Bankless - Where do we go from here?

Episode Date: November 15, 2022

This is the craziest moment we’ve experienced in crypto. So many things to unpack. But the biggest question remains… where do we go from here? ------  Earnifi | Check For Your Unclaimed Airdrops, POAPs, & NFTs https://bankless.cc/earnifi  ------  SUBSCRIBE TO NEWSLETTER:          https://newsletter.banklesshq.com/?utm_source=banklessshowsyt  ️ SUBSCRIBE TO PODCAST:                 http://podcast.banklesshq.com/   ------ BANKLESS SPONSOR TOOLS:  ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum   ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across   BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave   LEDGER | NANO HARDWARE WALLETS https://bankless.cc/Ledger  ️FUEL | THE MODULAR EXECUTION LAYER https://bankless.cc/Fuelpod  ------ Topics Covered: 0:00 Intro 6:30 One Week Later 13:00 Changing Perspective 17:25 Shaking Faith 21:20 Losing Funds 22:25 Sponsorships 27:30 Cronies 30:15 Regulators 34:30 The Content Treadmill 37:30 Richard Heart 39:45 Community Vibes 44:30 Staying Optimistic 50:25 Reflections ----- Resources: Sam’s Weird Twitter Behavior https://twitter.com/SBF_FTX/status/1592275869825134593  Sam’s Penthouse https://www.99.co/singapore/insider/cryptocurrency-ftx-ceo-sam-bankman-fried-sbf-bahamas-penthouse-sale-usd40m/  FTX Corporate Structure https://twitter.com/Leishman/status/1591800851236282368  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures 

Bankless Nation, it is November 14th. David and I have been doing these live streams for you, doing another one today, just to talk about everything that went on last week. Without question, David, last week was the craziest week I've ever seen in crypto. Which is saying something out of 2022. I'm just like maybe we'll ever see in crypto? God, I hope so. I hope so.

I don't know how. This feels like, I don't know how, there's no bigger thing that could like be worse. right like coinbase could collapse but i'm betting that it's not going to uh like there's no there's no bigger thing like it had that had to have been the finality of 2022 right the grand finale that was the fireworks that was it so we're done i i it's easier from here i mean you don't know that but it feels like a good bow on what was a terrible year in crypto good bow a terrible a bow of terribleness

on an otherwise terrible year in crypto. Well, we've got some things to unpack, I think. So part of this

is the story has, I think the events have settled down a little bit, even though SBF is still like tweeting out like he's a

zodiac killer. I don't know what the hell is going on with that man. We could talk about that if we want to, but part of me is like, why are you giving,

I don't even want to talk about SBF right now. I'm tired of giving him attention. Yeah. Yeah. But for people who aren't aware,

He is just tweeting out like letters of the alphabet. One by one by one, yeah. What? H-A-A-P-P-E, I think. So we're, we're, really? I think, yeah, yeah, P and E came really close after each other. We just recorded a podcast and last I was up to. See, I just can't look away, even though I don't want to talk about this.

I still want to know what he's typing. Let me look up his Twitter account. So is he spelled, he's spelling what happened? So, yeah, I can't imagine what other word, yeah. What happened with an end? Why? Why even bother, man? What a psychopath? Yeah, I don't get it.

Is he in control of his Twitter? And he's just, is he doing this for, what's motivating this guy at this point? I don't know. He's still in the Bahamas, right? No idea. And that's been unconfirmed either. Anyway, I mean, people, there's some things that we can't confirm. I think the purpose of this episode is to talk a bit more about,

what the state of the industry is. Like, I think that's overall confusing. Like, what is the state of things? I don't think we're in, I feel like we're in this period of time where, like, it's Monday. We're starting to see, like, announcements don't happen on the weekends. They happen on on the weekdays, right? And so we saw Travis Kling's, Ikega, Ikega, hedge fund, VC fund.

He had apparently the whole fund on, on FTX. He had everything on FTX. Yeah, everything on FTX. BlockFi just sent out an announcement saying, hey, like, we got. got nothing. We have to cease operations. Oh, cool. Sick, right? I had some funds in BlockFi this point. No longer. You actually had some funds on FTX, Ryan. Did you know?

Wait, I do. Well, through BlockFi, because they did, right. Oh, true. I'm super loud. Oh, sorry, chat. I'm turning myself down. And so, like, I think we're in this weird state where, like, we're starting to see the contagion fall out. And so, like, but the story's starting to end and, like, the industry is starting to have conversations about. how to proceed forward. I feel like we're in that like in-between phase right now.

We're like, the story's still here, but it's coming to a close. And now we're, now we have to think and like reflect as an industry as like, all right, what the hell do we do about this? Let's talk about it. And I want to hear what the bankless community thinks about it too. So we get a chat window open. We're going to be looking at that. Yeah.

And we have some other comments from the community to get into. I want to hear more about how your perspective might have changed too. Just the general mood in the crypto. with the feedback is in general, I think we've got to talk about where we go from here. So guys, stick with us. This is a live stream David and I are doing. We'll just go until we run out of things to talk about. But before we get there, 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. Hundreds of projects have already deployed

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is the topic. We've done a number of these live streams just because this is a pretty crazy timing, crypto, unlike anything we've experienced it. I want to ask you this question as we kick things off. So it's been about a week. All right. So it was a weekend a day since SBF, you know, tweeted as a famous tweet about FTT and selling that.

And we didn't, CZ, excuse me. And we didn't yet know. He tweeted over the weekend. It was, it was like Monday, which was Sunday, Monday. It was when FTCS stopped processing withdrawals. We did not know at the time, of course, that FDX was $10 billion in the whole insolvent. We didn't know that this guy was running some kind of a charade

was lending against investor money, basically using depositors money to pump his own fund and to plug holes. We didn't know all of that. You know, and my conclusion on that whole thing is like $10 billion is an insane amount of money. Do you think all of that went to Alameda? Because as far as I'm concerned,

I was listening to Brian Armstrong on the All In podcast, and Brian was like, I knew Coinbase's revenue. I knew FTX's revenue. And it didn't check out. Like, he kept on, like, buying all the things. And so, like, I'm kind of like, dude, FTCS was just like Sam's slush fund to do what the hell he wanted.

