On The Brink with Castle Island - Weekly Roundup 02/28/25 (Bybit Hack, SEC drops lawsuits, bank-issued stablecoins) (EP.599)

Episode Date: February 28, 2025

Matt and Nic return for another week of news and deals. In this episode:  Figure Markets announced the launch of their YLDS stablecoin, which is the first yield-bearing stablecoin to be approved by and registered with the SEC Crypto exchange Bybit was hacked on Friday for an estimated $1.48 billion worth of ETH in the largest hack in the industry's history n the past week, the SEC dropped lawsuits and investigations related to Coinbase, Robinhood, OpenSea, Uniswap, Gemini, and MetaMask Microstrategy purchased an additional 20,356 BTC last week Crypto exchange OKX pled guilty and agreed to pay $504 million in penalties for anti-money laundering law violations U.S. Treasury Secretary Scott Bessent has appointed Tyler Williams as an advisor on digital asset and blockchain policy During an interview with Bloomberg, Bank of America CEO Brian Moynihan stated that in light of the expected upcoming stablecoin legislation, he expects that Bank of America will "get into that business," and may even launch their own stablecoin Content mentioned in this episode: Jameson Lopp, Jack Dorsey is not Satoshi Nakamoto DeFi Education Fund, Examining the burdens, costs, and failures of the Bank Secrecy Act (BSA), and the potentially disastrous implications of applying the BSA to DeFi.

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 is 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, AI, $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 what a week, huh? There's a ton of news this week. Lots going on. Bitcoin is trading at $83,000. I don't know what's going on there.

That's not good. Risk assets selling off, NASDAX off over 2% today. Yeah, I think that's it. I think it's mainly to do with macro tariffs, higher inflation expectations, expectations of delayed rate cuts. I also do think the buy-bit hack is giving some people the jitters. to be honest with you.

Well, I think it shouldn't give people the jitters if they set up their custody infrastructure in a, like a world-class way. But yeah, I get the point. Yeah, we're going to dig into that. By-bit and Gnosis really messed up, I think, and we're not doing this in a professional way, if we're going to be honest.

Do you say Gnosis or do you say nosis? I guess it's Gnosis, right? Yeah. Well, anyway, the two of them, they really screwed up. So if you're using a real custodian and proper key management system, I think you're probably good. Yeah.

Not to worry. Yeah, I think that's right. Well, busy deal week, first two up are actually in the Castle Island portfolio. First one is Bitwise. This is, of course,

the crypto asset management firm. They raised $70 million from electric capital, mass mutual, Highland Capital, number of others. So congrats to the Bitwise team, just cranking over there, bitwise. Yeah, and I don't know if we mentioned this, but they had made this pledge to support

Bitcoin core development with some of the profits, I think, from their Bitcoin ETPs, and they made good on that. They did. Recently. So really, really cool to see them do that. It's an example to follow. Huge congrats to the Bitwise team. We'll have another Bitwise podcast coming up here pretty soon. I'll tease that. But there's some very exciting stuff over there. Next up we have Athena, the yield-bearing synthetic dollar issuer, I guess we don't call them a stable coin. There is 100 million from Franklin Templeton, F-Priam Capital, and us, and others. Athena really risk-managed that By-Bit situation, huh? Yeah, they did, actually.

So this is something that was a bit overlooked. They obviously used By-Bit for their hedging, and they had these off-exchange custody arrangements. I remember when we were first doing diligence with Athena, this is one of the most important questions was, well, you can have exposure to a lot of centralized exchanges and a lot of strange places. We don't necessarily trust them. How are you going to manage that risk? And they're like, we're going to do off exchange custody. And that wasn't really the most commonly done thing at the time. And it totally worked.

