On The Brink with Castle Island - Weekly Roundup 02/02/24 (FTX recovery, Bitcoin Season 2, Tether's Q4) (EP.502)

Episode Date: February 2, 2024

Matt and Nic are back with another week of news and deals. In this episode:  Where is the FTX tungsten cube? FTX will make a 100% recovery for creditors FTX 2.0 is not happening The Genesis Digital Assets mystery Tether's blockbuster quarter Chris Larsen hacked New legislative developments on SAB121 Bitcoin Season 2 is underway The Biden admin is requesting information from Bitcoin miners How anti-AI energy activism is revealing about the decel agenda The CSW v COPA case is nearing trial  We reflect on the terrible CSW era  Elizabeth Warren letter watch  The SEC withdraws their case against DebtBox in shame Content mentioned:  IEEE, Bezos Bucks? Get Ready for Corporate Digital Currency Sponsor notes:  Conducting the ETH Census In Coin Metrics State of the Network Issue 244, we highlight the complexities of calculating ETH's total supply and share our method for arriving at an accurate figure

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 to Britain's ailing economy with a new round of Conjecturee 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 a 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. Today on the Metrics Minute, we are touching on a controversial subject, which is the nuances of calculating Ethereum's total supply. So, as you know, Ethereum has become more complex as it has divided into the execution layer. and the consensus layer. Tracking the ETH supply involves accounting for both layers.

This is akin to conducting a census into bordering cities with no double counting. So the punchline is the theorem's total supply is 120 million, 182,877 as of last week. The Chappellella upgrade introduced a divergence between the beacon contract balance and ETH staked on the consensus layer. the deposit contract has a balance of 37 million, ETH staked on the consensus layer is near 28 million, with 9 million being unstaked after the activation withdrawals. Ethereum's free-float supply, considering illiquid and presumed lost Ethereum, stands at approximately 107 million, that's 13 million less than the total supply. That we would consider a more accurate depiction of ETH available to the market.

that is your metrics minute. A census in two towns at the same time. Is that what they said? That's right. My town just did a census, old-fashioned way, pen and paper. Really? Yeah. Was it accurate?

They sent out a thing and they asked you to put down who lives in your house. Yeah, it was accurate. So few people know, but there's an article in Bloomberg talking about China being the tungsten capital world recently, some Chinese city. That's actually not true. Your town is the tungsten capital of the world, my opinion. Why is that? Oh, because Dan has all the tungsten.

Yeah, CNS has a huge number of tungsten artifacts, and we also have some. Yeah, that's true. I'm slowly building my tungsten inventory. What I want to know is where is the FTX tungsten cube? Have we located it? We may never know. Well, there's a court hearing coming up at some point. there's a sentencing for Ryan Salem, who I think was instrumental.

And one of the many good things he did at FTX was by the tungsten. And maybe that will be asked. I don't know. John Ray is making 100% recovery. I mean, these claims are trading at 75 cents on the dollar a week ago. So maybe it's just the tungsten that closes that 25% gap. That's a famous cube. I mean, that's a historic tungsten cube.

That's worth something. How is that not being auctioned at Sotheby's? right now i mean a lot of open questions from mr john ray here so 100 cents on the dollar but that's at lower crypto prices right or is it yeah so that's like 16 16 000 500 in change for the price of bitcoin so all right talk to me when you get back to you know 2.0 on the dollar here so that's not that's 100 cents on like a fake dollar basically that's funny fiat math that's funny that's I don't agree with that. Anyway, good job.

John Ray. And so it also came out that FTX is not being restarted. So kind of contrary to what we had supposed. So sorry about that. We were wrong. Where's the value? I mean, yeah, you got a customer list, I guess. I mean, you got some hitters on that customer list.

But then you have a, you know, the back end engine was not exactly staggeringly good, I would say. And also they were getting hacked as of the day before they declared bankruptcy. So not sure there's much there. They were very much hacked. We're going to cover that today. But yeah, I was wrong about that. Not always right. I'll take that one on the chin.

