On The Brink with Castle Island - Weekly Roundup 01/20/23 (DOJ takes down Bitzlato, loyalty point inflation, FTX US still solvent?) (EP.389)

Episode Date: January 20, 2023

Matt and Nic return for another week of news and deals. In this episode:  What's going on with our merch? Nic's pitch for pickleball What's the deal with the leaked GTX pitch deck? What happened at CoinFLEX? Our conspiracy about GTX What's the latest with the FTX crime family Will FTX or FTX.US be relaunched? SBF says FTX.US is still solvent DOJ takes down Bizlato Genesis is exploring a bankruptcy process Coinbase is pulling out of Japan What was the deal with NEM? What happened with Veritaseum Corporate loyalty programs are getting debased Peter Thiel liquidates his BTC Sponsor notes: Subscribe to the Coin Metrics State of the Network newsletter

Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of Concentive easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called the Bitcoin.

Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And this episode is brought to you by Coin Metrics. And here is the Metrics Minute. For today's Metrics Minute, we're looking at changes in the distribution of Bitcoin holders. In the last year, there's been a shift towards Bitcoin addresses with smaller accounts holding more and more of supply. Addresses under 10 Bitcoin now hold 17.4% of all supply up from 14% a year ago. number of addresses holding between 0.01 and 1 Bitcoin has risen to an all-time high of 10.5 million addresses rising 2 million over the year. And of course, the percentage of Bitcoin held for at least

one year has reached an all-time high at around 67% of all coins. That is your Metrics Minute. And that was the Metrics Minute. You went to a Coin Metrics Happy Hour in New York yesterday. So can you believe this? I didn't know about the Happy Hour. I wasn't invited. We don't live in New York. We just all happen to be in New York. I was there. By chance, Hunter, our good friend Hunter, told me. So if he hadn't told me, I wouldn't have known it was happening.

I show up to the Sappi Hour. First of all, they didn't want to let me in, the bouncers. They're like, well, who do you know here? Are you on the list? Like, no, I'm not on the list. Brutal, brutal. They didn't know who you were. I get in there, and they're giving away North Face puffer jackets.

What? Like proper winter coats? Yeah, well, not like, I don't think you could wear them in Antarctica, but they're pretty warm. All right, so two questions. Number one, how do I not have a puffer jet? We share an office with these guys. I sit down the hall from the founding CEO, and I don't have one of these. And second question is, people must be buying a lot of market data, I imagine. Times are good over there? I mean, clearly the data market must be on fire based on the quality of this. merch. That's pretty impressive. I need to get my hands on some of that. We need to probably step our merch game up. They didn't give me one. Oh, you didn't get one? Well, yeah, because you didn't

buy that. That's good, actually. So maybe if you drop like a half a million dollar enterprise contract on them, you get a maybe that's how it works. If that's how it works, I'm actually completely okay with it. So being of our merch, what's going on? Are we refreshing it? Where's, what's our I don't know. I got a delivery. Our merch guy, it's good. He listens to the podcast. I got a delivery of merch in the mail. The hat, honestly, it didn't come within three inches of my ears, the hat that he sent me. Was it too big or too small? Too small. It was like a hat that maybe would have fit my three-year-old daughter, maybe. I have a small head, so I think that one was for me. And then I gave, so, and then there was also a hoodie. and I ended up giving that away to someone

because the quality was just not there. So we haven't made any progress on the merch store rebrand is what I'm getting from this. I did get a pretty interesting idea from him on some SBF related merch that I kind of liked. So he's workshoping a couple ideas.

People are crying out for Newcastle Island merch. We need to, we don't even call out the, so it's on the brink. What is it? On the Brink. dot shop. Dot shop on the brink. Is that our website?

Does it even work? Does it work? Does it work? Is it on the, yeah, it's on the brink. dot shop. Oh yeah, don't buy this hoodie, this embroidered hoodie. We got to take that off.

The hat looks good. I actually like that little hat we got. I don't know about this hat. I got a forewarning if you have a big head that's not going to fit you. There's so much stuff on here. I guess we don't have an approval process. This guy just throws it up there.

