On The Brink with Castle Island - Weekly Roundup 02/07/25 (FDIC Files, House & Senate Hearings, SEC crypto priorities) (EP.594)

Episode Date: February 7, 2025

Matt and Nic are back for more news and deals. In this episode:  Matt and Nic's ski adventure Berachain launches Mike Lempres of Silvergate finally speaks What we learned in the Senate debanking hearing The FDIC releases 790 pages of new documents related to the pause letters The FDIC is reprimanded by a judge in the Coinbase case Senator Lummis reveals a Fed memo that may be proof of OCP2.0 The SEC releases their list of priorities for the Crypto Task Force Hagerty releases the GENIUS Act on Stablecoins Czech Republic waives capital gains on Bitcoins held for 3 years Microstrategy is now just Strategy Truth.fi is releasing a Bitcoin product Ethereum's existential crisis

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated.

The Federal Government Loans American International Group, A.I. $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 quantitative 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 we are recording this in person with one microphone. This is a dumpster fire right now. This is the most under duress we've ever been recording a podcast episode. We're in Vermont.

We're close to Canada right now. There's a blizzard outside. We're actually trapped here in the lodge because the shuttle is gone missing. I feel like we're in a Stephen King novel. We're actually recording this in a ski lodge where we just had our offsite and we're trying to get back to our hotel so that we can actually enjoy some skiing. but we are snowed in literally in a blizzard right now. We did do something fun last night, though.

We went up the mountain and, well, it was also kind of busted too, frankly. So we were meant to go up in this big, like, tank thing, and then the tank broke. So then we had to go up in the groomers. I'd never been in a ski groomer before. That was one of the coolest experiences I've ever had. So we were in a ski groomer going up at a really embarrassing moment where there's all these lights on the mountain because you can see these other ski groomers. and there was one particularly bright one.

And I thought it was at the top of the mountain. I said, oh, is that a ski groomer up there? Like, what am I looking at? And the guy who was kind of a salty guy, he just said, that's Venus. So we went up, we went up the mountain. We had dinner in like a hut at the top of the mountain. It was great.

And then we skied down the mountain. And I asked my groomer pilot, so like which, when are you guys turning on the lights out here? You know, I don't know. I guess I figured they'd like, he's like, no, dude, we're giving you headlamps. And you're going to ski down with the headlamp. So try and ski slowly. That was risky.

I'm very happy our D&O insurance guy wasn't at dinner with us. Yeah, I mean, we lost Wyatt for a minute there. He lost his headlamp. I'd go up and get him. That was terrifying. We made it. Made it back. And, well, we're recording.

There's nothing else to do right now for us. We're just kind of stuck in a ski lodge and we'll do the news. So it has been a busy week here in the crypto space. We'll kick off with some deals of the week and then we'll get into these hearings. First one up is heard. This is a Web3 data platform. They raised $1.8 million from semantic archetype and others. Then you have beamable.

Their decentralized gaming platform, there is 13.5 million from Bitcraft and ARCA. Then it's Taproot Wizards, a Bitcoin Ordinals project. They raised $30 million. It was led by standard crypto, cyber fund, and others. Congrats to Udi and Eric over there. Then we have FlashNet, a decentralized Bitcoin exchange. There is $4.5 million from Abstract Ventures, Chapter 1, and Accomplice. Henlo is a meme coin project built on Barra Chain.

They raised $3 million from framework and primitive ventures. Barichane launched today, actually. Yeah, try and explain a meme coin on Barra Chain to like an internet investor in the 90s thing. This is just the future of finance, right? So then we have Roe Protocol, to centralize interest rates exchange. There is 4 million from coin fund, Oros, and flow traders. Then it's reservoir. This is a token trading infrastructure provider.

There is $14 million from Union Square Ventures, Coinbase, Variant, and others. Then we have Spindle and OnChain Advertising platform. They were acquired by Coinbase. Did you ever read Chaos Monkeys? This is the guy that wrote Chaos Monkeys. A pretty good book. I did not. But yeah, this is a nice, nice outcome.