Okay. I was wrong. Well, I don't know. They might still sell the customer list or something. Maybe there's some value there. Who knows? Probably not. So this was a monumental deal week.

I don't know what's going on. Just absolutely frenzy of deals. Tons of deals. Yeah, let's hop into it. First one up is Imgen AI. That's IMGN. There's so many good names this week. We're going to have to really decide

what the name of the week is. So this is a crypto-native image generation platform. They raised $1.6 million from HackVC, Raina Capital, Salini Capital, and others. All right, this next one we were really debating. So the technical full name of this deal is 10N8,000. Little Dragon. 10 and 8 little dragon.

10 and 8. I have no idea what that means. 10. So what does 10 and 8? It's not 10 to the power of it. No. 10. It's like a letter n.

108. 108. 108. Tenacious. 108. It is a Bitcoin Defi accelerator. They raised 1.5 million from Centauri New Tribe and others. We're going to be talking about this.

Bitcoin Season 2 is fully underway. that's what we're calling it. Bitcoin season. There is a monumental amount of deal activity going on in the Bitcoin DFI, Bitcoin L2 situation here. I don't think the rest of the world has woken up to this yet. Next one up is also a Bitcoin defy deal. Yeah. So, I mean, look, next up we have Portal.

There are Bitcoin Decks. There is $34 million from Coinbase, Arrington Capital, OKX, and Gate Ventures. there is just a flood of Bitcoin L2s and Daxes happening. I don't know what's going on, but it's happening. Next one is also a Bitcoin DeFi deal. Vellar. This is a company building a PURP exchange on Bitcoin. There is $3.5 million from CMS, Bitcoin Startup Lab, and others.

So this is big from a few different perspectives. We're not, we don't invest in the Bitcoin mining ecosystem, but if you are a public investor in these big, Bitcoin mining stocks, how is this not on your radar? That there's all sorts of Bitcoin L2, Bitcoin defy activity. If this stuff actually works, then the fee revenue here is going to be impactful, I would say, to the miners. Could be. And they need it. The halving's coming up. I don't know exactly when the halving is slated for, but this is, we're also going to touch on this later is the Biden admin's emergency. There's a Bitcoin mining emergency, according to them.

they feel that hash rate is going up. I mean, the halving's about to happen. So that tends to have hash rate, everything else equal. That's the real emergency. I don't know. The Biden administration is saying that Bitcoin mining is an emergency. Why is that? Is it blocking the way of immigrants rushing over the border?

Matt, your political evolution over the last few years of this podcast has been quite something to witness. I mean, I think it's the least emergency emergency of all time. I just ran the numbers and Bitcoin mining accounts for at most 1.5% of electricity generation in the U.S. And remember, they're not competing with expensive power, aka sort of urban residential power. By definition, they're not doing that. They're only buying relatively cheap energy. because it's the only energy that's competitive to mine Bitcoin with. So they're buying energy in the middle of nowhere.

Definitionally, if it's cheap, that means it's not being used for other stuff. So of all the emergencies out there, this is like the least emergency emergency. I don't have an alarm up on that Bitcoin mining emergency. In fact, I think it's actually in the national interest to have this ecosystem strongly in the United States. So it might be an emergency if you ban it. Yeah, I mean, I'm seeing now the exact same arguments that were deployed against Bitcoin mining are being used against AI, which is something I warned about. And I think that's very telling. I think that's very telling because AI is obviously useful, right? Obviously. A lot of people use it. There's clear consumer-grade

utility. There's no question about it that the way there was about Bitcoin, okay, maybe it's a smaller set of people that use it, less apparent utility. AI is obviously very useful technology and it's potentially going to add a few points to GDP growth. It's happening in America. Most of the big AI companies are Americans, obviously good for American interests. The fact that the same arguments being used against AI, you know, they were trialed on Bitcoin. I think it's telling because it shows that no matter how useful your industry, people are going to grouse about the energy consumption. And the D-cells are going to complain about any industry. So their interest is not like prudence and resource allocation. Their interest is just dragging us