This is happening completely unilaterally. know about this. We need some structure here. There are good winter hats. There's like GM winter hats. Those are good. It's, it's actually icing right in here. I'm looking out my window. It's, there's balls of ice falling from the sky. I mean, I respect to the entrepreneur, entrepreneurial spirit of our merch guy, but I feel like these decisions should be cleared with us. Well, we'll, we'll get it under control at some point. Well, the, we did some podcast this week. We're back. we kind of took a break from the non-round-up podcast, but we're totally back now.

We're back. So you sat down with Luke from Derbit, talked about proof reserves, your favorite topic. I noticed that you didn't even attempt to pronounce his last name. No, I just saw that last name, and I just said that looks like I'm going with Luke, Luke S.

How do you say that last name? So I had to re-record the intro seven or eight times, but I did eventually get it. What is it? Strier's, three years. Yeah, that rolls right off the tongue. It's Dutch. Yeah, all right.

Well, he was good on the podcast. So Deribet was one of my top scoring proof reserves. I've just unilaterally invented a scoring scheme for proofs of reserve, and they scored well, so a good job. Congrats to Derbett on the scoring. So you set, yeah, you sat down with Tony Skadari. Tony Skidari, of course, from Imperi Partners, which is a crypto investment bank.

So we talked about the M&A landscape, talked about the fundraising environment. Maybe we'll see some consolidation here in the next few months. So speaking of fundraising, actually quite a vibrant deal week, including deals from the Castle Island portfolio. A couple of Castle Island deals. So Arch, which is a financial services company,

they raised $2.75 million from tribe capital, from us, from untamed ventures, global founders capital, and others. Congrats to the arch team. And also in the portfolio, Moonpay, the crypto payments company acquired Nightshift, which is a creative studio. There we go, little M&A. There's a few M&A deals actually this week. Next one up is a crypto fund raise.

So it's Hashkey Global, which is a crypto fund based in Singapore. They raised $500 million for the third fund. What a great raise in this environment. Congrats to the Hashi key team. Then we've got Escape Velocity, which is a fun, focus on, physical infrastructure networks and digital commodity networks. They raised a 25 million debut fund. Congrats to them.

We're actually involved in this in a small amount, but we're really excited about these guys over at escape velocity. So congrats to Mahesh and sell. Next one up is Parfen. This is a Web 3 infrastructure company. They raised $15 million from Framework, Valor, L4 Venture Builder, and others. Then we've got Diva, which is a liquid staking protocol. there raised 3.5 million from A&T Capital.

Here we've got another M&A transaction. So Tactic, a crypto accounting platform, has been acquired by TaxBit. The amount was not disclosed, but another M&A there. All right, this is the most curious deal of the week. We have Quantum Temple, a Web 3 platform aiming to, quote, preserve cultural heritage. They raised $2 million from Borderless Elgrand Foundation in Schema Capital. what that means I could not tell you. Don't know what that means at all.

Yeah. Next one up is Obo Labs. This is a company building distributed validator technology on Ethereum. They raised $12.5 million from Pantera and archetype. Next up we have Bituda, the Digital Asset Investment Bank. There is a series A financing from RWE Energy Transition Investments. Congrats to Tim and Team over at Biduda. Next one up is, how do you pronounce this one?

It's S-Y-K-Y. Psyche? Psyche. Yeah, it's got to be Psyche. Psyche. This is a company that is focused on Web3 fashion. They raised $9.5 million from 776, Brevin-Hauer Digital and Polygon Ventures.

Psyche. That's actually not that bad. That's easy to say. Next up, we have Blue, a K-Y-C-N-A-M-L identity verification product for D-Fi. There is 3.22. million from blockchain, Fambushi, WaiV financial, and Gate I.O. Blue's a good name for a company.

I'm surprised that that was available. Maybe it wasn't. I don't know. Next one up is NIL Foundation, NIL. This is a data accessibility protocol. There raised $22 million from polychain, blockchain capital, Starkware, and MENA. Then we have Cipher, a wallet company.

There is 4.3 mil from Y Combinator, Samsung Next, and Balogies for Nabasson. And the last one is Gateway, a Web 3 credentialing business. They raised $4.2 million from reciprocal, 6th man, Spartan group, Figment, and others. A lot of deals this week. So our show last week got some pretty favorable reviews. Oh, really? People liked it?