In this case, they used, I think, copper with by bit. And so as a consequence, they were totally insulated from the bi-bid. habit hack. So really well done to them. Very well done. All right. Next one up is layer three. This is a Web3 consumer engagement platform. They raised $4 million from Greenfield Capital. And we have Unit Network, a tokenization defy platform. There is 18 million from blockchain founders fund, outlier ventures and others. Then it's Tenor Finance, a fixed rate crypto lending protocol that raised $2.5 million from Cherry Ventures, Coinbase Ventures, Latus, and others. And we have Meeb code. They're developers of an NFT,

election. There is three million from one confirmation. Mibco, that's a cool name. Next one up is Imua. I.MUA. I think that's Amua. They raised $5 million. It's a restaking protocol from Draper, Dragon, no limit holdings, and Paramita Capital. I think this is the first time for Parameda Capital on this one. Yeah, that's a new inclusion. Next up we have Memes Lab, a meme coin launchpad on the ton blockchain, raised $2.3 million from Lemnus Cap, TVM Ventures, Anamoka Brands, I would say read the room, guys. I don't know if meme... Pump fun for...

Yeah. I don't know if it's really time for that. Not this week. Just hold that fundraising announcement. Meme coins, just could you be more in the doghouse as a category? Yeah. I mean, pump fun is rapidly just fading away. People just aren't using it anymore.

I mean, this Hayden Davis guy who was behind the Malay token, has got to be looking at some serious jail time, right? Oh, yeah, I think we forgot to put this on the news, but there's now a federal probe into Hayden Davis, his fund, other people he was in cahoots with, and Millet. Yeah. I mean, I didn't know that the DOJ could do that, actually, investigate a foreign head of state. I mean, you're raising a lot of money from presumably U.S. citizens, right? Yeah. So I guess if a foreign head of state allegedly defrauds Americans, like the DOJ can go after them, is that a thing?

I don't know. Do you think Malay was actually closely involved or is this one of these things where it sounds like his sister was in some way affiliated? So did was there like a payment to the sister that got it was like a pay to play to get a seat at the table with Malay? Allegedly. Allegedly. Who knows, man. We're going to find out. But I don't know. Is this could this cause an international incident? Is this going to be a diplomatic crisis? Because I feel like Trump and Malay were kind of close. fairly close it's certainly it can't be good for Malay it's probably a lot worse for this Hayden guy though

yeah I hope Malay survives this I hope he is not involved or implicated yeah TBD so anyways that was a meme coin deal next one up is Byzantine finance this is a restaking protocol they raise $3 million from node capital and block wall ventures

then we have Maverick Dynamics and RWH tokenization platform, there is 5 million from big brain holdings, Gaff Capital, and others. Then we have Geoadnet. This is the decentralized network for satellite imaging. They raised $8 million from multi-coin, Parify, and DACM. Then we have blockchain.a.I. That's a blockchain risk management platform. There raise 5 million from White Star Capital and Arrington Capital. Raise is a blockchain gift card company. They raised $63 million from Han Ventures, Amber Group,

anagram and others. Gift cards used to be just the biggest thing. I used to give gift cards for Christmas presents. I don't really do it. I can't remember the last time I gave a gift card. It's still a thing, though. I actually have a gift card right next to me. I found it is a Nordstrom's gift card that I think has been in my house for like 10 years.

You think this is still good? Well, that's why it's a great business model. It's because people just forget about them. So you have huge amounts of breakage. Completely. And it actually is a great use case for a blockchain. Next up we have Ligero. ZK Proof Development Company. They raised

4 million from 1KX, Galaxy Ventures, and Franklin Templeton. And the last one is Aegis. This is a Bitcoin Stablecoin protocol. They raised 2 million from Profluent and DeWales Capital. DeWales Capital. Never heard of that one. Don't know them. It's a good name.

So, biggest news the week, I think, we'll get to the buy bit hack in a minute. But the SEC has been dropping their lawsuits just right and left. Huge, huge week for a lot of these big US-based crypto companies.

It's incredible. So there's a lot going on at the SEC. And I would encourage everybody to go to the SEC's website and look at some of the recent statements that have been made. So you had Hester Purse talking about the journey ahead. And then I believe it was last Thursday or Friday, Perce again put out basically a list of questions to the industry. So seeking collaboration and seeking people to come in and have meetings with the crypto task

force and to basically advise. And I would advise anyone that's in a crypto infrastructure business or works at a protocol that has a view on how these questions ought to be answered from a regulatory guidance perspective to actually go in and have a conversation, which is not something I would have said a year ago. Yeah, people have PTSD from like just come in and talk to us, but it's actually safe now. You can go in and talk to them and they're not going to see you. I think it would be in everybody's benefit here to go in and talk.