back to the Paleolithic Stone Age and returning us to a pre-industrial standard of living. That is the desire because they have this sort of religious belief that we committed this sin by industrializing. And now we have to repent and go back to a much worse condition. That's it. So I think this is very, very revealing. I think that's right. I'm kind of waiting for them to come for the Christmas lights because I'll tell you, you know, you get a house, you're doing at least four or five hours at the beginning of every December.

You've got to string the lights up. You've got to put them on the bushes. trees. I could save at least four to five hours plus a lot of electrical usage per year if they just took this Bitcoin mining and AI hate and just said, hey, Christmas lights, what are they good for? They will come for. That's more energy than Bitcoin. And honestly, this is causing evolution of my thoughts because I used to think, okay, well, the way to answer this is to make the case for Bitcoin being so important. But that doesn't work because AI is obviously important. Nobody needs to make that case. AI is great, right?

So that doesn't appease them. You just have to reject the complaint out of hand that any industry can use, quote, too much electricity. You just reject the premise. That's a new tactic here. I like it. That's what I've been doing. All right. Let's hop into the next deal.

This is Spellborn. It's a blockchain gaming studio. They raised $1.6 million from Anamoka, YG, Immutable, and others. This next one is called Gevulot. They're a privacy-focused L1 blockchain. They raise $6 million from variant Volt Capital and Rockaway. Then we have Mesh. This is the company formerly known as Front Finance.

It's an asset management and payment platform. There raised $6.5 million from PayPal Ventures. Then you have my choice for the name of the week, which is Forgotten Playland. They're a blockchain. Yeah, I like that one. Blockchain Gaming Company, there is $7 million from Merit Circle and Spartan Group. It's another good name right here. B-Box.

This is a decentralized exchange project. They raised $2.7 million from hashed Arrington Capital, CMS, and consensus. CMS getting on the board here this week. This is a strong week for CMS. Yeah, love to see it. Free space. That's the free space on the brink bingo. Next up, we have public AI, Web3 AI training platform.

They raised $2 million from Foresight Ventures in the Salana Foundation. Then we have Hyperlane, Web3 DataLake. company, there raised 5.2 million from Slow Ventures, Mailstrom, and Volt Capital. Then we have Navi. They're a DFI protocol built on sui. They raise two million from OKX mechanism and hashed. Then we have another good name, Ithaca protocol. This is an options protocol. There is 2.5 million from Wintermute and Cumberland. You ever been to I have not. Pretty good. Yeah. It's cold.

Because where Yale is, is that right? No, Cornell and Ithaca College. Okay. The saying is Ithaca is gorgeous, because they have gorges there. Next up is SquidRouter. That's an interoperability protocol. There is 4Millen from Polly Chain North Island Ventures, Fabric, and Breed VC. Squidruder is my favorite name of the week.

Squid is kind of a derogatory put-down word. You call someone a squid. Is that right? That's just a Boston thing. Yeah, I don't know that one. Yeah, kids are squid. Boston Slame. But I think in this context, it sounds like a great company.

Last one up is Cube Exchange. This is a crypto trading platform. They raised 12 million from six-man ventures, Parify, GSM, and others. That was a lot of deals this week. Yeah, I mean, you know, historically, I was of the opinion that we should drop the deals and do the news. But that got a very negative reaction from Brink Nation. So we are recommitting to maintaining the deals. People like the deals.

Keep doing deals. We'll keep putting them in. We pretty much, we try to put as many deals in as we see. There's probably deals that are happening that we're not catching, but that's a lot of deals. So some FTX news pieces here. So as we said, the estate expects to fully repay customers in this kind of remedial way, at lower crypto prices. and they will not be relaunching FTCS.