Yeah. Oh, yeah. Because people like this idea of having a fight, putting all the miscreants from this industry into an arena and just finding someone to beat them up is basically what, what we talked about and a lot of people like that idea. Yeah, charity boxing. I think it's got legs.

I totally think it's got legs. The problem is you just need to, you don't want these bad guys to win, so you just need to pick the, whoever's doing the picks here, you just need to make sure that the good guy wins. Speaking of fight, there's a UFC fight this weekend.

Are you going to be watching? You know, I've never actually watched UFC before. The thing I like about UFC is there's a lot of crypto sponsors crypto.com shadow crypto.com VChain sponsors UFC for some reason.

Remember VChain? Is that like the supply chain protocol or something? Splight chain, blockchain. Okay. Yeah. All right. But I like UFC because there's a variety of ways

to win. It's not just one style. You know, there's all these different approaches. Yeah. So you're going. Is it at MSG? No. I, if it was in New York, I would go.

It's in Brazil. Oh, so you're just going to watch. Oh, okay. No, I'll be, I'll be watching football. Actually, so on the sports topic, I was just interviewed for an interview about VCs that play pickleball. Oh, really? Yeah. Who plays pickleball?

I play pickleball. Yeah, but did you tell them that you get your ass kicked by 70-year-olds? I actually did say that, yeah. I mean, hopefully on a go forward basis that's not going to happen anymore. It actually took a class. So, you know, now I'm not going to lose anymore to over 60s. But yeah, so that's a whole article, apparently, that's press-worthy is VCs to play pickleball. Man, it's a bare market out there, huh?

It's good sport, though. See, my pitch is that it has a low-skill floor, but a high ceiling, if that makes sense. so you don't have to be that skilled in order to have fun playing unlike let's say tennis or golf we have to be pretty skilled to have fun that's making it not fun for most people that's a good yeah i like that analysis yeah golf is not fun when you're terrible i hate golf i refuse to play it i might just not play until i can actually take the time to to to be good at it i heard this great anecdote about this LP who was having some performance issues with a couple of the funds that he was in and he would just monitor on the golf handicap site so they have this gin it's called gin

where you can monitor to see how many rounds people are playing and he would just like track them that's pretty hilarious there's actually papers written correlating stock price performance and number of rounds of golf played by sea level executives I'm actually I don't remember what they concluded whether it is positively related to stock price or negatively. But there have been papers written. Probably not a great look, regardless. All right, so should we queue up the music? All right, let's hit it. What you're going to do? What you're going to do when they come for you? Bad boys, bad boys. What you're going to do? What you're going to do when they come for you? All right. So usual suspect bad boys, three arrows. Three arrows. Three arrows.

Rodsters. Big news this week is these guys at the RROs are apparently teaming up with the founders of CoinFlex, which I don't know. I didn't know that these guys had it in them to stoop this low, but they're teaming up. They're going to form an exchange called GTX. It's because G comes after F. So it's not FTX. It's GTX. And the exchange would focus on trading bankruptcy claims. And the source of these bankruptcies is, of course, three arrows for a lot of these companies. So they're going to start trading and making a market and bankruptcy claims that really depend on stuff that they own or have stashed away in real estate assets or cold wallets. So I don't even know what to say. Suffice it to say it's a total joke and a disgrace.

Yeah. If you invest in this, I'm not going to do business with you. Just a general message. I hope that's the case for most ethical people in this industry. Oh, yeah. I mean, I think the guy, Evgeny from Wintermute, hopped on and said that immediately.

And I think that's the right take. I mean, anyone who does this deal should be blackballed. Yeah, like, it's all well and good to bet on, you know, second chances or whatever, but the Three Arrow's saga is not over.

They are still on the run from creditors. They're still not cooperating with liquidators. They're still hiding in non-extradition jurisdictions. So that has not concluded. there's a legal process that is playing out, will continue to play out. So if you invest, you're endorsing their criminality.

