On The Brink with Castle Island - Weekly Roundup 03/15/24 (CSW is not Satoshi, Nigeria v Binance, Traeger and Bitcoin) (EP.510)

Episode Date: March 15, 2024

Matt and Nic are back for another week of ATHs. In this episode: ETH's Dencun upgrade goes live Is ETH stuck between two different stakeholder groups? Is Traeger going to hold Bitcoin? Saylor is still buying Bitcoin Nigeria holds two Binance executives for a $10b ransom A UK judge in the COPA case has determined that Craig Wright is not Satoshi Why the COPA v CSW case matters Blackrock will buy Bitcoin ETFs in their global allocation fund Greyscale filed for a low-fee spinoff of GBTC, ticker BTC John Griffin of Griffin and Shams is back with another terrible paper A new paper alleges that crypto finances slavery Sponsor notes: Market Dynamics & Risks of Liquid Staking Tokens  In Coin Metrics State of the Network Issue 250, we explore the market dynamics and risks of liquid staking tokens (LST's)

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

So out of this worry, we have something called the... of Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And this episode is brought to you by Coin Metrics, and here is the Metrics Minute. For today's Metrics Minute, we're looking at the dynamics of liquid staking tokens. Staking on the Ethereum network has grown tremendously with 31 million eth or 26% of supply and 125 billion in value staked on the beacon chain.

9.8 million eth has been staked through pools like Lido, which represents a 31% market share followed by Coinbase and Binance. Liquid staking tokens at Lido Steeth represent 33% of all deposits on Avev2, and 9.5 billion in collateral across defy lending markets like Avev3, Maker, Spark, and Compound V3. Also in Ethereum news, the Denkun hard-forcwent live yesterday, implementing EIP 4844, since the upgrade the network has processed over 7,000 blobs. some roll-ups like optimism-based and cK Sync have started utilizing blobs dropping their settlement costs from an hourly average of 0.15-Eath to 0.0005-Eath so dramatically bringing down the cost to be an

L2 on ETH bringing down fees on those L-2s in line with basically Solana fees so huge development for I have some interesting thoughts. Well, I have some thoughts on that. I don't know if they're interesting. I have thoughts on that. Anyway, that's your- What are your thoughts? What's your thoughts?

All right. I think ETH is caught between two, trying to appease two different sets of stakeholders. And I wrote- Investors and the developers. Well, yeah, users, I would say. Investors and users. They're different groups of different goals, different incentives.

The holders of the ETH token, and basically want deflation, they want burns, they actually want fees to be high, relatively speaking, because they receive a capital return, right? Staking, you get fees from MEV, you get fees from usage, you get fees from the burning, or you get a capital return from the burning of ETH.

And back in the day, I think ETH was trying to position itself as counter to Bitcoin as a sort of store value asset. What was the name of the upgrade when they introduced the burning of ETH? EIP 1559. Yeah. And so that was a investor focused upgrade, in my opinion. And then they felt pressure from the other side from Salana. Low fees, easy, access, convenient.

People started doing stuff on Salon instead of Eath. That's the meta for meme coins right now, for instance. And then I think they ping ponged back to try. trying to appease or cater to the needs of users and reduce the L2 fees. Great for users, not as good for token holders, right? So I think they're caught in two minds here. Do we want ETH to be this kind of store value, capital return asset that looks attractive to investors?

Do we want Ethereum to be a useful place to build things, a cheap place to transact with? And they keep on a whip-songing between the two. Now they've gone back in the other direction. I don't look, I don't know which path is best. Maybe there's a middle ground, but it seems to be a little bit schizophrenic, is my interpretation. But don't you think, though, so the blobs are going to result in L2 fees being quite low, but still base level Ethereum still will have high fees? Yeah, I think that's fair, but I expect most usage does go to the L2,

thus in the aggregate driving down ETH fees. So I do think the net net of this is that ETH fees are structurally less over time. Because ultimately, of course, you're really just going to transact on the all two. Well, I don't disagree with any of that. I will say just the ability to have these upgrades and that they actually work is a really impressive thing. Yeah, no. I mean, it's the ETH philosophy, right? Frequent hard forks, they do change ETH, the protocol, fair amount.

And you can say, like, they're more adaptive. They're reacting to the market dynamics. They react to Bitcoin. They're connected to Solana. So if you like that, then they're executing. But I would love to see more discussion of this conflict in Ethereum between the different types of stakeholders. I think there is one, even if the developers frame it as merely technical upgrades.

It still has economic impacts. Well, it was a busy week. I've been on the podcast circuit this week. Yeah, what motivated you do that? Well, Alex Thorne asked me to go on Galaxy brands. I listen to that podcast every week. Really enjoy it. So it was down in New York, swung by the Galaxy HQ, went on Galaxy Brands.