That's it. Pretty great haul for whoever, and I think we know some of these names, a lot of them aren't public, some of these big firms that were buying these claims. Just a great haul. I mean, some of these things are trading, you know, 10 cents when it first happened.

Yeah, I mean, early on, people sold their claims at 10 to 20 cents on the dollar and have to imagine they're feeling a lot of regret now, frankly. I guess it comes down to, could you reallocate that money in space? So if you're a crypto hedge fund and you sold at that level, you know, hopefully didn't just have to give the money right back to your LPs. Maybe you punt it around a little bit and the market went up.

So, you know, it's probably going to be like a high 20s, low 30s, IRA on that type of a trade. So the other second piece of FTCS news, there were arrests made in the $400 million hack of FTCS, which had filed for bankruptcy. I think that same day. That was in November 2020. And apparently it was a Sim Swap

orchestrated by a Chicago man, according to Krebs on security, Robert Powell, aka L. Swapo, which is great alias. I mean, points for creativity on the alias. No points for being a thief. So, you know,

I remember this was like kind of overlooked at the time because there's so much chaos and, you know, 400, like, what's an extra 400 million going out the door? You know, I guess we don't have definitive confirmation that this was FTCX, but Krebs did a really good job in his blog post. We'll put it in our newsletter, tying this to the FTCS hack. So his premise is that that's where the money came from, which makes sense, just based on the dates and the times and the charging documents. But, yeah, I think the view was that that was an inside job at the time. And maybe, you know, maybe it was. Maybe there was like some insider tip off, but seems like El Swapo was not an FTX employee. So, I mean, so this was AT&T. And honestly, in the year

of Our Lord, 2024, I continue to be so disappointed by the telecoms companies. I mean, how are sim swaps still a thing? Is there some reason why sim swaps are so easy? Like, what, is there like a fundamental structural reason that's inherent to how mobile phones work that sim swaps are so easy like what's going to it's just so crazy that you know if it was any other industry that was getting victimized like this this would have been figured out two years ago but you would think that there would be some something you could do with pass keys so i don't know if you're kind of following i'm sure you have pass key logins on a bunch of your devices now but these biometric logins and just the improvement of the login experience from pass keys or you know Google has them all the majors are

using pass keys now why can't you just have a biometric authentication here apparently in this case they used fake IDs so they physically went to an 18-t store with a fake ID I guess the name would have been the name of the person they're impersonating and the picture would have been their own picture presumably and that was sufficient but like come on it like where is the class action lawsuit here, adding up all the losses from sim swaps. I think that would be more than the market cap of AT&T. I mean, it's just like,

I mean, that's, like, it's enraging that this issue is still outstanding. After so many incidents, so much value loss due to sim swaps. It's a, you know, it's a good reason to root for D-PIN. Who knows if something pops out of that category to threaten the majors here, but that would be

a really positive contribution to the world if cryptographic, attestations can really emerge and start to disrupt the telco monopolies. I guess this next story is potentially some swap as well. We don't know exactly how this happened, but Chris Larson, who's the co-founder of Ripple, he was hacked this week, $112.5 million worth of XRP on the move to various exchanges. According to reports, the exchanges and law enforcement are working on halting some of these exchange accounts and are on the case. So who knows if it gets recovered or not. but quite possibly a swimswap too for all we know yeah and you know i understand that the best

practice is not to have sMS based 2FA obviously everyone knows that you know not to victim blame here but don't use SMS based 2FA however a lot of platforms enable that by default uh some platforms don't support physical 2FA i mean use a ubiki obviously but not everyone supports physical 2FA or time-based authentication. Well, that's the biggest problem, right? Is that a lot of people are aware that SMS 2FA is not the way to go. And if you're out there and you have SMS 2FA, remove it from every single brokerage and crypto service that you possibly can and use an authenticator or use a Yuba key.