Maybe once they serve their time and pay their debt to society, you can think about giving them a second chance. I think it's pretty comical that they've created this buzz around, oh, hey, they're pitching Sequoia, they're pitching paradigm, and the word on the street is just kind of all these rumors around people that took the meeting.

It's a total joke. Those funds should probably come out and put those rumors. to rest. I don't see how it benefits them for those rumors to circulate, because that's just a way that founders generate hype saying they have a meeting with Sequoia or whatever. If I were Sequoia, I would publicly say, like, we're not talking to these people, unless they are. The coin flex thing is just super puzzling, too, because these guys are in or are structuring. So they're going through a bankruptcy themselves.

And can you imagine being one of these investors in CoinFlex that gets rolled into a new entity? You're going to go kicking and screaming. If you're one of these, there's a bunch of reputable investors on that CoinFlex cap table. I don't know what the status of the liquidation is, but in their FAQs, they talk about their series B round is going to be on par with the creditors, which I don't even get how that makes sense, but they're going to get rolled into this new entity. So you're like a reputable U.S. fund on that cap table. you're not going to want to be in business with Kyle and Sue. And this is just completely,

this is a rotten deal. Yeah, do you want the liability associated with being a shareholder in Kyle and Sue's new venture just because you happen to invest in coin flex or historically coin floor? That's a hell of a roller coaster ride. I mean, actually speaking of which, it's interesting that they teamed up with this guy, Mark Lamb, who is a former Brink podcast guest. had him on the podcast a while ago, yeah. Before CoinFlex failed. Well, they, I don't think, I don't think they didn't they failed because like Roger Verre, they allowed him to have a huge margin position. They didn't like rug like Sam. Yeah. I think they just blew it up because they. I would say it's similar in many respects to FTX. I mean, aside from maybe siphoning all the money out, but they certainly

allowed one entity to amass a huge margin position and default, thus locking most user funds in the exchange. And it's Roger Burr. I mean, that's like, of all people, Roger Burr. So it's not like Mark Lam covered himself in glory in his prior venture either. Now, I don't know what these guys are thinking. I think it's a pretty stupid thing. And my guess is that it does not get off the ground, actually. Yeah, the other thing, my conspiracy is that they want to amass all of these bankruptcy claims on their platform and then retire them, thus eliminating some of their own Debt burden. Yeah, I don't even know if you can do that.

I mean, but it's not a bad conspiracy theory. I mean, the crazy thing is that there's no one on earth that has more insight into what the recovery is going to be for some of these bankruptcy claims. Because it's entirely contingent on where all the money's hidden. And we know from a bunch of the reporting that's been done and a bunch of the stuff that will come out that there's assets there. So it'll be interesting. It's so puzzling. Sue is bragging on Twitter about how he, how, you know, holding crypto in self-custody is an important, you know, way to achieve self-autonomy.

It's like, why would you say that if you knew you were the target of creditors? Why are you publicly admitting that you've stashed crypto assets away that are the property of your creditors? It's bizarre. So that's that one. That's GTX. Hopefully the last time we hear about it. Let's get into some FTX crime family news. So FTCS CEO, John Ray, has done.

done an interview with the Wall Street Journal. He said everything is on the table, including the relaunching of the exchange when it comes to creating salvage value for these creditors. And on the news, the FTT token went up about 30% over the course of an hour. So either this guy is actually thinking about relaunching the exchange or this is just a move to get some exit liquidity for FTC, or FTT rather. But I don't know. Maybe he will relaunch the exchange. Who knows? I trust John Ray. He's one of the only people. people in crypto that I trust at this point. That would be wild if he was the CEO of a operating exchange.

That would be beyond. If that's what it takes, that's how he's going to get 100 cents on the dollar back. I would use FTX US if it relaunched under John Ray's supervision. I'm putting that on the table. You have at least one client. That's a verbal letter of intent. FtX US, which, which Sam says, is still solvent.