He has a block clock that works, unlike me. Yeah, I really need to get me first. I tried to get yours working. I couldn't. Yeah, it's just effective. I tried it on three or four different Wi-Fi configurations. It doesn't work. All right.

Had a good chat with Alex. Talked about Prometheum, talked about just the state of the crypto venture markets. So that was a lot of fun. Prometheum gets curiouser and curiouser. Very strange. Very strange story. And then you did a podcast I've frankly never heard of called Insecurities. Oh, this is another one of my favorite podcast.

So they talk about securities law. I'm surprised that you should be an expert in this. Yeah, no, I actually don't listen to any podcasts. I'm a net exporter of podcasts. Okay. So this was with Kurt Wolf and Chris Elkimov, or Ekimov, rather. Good podcast. I had a lot of fun.

So we talked about Sab 121, Market Structural. bill why stable coins is a good thing for the United States why the US should be leaning into this why banks and broker dealers are getting hamstrung so I kind of hit all my greatest hits on the regulatory front well all right speaking of the greatest hits this is we're going to break some news here kind of so do you remember roughly four years ago when you broke the micro strategy news I do I distinctly remember that it was a much bigger deal than I thought it was at the time We kind of dismissed it. I went back and listened to the podcast episode where we talked about it.

I hadn't even heard of micro strategy and you found the filing. And I think we both thought they would buy like 10 Bitcoin and that would call it a day. Yeah, I just said it had this a cute little thing. I don't know. Maybe we could run the audio of this at some point. But it was a I just thought it was a peculiar thing that this guy would go out and actually put some of his treasury into Bitcoin. Yeah. And now he buys clips of.

hundreds of millions of dollars of Bitcoin on an apparently weekly basis. So I'm not saying this is the next micro strategy, but your Edgar Fu has again yielded a result here. So I'm going to let you share it with the class. Well, so a similar filing happened with a company called Treger, which they make grills. So they're your backyard grill company. So they put out a filing this week that said,

let me just pull up the verbatim here so I don't get it wrong. But in the future, we may accept Bitcoin or other forms of cryptocurrency as a form of payment for our product subject to applicable laws, which we may or may not liquidate upon receipt. Pretty interesting. So if you want to buy a grill, you might be funding the next big Bitcoin purchaser. The best part is I love Trigger grills. I love grilling. Yeah, they're really good. Grilling is like my favorite thing in the world love to grill on a trigger grill they like bitcoin apparently and the best part is that their ticker is cook let them ticker cook let them cook yeah so they're cooking i mean are they going to go full micro strategy probably not but uh this is you know this is the adoption that i think

satoshi would have wanted it's grill based adoption i still have not seen anyone do a really in-depth the analysis on what Michael Saylor is actually doing and how it's just revolutionizing capital markets as we know it. I've never seen anything like this. This guy unloaded the clip on $800 million worth of Bitcoin purchased, I think Sunday night, early Monday morning. And then two days later announces another $500 million convert that's going to go probably next week is my guess. So this guy just cannot be stopped. I mean, it's still trading in a monster premium to the underlying, right? So he still has room to go if he wants to issue more. stock, right? I think he's going to continue. He'll go up until the point where he loses control of

the business, I guess, right? So maybe he needs to look at adding founder shares or restructuring the company in some capacity, but it's clear this guy just wants to own as much Bitcoin as he possibly can. All right. Well, tons of news this week, insane amounts of news, I would say mostly good stuff. Let's quickly hit on the deals first. First one up is Eclipse. It's an Ethereum layer two. It's powered by the Salana Virtual Machine. There raised $50 million in a round that was led by placeholder and hack VC. Next up we have Elixir. Their decentralized market making protocol, they raise $8 million from Misson Labs,

Maelstrom, GSM, Amber, and Manifold. Then we have NFTFI, an NFT lending protocol that raised $6 million from Placeholder, Mavene 11, Brevin Howard, reciprocal, and others. Then you have Blue Whale, a decentralized AI protocol. They raise $7 million from SBI holdings and others. Then it's Medocene. This is a blockchain gaming platform that raised 10 million from Anamoka and Spartan. Then you've got Fjord Foundry.

They're a token cell platform. There is 4.3 million from Lemnoscap, Mechanism, and Z Prime. Last one up is ClearToken. This is a cryptocurrency clearinghouse. They raised 10 million from Nemores Laser Digital, Flow traders, Zodia Custody, GSR, and LMAX. Busy deal week? Yeah, I mean, I don't even know where to stop. I think for me, the ETF flows were again, very impressive.