And I think there has been a show of good faith, not just by putting out these questions, but by actually dropping these investigations and lawsuits into Coinbase, Robin Hood, OpenC, Uniswap, Gemini, and apparently MetaMask under consensus, all within a week. So basically you're seeing the good actors here get shown a little bit of relief is what I take from that. What are the outstanding litigations that are even left at this point? I think there was, I don't know if it's a case or a Wells notice, but Cracken has something. Is the Ripple one still going? The Ripple one still open.

Yeah. Ripple one was brought before Gensler. Yeah. I mean, these are all the biggest ones. It's a huge, huge change for the industry. It doesn't mean that all of these companies are. completely in the clear forever, but if something new is broad, I think it would be much higher bar.

Yeah, and maybe we can link to the statement in the show notes, but it's, what I'm talking about is a statement called, there must be some way out of here. It's by Hester Purse. It was on February 21st. And it's, I would go read that. So it has a lot of specific questions for the industry. And basically, it's a call for joint collaboration. So, hey, go in and ask.

for exemptive relief if you're operating in a gray area, I would say. I am seeing a lot of non-cryptive people spending conspiracies about this, which kind of on the surface level kind of seem to make sense. But then if you look into it, it doesn't really make sense. Like there's a big tweet saying, oh, well, Coinbase donated a lot of money to Fair Shake. And then the case against them was dropped. Like, yeah, I guess like if you're just aware of those facts, it looks bad. But the reality is

Fairshake just donated to members of Congress on both the right and the left. They weren't involved in the presidential election, which obviously Trump appoints the SEC. And it was just widely understood in the industry that the SEC was taking a wrong-headed approach to litigation. So I don't think it's sinister. A lot of people are characterizing it as sinister.

I don't think it's sinister at all. I mean, you could also just have the perspective of whether you like this industry or not, it is an industry and there are thousands of people building businesses and protocols in this industry and we ought to have some framework to codify what it needs to look like in the US and just having the SEC sue everyone out of existence is probably not the best path forward there yeah so we await further guidance from the SEC on the by bit front I think we should talk about this is the biggest crypto hack ever by a lot and

And maybe the biggest financial theft ever in any domain, possibly. Yeah, not good. So by bit is a, where are they even domiciled? I don't know. This is a Asian exchange somewhere in Asia. They were hacked last Friday for an estimated $1.4 billion worth of Eath. Pretty quickly came out. Zach XPT, I think was the first person that nailed this.

that North Korea, the Lazarus group, was responsible for the hack. Now, the hack basically stemmed from a compromise in the NOSIS safe infrastructure. So NOSIS safe is this, how would you describe it, open source custody library? Yeah, multi-sig-free, basically. So it seems like what happened was a NOSIS safe team member was compromised. So what ByBit was looking at was a user. interface that was not actually the NOSIS safe user interface. And then they had a signing scheme with ledger hardware wallets where they were seeing what they

thought was the right address, but was not actually the correct address because it was being stymied by this fake UI that was piping into ledger. Is that roughly accurate? That's right. And one problem is there are many problems here. One is that, you know, why is NOSA safe allowing updates to UIs to go out with limited oversight and permissions? Why are they letting the software change without, you know, and there's a lot of things you can do in terms of hashing the code and making sure that there aren't unauthorized changes occurring? The other one is by I be using ledgers, making a theorem transaction, it's too long to visualize on the ledger UI.