I don't know if you spent the time to read his blog post this week. Spoiler alert, the logic by which he says that F2XUS is solvent is that there's $250 million of regulatory capital at Ledger X. He didn't really mention the fact that they bought Ledger X with Alameda

who bought it with client funds. So can't really take credit for that 250, buddy. That was like your client's money. It's not solvent when you're counting just your customer's money. Big dope. That's a bummer. I think they should restart FTXUS. I don't know if you pay out creditors or clients or if you keep it frozen and you let people

create new accounts and you continue the normal process with those existing frozen accounts and you just let people reopen new accounts. But here's my pitch. Bring back Brett Harrison. Reopen the exchange. Reopen the FTCS exchange. Silo it off from FDX. national. It was a good product. Do you think that anyone would trade on it? I mean, exchanges are

built on trust, right? I mean, do a proof of reserve as well. Okay, we'll do a proof of reserve. I don't know. The big part of launching exchanges is just getting liquidity. Good luck getting market makers and good luck getting critical density of liquidity on there. I don't know. I think it would be pretty much a flop. What if Mr. John Ray launched a market maker called Gallameda and made it the exclusive liquidity provider on FtXUS 2. All right, now we're cooking. Now we're cooking. Wait till John Ray gets to the, yeah, wait till he gets behind the wheels here.

He's going to say, hold on. What is this token? Oh, this is just an unregistered securities offering. Oh, and what are we doing here? Oh, it's a U.S. customer? I don't think he's going to launch this exchange. I hate to break it to it. And anyone can do it.

It's Mr. John Ray. So I eagerly look forward to the relaunch here. bunch of WSJ content this week on FTX. So there's a big article on some of the predatory practices that the FTCS team had in Africa. There was an opinion piece on why the SEC didn't stop FTX and why they were meeting with them. So that's good to see people continuing to bring that up. The fact that these FOIA pages for Gary Gensler's calendar haven't been updated since July. We don't know how many meetings there were. WSJ is all over this stuff. Yeah, it's a great question. So the big news of the week, I can't believe it took us 20 plus minutes

to get there, but Bizz Lato, whatever that is. So the Department of Justice has charged Bizz Lato, one of its founders, Anatoly Legg de Maktav, with money laundering. And it appears that this is a Hong Kong-based crypto exchange. I'd never heard of it. It's linked to a bunch of Russian money laundering. So I'd say, you know, good job catching them.

It seems like they laundered like $700 million. of the past couple years. So people were kind of dunking on them, but it's good to see bad people get brought down. So we saw the news drop at what, 9 a.m. That there was a big settlement coming out, big indictment. And then at noon, we hurriedly got out our phones to check out what it was. We were in suspense for hours.

And it was Bitz Lotto. Bits Lato, yeah. Apparently they should be in the bad boys club. The problem is just no one knows who they are, including myself. But I don't know, it's good job catching them, I guess, right? The guy was arrested in Miami. That's where all the crypto bad boys, they all try to go to Miami, especially in the winter. You know who I saw this morning when I was getting a croissant?

Who? Don Chiedel. Don Chiedle. No kidding. What a great actor. Yeah. Hotel Rwanda. Yeah.

That was not in Miami. In Miami, I'm sure it would have been some crypto fraudster. Yeah, you're not even in Miami. Any other FTX crime family news? I guess that's it. Yeah, that's pretty much it. Other news that's hitting the tape this week, a lot of rumors that Genesis Capital is going to file pre-packaged bankruptcy,

starting to leak that some of the details would include a forbearance on repayments to creditors. there would be some cash consideration potentially and there would be equity in the parent company, DCG. So don't know if those rumors are founded or not, but we'll see. Maybe by the time this comes out, something will have happened. Typically bankruptcies happen on Fridays.

Really? Yeah, because then it gives you the weekend to get everything in order. You declare and then you have like the first day hearing on Mondays typically. And then the junior people just work all weekend. That's some bankruptcy alpha right there. Yeah. So who knows?

In other news, Coinbase, do you see this? They're pulling out of Japan? And this is on the heels of Cracken pulled out of Japan. Seems like some of the regulatory wins in Japan are not favorable. So I was talking to someone yesterday who said that you basically need to K.Y.C. With a bank in Japan in order to trade on a cryptocurrency exchange, which basically means that you have to be a Japanese citizen. because if you're a U.S. citizen, you can't do that.