So congrats to the team there. Then we have cipher mining. This is a publicly traded Bitcoin mining company that raised $50 million in an investment from SoftBank. Is SoftBank back back? What great news, SoftBank, back to buy our bags. Speaking of back, SPACs are back, apparently. So Fifth Era raised a $200 billion spec with the goal of acquiring a blockchain company.

That's exciting news. So congratulations to Matthew Mitch. Allison over there at Fifth Era. I think this is going to be really interesting. I think you could see a few companies in the crypto space go public via SPAC in the next year or two. Yeah, we've heard rumors that Bullish is looking at a public listing too. Yeah, that broke this week. I think on Bloomberg, there's a report that Bullish will be going public. Maybe that they already have a confidential filing out there. But I think you see more competition here in the exchange and brokerage market now that the regulatory headwinds have abated. So we had a pretty crazy day yesterday.

We had, I think one of our most important podcasts of all time came out with Mike Lempress. He was the chairman of Silvergate when everything went down over there. And that was actually the first time anyone from Silvergate had spoken on the record since they announced their liquidation in in 2023. So that was a great interview. Mike is awesome. Obviously, he couldn't say what he probably wanted to say. He's not allowed to say what the communication was under confidential supervisory information to the bank. So obviously he did a great job of effectively, I'd say, corroborating everything that you've reported about choke point, but without getting into the specifics. Yeah, I mean, I thought he was very forthcoming. And as you say, there are still

restrictions on what he can say. There's still settlements ongoing. And then, of course, there's the confidential supervisory information doctrine, which means that he can't share anything the regulator said to them specifically, but he did basically say that everything I'd written was true. So highly recommend that episode if you want to dig into what happened at Silvergate. I found it absolutely fascinating. So that was on the same day that the Senate Banking Committee held their initial hearing to discuss the impact of debanking in the United States. What was takeaway. I know that you actually watched this whole Senate banking hearing. Yeah, so we've back-to-back hearings. First up, there was Senate hearing on debanking. You had Nathan from Anchorage

testifying. I thought he did a great job. You had someone from Old Glory Bank, which is actually not a crypto bank. They were just a bank that's focused on basically conservative causes. And some of my writing was referenced. So I was really happy. about that. It was funny because you had the crypto folks complaining about Operation Shug 1-2-2. Then Elizabeth Warren also had a line of questioning

in some comments and she said basically, well, if we care about debanking, we should unfreeze the CFPB, which is actually valid, I think. The CFPB does care about debanking, but so there were two different threads. People were basically

talking past each other in the hearing. I mean, Elizabeth Warren knows what this hearing is about and just taking it in that direction. To me, that's a totally separate discussion. We're talking about what happened in the past year and how to prevent it from happening again. We don't need to go into the CFPB in a hearing like that. I thought that was sort of a waste of time. Very deliberate strategy.

She's obviously a great politician. Yeah, and today we have, so that once we published this episode, this will be yesterday, but today we have the Operation Chokepoint 2 hearing in the house, which I think will be very interesting. We've Austin Campbell testifying, obviously he's exceptional. Paul Grawell from Coinbase, Fred Teal from Mera, and then someone from Better Markets would tune out their comments. But I'm really, really looking forward to this hearing.

This is specifically on the crypto debanking. I think it'll be absolutely fascinating. We've had so much information come out just in the last day around this. The FDIC released a trove of documents, 790 pages of documents. The new interim chairman Travis Hill released all these documents relating to the Coinbase FOIAs, all their communications with banks around the pause letters. I'm still going through that, so give me some time to sort through it. At the same time, just today, a transcript of the court hearings around the FOIAs came out,

and this judge was just castigating the FDIC counsel on their inability to release. least the full foias that Coinbase had requested. All right. So we are back with two mics. We just got rescued. We interrupt this podcast to say that we finally made it back to our hotel. It was touch and go. The roads are not good here in northern Vermont.

There's a blizzard. We were almost lost to the winds of winter here. But we persevere. I mean, now we're back with two microphones. I think we're ready to get back into this in earnest. We go through a lot in order to record this podcast. We do. We do.

