actually joined forces with the Federal Reserve Bank of New York to actually explore a CBDC trial. We will see what comes up out of that.

Starting point is 01:10:30 Yeah, absolutely. Neither am I. David, some cool releases this week. The first from Defy Lama. What are they up to? Oh, they have an aggregator. So they are joining Macha 1 inch, now Defi Lama. Exchange aggregator.

Starting point is 01:10:43 Oh, very cool. And how about this? This is really exciting, actually. I'm so excited! Permissionless, 2023. It was a great conference, probably, definitely the best crypto conference I've ever been to, I'm sure it was. I'm true. I'm true. Hey, I can also say it was one of the best. It was definitely in the top three crypto conferences that I've been to in the last two years. And I've been to basically all of them. Well, this is one that we are helping to throw. We helped to throw it last

Starting point is 01:11:11 year with the team of Blockworks and we're doing it again this year. And this year it's going to be bigger, badder, better. Yeah. And when I say this year, by the way, I don't mean 2022. Sorry, I'm talking about September, 2023, Austin, Texas, September 11th through the 13th, more precisely. Yeah, so we're going to Austin because we need a bigger venue for this. And the news is that right now you can get tickets at the lowest possible price that you'll ever be able to get it. Because in 13 days, the price of this thing increases. General admission passed, the permissionless conference,

Starting point is 01:11:46 is $199. If you buy that now, so if you know you're still going to be crypto in September of next year, if you're a settler, not a tourist, you're going to want one of these tickets. And the big benefit, of course, is if you are a bankless premium subscriber,

Starting point is 01:12:01 you get another 30% off on this. So bankless premium members, not only do you get that fantastic Chris Berninski episode and your premium RSS feed, but you get 30% off of the general admission pass at permissionless. There's a link in the show notes where you can click and actually redeem that 30% discount if you are a bankless premium member. So, dude, I'm so excited. And you know what, David, you and I get to plan the agenda. We get to plan all of the speakers. Oh, well, only if people like the agenda,

Starting point is 01:12:33 then we did it. If not, it was blockworks, then. But that's so fun. I just love pouring all of the bankless content into that agenda. and getting the entire community together for this. Yeah, people were surprised that Permission List 2022 was a year one conference, but yeah, that was the first year that we did it. And it was a huge success. I'm really looking forward to doing this again in 2023. Ryan, I'm looking forward to seeing you, man.

Starting point is 01:12:57 For the second time? For the second time in our list? Dude, I got to get up to New York. I'll come up to New York before that. That'll be embarrassing if that's the second time. No, I'm not doing my layer zero. It's too much. Matter Lab, ZK. Sink raises $200 million.

Starting point is 01:13:11 So in their series C led by blockchain capital and dragonfly ventures, ZKSink raised $200 million, which leads to the total funding of $458 million, and a lot of that going ultimately into the ZKSink ecosystem. So congratulations to ZKSink on the race, and also Ryan and I are advisors to ZKSink. There's also an episode on ZKSync that we dropped on the bankless YouTube channel, and you can catch up and find out more about that raise and what they're doing more recently. CZ is also still investing, I guess, the only guy left with money. I hope it's real money. You think it is, David?

Starting point is 01:13:48 Not like the FDX, Sam-Begman-Free money, it's real? I think it is. I think it is. I don't know, though, because, you know, you just don't really know. I just signed eight investment deals, all small amounts, but good projects, we think. I guess trying to bolster the strength of this industry while everyone's panicking. Good time to invest, I think, if you're CZ, though, for sure. Good time to buy companies and stuff.

Starting point is 01:14:09 It's also still a good time to get a job in crypto. I mean, when you have layer two doing a $200 million raise, you know ZK Sync is hiring. What do we got on the job board this week? Shall I read some out? Yeah, I do it. All right, bankless.pallet.com, of course, you can find out about a senior smart contract engineer at Swell, senior front end engineer at Swell as well, and a backend engineer. Uniswap Labs, they need a developer relations lead as senior frontend engineer and more.

Starting point is 01:14:36 There's all sorts of jobs still on the bankless job boards. Open Hedge, optimism is high, rabbit hole, coin shift, ribic capital, chain link labs, and more. Find that out. Link in the show notes or bankless.com.com slash jobs. Guys, we're going to be back with some hot takes from crypto-twitter, and you know they're going to be hot this week. Pretty spicy. Some takes from Eric Voorhees, Chris Berninski, Brian Armstrong, and more. But before we do, we want to thank the sponsors that made this episode possible. Arbitrum 1 is pioneering the world of secure Ethereum. scalability and is continuing to accelerate the Web 3 landscape.

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Starting point is 01:16:51 slash banklist and click the wallet icon to get started. All right, guys, we're back. Takes of the week. Jake Trevinsky, number one. What's he saying here? A lot of people think the collapse of FTX is evidence that crypto doesn't have a future. For me, it's the exact opposite. This proves why crypto, trustless,

Starting point is 01:17:06 permissionless, uncensurable crypto is the only path forward for the future. This week we grieved. Next week, we build good words from Jake Trevinsky. I think we've made this point earlier the week that crypto is kind of bifurcated into two paths.