So it's just closing off the addressable market for these cryptocurrency exchanges in Japan. So maybe we'll see more companies just retreat. Do you remember when Japan was like the crypto hotspot back in the day? I do. I mean, wasn't there a premium for, was it the sushi premium? Is it did people call it the sushi premium? Or am I just making that up?

I don't remember that, but very well could have been. But yeah, there's a bit flogical. Remember BitFlyer was like a high high flying company? They announced that they were coming to the U.S. I don't know that they ever did. Japan wasn't what was that? Ask that NEM? Do you remember NEM?

Oh my gosh. Yeah. NEM was like, I thought it was like Japanese Ethereum. What was the Japanese Ethereum? Well, there was Chinese Ethereum. There was Korean Ethereum. I mean, Japan had a real crypto moment maybe five years ago. And now it seems that the regulators,

hate it. Seems like regular retail investors hate it. NEM was like a top five asset, I want to say. Yeah. No one really knew about NEM over here. That was a mystery. I think you did was your paper. Did you analyze NEM for your thesis paper? Yeah, from my thesis. Yeah, NEM was, it was a top 10 asset at that time. And it was, I remember it's very hard to find any information on it. I went through the top 50 at the time crypto assets and look through to their governance structure, affiliated corporate entities. That gave me severe brain damage doing that exercise. Yeah, I can only imagine. You should post that paper.

It's on my website, Nick Carter.Info. Oh, is it still up there? Nice. All right. Yeah. I think it's age well. I looked into BitConnect. At the time, Veritasam.

Or Veritasam. Big Connect. Oh, Veritasim. Who was that guy? Was that Reggie? What's his face? Reggie Middleton. He's still mad at me.

Reggie Middleton. Oh, man. He scammed. He was one of the better scammers of all time, that guy. So Reggie Middleton is still mad at me. He still tweets at me. Even post-settlement. He settled with the SEC for like a meaningful sum of money.

And he still is mad that I called Veritasium like a scam. Didn't he own like 99% of the supplier, some ungodly number? Yeah, I'm looking at my master's thesis right now. And in the thesis, I said that he owned 98% of the initial supply. I wouldn't like that either, but that was the truth. So this was the top, wow, NEM was the fifth largest crypto asset when I did the paper, followed by Dash, Ethereum Classic Iota, Stratus. Man, it's a throwback. BitConnect was top 15, bit shares, Neo, QDem, Steam it. So I wanted to get your take on what's going on with these loyalty programs. Have you been following any of this stuff?

Just the debasement of the loyalty points systems? Do you mean frequent flower miles? Well, that too, I'm sure. So the ones that I saw over the past couple weeks, so Best Buy, Starbucks, and Dunkin' Donuts have just completely botched their loyalty programs. by making it so much harder to get free stuff. So Best Buy, they used to have a loyalty program. Apparently, I was not in this one.

But now you can only be in it if you have a Best Buy credit card. Starbucks, they just totally debased the currency. So it used to take 50 stars, now it takes 100. What used to take 150, now is 200. What used to take 200 is now 300. So they just said it's a pure debasing. Dunkin' Donuts went from 200 points to get a free coffee, to 700. So this is a, this is an outrage. It's a scandal. Has something happened to catalyze

your sudden interest in corporate loyalty points? Or was not really? I just know this the straw that broke, you know, you saw it, you open your Duncan app and you're like, wow, 700 points. What's going on? Well, so I'm a very loyal customer of Starbucks and I also go to Duncan Donuts a lot. So that both of them in my hometown. And I, I, I like, them both. I probably go to Starbucks more, but they're both really good. The other thing with Dunkin' Donuts is that you just can't get consistency from location to location because they're a franchise model. And so you can't get the same food even sometimes. Not that you really want food. The only good thing at Dunkin' Donuts on the food menu is the donuts, really. But it's just

inconsistent. If you want the chocolate stick, there's like two Dunkin' Donuts locations in Massachusetts now that have the chocolate stick, which is a pure outrage. That's just, one of the originals. That's just seed oil central. I think it's probably to be avoided at all I don't think so. I don't know if it has seed oil. Duncan Donuts is old school. I think it's probably just sugar and flour. I'll say this about loyalty points. I'm, you know, I used to be a JetBlue man through and through, big time mosaic guy right here. I'm not, you know, I'm migrating. I'm changing. I'm no longer a JetBlue man. What are you going to go to? Well, I'm taking suggestions, really. I might have to be an American Airlines guy from now on.