So I don't, where were we? We were talking about the FDIC. So the FDIC produced these 700 pages of documents and then you were saying that there was a back and forth that was released, a transcript with the judge. So is that, does that transcript predate the release of the documents? How should I think about that? Yeah, so this is last month. This is an exchange that the court had between the FDIC Council and then Coinbase is suing

them for these documents, which are these pause letters that have been grab. gradually getting revealed. And basically the court totally lost its patience with the FDIC for dragging their feet on this. And the transcript is like one of the craziest things I've ever read. So basically it turns out the FDIC didn't put a litigation hold on these documents, which means you have to retain documents that are made to be the subject of litigation. The court is really aggressively coming after them for basically not doing what they were meant to do. It's just I encourage you to read it. Scott Johnson has a good thread on it. The conclusion of the whole thing is the FDIC asked for a stay, so they asked to extend the time to reveal this information

and the court, the judge says, I'm not staying this case at all. In fact, I'm speeding it up dramatically, you're going to have the documents of them within a week. And there's a lot more, but it's pretty remarkable reading. I wouldn't want to be one of these people on the inside of the FDIC that was doing these nefarious things, trying to choke off the industry because there's no air cover anymore. I think the crime is actually the cover-up in this case. There was a cover-up. That much is clear.

So we do have now these 790 pages of communications. I'm going to read through those. Mike Lempress came on our podcast. There was the Senate hearing yesterday. There's a House hearing today. There's also congressional subpoenas and investigations ongoing. Some of which have borne fruit. So Cynthia Lemis at the end of the hearing yesterday said that they had found an internal memo from the Fed,

basically saying that Fed staff should consider, quote, the conduct of the institution and its leadership. and whether association with the institution poses undue reputational risk to the reserve bank. She says this is proof of choke point 2.0. It kind of confirms what we knew, like, these supervisory agencies use reputational risk as part of their bank evaluation framework. It's part of camels. So camels should be renamed to cramels, basically. But it's a total catch-22, as I've said before on this show.

The regulators can just determine that a bank dealing with a certain industry poses reputational risk. Anything could have reputational risk. Yeah, so it's kind of a made-up thing, and then that's a way that they can persuade the bank to not deal with an industry because it would get them a worse camel score, which is a huge issue for a bank. So that happened. Nymag, one of our favorite journalist, Jen Weechner, she wrote a piece on John Wichner, she wrote a piece on chokepoint called a very crypto mystery. And then yesterday came out, the FDIC says they wrote, there's an article in Barrens saying that they're going to revise their crypto guidelines.

They're going to allow banks to engage in crypto activities. Banks met with officials to discuss crypto custody, tokenized deposits. So this whole thing has dramatically changed even in the space of just one day. It's incredible how fast things are moving here. I mean, they're also moving very quickly at the SEC here. So Hester Perth came out with a statement. It's called The Journey Begins. And so this came out on February 4th. And she goes into some good detail here on the types of things you should expect from this crypto task force at the SEC. She's going to go through a few of them. So the first one is security status. The status of crypto assets under securities law is fundamental to resolving many other questions. The task force is working hard to determine different types

of crypto assets. I take that as a essentially a taxonomy and maybe a first step towards a market structure bill here is just getting some of that clarity from the SEC. So that alone, in my mind, is a huge win for the industry if we just get something. Definitely. The second thing is around scoping out jurisdiction. And so the task force will identify some areas that fall inside and outside of the agency's commission's jurisdiction. This has obviously been a huge deal. There's a turf war between the CFTC, the SEC, even state money transmitters in some use cases. So the proposed resolution here is to welcome no action letters. I haven't seen a no action letter in the crypto space for years, but that is a tool that is at the SEC's disposal, really.

And so I would think that you would start to see a bunch of no action letters popping out. There's a lot more, too. They talked about temporary perspective and retractive relief for. token offerings. Yep. So they're looking at maybe potentially disclosure framework for issuers.

They talk about registered offerings, a special purpose broker dealer, no action statement. They're going to clarify crypto lending and staking. They are looking at rule changes around exchange traded products.