So you can't do sanity checks whereby you're checking that the address is the right one. I believe that I think that's my understanding with at least most ledgers. So this is kind of like also an Ethereum thing when you're using a ledger. You can't really sanity check the whole transaction. So that's another problem. I mean, ByBit should not be using, they just shouldn't have gone for this approach. Yeah, I mean, I think this is more of a fundamental market structure question is if you run an exchange should you also be a custodian. And I in regular markets you,

you just don't have this, right? Like, and it's primarily a risk issue where you wouldn't want the exchange to just be holding user funds. So this could have been solved by just using a third party exchange. They could have plugged into like an anchorage or something like that. But I guess they also could have just run like fireblocks. Yeah. I don't think this would have happened with fireblocks. I don't definitely wouldn't have happened unless fireblocks itself was compromised, right? It is interesting because this is state level actress. It's very sophisticated. So maybe there are ways to cheat even the best systems in terms of operational controls and

things like that. I mean, it's a very determined, say the actor, they went and they hack nosis, they identified by bit. They specifically targeted by bit. And the interesting thing with state attackers is they don't negotiate. Like you see hacks that happen by individuals sometimes. oftentimes there'll be a negotiation that will give some of the funds back. That does not happen with North Korea. They don't negotiate. Yeah, so I guess that leads to

the next question is just what can be done here? I mean, North Korea's Lazarus group is just running wild here on not just crypto, but any sort of infrastructure in the West. Is this going to be something

where we end up going to war over this? There's no concept of doing sanctions against a country that's already isolated from the world. I think you could ask questions of China because my understanding is that North Korea ultimately turns ETH into fiat by going to Bitcoin

and then liquidating it for yuan on Chinese OTC and then with the yuan they can buy stuff right now missile parts or whatever so they are a protege of China you know they're like affiliated with them obviously North Korea has nuclear weapons, maybe. So it's not like you can easily go to war with them, but

I think we could certainly ask questions of China for permitting this kind of behavior. I think it's probably where you have to go. I mean, this is $1.5 billion. And where do you think it's going to go? Nowhere good. I mean, I think we know what they're going to do with the money. And it's pretty bad. It's pretty bad. So I will say by bit for, like, I think they had the wrong setup here. I think if you're running like a regulated venue here, you wouldn't have had your custody configured this way. That said, I mean, they did handle this well from a crisis communications perspective. I'll give them that. They were out front. They apparently have enough capital here to make users whole, which is crazy. It's not entirely clear where that is that just coming from their

own balance sheet? I mean, that's very unclear. They were, so they were indicating that they effectively generated that much in profit over the past couple of years. So who knows? We'll have to find out if that actually happens. But they immediately started borrowing ETH because of course they might have like dollar denominated. They're short ETH effectively. Yeah.

So weirdly this was like a positive catalyst for ETH in some ways because now you have a compelled buyer of a billion and a half dollars of ETH, I guess. Yeah, exactly. I don't know if ETH actually did well price-wise following this. What this does make me upset about is Saab-1-21, Matt.

Yep. Because Saab-1-21 forced custody out of the custody system for financial assets into the exchanges. Right? And I'm not saying

By-bit would have necessarily used B&Y Mellon for custody, but it did fragileize the ecosystem. This is what we've been talking about. It forced all these exchanges to home brew their own custody and it didn't let any of the best custodians in the world, the existing custodians of financial assets, do custody. So I'm redirecting 20% of my anger here at Sive 112. Okay. I didn't think we would get there on this, but this being Gary Gensler's fault, I'm partially 20% seems like the right number. I'd say anywhere between 20 and 30%.

It is partially Gunser's fault. That was a masterful spin zone there, but I do see the point. It's not even really spin. I mean, this is true, right? Like if you were in a market that had clarity on market structure, which we've been kind of pushing for for the past four years, you just wouldn't have this setup. You wouldn't have by bit managing over a billion dollars of customer funds

using an open source, NOSIS safe library. Yeah, and if the exchange market would, was more well regulated in this country, like maybe people wouldn't go offshore to use basically unlicensed derivatives exchange, right? Maybe they'd be doing here. And I arguably, I would say generally, the offshore exchanges have worse controls than the onshore ones. So some of the responsibility is definitely in the hands of the Gensler, SEC.

All right. Let's stay on Asian cryptocurrency exchanges. So OKX has pled guilty and agreed to pay a full. $504 million penalty for anti-money laundering violations. It seems like this stems from effectively operating the platform in the U.S. here. Yeah, it looks like the fees, so there's no jail time here for anyone. It looks like they did serve U.S. clients over seven years, and the fine is equivalent to roughly the revenue that they earned from U.S. clients over that time plus additional fines. Got it. Okay. Well, so that was a kind of an enforcement action this week in a week.