JetBlue's just screwed me over one too many times. And that's the end of a beautiful relationship. Yeah, JetBlue has really gone off the deep end. And are they still trying to buy spirit? I wouldn't try to buy that if I were a man. Oh, God. That's a terrible airline. That's an awful one.

I can't abide that. Yeah, they have the worst reliability record of any of the major airlines. So I'm just very sadly saying goodbye to JetBlue. No, it's too bad. unless they want to come back and sponsor the podcast and give you free airfare, then you're back. Yeah, you'll notice through the lack of ads, we have open podcast sponsorship slots. Here you, hear you.

We're not going to do nexo.io, though. If you are a credible firm that promises not to engage in fraud of any sort, we're listening. It's a tall task in this industry right now. These days. Yep. So what's your theory on why Bitcoin is just, on a ripper here the past two weeks. I think that people like to ascribe it to a single entity.

And what I think is that Bitcoin is the most anticipatory market out there. Like you remember when COVID struck and Bitcoin was kind of the first macro asset to move to the downside and then also the first to move to the upside when we had a liquidity bonanza. I think it's something similar. I think we're starting to price in pivot. We're looking at more softening in the economy, more indicators that imply a re-loosening of financial conditions.

So that's my theory here, very big, very general. But I think Bitcoin is starting to wake up to that likelihood. I don't think it's attributable to any specific single entity. Well, it's hard to tell, right? that it is probably exactly what you said it is and by corollary that means that macro funds are probably taking note of it so it wouldn't surprise me at all that you know some macro fund put on a big long bitcoin position no you wouldn't really know because they're not going to hold it in their own custody it's probably just going to be the omnibus accounts at coin base that hold it and it's

really difficult to to track those I mean you can track them you just can't attribute down to the sub level so my guess is that it's a you know some big capital moved into it I mean the went up like what 20% over the past two weeks yeah it was a hell of a rally I think you're right there's obviously some agent acting on this premise I think the question is what do they believe but bitcoin is one of these liquid markets you can express those views on so that's my theory stay tuned the other thing that it could be is just more confidence that this trust this gray scale investment trust is not going to be liquidated, right?

Totally. Which that's been a big new story for the past couple of weeks. It's just what are the 144 implications of this trust? Is this SEC action going to dig into the trust? There's apparently some language there where they can actually charge the trust legal fees if they have special situations arise. So there's a bunch of folks that have called that out. So if you got definitive, hey, we're not liquidating this, which again, you're not going to get that.

But if it was very clear that that was not going to get liquidated onto the open market, probably the price of Bitcoin would be higher. Yeah. And if the market was pricing, yeah. So as the market prices in anticipated negative events like the trust unwinding or some issue with Binance, obviously there's a ton of noise there over the last few weeks. and then those don't come to pass, that alone can be a positive catalyst. Mount Gox coins coming on, though, in the next couple months it looks like.

So remember that Fortress bought a lot of those claims, so they'll be the recipient of a lot of those coins. The question is, what would Fortress do with the coins? Would they liquidate to complete the arbitrage? Or obviously, Fortress is pretty pro-Bitcoin, historically would they just hold? I admit, when you're saying, sitting on that much of a gain, you probably have to take some chips off the table, I'd imagine.

It's just like Peter Thiel, right? Peter Thiel, officially a no-coiner, former corner. I hate to see it. Made a ton of money on it. Made a ton of money on the trade. He got the bag. But the weird thing was that he was extolling Bitcoin as he was selling it. Yeah.

I don't like that. Not a fan of that. It's not a security. It's a good thing for him. It's not. But it's, yeah, he was down at that conference. He was down at that conference that we're at. It's just saying, hey, the price of Bitcoin is going to go way up.

Meanwhile, the guy's just taking it all off the table. Oh, man. Wake up. Don't know about that. Of course. All right. I think that's it for the week. We'll see you on Monday.

Have a safe and healthy weekend.