Starting point is 01:17:23 We're going to have the centralized path. We'll always have that. That will be more tightly regulated from here on going forward. The other path, the bankless path, is the defy path. And I'm hopeful that we continue to build on these permissionless,

Starting point is 01:17:36 uncensurable, trustless protocol, the DFI protocols from the base layer up. Space in the middle that FDX tried to occupy no longer exists, no longer exist, and was not a good space to occupy to begin with. What's this tweet from Eric Forhees? Eric Forhey says, Crucial lesson to DeFi Builders. Do not take a victory lap. Do not let your guard down.

Starting point is 01:17:59 Do not cede an inch to complacency in your code. Audit often and from multiple parties and assume the audits. it's failed, use guard rails to scale cautiously, Defi wins with vigilance. I think this is just emblematic of like this state of mind of just like, just being more just militant and mission driven about why we're here in the first place. And when somebody like SBF and FTX comes and crashes our party, what do we do? We get better in spite, out of spite. And I feel like that fits into the theme of this week, which is Goodridden. Yeah, I really, I love having the ability to view source on these assets and some of these decentralized protocols, right? It's like, and that's the way

Starting point is 01:18:47 all crypto should be, right? The fact that we had no idea what was going on in FDX's balance sheet, that is so anti-crypto. That is so anti-Defi. What's this from Chris, Chris Berninski, talking about the Dark Lord? Read this out. Chris says, everywhere I look, there are muggles who don't know the dark lord has fallen and the wizards are free i think it's just like emblematic of just like yeah the wizards what does he mean the wizards are like crypto natives right and we're free from because the dark lord is dead yeah basically basically we just uh baldemort just um is gone now the to a better place and so um you know it seems like it seems like everyone's sad and upset because you know i guess there's this blight on crypto but chris is

Starting point is 01:19:34 looking at the removal of a cancer from the system. And he's saying, no, this is actually the best news. I mean, Chris almost seems from his tweets, and even what we read earlier in the episode, he doesn't seem jubilant about all of this. And not obviously the events and the people impacted, you know, nothing like that. But just the fact that it's up only from here. Yeah. It, we have felt unnecessary pain. You can't be down bad any worse. No, and we've, this is the right kind of pain to feel like these are tough. lessons, but we're learning them. And, uh, you know, through learning these lessons, we can, we can make it out and to the other side. All right, David, I could ask you,

Starting point is 01:20:12 uh, what do you bullish on this week? I think you've got something to, uh, to show us today. Yeah. Yeah, yeah, yeah. Uh, so last week, I was down bad. I was very sad. I was a sad boy, as listeners of the, uh, weekly roll up would, would remember. Uh, and, like, the amount of just, like, hate and flack I got out of that on Twitter was like surprising. Like, people are just like, I think not secure. You were the poster, you were like a poster boy for all of kind of the down bad crypto people,

Starting point is 01:20:40 I think. Even like in, so there was two groups that I saw because David, you almost became a meme last week, right? Yeah. There was definitely the internal crypto who are familiar with bankless,

Starting point is 01:20:49 familiar with the show, like know who you are. And these are people like from, I don't know, the hex community. The communities that I have offended previously. Yes. Or that,

Starting point is 01:21:00 I don't know, they have some beef maybe with bankless. or something that you've said. And so there was a lot of, and even strong Bitcoin Maximil's communities. Like there was a lot from there. But then I also saw you in kind of outside crypto cultures. Like there was this mega streamer with like, I don't know,

Starting point is 01:21:16 three million subscribers to his Twitch channel. Yeah, let's watch these crypto bros cry. He was watching you over and over on a cycle. I watched like 30 minutes of this where he was just talking about it. And it was just like, and I think he was using that as, you know, All the crypto, all the crypto bros are crying right now. Look at this guy. Ha, ha, ha.

Starting point is 01:21:36 So they're legitimately crying. Which that piece probably, I mean, that's outside of the, you know, the crypto tribe. And they don't know you, right? It's just like, whatever. Okay. So the part that people didn't see, and this is what I'm bullish on, Ryan, is just the bankless family. I felt like there was a family here. And the just insane amount of outpouring of messages that I got.

Starting point is 01:21:58 And I think you got a bunch of them, too, just in my Twitter DMs, inside of the Inner Circle Discord was just like, it was pages, Ryan, of like, and I took some screenshots of them and sent them to you just be like, dude, look at like all of these people like saying like how much they've just appreciated bank lists and like all this stuff that we've been doing over the last year and especially over the last week. And I didn't, not any one of them was really emblematic of all of them, but until I got this one, Ryan, which was somebody wrote out an entire letter entitled pep talk from a long time listener. You and Ryan have put your hearts and souls into helping make the crypto space more accessible and meaningful to the average non-technical user, and you've done it

Starting point is 01:22:40 tirelessly week after week. You are to the space where Andreas Antonopoulos was for Bitcoin back in the day, only to you're operating at the bleeding edge. And I'm sure it must feel exhilarating at times and futile at times like now. If anyone gives you shit for a motion you displayed in the video, that's their issue in a space that can become so incredibly mechanical, toxic, mercenary, devoid of humanity. You guys have constantly been the light that brings the human ellen back into the focus, and it's heartbreaking to see one of the good guys in despair.