A chunky, chunky, chunky, fine, for sure. Very chunky. All right, next one up, figure markets. So they announced, these guys got approved for a yield-bearing stable coin, which is the first yield-bearing stable coin that has been approved and registered with the SEC. They also announced this week that they received a $200 million investment from six street partners, a big diversified alt manager there. So the figure team deserve some kudos for navigating that landscape with the SEC. So this is the security officially. I guess the question is, what can you do with it as a stable coin that is explicitly considered a security? I mean, you can't really use it in defy. Is that right?

Yeah, I think this would be naturally consistent. strained by the secondary trading landscape for security tokens, which as of right now doesn't really exist yet. But that's on the list of questions that the SEC is looking for feedback on. So I'm sure the figure folks, Kagnay's in there telling them what the market structure should look like. Also on stable coins, Bank of America CEO Brian Moynihan in a Bloomberg interview said that they are getting into the business of stable coins.

They may even launch their own stable coin. also unclear what a Bank of America Stablecoin would look like. I actually think that they are well placed to do Stablecoin stuff. I don't know if Stablecoin itself issuing one makes sense, but Bank of America is one of the most frequented banks

for the Global South, even non-U.S. citizens, believe it or not. So places where Stablecoins are big, there's actually a lot of Bank of America clients. So there might be something there. You kind of referenced a tokenized, deposit, which is to me quite different from a stable coin and not fully backed. You're taking credit risk to Bank of America. I wonder if it'll end up being a stable coin or a tokenized deposit. Yeah. Omead Malikin has an interesting piece on this, the Columbia professor, about why tokenized

deposits won't be a thing. And I think he has a point, which is to say, if you're a tokenized deposits, a liability of the bank, it's not necessarily a pristine as a stable coin that's backed directly by treasuries, right? Of course. So, and then also, banks don't pay out the full Fed funds rates to depositors, right? I don't know what the average yield in a high yield checking account or something is at any of the largest banks, but it's certainly not four and a half percent. So do they really want to incur a much?

higher cost of capital by let's say it becomes yield bearing by going to the standard in the crypto space which is to only keep I don't know 50 basis points of net interest margin they'd much rather continue the status quo which is not to pass on most of the yield yeah I think that's right I mean it also begs a question of if you have a tokenized deposit and let's just say there's a bunch of banks that all do individual tokenized deposits they all shouldn't trade at a dollar. Let's just say they're not passing on the yield. They should really trade based on the credit risk of the business, I would think.

But in theory, the bank is FDIC insured or something like that. Yeah, up to a certain level. But, I mean, you'd probably feel better about a dollar at Bank of New York Mellon than you would, I don't know, some third-rate bank in the Midwest or something, right? But we don't treat checking accounts, dollars. commercial bank dollars as non-fundable with each other? No, but they, in fact, they could be theoretically. We almost found out in the SVB.

Well, with SVB, they were non-fungible. Yeah. I mean, if you were trying to settle a billion-dollar transaction, I think you'd think about it. Yeah, I don't know if banks are going to get into the tokenized deposit business. Just do stable coins. It's better. It's better for the story anyway with exporting dollars at massive scale, right?

what's wrong with just doing it that way? I would be surprised if any major banks issue a stable coin in the next year. I do think they will be serving stable coin issuers and stable coin payment providers without a doubt. So it's funny that Bank of America is kind of making all this noise now. And they have been, to be clear, patenting blockchain stuff for probably the past 10 years. But I don't see a team over there. I wonder how some of these banks are actually going to get some of this stuff to market. It's really hard to hire certain categories of professionals within the blockchain space.

And I think a lot of these banks have just been neglecting it for so long that I'm not sure how they're going to do it. So a couple of other news items to tick through here, Vivek Rameswami, running for Ohio governor, formerly of Doge, says that he will post all government transactions to the blockchain. Okay. What blockchain? Who knows? But, who knows? But the weird thing about this is like I don't know Ohio is who who do they like remit funds to like I guess

I don't know how it works who does states pay money to like the garbage collection guys or something do they pay out to individual taxpayers I don't know yeah of course yeah whoever they do that too if it's on the blockchain then the recipient

we need to blockchain wallet too right yes So are you going to have to onboard every recipient of state of Ohio funds to some wallet? Is that a desirable property? So let's say that the state pays five different trash collection companies in the state capital. Would you actually want it known what that contract looks like? I guess you would be able to FOIA it anyway, right? But blockchain would show you in real time what each company is actually getting paid on a biweekly basis.