You see that, like, $40 million apartment that he had or a penthouse that he had in the Bahamas? Actually, okay, I saw pictures of this, but I didn't get a time to, like, it's like, I want to actually go through the listing and take a look at that. But yes, I saw that. among other things, which has been, I believe, put up for sale, right? Yes. $40 million apartment in the Bahamas. He's just like chilling the Bahamas, wasn't he?

Yeah. Yeah, yeah. Do you have that photo? Oh, of the apartment? Yeah, I'll go get it. Yeah. I think I put it in our Discord. Let's take me a second.

But like, I don't know, man. He, like, I don't know how big the hole in Alameda was. But again, like I said, I don't think it can be $10 billion. big and Sam was just like buying everything like left and right as much as thing as as many things as possible and so like he just had no like discretionary like nature about the funds and he just used customer deposits to buy whatever the hell he wanted like I think that's going to be the conclusion to this whole thing there's something psychological about like there's something deeply ingrained that would cause somebody to do

that I know by the way it was late last week Vatelic tweeted out this kind of thing you know, true Vitalic style where he sort of separated SBF the person versus SBF the public brand and the public image, right? And his comment was like SBF, the public individual,

the runner of FTX, deserves a lot of the slamming and the dunking and the vitriol and the anger coming at him, right? Because this is a $10 billion hole that probably set our industry back years. Yeah.

And yet, he balanced that with SBF, the person, is still a human being, worthy of value and respect, as all human beings are. And he was hopeful that SBF had some family and friends that were supportive of him. This is kind of how I feel. And this is, I don't, I'm not one of SBF's friends. I'm not his family member. So I can't speak to the person. But the public individual, Sam Begman-Fried, that screwed our industry over and pulled

one over on us. Like, I, I guess I have entered the phase. And it goes in and out for me. We're sometimes, like, do you know how you're supposed to go through the stages of grief, grief sequentially, right? And there's like anger and there's sad. But for me, I've been going in and out of sometimes I'm sad and sometimes I'm angry. And I go that's sad and I'm angry. And it goes back and forth. Right now, as we're streaming this, at this moment, I'm pretty pissed. I'm pretty pissed. I'm angry. Like, why, like, look at this, man. This is the, uh, the Singapore house. Wait, Singapore?

Bahamas. Bahamas. Okay. Bahamas. Excuse me. This. And that, see, this is the thing, like, say, like, he had this whole, like, you know, new balances and, and, and effective altruism and, like, plain old t-shirts.

And then he owned this thing. I don't even see Sam as the person, like, giving a fuck about stuff like this. I think he... That's because that's his con, man. that like he conned us into believing these things. No, I don't think he, like, I'm saying like, I don't think Sam cares about a super fancy apartment. I think he is just like playing life like a video game

and trying to score as many points as possible. So if he buys Twitter, he buys his apartment. Like, can you see Sam sitting down on that couch and watching that TV? Like, no, he just cares about owning a $50 billion or $50 million dollar, like, apartment just because he wants to check that box. like it's a little sociopathic yeah he's just kind of leveling up treating the world like a video

game yes and some kind of like you know private i vr instance and everyone else is an mpc yeah i guess i guess so and i think like he had and so the other thing i learned from the uh the all in pod was that um um um um um um um um chamath when it was thinking about investing in ftx uh and chumoth like and his people like gave them like a two page two pageer as like recommendations and one of them was like set up a board of directors aka like you know have some adults in the room uh and there you know what the response was from from from from from from spf to fuck off what yes that was the response just like to trammoth well that that had to be a red flag big red flag yeah right and so like alameda and and FTX, like Alameda and like the Caroline girl.

Like, I don't know. It was just like Sam and his friends who was like got access to a billion dollar like money printer. And they're like, hey, what do we do? Let's buy this 50 million dollar like penthouse. Like this is some, this is Wolf of Wall Street. Yeah. This is like, this is crazy. Yeah.

Yeah. So how have the events of last week changed your perspective on things? Oh. So like there was the moment in the weekly roll up, right? like everyone knows about. And like the bankless universe. When you, when you got emotional about this.

Yeah, exactly. Yeah. Uh-huh. And like, everyone was like, why are you getting sad? Like, this is C-Fi.

This is exactly emblematic of like what we're trying to avoid. And like, defy literally fixes this. Like this is why we're all here. Like financial system by code and math. And I think I was just getting frustrated. Just like, it's just like a bunch of like narrative storytelling.

and I believe it. But like, we keep on building all of these cool defy things and then we like run over to FTX. Right. Like, it was just like a moment of just like, and we joke that like,

you make money in crypto by going through your second cycle, uh, not your first cycle. Like your first cycle, you take pain and then you have lessons and then you, you make money the second time around. Well,

if that's true, like you make money the second time around because you're dumping on the first people. Right. And so like, I'm just like cornered by this fact. that like there's no way for this industry to like move and progress forward in a way that like doesn't harm people.

Because like how do we learn as an industry? Like not your keys, not your crypto. Well, where did we learn that from? Mount Cox, right? Like, all right. Well, now we're learning that like cross-chain bridges are bad because we'll lose money there. And it's like, we only seem to like learn the lessons and actually apply principles like by

losing billions of dollars. And that was just like frustrating. That I, when we were recording that, I was. like, you know, trying to give some, some thoughts on this. But like, in the back of my mind, I was like, oh, SBF just broke David. Like, do you know, like, you're one of the most enthusiastic, like, bullish, permable people I know, right? In crypto and about this space. Not just, not like just dollar price in your eyes, right?

It's actually like you're excited about this technology and excited about the good it can do for the world. And I think I saw, like, as you're talking, like, you doubting that. Not necessarily for the first time, but like maybe in a fundamental way I hadn't seen before. And it was funny because actually, you know that Molly White episode that we released yesterday where she's like, Web3 is going just great. And we recorded that a month ago. And we did the debrief on that. And I remember you talking the debrief about, you know, Molly White sees crypto as like,

Like, crypto is like a whole bunch of turtles born on the beach, right? And they're all kind of running for the ocean. Right. And so many turtles are born, but only a few are actually going to make it. And your comment then was like, and Molly's really concerned about the turtles because she's like, there's so much pain. There's so much stuff. Like, why do we have to let turtles die, right?