I mean, it's everything, really, that we could have possibly wanted that the now going to work on. Yeah, I mean, they explicitly call out custody solutions for investment advisors. This has been a real worry, I would say, for a lot of crypto asset managers around just the definition of a qualified custodian and how that works. And so keeping assets with a qualified custodian, what do you do if the assets that you're looking to hold are not supported by that qualified custodian? I think you're going to get a clear regulatory framework there. Talking about crypto lending,

crypto staking, giving some clear guidance on the do's and don'ts. That would be huge for startups. Then there's this section around clearing agencies and transfer agents at the intersection of basically tokenized securities. And so that's been a huge issue for this industry is that a lot of people are trying to tokenize real-world assets and get that clarity on how these need to be transacted. It looks like you're going to be able to get that. And then lastly, there's a cross-border sandbox concept of effectively having experimentation. that scale, which I don't know what would go in that bucket, but obviously there's a lot of new categories, D-PIN, you know, blockchain-based gaming. Maybe they end up giving just a sandbox

environment to certain categories here. It'll be interesting to see where that goes. So a lot happening on the SEC front also legislatively. Senators Tim Scott, Haggarty, Lomas, and Jellibrand introduced the new version of the stable coin bill, which is called the Genius Act. I don't know what genius is a guiding and establishing national innovation for U.S. Stablecoin. So that's genius. What a great name. Whoever does that. I mean, that's an interesting job coming up with the acronyms for legislation.

It's got to be some staffer, but that's a 10 out of 10 acronym. I guess AI could do that. I wonder if they use AI. So this is kind of the similar bill to the one that we've seen tossed around the same $10 billion threshold is in place. So if a stable coin exceeds that, then it graduates from state regulated to nationally regulated. That might be a sticking point. But yeah, the text of the Genius Act is now out. Did you pay any attention to this David Sachs press conference that had all of the committee heads of the relevant House and the Senate side? So you had the House Financial Services Committee,

the Ag Committee, and you had Senate banking and Senate Ag as well. So basically everyone got up there and just talked about what the path forward was in the crypto space, specifically as it relates to stable coins and market structure. It seems to me like stable coins is going to move quickly here, but I think Fit21 is going to be reintroduced under a different name, was the sense I have. I thought it was notable that Sachs held the crypto press conference before he ever did anything on AI. Yeah. So it's a statement of intent.

They also did at the end talk about the, Yeah, reserve. So the Bitcoiner's got something. He got asked about the reserve from someone from Yahoo, I think. So they are going to study the reserve. When a government says they're going to study something, by the way, guys, let me just translate this for you. It means they're not going to do it. Okay.

So sorry to burst anyone's bubble. I think there'll be a stockpile. There'll maybe be a let's not sell all the coins we already have. Speaking of the emerging nation that is maybe, considering a reserve Czech Republic. Have you been monitoring the latest activities in Czech Republic, Matt? So what were they doing? They were studying it. They put it up for approval. Is it an approved asset now? What's going on there? The new thing that happened is they removed capital gains for Bitcoin on a three-year hold period. So they are actually doing pro-Bicwin stuff. And by the way, there are ways to do pro-Bitcoin policy in a nation that aren't just literally buying it. This is an example.

So does this mean that all these crypto bros are not going to move to Puerto Rico? They're going to move to the Czech Republic now? It might be Czech Republic. Yeah. It's a nice country. There's worst places. Probably a lot better, actually, frankly, than living in PR. What's the scene in Czech Republic?

Do they have beaches and stuff? Skiing? I think it's landlocked country. All right. But there's probably skiing. I've never been skiing in the Czech Republic. Yeah, it looks like you're, looks like you got some mountains there. I mean, I would say Slovenia.

I've skied in Slovakia. Really? Yeah, it was very cold. It was even colder than here in Vermont, which is also extremely cold. Two degrees. Yeah. In other SEC news, apparently, according to a Reuters report, lawyers at the SEC are being told that they need to get explicit approval from leadership

before launching new probes. I think everything's kind of on hold over there in terms of these investigations. It seems like they'll wait for the confirmation and kind of go. go from there is what I would think. Atkins still has not been confirmed. Didn't they re-house some of the investigative team at the SEC? I think the top litigator at the SEC that was doing crypto investigations has been moved to the IT department. Oh, is he just, I believe. So it's kind of like when you just like put someone's office into the broom closet and we're sending a message. To toss away the key. Yeah. Well, I don't know. I think that's a,

It is clear what direction that agency is going, and it's towards more regulatory clarity and probably at least temporarily towards less enforcement on things that are on the line. Obviously, the fraud stuff will still get, you know, investigated. So micro strategy has dropped the micro. They are now just strategy. All right. I kind of like that. That's okay.