But a lot of these platforms don't have it yet. So that's the problem. Yeah. I mean, I think Twitter is in that category. I'm not even sure they support physical two-factor. I think they do. They certainly default you into SMS-based 2-FA. Yeah.

Yeah, Twitter's got 2-FA. It's kind of on the platforms as well to realize that this is a huge attack factor and a huge problem. Yeah, it's a huge liability for the platforms too. So you're going to get sued by people that lose money. So switch it over. All right, some personnel news. We always like highlighting J.P. Morgan executives that become former J.P. Morgan executive. So the crypto trading firm, G.S.R., which is one of the largest digital asset market makers,

appointed former J.P. Morgan executive, Andreas Kukorrinas as their new head of trading. So, you know, let's just see some more of that talent flow out of JPM here. Yeah. Reminder, Jamie Diamond believes that Satoshi Nakamoto is coming back in the year 2140, and he will take your bitcoins. That's the firm-wide perspective at J.P. Morgan that Satoshi will rise in 2140, take your coins. He also believes, based on his Elizabeth Warren, congressional testimony, that this is just for drug dealers and criminals. So there's actually no use case here. It's not like stable coins are allowing people to hold, you know, dollar value in savings technology for the first time in the world,

or that Bitcoin is being used as a debasement slash chaos hedge by, you know, what, 50 million Americans? So, yeah, the firm-wide perspective at J.P. Morgan is that this has no merit. Although they are the authorized participant on a number of these ETFs, and they're making money on it. So they don't mind making money off it while they bash it. Yeah, on the Satoshi Nakamoto conspiracy front also, we didn't put this in our newsletter,

but the Copa versus Craig Wright case is actually about to occur. It's about to be initiated in court in the UK. And Craig Wright and his various nefarious backers have apparently already tried to settle unsuccessfully. So yeah, so tee this up a little bit. So who is Copa, what this lawsuit is all about? Yeah, this is all from memory. But Copa, I believe, is sort of a collective of various sort of Bitcoin entities. I think Block is involved, formerly known as Cash App Square.

And the objective is to end this sort of legal harassment against Bitcoin developers by Craig Wright and his cronies. It's worth noting that Craig Wright fully lost his case to Peter McCormack recently, which is amazing news, of course. And honestly, it looks like, I mean, this is a, this is kind of a long-running, low-level kind of form of legal terrorism against anyone involved. involved in the Bitcoin space, whether it's enthusiasts like Peter McCormack or the core developers themselves, many of whom quit. Like they publicly distanced themselves from Bitcoin due to this legal harassment. So it's one of the most important initiatives out there and hasn't received a lot of coverage. It looks like the Craig Wright and his team is kind of like falling apart at this point.

And, you know, his strategy was just to make a sort of bunch of legal claims. favorable jurisdictions and represent himself as Satoshi and, you know, try and harass people and to stop working on Bitcoin or bolster BSV as a Bitcoin alternative. And it looks like this is, this scheme is finally dissolving after, I mean, what, six, seven years of them doing this. Crazy. It feels like it's been going on forever. It's been incredibly annoying. I mean, you remember the Bitcoin cash frenzy in 2017. A lot of that was buoyed by people believing that Craig Wright had some claim or relation.

I mean, credible people I knew in the industry believed this. And honestly, I'm still mad about it. Like, people would call me up, be like, dude, Craig Wright, like, I think there's something to this. Like, I think, you know, the tulip trust is real. I think he's going to move the coins and sell the. Satoshi coins and buy BCH or whatever, I'm not over that. I'm still mad about that. That's crazy.