Right. And that's, I think, what we're seeing right now. And it's like painful. Like the turtles are getting, it's like, it's like D-Day, man. They're going to be blown up all around us. The turtles are dying. and they're just little baby cute turtles. And why do they have to die?

Why does this have to happen? Why can't we just all make it to the ocean? We're all going to make it. Do you remember that thing? Yeah, we're all going to make it. We don't say that as much. We didn't all make it. I was always suspicious of that.

I was on board with the GM thing, but we're all going to make it. I was like, I got news. I mean, that's nice to say, but like, someone was not going to make it. Okay, and also, like, why does that have to be true? And, like, this is why we're all mad at Sam is because, like, Sam killed, like, all-time highs in, like, turtle deaths. Like, he killed the most amount of turtles. Like, after we had Celsius and three hours capital and, like, and, like, yeah, it was, like the... Drones, just scraping the turtles.

Look, I'm only laughing about this because if I don't laugh, then David's going to get emotional again. Yeah, yeah, the chat's going to make fun of me. Yeah, the chat's not being very nice right now. But we'll see. It's never nice. Well, it's been nicer. There's some antagonists in the chat right now. So how have the events changed your perspective then?

Like, last week, I know how you're feeling. But like this week, is it a fundamental shift? Are you like, I mean, has it shaken your faith in what we're doing here? It's made me understand Bitcoin maximalism a little bit better. It's like, it's made the last week, like, made me feel very. extremist or like want to become an extremist. Well, that's interesting. Yeah. And so like I, extremist about what? So like I previously would have called myself like a bank apologist, right? It's like in the in the future crypto world that I'd see, there's going to be a broad variety,

a broad spectrum of quality products. And some of those are going to be centralized and some of those are going to be decentralized. And just because humans are folly and we have SBFs of the world and like Bernie Madoffs and like all these centralized. powers that do all the bad things that doesn't stop the existence of good quality centralized products that exist out there there centralized products are allowed to exist like i believe brian armstrong is great personal hero i think coinbase is great um but like now i'm like well now i'm just like mill it feels you don't trust brian you don't trust coinbase no i do trust brian but like at some point it's like there's after you start trusting brian like where do you draw the line

And if you want to trust Brian, like, all right, you'll trust like, I also trust Gemini. I also trust like nexto. But at some point, like, you're going to add, you're going to add too many people into that circle of trust and you're going to have one bad one. And so, like, at some point, like, I can see, like, the polarization of Bitcoiners who are like, not one bank, like, not one ever. Like, one is too much.

One is too much. You don't ever compromise. You don't ever compromise on values. Right. And so I can start to resonate with that, like, a lot more. Like, the shelling fence has kind of moved on. where you're like rather than it's just the policy should be 100% bankless all the time. Right.

And as soon as possible, you get your funds off of that exchange. I mean, like, so I had a conversation with my dad over the week and he was like, what is happening in crypto, right? I'm like, well, okay. So and then, but he's like, well, I have some funds on Coinbase. Should I take him off Coinbase? Right. And I was like, dad, you probably should.

I'm not, I don't think, I don't think Coinbase is going. under as part of this, right? But we don't know, do we? This is the thing. Have you been up to date? And it's like, what do you think of proof of reserves? We're talking about the, how it's changed our perspective on things, right? But how has it changed, I guess everyone's perspective on this? Let's talk about some of the, some of the players. So crypto exchanges themselves, this hasn't just been a hit to FDX's credibility. All crypto exchanges. Yes, everything. Centralized. Anything centralized.

Anything that cuts these private keys is under tremendous amount of scrutiny. And I become like a bit proof of reserves. Right. Like, or you don't deserve to hold any of our private keys. Right. Audits are audits enough? Proof of reserves. Proof of liabilities as well as part of that is not just enough.

I don't even know if that's possible. Proof of lack of liability. I don't even know if that's possible. So we're back to auditors. We're back to trusting. But like FDX was audited. They were, Armino was one of the auditors.

It's not like a big four, but it's like one of the top auditors. I mean, they were audited. So it does, it does kind of galvanize you to and like, militarize you to be like, well, we should like back to back to bankless, full bankless, right? It used to be the policy of like bankless over time. Plus the things that get you there.

Yes. Plus the things that get you there and you don't have to do it all at once because don't lose your private keys and there's a lot of risk over there. But now I'm just like, I am weighing the risk of keeping anything on a centralized exchange very high. I've lost some funds in this process. Yeah. I've never lost funds. I've never lost funds. Well, okay, in 2017 I got fished for a fake Iota wallet. That's my only time. Really? Yeah. Other than that, I haven't. Do you click an email? I was spitting up a new wallet and I was like, I need a new Iota wallet. So I went to an Iota wallet generator, but it was just like, I just sent my my, oh, Iota to like their wallet. Yeah. Trinary code. Do you remember this? A trinary code?

That was one of their things. Yeah, it was like, we're basing our, uh, no, the DAG. The DAG. The DAG. Yeah, the DAGs. Yeah, right. All right. So, but that's the only time. Yeah. So I had a little bit of funds on, um, Celsius previously, remember? Because like, I try these things. And then also blockFi. And I kept just a little bit on there, even after they got bailed out. I was like, oh, okay, well, you may as well not, that's never coming back. Didn't BlockFi said an email today kind of confirming? I've checked my email. Yeah, BlockFi said an email saying, hey, like, we're ceasing operations.

Don't deposit any money. Yeah. Yeah. Have you noticed, like, the crypto industry just feels like at each other's throat right now. Like, everyone just feels super toxic. Oh, yeah, dude. Why the hell is that? No, this made me sad.

It's like, I know you were, because we've been. We've been attacked in the past. Yeah, we got, we got, like, stay golden in here who's, like, in our chat saying, like, oh, this video is brought to you by FTX, even though we've never, ever had an FTX as a sponsor. And, like, up, up, up only had FTX as a sponsor. Because the whole thing is, like, the industry got duped. We've had Gemini. I mean, could the Winkle Voss twins be rugging us now?