And they have a new goal. They want to increase the value of their Bitcoin holdings by $10 billion in 2025. Okay. So that is strategy? Is the strategy just to have Bitcoin go up in value? That's the strategy. I don't know. I don't know how that works.

I guess if you buy more. Yeah, it is working. Layer Zero Labs is settled with the FTX estate. After they were sued to clawback shares, Alameda research had sold an exchange for writing off a loan in the days leading up to the collapse. Those days leading up to the collapse and right after the collapse, those were some crazy times. You had a lot of projects trying to buy them. back their equity from FTX, trying to cut deals. And I guess John Ray is just going through every transaction at this point.

So it sounds like this was part of that. And they settled and moved on, I guess. It's incredible. It's been over two years since FTCS collapsed now. Never forget the day. It just landed in San Francisco. It's funny. Actually, you know what?

Today is the two-year anniversary of my first chokepoint article in Pirate Wires. Is it really? Yeah. So two years. And then two years later, choke point is over. Talk about the impact there. I mean, just to see all of this coming to fruition in the Senate and in the House is just crazy. I don't think I'll ever have something happened to me again in my life where I write an article and then a couple of years later, the House has a hearing.

That's the title of my article. The title of it. Yeah, that was insane. The literal title of my article. I saw that Mike Salana had retweeted that. That's just incredible. That is never going to happen again. Trump is doing crypto stuff. He is Trump Media and Technology Group.

Is it called Trump Truth.Fi now? Well, yeah, they remember last week they came out with an 8K that said they're expanding from just social into financial services. So I think it's broader. So truth. So truth.comi is going to offer ETFs. They filed trademarks for certain ETFs and SMAs. One is made in America. One's U.S. energy independence.

And one is a Bitcoin plus. Plus what? We don't know. I don't know if the like hardcore Bitcoin people are going to like this because Bitcoin Plus implies something else. Like bigger blocks? Bitcoin. Yeah, maybe Trump is going to try and do a big block fork. Maybe it's just plus lending or something.

Or plus yield or plus BCH. Plus BSV, BCH. I'm talking about that last night. What a crazy time period for this industry, the BCH, BSV era. Those were some very bad memories. I remember when BCH came out in, was it August 2017? I think that's right. I had a moment of worry, and I thought maybe the big blocker is going to win.

Yeah. And Bitcoin is over. Well, it looked like they were going to win. They had all the economic actors, right? Like all of the payment processors and exchanges were sort of leaning in that direction at one point. I was pretty terrified. Then the small blockers won, but they arguably won too hard because they didn't innovate on Bitcoin for the next five years.

Yeah, it's been stagnant until recently. There's this narrative that Bitcoin, quote, unquote, lost the block size war. It's kind of food for thought there. What is your take on what's going on in Ethereum land right now around this just community meltdown that's going on in Ethereum? I think the fundamental problem of Ethereum is they don't know what they are. So sometimes Ethereum will promote themselves as this deflationary asset with the burn. And if you use the chain, then some of those fees get skimmed off and return,

there's a capital return of the token holders. And then, so then if you hold the Ethereum token, you like that. But then sometimes Ethereum leadership is like, well, actually, let's not privilege the token holders. Let's make this thing better for the users. And let's not do the fees and let's not redirect the MIV and all that stuff to the token holders, let's just make Ethereum as frictionless as possible. It's making more like Solana or something. And so they constantly vacillate between these two attitudes, which I think