Like credible people that I personally knew well that were crypto VCs believed this. A lot of them still operating. Yeah, yeah, yeah. And so I cause immeasurable amounts of harm to the industry, distraction, waste of time on these false claimants to the Bitcoin throne, and genuine harm to Bitcoin developers. and podcasters, Hoddle Not as well, a Bitcoin educator,

I mean, huge amounts of real world harm. So I'm very excited, frankly, for sort of the resolution of this. And obviously, I think Craig will resoundingly losing court if it goes that far. And I'm really glad that Copo was put together to finally put an end to this. And Peter McCormick deserves a ton of credit

for going to bat here. He could have just as easily said, you know, hey, I acknowledge Craig Wright and moved on with his life. And a lot of people did. But you have to give him a ton of credit. He went through a lot of personal, you know, anxiety and, frankly, like, medical issues just related to the stress of this whole thing. So the industry should really thank him and this guy, Hold on Not as well. I mean, there's two people that really went to bat. Yeah, I mean, these are private citizens. Peter runs a personal friend of mine, of course. So I feel, like I felt for him as he saw him as he went through this and the strategy of Craig Wright was to massively drive up legal fees into the millions and millions of dollars and then hope for a court decision that would force him to pay their legal fees I mean like evil stuff like really really nasty stuff and Peter didn't back down he fought and ultimately won but I mean and you imagine the

stress as a private citizen running a small business facing potentially sort of $5 million court judgment against you. So a huge credit to him for sticking through it and for winning. I think I've told this story before on the podcast, but I was in the room when Gavin Indreason announced that he believed that Satoshi was Craig Wright at consensus. It was either 2015 or 16. I was sitting right behind Roger Vera, actually. And he turned around. There was a bunch of fidelity guys that were sitting with me. And he was like, I can't believe it.

Like, this is crazy. And he would go on to, of course, actually believe it. But it was rather convincing to have Gavin and Dresen up there and say, I've seen proof. And, you know, and of course he saw fictitious proof. He was duped as well, which is too bad because he was kind of exiled from the community as well. So there was collateral damage on all sides of this. But you had Gavin on stage with, I think it was Vitalik. And I forget who else was up there.

But it was kind of this like earth shattering moment in the industry that, oh, wow, this never heard of Craig Wright. I guess he's Satoshi. Yeah, I think that's when I sort of lost my crypto innocence in 2017 was when the BCH moment happened. And I thought, wow, these people that are liars could actually maybe unseat Bitcoin or really do harm to it. And I'm not a grudge holder. I don't hold grudges. But anybody that ever boosted Craig Wright, any of his cronies or BCH or BSV, You have my eternal enmity and contempt eternally.

It's like that scene from Billy Madison where the guy has the list. And Billy Madison calls him to apologize. You cross them off the list. So if you're one of these Bitcoin Cash people and you want to apologize, just get in touch. Take you off the list. I mean, I'll still be bad. But yeah, feel free to apologize. Nobody ever does.

Yeah, really, I'm interested to see how that case goes. So another thing I want to talk about this week, I found it very interesting. So there was this article this week. It was in the IEEE spectrum. So this is kind of a journal, like a HBR-style journal. And there was this very interesting article about the possibility of Amazon starting their own stable coin network. So it's called Bezos, Buck's Get Ready for Corporate Digital Currency.

Sort of lays out this case for why Amazon should start essentially a tokenized money market mutual fund and use it as the internal. currency for Amazon. So basically have a stable coin and reduce Amazon's reliance on the credit card processors and basically just keep the like the cash that moves around the Amazon ecosystem internal to Amazon and accruing net interest income. It's kind of a no-brainer idea from a corporate perspective. I think this makes a ton of sense on the merits of it. Obviously if it's on a interoperable blockchain, it would be all the better. But you could see this almost being a like a loyalty points proxy, but with dollars, making interest for Amazon. In this rate environment, it would make a ton of sense. I guess the question is, you know, is this regulatoryally possible?