Like, right. I don't think so, but I can't save her 100% certainty. Right. Yeah, Alan feels guys like bankless loved Blockfly Also never had BlockFi as a sponsor They're just looking for people to tie to the stake in Byrne Yeah, like I guess when like we lose like 10 billion dollars as an industry Like people just get like

They don't get the growing the pie mentality And so like we've triggered a few communities I've triggered a few communities like the Hex community and the Cardana community Did you ever have BlockFi as a sponsor? No We never had BlockFi as a sponsor No Never learn from the haters.

You promoted so much garbage. What garbage did we promote? Tell us. What garbage? What garbage? There's not a single bankless sponsor that has lost a dime of bankless listener money. Don't say that, David. Yet.

Luck on wood. I mean, guys, we just try our best. I mean, like, what are we going to do? We're very judicious in terms of the sponsors we decide to support. We've recently made a sponsor decision. At the very beginning of bankless, we would not do anything with centralized custodian companies. And I think the very first centralized custodian we started to work with as a sponsor was Gemini. And why?

It's because I'm a Gemini user. Your Gemini user as well happened in the past. There are a few exchanges probably that I would consider. that I like, you have to trust something. You have to, look, you have to get your Fiat to crypto. Yep. All right. In order to do that, you need an exchange.

I don't know how else you do that. There is no other way to do that. Right. So Gemini would be, like, was a sponsor. I'd probably do something with Cracken. I trust them reasonably to get my Fiat over to crypto. I'd probably do something with Coinbase. Never done anything with FTX.

Right. The very first time, we decided to do something with a, borrowing and lending centralized company was NXO. And that was because they had survived everything up to this point. We have, and then also Juno, you know that startup. Also an exchange with, that's also a bank that has like crypto powers. Yeah, it's because I have like, look, I have, Coinbase, I literally still have a Wells Fargo account.

Yeah. And I have, I don't know how many accounts we have for bankless. as a company, right? But like they've kicked us out of Bank of America because we have interactions with crypto and so we're at small community credit unions. Like we have to use banks. Right.

In order, we can't go fully bankless yet. Like I wish that were the case. This is a journey. It's going to take a decade or more for us to get all the way there. So we support hybrid solutions along the way when we can. That said,

I think that you talked about being militant. Yeah. I think that's very important for us to not support centralized institutions moving forward when there's an alternative. I'll make some exceptions to this. So, for example, if it's an exchange, if it's doing the fiat to crypto, totally need that. Totally understand that. There's no way around it.

But if it's doing lending and borrowing, unless we have some sort of proof of reserve system, Without proof, yeah, that includes some sort of liabilities or some super strong audits. Right. And then that should be qualified as well. Maybe that's not even enough. Like we need some real certainty there in order to ever work with a partner like that again. The other thing I'm pretty wary of right now, David, is staking, centralized staking. Yeah.

Yeah. I mean, can you imagine if FTX was like staking, I don't know, 10% of ether right now? Like what would that, what, like what would happen? Right. If that was the case. Right. That's a major attack factor.

You give up your private, like, so decentralized staking providers are really important here. What are your thoughts on this? Yeah. I think like, I don't have too many thoughts on like the staking element, but I think like you have to have a bank, a crypto bank, Coinbase, Gemini, whatever, crack in to go from, fiat into the crypto world.

And I think like at this point, like this is what we're, it's ironic that like FTX was in the Bahamas so they would be outside of crypto regulation. And so at some point you kind of have to tip your hat to like regulated entities because of this is what regulation does. And so like like crypto banks that are inside of the U.S. I feel like is a acceptable line to draw. Maybe, but what happened to FTX U.S.? Is that still here?

Yeah. I don't know how that. I thought that those were separate. Yeah. Did you see the tweet about like SBF's dad is like a, like a Stanford like tax, tax person? And then, and then it had like, I'm going to, I'm going to butcher this. I'm going to go get to tweet. It was, it was pretty funny.

Can you, I'm going to post it into the. This is part of the conspiracy theory stuff about SBF being. It's, no, it's less of a conspiracy theory. hair, can you share your screen on that one? Yeah. It almost feels scripted, that element of it. Dude, this whole thing feels extremely scripted. Oh, wow, yeah.

I have seen this. What are we looking at? I don't know if you're sharing the right one. You're just sharing your notifications. Oh, actually. Stop share. Let me share it there. This.

SBF's, what was the tweet say? SPS father was an expert in tax shelters and a professor at Stanford law. On entirely unrelated note, this is FTCS's corporate structure. Dude, that thing looks like a motherboard, man. Yeah, it does. That's crazy. Look at all of these entities. I can't even, like, I can't even read it.

Yeah, it's insane. It's absolutely insane. Yeah. So, okay, so we've lost faith in centralized institutions or centralized custodians. And by the way, I don't think that's a bad thing. Right. Like, it's a bummer that we can't have both. Yeah.

Bankless playing innocent is hilarious. There is still got sponsors. I see. Yes. Sponsors are how we pay for the show. Yes, we have sponsors. We have sponsors. We will.

I mean, the way a bank list makes revenue is through sponsors and then through subscription. Yep. Make member fees. That's how we make revenue, grow a business. We have eight folks on our team and counting. We're trying to build, you know, incredible products. We actually have a new product to announce probably that's coming, maybe this. week or next week, we'll get that announcement out.

I mean, like, we're busy. Like, we're trying to grow this mission. And so, yes, we have a revenue model. But, okay, so that's centralized exchanges. What about regulators? What do you think they do in the wake of this? Okay, so this is what has made me optimistic. Is that, like, even JP Morgan just now wrote some article saying, like,

hey, like, all of the bad things that happened in 2022 in crypto was because of centralization. And like, I actually think that this is a moment where we are actually able to go to the regulators and be like, look at what happened. It was a regulation, shitty regulation inside the United States that made and that enabled FTX to go offshore and do all the offshore things. And it was centralization. It was been the same things. I'm optimistic that there is a moment where the crypto industry, the decentralized side of the crypto industry and regulators can come together and do something useful for a change. See, that's some of that Hoffman optimist.