is not good from an investor perspective, because now you don't know what they're going to be. And so I think right now they're pivoting back towards let's create abundant block space and let's keep the fees low. Yeah, but it's just not going to work. I mean, if you were launching like a stable coin right now, why would you ever do it on Ethereum, L1? Like, it makes no sense. to do that. That is not an economically rational choice. And I think Ethereum is also hamstrung. They have this culture of decentralization that they've kind of inherited from Bitcoin. But if you're a new or modern smart contract platform, new L1, you kind of want more concentrated leadership. And now you don't really have the

regulatory penalty for having that. So it feels a little anachronistic the way that Ethereum is operated. It's almost like you kind of want them to bite the bullet. and have much more clear top-down direction. It's just a classic stuck in the middle case where if you want to lean into the money use case, you're just not going to be better than Bitcoin. Ethereum will never be as good as Bitcoin in terms of a digital store of value.

And then on the tech front, it's just really hard to upgrade it. And so Monad, for instance, is in disclosure where investors there, but objectively, that's just going to be a much better platform. The U.X is going to be a lot better. It's going to be faster. You're not going to be able to change Ethereum. from the ground up in that direction.

So you're kind of just stuck in the middle. Then you have this dynamic with the L2s where they're just completely parasitic to the value of the token. And there's really just not enough fee revenue coming up for those things to justify any sort of a bull case on Ethereum right now. I will add that Matt is wearing a Monad sweatshirt

as he says this. Yeah, I mean, I'm completely biased. So just to be clear, I think that Monad is just going to be a much better platform to build things on. I mean, but yeah, Ethereum is having a real. real crisis. It doesn't know what it is. And the L2 strategy probably makes sense from a scalability

perspective, but you're right. It is parasitic. We said this. I wrote a couple of blog posts about this back in the day. It's definitely true. Definitely true. And, you know, I think maybe John Feffer was right. John Feffer was right. I mean, an institutional investor's take on crypto assets is 2017. December November 2017 published that. People made fun of him for it. These things take time. And now investors are really taking a second look at the value capture mechanisms for L1s and L2s. And they're going back to first principles. Yeah. Yeah, I think that's right. I mean, there is, it's an interesting thought experiment to think about what you would have done differently if you were Ethereum leadership around these L2s. You kind of had to do the L2s

because Ethereum was breaking. There was no other roadmap. And so you launch, you know, you enable these L2s, they take off. And, you know, for a time, I guess it's good, right? Like more people building in the EVM ecosystem. These things can comport with the wallets, although there is a lot of friction there and bridging. But if you had to do it differently, you'd try to capture more value for ETH the token with these L2s.

It's like this concept of tariffing the L2s is kind of intellectually interesting. Where is there a world where you could have structured some of these things where the native token of the L2 in some way is owned by ETH or something. And look at the traction of base. I mean, base is crushing it. It's probably the most used L2 on ETH now. Right. Every cent of value that's flowing into Coinbase's equity,

that would have otherwise gone to ETH itself. So Coinbase is aligned with Eith for sure, but factually, they are siphoning a lot of value out from ETH. siphoning a ton of value off for me. You also just have the dynamic of, you know, people that are in retail land just buying these assets. And, all right, buying optimism arbitram, that's a dollar that could have gone into to ETH. And to be clear, I don't think this tariff thing would work. But I think it's an interesting thought experiment.

I do think that you would just have forks and people would not want to have the, you know, the overhang of paying ETH. But I don't know how you solve it. No, it's, Ethereum is troubled right now. But I would say overall investors are taking another look at what was the conventional wisdom for what makes an L1 valuable. And there's a crisis of confidence across the whole industry, my opinion. I still think you'll end up in a place where someone's going to win a Nobel Prize for crypto asset valuation, but we might be 20 years away from a steady state reality there. Yeah, if that person could just go ahead and write the dissertation so that we can,

read it and find out what these things are worth. Because like what should a smart contract platform be worth that's not competing to be money? It shouldn't be worth zero. You know, there's some reservation demand for the token, but what should it be worth? Yeah. So there's a weird article in Blockworks today about World Liberty Fight. Did you see this? No, what happened?