I would say definitely not in this political climate. You see the hostility towards Facebook when they tried to do something similar with the second version of Libro, which was basically just a stable coin. But this is a real idea with legs, I think. And I think if you have a different regulatory regime here, there's no question that Amazon will probably try something like this. Yeah, I read it and I found a very thought-provoking. To be clear, this is sort of a thought experiment, right? There's no indication that this is actually in the works. There's not reporting. This is this is kind of saying, if you were Amazon, why wouldn't you do this? And you obviously would, right? Like you would reduce your dependency on the, you know, the payment processors. You would have this

new line item, which is basically just clipping fees on treasuries. And you basically make yourself a money market mutual fund. You'd probably be the largest money market mutual fund. It'd at least be top five out of the gate, I would imagine. And of course, you'd probably pull yourself into a SIFI designation, is my guess. You know, you'd be so big that you'd be systemically important to the financial system based on how many assets would come onto this thing. Yeah, we will put this one in the show notes and you can make up your own mind. So one interesting report this week, Tether's Q4 attestation. This is a blockbuster.

I don't think the Tether Truthers exist anymore. I haven't heard from them in a while. Yeah, they're all quiet. They've gone quiet. So Tether, they reported a $2.9 billion net profit in Q4, which, by the way, is more than some of the largest financial institutions. the world make. I think it's more than Black Rock, actually, or Goldman quarterly. And remember, they have about 50 employees. This was, according to their attestation report conducted by BDO.

So they do have an auditor. It's BDO. This was not an audit. This is an attestation. That's something. They've increased their excess reserves to 5.4 billion. So they have, you know, a very meaningful sort of capitalization as well to cover any issues or shortfalls or losses in the loan portfolio. So a very healthy business, I dare say. I mean, they're climbing to $100 billion. They might even reach it this week or next week, which would be a pretty remarkable milestone. I mean, that thing got some attention. I'll tell you on Wall Street.

People are noticing that and probably wondering why their banks can't do stable coins, which is probably a good question. Yeah, I mean, you have to imagine it catalyzes. some questions on Wall Street. I mean, this appears to be the best business in the world, basically. I mean, on a per-employee basis, revenue per-employee. And you have to think that a lot of these firms are wondering why they're being frozen out of it because of anti-stable coin policy in the U.S.

It's funny. From my office in downtown Boston, I could actually hear Elizabeth Warren's people writing out their letter about this, actually, that she, She's going to send inevitably to the Treasury Department or whoever. It's just, why is this company making so much money? I mean, I'm actually surprised that they haven't increased the letter pace because AI means you can create content so much faster. Like, they could be turning out.

She wrote a letter this week. There was a letter. There was a letter. Oh, yeah. It was, it was to Jerome Powell. Cut the interest rates because houses are too expensive. So if you cut them, they'll, I don't think she would. I've got the second part.

Yeah, explain that one to me. So lower interest rates, buying a house is now easier. And does not, does that not make a house more expensive? So, well, I was out with a guy who's not in the crypto industry,

but he's in the politics game. And I said something similar to what you just said, how this doesn't make any sense. And he said, no, you don't get it. It's not, it does make sense.

From her perspective, it makes sense. She's making her, housing more affordable. And I was like, no, you don't get it. Like it's like a lower interest rates and the houses go up. He goes, no, you don't get it. It's a sound bite. The trick is to strip out any third or second order consequences and live on the first order. Just live on the, be a politician, live on the first order. It was funny. It was like a 30 second back and forth. I was like, no, hold on. I was trying to explain to him how interest rates work. He's like, no, no, you don't get it. And I'm like, at the

end of it, I actually said, no, I actually, I guess I don't get it. I mean. She's the senator and not you. So, yeah, technically that means that you're wrong. Yeah, I mean, just look at how much money she's been making as a senator. She's a great business person. Yeah, exactly. I have a breaking news event right now. Okay.