You would think that the one that's the low bid would actually just go and say, hey, I actually want this. Yeah, I honestly think there's huge issues here. Not to rain on Vivek's parade or anything, but he's also been on the show before. Maybe we should have him back so we can explain the policy. But, you know, like if you're paying out, I don't know, is there some kind of pension scheme in Ohio? I don't know how it works. Let's say there's a state pension. and you're paying out funds to retirees or something.

Do we want them to be on the blockchain? Do we want their addresses to be public? Is that desirable? Well, I think you're going to end up with these blockchain designs that have public ledgers with privacy built on top. I just don't know if we're fully there yet from a takeoff perspective on that. So we're going to put that one in the category of need to learn more, because as currently contemplated, it makes no sense.

I mean, I think you just need to stop going a level deeper here. You just put it on the blockchain. It should have been the end of that news item. On the blockchain. Ohio, yeah. It's on the blockchain. Ohio did have, you could pay your taxes on the blockchain for time in Ohio. There was also a, yeah, and there was also a DMV initiative in Ohio.

years ago. So I think Ohio has been put car titles on the blockchain just from a timestamping perspective, less of a monetary use case. All right. So is Jack Dorsey, Satoshi Matt, what is the verdict? Yeah, so we should have talked about this last week, but that got a news cycle. Actually, it was funny. So I was in Florida at my in-law's house last week. And I walked out to grab a cup of coffee and I had my Satoshi pickleball shirt on a shout out. I don't want to dox him to the loyal on the brink listener that sent us those t-shirts. But I was wearing it. It has like a big Bitcoin logo on it.

And it says, Satoshi Pickleball Club. And I have my youngest child with me, I'm buying a cup of coffee. And someone comes up to me and says, hey, Bitcoin, it's Jack Dorsey, huh? And he just actually dove into it. He was like, I think it's Jack Dorsey.

Did you see this post? He had no idea who I was. Did you imply that you wanted to converse with this man about the United States? Satoshi or no but I guess to be fair to him it's in this part of Florida I don't think you probably see a lot of people wearing Bitcoin t-shirts so I probably would have at least so he just dives in immediately into a tirade about why it's Jack Dorsey yeah he did it in a nice way he's like hey what do you think about this Jack Dorsey thing like you think it's him he's like I don't know it looks pretty

good like do you think it's Dorsey I was like I wouldn't worry about it man I don't think it's Jack Dorsey he's like oh no you don't think it is I was like I I think that evidence is very He kind of just walked away. I don't know if he wanted to be Jack Dorsey or not. So Jameson Lop, who is great. I mean, he's a real historian of this stuff, has done a thread on it. Actually, a whole blog post entitled Jack Dorsey is not Satoshi Nakamoto. So I think it's very clear what his view is. We'll put this in the show notes. There's so much stuff in here as to why it's not him. So, I mean, he was running Twitter and Square at the time when Bitcoin came out.

So obviously he was probably pretty busy running two companies that would become decakorns. And then there's a lot of stuff in here about times that Jack Dorsey was in meetings that he tweeted about, which were contemporaneous with times that Satoshi was posting all this stuff on the forums. So I think that settles it. I mean, there's one time where he's meeting the president of Chile and Satoshi's posting something or other. I mean, you can't do both things. No, you can't do both.

Jameson Lopp is just such a national treasure. Do you remember when he did the deep dive on Hal Finney, when Hal Finney was like in a road race at the same time that supposedly Satoshi was doing something? And so he ruled out Hal Finney from being Satoshi because he was actually running like a 5K. That's great. Yeah.

So there's a lot of this. kind of stuff in it. There's like 20 examples of Jack Dorsey tweeting about how he's meeting someone at a specific time ruling out that he could have been making these forum postings, or at the very least, it would mean that there's a team here.