Yes. Yes. I'm optimistic that this is. I think we have a better, we have more evidence and more talking points, and this is an educational event that we can take to the regulators and move forward with. Did you see this, by the way? So I was feeling like that, like, a sad thing is Sam may kill Define the US on its way out, right?

Right. The wrath of the regulators is coming, right? So Jake Trevinsky, I asked him, what do we do? Did you see his thread here? Oh, I didn't see it. I thought that one tweet, I didn't see the thread. Oh, my God, fire. He wrote this whole thread.

What do we do, Jake? The regulators are coming. They're going to squash us. Jake says, we tell the truth. We explained that this wasn't a U.S. regulatory failure or a flaw in the technology. It was a historic fraud perpetrated by a con man in the Bahamas. We uncover in detail exactly what happened, honestly and ruthlessly, to lay bare the crime in full. We take responsibility for not calling out the red flags, for not.

pushing back. We help with investigations. We show how open source public blockchains offer an unprecedented ability to root out bad actors. We take it upon ourselves to use this technology for what it does best, to increase transparency to mitigate risk, eliminating untrustworthy third parties. We make proof of reserves a top priority. We restore the principles that brought us here. Don't trust, verify, not your keys, not your coins. We focus on education for newcomers. The very first thing we teach is self-custody, not which coin will make them rich quick we teach them self-custody we teach them how to go banquets i'm like oh there's nothing new here we've been doing this back to basics right yes yes there was something you said

in the weekly roll-up um it was like there was a moment in time where crypto really put forth values first and we had some like memes that that you chanted which and it was like uh protocols protocols protocols not kings or something or code not people code not kings yes exactly we've yeah thank you this is why this is why you're a meme artist and I think like just like we 2021 was just like a bunch of bull market mania where we forgot about that stuff like that's a king yet you still show nexo we are was were we not clear yeah we are not working with nexo moving forward yeah which is a shame for nexo because like they're doing just fine probably yes um But that's, that's SPF's fault.

And it's like, there's, the whole defy chant of 2020, 2019 was like all about that, right? Can you say it again? So can you say it? Yeah. Can you say it? Protocols not people. Code not kings. Can you say it again?

Can you say it again for the people in the back? Protocols not people. Code not king. I was like, okay, so we forgot that. We forgot in 2021. We forgot that. It was NFT mania, it was bored ape season, yield farming. and I think we forgot all about it.

And like, you know, it's just, it's like, we're just, it's the crypto industry. We're just here for that. And I think, like, over the next, like, year or so of, like, we just drill that into people's heads, man. Justin said, no, you guys forgot about that stuff. Many of us did not forget about that stuff. By the way, I'm only reading right now,

chatter from, like, the... YouTube chat? The evil army? YouTube chat, that's angry. I mean, there's a lot of supporters, obviously. Do you think we forgot that? Do you think bankless forgot that, David? Yeah, there's like a decent amount of just like the content treadmill is like pretty

subsuming. And so like, all right, like it's Monday. Gotta get another podcast out the door. Like, what are we going to talk about? And like when you're in in it, it's harder to like stay zoomed out. And I think that's really what has like what's I was doing this weekend. It was like zooming out a little bit. But like also at the same time like there's only so much content you can make about that.

Right. Like I don't know, man. I feel like we did a fairly good job about that. Like one asset that we've always been like accused of like talking about price too much is an asset I make no apologies for talking about price. Oh, ether? And that asset is ether. Right.

Yeah. It's the whole, unless ether has value like the security of the entire network goes down. Right. I mean like I personally, maybe I don't want to be defensive. I want to be introspective here. But personally, David, I think we did a pretty good job at that. Yeah. But you're right.

There is always the temptation. We weren't militant about it, right? And so, like, that's why I called it. Like, yeah, I've been like a bank apologist lately. A bank apologist? I don't think you have that. Up to, up to now. The least bank apologist of, I mean, like, I don't know.

I guess, I guess what are we trying to accomplish right now? Are we trying to kind of look in the mirror? I guess so. A little bit. Like, what did we do? Yeah. Well, because you had that tweet where you were like, apologize on behalf of the crypto industry.

It's like, hey, we missed this one. We missed SPF. Like, I'm really sorry about that. And people were like, why are you guys apologizing? What the hell did you guys do? It's like, sometimes like anything, if it happens in crypto, I feel responsibility over it. And that's what I think what felt me, like wrecked me so hard on the weekly roll-up.

It was like, yo, when Sam Ruggs, this is my industry. And like what also hit me pretty hard and probably like what started that whole thing was like I was on a call with my mom and sister, like a FaceTime call. It was my mom, sister, and dad was my dad's birthday. I was wishing him a happy birthday. And we were talking about, like, I was saying like, oh, yeah, the shit's going down in the crypto world. And they had heard about it, obviously.

And I was like, yeah, it's, like, really hard to, like, defend crypto. And, like, the speed and, like, energy to which my mom and sister started nodding, like, yeah, it is really hard to defend what you guys are doing right now. And I'm like, oh, dude. You're right. Yeah. You're right. You're right.

They don't see the distinction. They haven't listened to all of our content. all of the shows. They don't see the subtle differences between what we try to talk about and what some other crypto person is talking about. And by the way, they also see, we do talk about price go up, don't we? Yeah. Like number go up. And that can all sound the same without kind of the deeper context. Dude, I love all these trolls in the in the chat. Like, time to cry again. It's like, you go make a podcast that has a bejillion listeners. teach you a lesson. Yeah, what lesson is

Richard going to teach me? Let's see. Richard Hart. Let's go to the website here. Oh, dude, the website's so bad. What's Richard Hart? Richard Hart is a force for good in this world. He owns the largest How can he have that? This is the biggest troll website of all time. And raise $23 million for medical research. He owns the quickest Ferrari ever made and the most expensive Rolexes ever made. This is Richardhardt.com. I'm on the right website. He's got 10 million in watches and 3 million in cars. With 145 IQ, he invented 145. Yeah, that's really good.