So the digital Chamber of Commerce has just hopped into my messages here. I have an urgent announcement. If you had staff accounting bulletin 121 on the list of things we would talk about this week, you win. moments ago, Senator Lomas, Republican from Wyoming, along with representatives, Nickel, Democrat from North Carolina, and Flood, Republican from Nebraska, introduced joint resolution to nullify the SEC staff accounting bulletin 121. So this, of course, is the rule that mandates digital asset custodians, maintain their customer assets on their own balance sheet, totally makes it unfeasible for banks in the U.S. to play in the digital asset custody arena. we now have a bipartisan joint resolution introduced. This is great. We already had this bill from Flood and Richie Torres,

which was bipartisan as well. Lummus is on board. Representative Nicol, North Carolina, don't know who he is. Love him. We're making progress here. This is a white swan event if this goes away. This is a white swan.

People don't understand how impactful this will be to the market structure of crypto. This is a right tail event. There I was worried that we were going to get through a whole episode, not mentioned sob one-two-one. But we snuck it in. Yeah, it's crazy. You know, you get this fixed. You have banks coming in.

They're playing in the custody market. Shortly after Gensler leaves office, you'll probably have in-kind creates for the ETFs. These authorized participants like J.P. Morgan Chase, who says that they hate Bitcoin, but make a lot of money off of it. They will do the in-kind create. They will make even more money. this is great news i mean who knows what the prospects for this bill are but it does need to pass because sub one to one is a breathtingly stupid rule so so i've uh other cc news so c c commissioner hester purse had a very thoughtful dissent this week on this c cag rule which i i didn't even

know about this so apparently if you get sued by the cc and you settle you're not to talk about it ever. You can never talk about the process. So all these things like the debt box case, all of these issues that are coming out around the enforcement division of the SEC overreaching, falsifying documents, you're not allowed to talk about your process. I wonder if these library guys were allowed to talk. I guess I don't know what the terms of their settlement were, but it seems a little strange that if you're just not allowed to ever talk about it. Yeah. So on that same theme the SEC withdrew their case tail between their legs against

I don't actually remember who the um dead box so they withdrew the case against dead box this was the one where they had wrongly and erroneously asked for I think an injunction

or a restraining order against them TRO or so yeah based on made up facts that were not true and the judge was extremely upset by this, of course. You're not allowed to do that. And instead of sort of carrying that out to its resolution, the SEC was like, oh, yeah, no, forget about it.

Forget about the case. Yeah, we did nothing wrong. Let's just all agree to forget about this. You ever feel like we're talking about a mob boss? Yeah, this sounds like rocketeering or something. This is insane, like insane behavior. It's just really crazy. All right.

Last one that I had this week, it was interesting. The SEC had a, or not the SCC, the Wall Street Journal had a case, this story about Genesis digital assets, one of the largest Bitcoin miners. They, of course, got over a billion dollars from FTX as an investment, including $500 million in secondary to a co-founder who's no longer worth the firm. So pretty good haul for that guy. Best trade in the history of FTCS, I would say. Yeah.

So this article is in time. titled The Jiu-Jitsu champ who got nearly 500 million from Sam Bankman-Fried. Apparently, his name is Rashid MacKat. I would not want to run into this guy in an alley. This guy looks like a bad dude. He looks dangerous. Yeah, I don't think I would bring up. It looks very dangerous.

If I met him, I wouldn't at all bring up the 500 million. I would compliment him maybe. Just, hey, look, you're like one of the only people that ever made money on FTX and good trade. it is extremely curious though this is one of those we were wondering why and how ftx spent what was it 1.3 billion of their balance sheet on gda especially because i mean spf was not a mining enjoyer he he didn't like proof of work that was my problem with him he's a proof work hater but he invested i still have no idea why they did this deal i just doesn't make any sense, but they did it. Yeah, years later, we're still figuring out what in the hell went on over

there. And this is one of those outstanding mysteries. I hope we find out what the heck happened here. It was weird. All right. Well, I think we're at time. I think that's it for the week. We will be back on Monday with a new episode. Everybody have a safe and healthy weekend. We will see you on Monday.