But yeah, I mean, the obvious biggest piece of evidence is he was running two big companies at the same time. He doesn't have time to do Bitcoin. Come on. I love the part of the post. He was like, well, he's hiding in plain sight. He wears Satoshi T-shirts. It's like, yeah, a lot of people do that.

Yeah, including you. So you're probably not Satoshi. I've never been mistaken, but it is quite a compliment to Jack Dorsey that people would think that he would be on that level. He does really love Bitcoin, like really loves it. He does, yeah, he does. And he's a huge advocate for it. I mean, without Jack Dorsey fronting the cost of some of those Craig Wright lawsuits,

I think the history could be a lot different. Yeah, none of this is to disparate Jack Dorsey in anyway. He's done tremendous. work for Bitcoin. I mean, so many initiatives over there at Block 2 that are pro-Bitcoin stuff. And really just Bitcoin, it's nothing else, no other coin. All right. In other news, did we talk about Tyler Williams yet? No. So U.S. Treasury Secretary Scott Besant has appointed Tyler Williams as an advisor on digital asset

and blockchain policy. Tyler Williams, until last week, was the head of policy at Galaxy Digital and well-known person in the digital asset blockchain's space, a really good thing for our country to have a guy like that working at Treasury. Yeah, I mean, we both have dealt with him personally and professionally, and Tyler is just exceptional, really one of the best policy people on the hill. So Galaxy's lost a good one, and Treasury has really gained a very, very strong advocate for the industry. So it's an incredibly positive sign. Congrats to Tyler. Yeah, big, big news there. And then I guess sometimes we lead with this, but micro strategy bought more Bitcoin, $1.9 billion worth. I guess they're down on that

pretty good. It's a good week when that's the last news item, you know, when there's other stuff to talk about. Yeah. It's, I mean, they threw that in the market and the market puked right away. Sometimes that happens, but when you're just buying regularly, I guess you don't care. The thing is, though, they're still safe because they're not that highly levered. No, they're really not. I mean, it's all mostly convert. People have this mental model like, oh, well, Bitcoin goes down anymore, like Microstrategies screwed. They're really not.

As much as some people would like that to be the case, they're actually fine. Their cost basis is probably in the 60K range. And yeah, you're right. I think if we tap those levels, people will be freaking out. But it's like, what do you think micro strategy board is going to do? Just tell them to sell it all because they're at their cost basis. Like, that's not how it works over there. Yeah.

There's nothing really compelling them to sell the Bitcoin. until it gets to like the 20s. I think even then. It's convertible debt. I mean, they don't have, they had that silver gate loan, which was collateralized with Bitcoin, but they don't have that anymore. So I really don't know if he really has a stomp out level.

So maybe the last thing here, Citadel, it was reported, is getting into crypto trading. This has been something that many people have known for a while, but finally came out. Yeah. I'd say expect more of this, right? Just traditional players coming into this market, seeing an opportunity.

I feel like there's going to be a lot of money being made once you figure out what these spot markets need to look like too. Yeah, so I would say overall very good development, another sign of maturity for the industry. I'll leave people with maybe a read for the weekend, a little bit of a long read. So the DFAI Education Fund put out a really good blog post a couple days ago, called examining the burdens, costs, and failures of the Bank Secrecy Act and the potential disastrous

implications of applying the BSA to defy. I thought it was really well done. So if anyone is a defy policy wonk, you're going to want to go and check that out. My total wild guess at what might happen in the next four years is that the Supreme Court might actually review the Bank Secrecy Act I would find it unconstitutional. Yeah, I actually think that's likely to happen. I don't know. Are you aware of any cases that are making their way through junior courts? No.

Maybe I should look into it, but I just think it is unconstitutional. And I think this court is willing to overturn decades-old decisions like Chevron deference. Yeah. It's kind of like be careful what you wish for if you're going after defy using the BSA as a tool, because you might end up kind of what happened with the SEC. where you kind of maybe like lose Howie in the in the midst of it all right so I think that's a good place to leave it we will be back next week everybody have a safe and healthy weekend