Which went up in price 10,000 X. He gave over 500,000, $500 million of free money to Bitcoiners and created the largest free air drop of coins through pulse chain.com. He also called Bitcoin's top two cycles in a row. This is his one. website. This is a person that should not be doing what he's doing in crypto. This is an example of demagogue that does not deserve our respect. And anyone who tells you he does is trying to sell you some hex coin. And that's the bottom line. And so, I mean, do you think he wrote that himself? I have no idea. Are we getting, are people angry in the chat? Well, that's what I'm saying. Like, dude, everyone's angry, man. Like, we have like, we have like, we have like three. You were a serious adult with a brain.

Read this website and tell me how you think that this is a legitimate person who cares about the values that that crypto is based on. It's insane, man. It's insane. Well, that's what I was saying. Like, the industry just feels so toxic at the moment. Like, perhaps I've been too mean to the Cardano folk. And so they come back. Do you regret that?

Do you want to say sorry to any of the Cardano folk right now? Cardano is not a scam. Yes, I regret. I regret saying those words. I felt very frustrated by not, because, like, Ethereum has, like, a history of, like, unfulfilled promises, which is now late, I would now consider those promises fulfilled. I think Cardano also has that, and I just am skeptical on, like, they're even being intent on that being fixed, but I'll totally admit that that's just my gut feeling that the Cardano

community knows way more about. And so their opinions are probably far more legitimate than mine. The ex community can fuck right off. Well, there you go. Um, that's the mood. Um, what, what do you think the mood of the rest of the market is? Are people angry? Are they just hurt? Are people leaving for good? Have you heard anyone in your circle say, hey, I'm out for good. Like, this was it for me. Well, yeah, but no, because like, I surround myself by like other people that are going to be here no matter what, right? Yeah. So like,

there's, it's like the margins that are the undecided. You're in a bubble, aren't you? Yeah, I'm in, I'm in, like, a bubble for sure. Yeah, yeah, yeah. And, and so no, I don't see anyone leaving, but like I wouldn't put myself in the comfort or in the company of somebody who would leave though all right let's talk about people we know who've been on the podcast maybe okay Travis cling ikegai did did you just say their fund is blown up yeah yeah that's sad and it's because uh Travis had all of his fun at least it sounds like a significant majority of the funds on FTX yeah absolutely brutal multi-coigne they're still standing but like wounded down down 10 to 15 percent yeah 10 to 50 There's like the jokes around of like people two months ago, proud investors of FTX like VCs now.

It was a small check. What about like I know like paradigm for example? They were in on the FDX deal, weren't they? Yes. Yeah, yeah, yeah, yeah. I mean, a lot of people were, man. A lot of people had like they were part of one of the ways that FTX had a bunch of money is they kept on raising money, man. They had great revenue and then they would buy everything.

but like it was it was one gigantic fraud where like money in to fund spf's ego okay do you know another thing we got a lot of pushback for i feel like i don't want to spend this episode on this defending ourselves yeah because i don't feel like we need to defend ourselves in this latest but but last thing do you regret ever having sbf on we've had no dude no no no not at all for the first time we'll miss it back in march yeah and this is like a contrast because we're having all of the exchange. Yeah. He ran the second largest, third largest exchange.

We had Brian Armstrong on. And he talked about crypto values. And then we had SBF on and the contrast of like, there aren't crypto values there. It was like, I'm a trader. This is how we make money. Right. I'm a business builder. I'm a trader.

And I'm good at it. Talk to CZ. But he said that, um, I mean, a lot of people are saying you had F, you had SBF on. You gave him a platform. You enabled this. Is this just part of the, the witch burning process? I guess.

Yeah. people are just looking for people to I don't regret that I don't want us not to talk to it was a good episode I was like yeah what I learned from that what did I learn from that episode with SPF he's not going to build defy he's going to build a good exchange

and remember like the exchange was good it was a good product that people enjoyed and if except for the fraud in the back but the exchange in the front was a functioning product that was worth some thing yes it's a Well, see, like, there should be a dividing line between, like, okay, you have the

functioning exchange, which was a money printer, which was great. And, like, that's why FTX employees even feel rigged by this is because, like, in the back, it was SBF's, like, personal bank account to go, like, buy cool things because he was a child with no adult in the room. Right. And so, like, if you could separate those things, and this is why Tramoth wanted to have FDX as, like, a board of director. If you could separate those things and have like adults in the room, we would still be able to have FTCS.

The best thing we can do is like, so here's the thing as kind of a, I think a content creator and having a podcast that I've learned. Like our audience isn't dumb. No. Why should we like? We have one of the, I just tell you we have one of the smartest audiences in crypto. I mean, like we shouldn't be paternalistic about this. They can listen to a conversation and make their own judgments about. about the individual in front of them is exactly what we also did with Eric versus Eric Forhees

versus SBF. We brought them in and they just talked. Talk. And if you came out of that episode and you were thinking that SBF was in it for crypto values and cared about defy and decentralization and was going to stand up for these principles in DC, I don't know what to tell you. Because you didn't watch the same episode that I did. Right. And so we were trying to get Sam on for a while and we were having a bad time reaching to him because we've been so antagonistic to him up to that point.

Yeah, right. He had you blocked. I forgot about that. Yeah, it was a preemptive blocking. Like I'd never interact with him. But he just didn't like, I don't know, bang this value. I don't know. Something I said. There was something, yeah, we were like barely warm to Sam is sometimes antagonistic because he was like part of the Solonic ecosystem and we were critical of Solana. Anyways, I don't know. In all of my years in crypto, I've never been hacked, scammed, or lost money to a thief. And a lot of that credit goes to my Ledger Hardware wallet. The Ledger NanoX and the Ledger NanoS Plus hardware wallets allow users like you and me to secure and manage all of our crypto assets and our NFTs. All with the security of storing users' private keys offline and out of reach from hackers. The Ledger NanoX is the perfect hardware wallet for managing your crypto and NFTs on the go because it connects to your phone with Bluetooth and has a nice big screen for easy. transaction readings. Ledger has also upgraded the iconic Ledger NanoS and made the new

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So go to across.TO to quickly and securely bridge your assets between Ethereum, optimism, Polygon, Arbitrum, or Boba networks. Where do we go from here? Can we get to that? Okay, so here's what I'm optimistic about again. We, as an industry, we're faced with a lot of scammers and just like fraudsters and bad actors in 2022. Doe Kwan, Danny Sesta, three errors capital, who, again, I think Suu's like a okay guy, but like when you give him money he's bad. And like,

yeah. And like now SBF. And like so we, we've been faced with a variety of like fraudulent people or just like scammers like Danny and Sesta and like Doquan. I don't know what to categorize him, but like not good. And so like as an industry we've learned who these people are.