So you sound worried, which is correct. So they are doing these token swap deals according to Blockworks. The offer is by at least $10 million. worth of WLFI tokens with a 10% fee and World Liberty Financial will buy the same amount of the blockchain's native token. I don't know if we need to be doing this guys. Come on. Yeah, I don't like this at all. Yeah. Which is my normal refrain on World Liberty Phi. Yeah, let's just try to not have scandals. Let's just try to really be careful here the next few years. So Justin's Trondow bought 75 million of World Liberty Phi, which maybe explains why they bought some Tron?

I would think so. I would think that's exactly what happened. So now the World Liberty Phi has $370 million worth of crypto, which is unreal. So it's just become this kind of like EarthSats, like asset management platform, weird hedge fund thing. I didn't expect that, actually. I thought it would flop. Yeah, I mean, it really got a second win. once Trump got elected. But I don't know, there's a lot of insider holdings on that. And I think the first unlock is coming up in the next couple of months.

So I don't know. I mean, would Trump allow the SEC to look into this thing, you know, if there is any kind of perceived malfeasance? Maybe not, right? Well, I think you're going to have this, like, retroactive situation here where there's maybe this grace period to come into. compliance for a project like that where okay what is done is done and now we have a new token disclosure regime and so you have you know two years to come into full compliance with it

that's probably what happens right i think in hindsight it makes total sense that trump ended up absolutely loving crypto right like i mean it's a hotball of money that's it seems like something that trump would like i don't know why he didn't like it earlier i he it seems like his children really got into it while he was out of office. So, well, yeah, look, we'll keep, we'll keep bringing the news to you both good and bad. Okay, we're not going to censor anything on this podcast. No, uncensored. What did you think of this Sunday night just market meltdown here, tariff-related? Yeah, I mean, there's a lot of volatility in Washington right now. Foreign policy, tariffs, trade wars. I think it makes sense. I mean, huge tariffs.

on our allies and on China. I mean, that really does actually affect the consumer. It affects presumably interest rates, inflation, without a doubt. If inflation picks up, interest rates probably are slower to fall. So I think it's a valid market reaction. Yeah, so it continues to be incredible how Bitcoin is really the leading indicator for the equity markets on the weekend. And Bitcoin's held up really well.

Yeah, Bitcoin has, although Eith, man, back to our early. earlier point. That was, people were just selling as much ETH as they could on Sunday. So Barra Chain launched today. I don't know what Barra Chain is, to be honest with you. Do you know? Yes, it is a new L1 proof of liquidity. So this is a strong launch, I would say, at this point. Yeah, it seems to be off to a hot start. FDV is $4.55 billion at the time of this recording. So, you know, you're going to have some launches here in the next few months. And There's an ecosystem here. Yeah, I mean, one of the most anticipated launches of this year is Barrett Chain.

It's the second most anticipated launch of the year, for sure. I think we can guess what the first one is. All right, another interesting story here. So there was a earnings release with interactive brokers. Their CEO came out and said that they expect to expand their crypto asset offerings, specifically mentioning Solana. They also said that the allocation cap, which apparently they had a 1% allocation cap on their accounts, which is crazy. I didn't realize that.

So you couldn't have more than 1% of your portfolio in crypto if you use IB, which that's really low. That's minuscule. So that's going to go away. It sounds like the cap and they're going to expand assets. That's really good for Paxos. I'm pretty sure Paxos is the back end for interactive brokers right now. So he says that there were four coins that are heavily. traded Bitcoin Ethereum, Stablecoin, and Bitcoin Cash.

Bitcoin Cash, right? Because it's not a security. I don't know why anyone would be trading Bitcoin Cash, but... I could understand why you're trading out of it if you, maybe you accidentally had some or something. So, yeah, they are... I mean, capping allocations of 1% is crazy. That's just nothing. That's, yeah, I mean, from a suitability perspective, like, you maybe have to have some sort of a notion of a cap, but it's just such a volatile industry that 1% is going to jump up and down by a few percentage points. All right. So I think that is it for the news of the week. Really, you know, I got to give us a pat on the back for the way that we pulled this podcast together. Yeah, really went through it. We are now, I think, going to go skiing. There's a blizzard out there.

It's very cold. So if you don't hear from us next week, you know what happened. All right, everybody. Have a safe and healthy weekend, and we will see you on Monday.