Starting point is 01:23:08 And this goes on. I just want to thank the bankless community, and everyone who's listening, and everyone who's just like, it's always nice to know that you guys are there. And it was a nice moment just to

Starting point is 01:23:23 know that we're doing the right thing and we have people that are along the bankless journey with us. So thank you for everyone who's been listening to these things, these weekly roll-ups over and over and over again. And thank you for your words of support. I definitely appreciate it. Yeah, 100%. I appreciate it. David, I'm not going to lie. I was feeling pretty down like this past weekend about everything, right? Just like SBF, crypto getting a black eye, but then also just some of the infighting in crypto. Like, yeah, they got toxic. A lot of the blame, they were looking for people to kind of burn

Starting point is 01:23:57 at the stake and, you know, anybody who had a YouTube channel, anyone who had a podcast, like sometimes we were sort of thrown under that bus too. But what more than compensated for it was letters like this and messages like this. And hundreds. My DMs were filled. I did not expect that. Yeah. And this is kind of just the, I don't know, the silent majority, I think, of good people in crypto. And I just want to say, we appreciate you guys. We appreciate the bankless community in the bankless nation. And I mean, ultimately, you guys are why we do this. You know, I don't think I would have the energy to continue doing this. I mean, God, how many episodes have we recorded over the past two weeks, all-time highs?

Starting point is 01:24:41 Oh, in the last two weeks. Yeah, over 500. My God. And by the way, podcast just hit 30 million downloads too, which is really cool. And we just appreciate knowing you guys are there for us and listening in week to week. And you guys are the silent ones that reach out when we need help and when we're in crisis. So we're doing this for you. Wow. I don't have another one to top that, David. I don't know what I'm bullish on compared to that. I'm definitely bullish the bankless community.

Starting point is 01:25:09 I think I'm bullish about an opportunity to rebuild, though. Sort of like, you know, the Dark Lord is Dead kind of idea with Berninski here. I think that SBF and that circle of, trader finance I'm going to call it finance bros as shorthand but that whole culture was sort of the

Starting point is 01:25:35 last distraction for me that I felt now it's very clear what's in front of us we've got decentralized finance Ethereum and related communities and then we have on the other side we have some of the crypto banks like the binances of the world

Starting point is 01:25:54 and it's these two these two camps. And not say Binus is always doing bad things, of course. I think they have some crypto values, but they're not building on yet, anyway, on base layer protocols like Ethereum and Bitcoin. And so I feel like the last distraction is gone, and we know very clearly what we need to do and how we need to rebuild this industry and revitalize it. That doesn't mean it's going to happen overnight. But, you know, I know where I'm going to be. And I'm just excited to get the last remaining toxicity out. I do feel like we've cut out kind of the final cancer and we are on the road to recovery and we're in remission right now and, you know, things are looking good. Our chances

Starting point is 01:26:39 look very good from here on out. So that's what I'm excited about. Yeah, and it's what I'm optimistic about. Like this is exactly what kind of Chris Brideski was saying. It's like, yeah, we're down bad, but like, it's up only from here. Like, you can't get any worse. That's right. So you can only. So you can only be optimistic. All right, meme in the week. What are we looking at? Oh, my God. The big short number two, Sam Bankin-free, Doe-C-Qan, C-Z, and Michael Saylor. Oh, my God, I hope Michael Saylor actually doesn't get liquidated. That'd be bad for all of us. Oh, no. Anyways, coming soon to a theater near you, I hope not, but it's a good meme. Guys, you got to stick around for the moment of Zen. It's another song by the song of Damon. I think he captures the SBF fiasco pretty perfectly, so you're going to enjoy this.

Starting point is 01:27:22 Of course, as always, risks and disclaimers. Herbdo is risky. so is defy so is eith all of this stuff is you could lose what you put in but we are 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 okay sam was having meetings with gary a gary used to work for a blend then is the papa of caroline and she was stooping sam all bespoke non-reported transactions happening um ft x no one knew how much risk was in that system um I'm I can tell it all

Starting point is 01:28:08 customer bosses Um Um Um Tell it all Vell apart Sam was having me is with Gary

Starting point is 01:28:19 Gary is to work for Glad Glad is those stripping bosses Um

Bankless - ROLLUP: FTX Contagion | SBF Tweet Thread | Genesis Trading | Gemini Earn | StarkNet Token | Cosmos ATOM 2.0

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