They have a couple. They're all different flavors, but they all have kind of similar bases to them. Like they all are obsessed with themselves. They all want to promote their ego. like why was SBF the face of FTX with his like sweaty t-shirts and like new balance sneakers and he plastered himself all over San Francisco so like we've as an industry back in 2013 we learned not your keys not your crypto because of Mount Cox we haven't learned something like that for a long

time as bad as 2017 at 2018 was it was like wasn't really anything like there wasn't anything that crazy there it was just like unsustainable business models with ICSie In 2022, it got bad because we had so many scammers rug us left and right. But like the learning lessons is like, I think we as an industry will be able to call out the early warning signs and the red flags a lot better now because of the lessons that we've learned in 2022. So I think it is going to be a lot harder to scam this industry and defraud this industry moving forward because we've seen it before.

We've had it happen to us. Do you think we just get some temporary resistance though? and then need to be re-inoculated. There's a new generation that comes. They also need to be inoculated, right? I mean, the class of 2013, and a lot of those OGs were not fooled by this SBF person. Right.

I guess, like, look, Vorhees did not think SBF was a straight scam. No one did, dude. No one did. SBF was the most successful conman that we have had in crypto. Right. Like, just very good at it. See, con man implies intent. He didn't even intend to be a con man.

he was just irresponsible. I guess. I don't know. I don't know. I don't know what the man is thinking. I don't know what is in his kind of like brain or his heart. I mean, like, look, man, 11 days before we had the conversation with him and he knew he had a $10 billion, you know, a hole in his balance sheet. He's playing with depositors money.

I mean, I don't know what you call that con. I don't know. Fraud. You don't accidentally. You don't accidentally stumble. into that. Like there was some definitely. Anyway, Vorhees did not smell that out in person, but he knew, like, I'm not going to give anyone, like on principle alone. I'm not going to give someone else my private keys. Right. Right. Like, I'll use exchange. You get fiat to crypto and I'm out. I'm out.

Yeah. Right. And I have custody of my, or it's in a smart contract while or something else. By the way, I think the apology that we as an industry and a subset of an industry of crypto, we in the defy community owe the world and the rest of crypto is we didn't educate well enough okay we tried we mean we tried yeah well i'll say it's like the tension isn't there all the time we talk about private keys and somebody else is talking about like whatever coin has gone up 20x and they'd rather tune into that um but education i think we could have done a better job the other thing is building it's just the user experience of taking custody of your private key he sucks still it's not great it's hard right so even in my dad when i was talking to him i was

like you want to get your money off coinbase he's like yeah you're going to help me with that and like yeah i really am going to need to help you that um so you don't like so that's the other thing i think we could be that we could have done better yeah i was on um kevin owaukee's uh podcast yesterday uh and we were talking about like all right what what like uh how do we how do we move forward in in like more concrete steps and like, yo, we need account abstraction, bro. Like,

that's exactly what we need. And like, we don't have time to go into what account abstraction is. But like, it is the thing that unlocks the golden age of UX improvement for self-custody assets. And this is like education is one thing. We just need to make self-custody assets cool and fun and easy. And we don't get there without account abstraction.

It's account extraction smart contract wallets really is the way forward, right? Yeah. I mean, talked about we had them on the podcast was almost like two years ago now he talked about this he's talked about a number of times i mean but like on bankless i just feel like that's an area we haven't moved the dial very much at all um and i'm i'm a little like hopefully this will be the the pressure that we need there's a tremendous amount of demand right now to use bankless systems to take custody of your own keys and dude i want the experience of like having on my phone

and I can share social recovery style with a few other people in my network that I trust. And the gas fees are low. And so it's not going to cost me, you know, $100. Well, see, with the kind of traction, it wouldn't even be your family. It would be just your other devices. Perfect.

Yeah. Like, that is something we absolutely need right now. Yeah. All right. What else you got? What else is in your mind? I don't know, chat. we're either going to talk about whatever you guys want us to talk about or we're going to sign off.

So take this moment to ask some questions or prompt us with something. What are prices like real quick? 12, low 12s for Eath, I think. That's not bad considering. That's not bad considering. 075, yeah. Once again, I feel good about my buys. Have you made any move lately?

No, David. See, so I was thinking about the difference between like our kind of timing things. Uh-huh. And you're really good at getting these local buys. Lately. Lately. Yeah. Knock on wood.

That's good. But I want to be really good at buying the kind of the more sustained like long time. I don't think we'll be in this range for a while. I'm not catching right now. Yeah. At some point. And so I don't think we're going lower. I'm still on board.

I think we're going to triple digits first. I think something's going to shake us. I'm not talking about locally. I could take a month. It could take a few months. I have no idea. but that's what I'm guessing. I could be wrong,

in which case I'll have missed the train yet again. Oh, Hunter asked when's Steve Newcomb? We have a Wednesday episode coming out with Steve from ZK Sync. So there's that. Look, that's still progressing. What's the next big tragedy

to default crypto? Do you think? We've seen a lot of them. If it's a bigger one, then it's just dashing my hopes and dreams. Jesus. The only way it could be bigger than FTF is if it was something that was even more trusted by the industry.

And so, like, that's got to be something like Gemini or Coinbase. Like, if some trading firm, like Genesis went under, which people were worried about, people are like, oh, get your funds out of Gemini earned because Genesis, their trading firm is going under. Like, if it was just a good trading firm, that would be one thing. But it's like, we need to, like, not lose trust and faith in our institutions. And that includes our fiat on ramps. And so, like, yeah, if Coinbase did something bad or Gemini did. something bad or cracking, like that would be bad. But again, like, what's the bigger shark

beyond FTX? I'm worried the next thing is I think we've removed the custodial kind of risk from the pools here mostly. And we've we've removed a lot of the margin, a lot of the leverage. I've always been worried about kind of the D-Day sort of hack, like a major smart contract hack or something, like a like an Avey or like maybe in kind of. of the new world of layer two's something layer two some issue with a massive layer two after it gets to protocol layer hack yes yeah and there's like a a Dow type of event like the original the Dow event where you have a massive hack um but so you want you want some dwelling on you want some alpha i want some alpha so i had some friends over at my place this weekend uh one of

them worked at Coinbase, who shall not be named. But they were talking about just like they're inside of the United States competition. Like it's FTX, it's Binance, it's Coinbase. FTX was flat in terms of user adoption and user acquisition. It was Binance that's been starting to creep up against Coinbase. And this was before FTX went under. Wow. Yeah.

So now our banks have gotten even bigger because we've had a major competitor, get kind of deleted. And, you know, Coinbase is there, but Coinbase is somewhat defy aligned, I feel like. Yes, Coinbase is very defy aligned. They have a self-custodial wallet inside of their main consumer application. Yeah. I mean, we'll continue to push on them and hold them accountable for that. But, I mean, that's what they says.

They're more defy aligned. So I feel like left standing. It's kind of the, like, because the Altlayer ones have taken not mortal loons. I think they'll be back. But they are severely wounded and they're kind of limping away, like the Seoul community is down bad right now. Yeah, I think that's definitely true in terms of price. But I'm wondering if like, I mean, you remember what it was like when we watched Ether go to $80. Like, I became like, I felt stronger camaraderie with the crypto Twitter at Heathcru during that moment.

I just think it's what Soul has to figure out is like what Solana has to figure out is, look, I don't think they're dead. they're definitely not dead. But now they've got kind of a major exchange supporter that was basically a Joe Lubin like of Solana out of the picture completely. They take a hit from that, right? And in the face of that, they also have increasingly layer two competition that is pretty significant. And having low block fees is not enough.

Like right now, when you have like ZK EVMs that are, nipping at your heels. So I do think Salon is going to have to, I mean, they're going to exist, but they're going to have to have some uphill battles, yeah. They might have some uphill battles and they might have to kind of reinvent themselves. But anyway, all that to say, I feel like it's Binance and then there's Ethereum Defi.

These are the major horses left. Yeah. And so I'm not saying CZ's final boss because he's not. I don't think. And right now he's reasonably crypto aligned. But like, finance is a bank. right and I hope they go in the direction of decentralization but it's interesting that rather than align with Ethereum and building on layer twos they decide to launch their own kind of

geth for right and B and B&B chain powered by B&B the token and like I think CZ is a brilliant strategist and business person but I don't know I don't know if that will mesh with what the end state vision we we hope for for defy and crypto is right I think like finance will only be as defy aligned as it makes rational profit sense. As in like, the only reason why finance smart chain exists is because it was a profitable endeavor by CZ, not because of any particular like ethos of crypto, right? But still, that is a significant step ahead of most people in this space. Do you think that we'll be able to convince regulators that,

defy is already regulated. It's just regulated by code. That's the biggest ask in that's possible, like to convince them that the EVM is all the regulation that we need. It's not, that's not, so I think that's not totally the objective. I think it would be really cool if we figured out, all right, so part of this, which was so fascinating is we got to watch a bank run unfold in real time.

That was pretty fun. On Chain of Linux. On Nansen, on, ether scan on Twitter, right? Like, the whole thing was publicly visible. That's, to me, that sounds like a regulator's best friend. Yeah. And if we can kind of present tools to them that allow them to check the reserves of

D5 protocols if they want, but also like, you know, some of the more centralized parties and invalidate in it, like, they might, I'm not saying this current regulatory regime, But like if they were smart, back to your optimistic vision, if we could educate them and show them and convince them of all of the wins in Defi. And if they really cared about the missions of their regulatory agencies, which is like protecting American citizens, right? And, you know, fair and efficient markets, these sorts of things. Then maybe there's a shot that we can actually recruit them and get them on board to pushing the industry in the direction of, why have another, you know, blockfi stood up when we can have that user interface

on top of an AVE and a compound and like collateral-backed DFIbe protocols that are completely transparent and publicly audible. Yeah, with proof of reserves every 12 seconds, yeah. Right? I mean, this is kind of what we need to do. Like there is a window that has opened here and we need to make sure.

You think so? Yes. Yes. I guess my final thought on this piece is I am so relieved that a sociopath and a predator who is clearly bending his empire towards the destruction of defy crypto and we didn't know it yet like it's basically it's like Senator Palpatine. Yes. In the back.

Yes, we found Senator Palpatine in like this first two or three years of existence. Yeah. Right? Thank God because he turns into Emperor Palpatine. later, full Sith Lord. And like, then it's too late. Then he's already has the entire galaxy under his Zeminian, right? Yep.

We have to fight that. Like, that's literally what we just uncovered. And I am, if he got, if he got this far in what has he been in the industry since 2018, 2019, he got this far in four years. Biggest Democratic donor, massive political, you know, the guy who's representing crypto in our houses of legislation second largest crypto exchange Tom Brady

cameos like this guy was everywhere and would have been such a dangerous individual to have in this space and we got him out what a victory that is he was a cancer and this is why the industry is hurting right now we crypto is one holistic body

we had cancer it was propping us up for a while and now we cut the cancer out and now we're hurting and now we're post surgery and now we're recovering. Recovering. Recovering. Maybe that's the state of things as we are recovering. Did he really just tweet out an NN?

Yep, we got NN. This guy. This fucking guy. What happened? What happened? That's what he's going to do? Yeah. Unbelievable.

Unreal. All right. I can't wait to forget this guy and move on. Bankless, move on with DFI. You got anything left, David? I think this is good. This is helpful, yeah. Thanks for staying strong.

Bankless community. We appreciate you guys.