We had our first billion dollar net flow day, I think. Obviously, absolutely crazy. Bitcoin hit an all-time high. That was cool. And very excitingly, I think for me, Craig Wright, officially, as decreed by a UK court of law, having considered all the facts, is not Satoshi. In fact, he's the only person on the planet who the law, specifically says is not Satoshi. So we literally are all Satoshi, except for specifically

Craig Wright is not Satoshi according to the law. So our long national, I guess international nightmare is over. Can this guy just stop suing Bitcoin Core developers now? Is that going to stop? Yeah. So this is, I think, what people don't understand. This isn't just a battle, like a symbolic battle for who's Satoshi or whatever. Craig Wright has been legally harassing almost all. Bitcoin core developers suing them individually, putting them under a huge amount of jurors, as well as regular Bitcoin advocates like Hoddle Not, Peter McCormack, and Kopa took a very aggressive legal strategy. They sought to prove Copa was kind of a nonprofit funded by, I think, Coinbase and Jack Dorsey and others. They sought to get an affirmative declarative judgment

from a court that Craig was specifically not Satoshi, which was very aggressive, somewhat risky strategy. It worked. The judge looked at the facts, decided he's not Satoshi. Here's the quote from the judge. First, the judge says, I'll make certain declarations which I'm satisfied or useful and necessary to do justice between the parties. First, the doctor right is not the author of the Bitcoin white paper. Second, Dr. Wright is not the person who adopted or are.

operated under the pseudonym Satoshi Nakamoto in the period 20 2008 to 11. Third, Dr. Wright is not the person who created the Bitcoin system. And fourth, he is not the author of the initial versions of the Bitcoin software. It doesn't get better than that. It doesn't get better than that. We won. He's not Satoshi. The other cases will make note of this. It's not over. He's still suing people, but legally, in my opinion, he's dead in the water. So the part I've never understood on this is this guy, Calvin Eyre, who it looks like he spent over $100 million financing Craig Wright over the years. What was this guy's end game?

What was he expecting? Was he expecting Craig Wright to unlock the coins here at some point and he would get a cut of that? Yeah, I mean, it's something to do with BSV and basically stealing a portion of the BSV supply, getting the court of law to basically apportion Bitcoin over to him. I mean, who knows? it didn't work. Whatever Craig told Calvin was convincing, but it was a failure.

The strategy is clearly a failure, and he's lost. And I mean, if he doesn't lose faith in Craig now, I don't know what will cause him to. But this is immensely good news, like on a par with the ETF approval for me in terms of the goodness of the news because it means there is now a legal shield

for these core devs to come back and unretire and start contributing to Bitcoin again. because there was a huge attrition because of this specifically. Because like, you know, cord devs are normal. A lot of them are pretty quiet people. They don't want to be public figures. Dealing with fighting over soft forks bad enough. This was an additional provocation.

They certainly didn't need. No one needs that. And thanks to Copa, now we can kind of resume normality. So it's immensely positive news. So do you think that some of these Bitcoin core devs will come back? I hope so. Yeah, I mean, we were actually in a pretty bad spot in terms of the, these sort of like willingness among the most elite core devs to contribute to Bitcoin. And so I think that'll change.

All right. So that was big news. Other news this week, so Wyoming, their governor, has signed a bill into law that gives Dow's legal standing in the state. The bill also enables Dow's to contract with third parties, open bank accounts, have taxes paid and all sorts of different things here. There's another bill that talks about the bankruptcy remoteness of financial institutions that are operating in the Bitcoin space. This is a bill around trust and bank assets in the bankruptcy classification of those. I think it might as well be called the next FTX won't happen in Wyoming Act.

So it really just gives clarity around how to deem an asset or a liability of a financial institution that is conducting business and digital assets and how you keep those accounts segregated from a bankruptcy remote perspective. So really interesting stuff happening in Wyoming continues to be at the cutting edge of this industry. Yeah, Wyoming certainly still the most crypto progressive state. One very interesting piece of news this week, which is kind of gets into the composability of these Bitcoin ETFs. BlackRock said that they intend to purchase spot Bitcoin ETFs in their global allocation fund, which is... Huge.

I mean, like, this is the next phase for the ETF. It's not just sort of retail punchers buying it. It's Bitcoin becoming a alternative asset class in its own right and finding its place in these diversified sort of all-weather portfolies. And that's an $18 billion fund. $18 billion fund. And so you're starting to see this global asset allocation category wake up. You've already seen Fidelity put this into a fund up in Canada.

So I think you'll see more of this. And it's just more structural demand for these Bitcoin ETFs, which we're kind of in the early innings, even on the wirehouse platforms, but this will be the next leg here. Yeah, I mean, very, very exciting stuff. Interesting ETF news also, Grayscale has filed for a low fee spinoff of GBDC, ticker BDC. So explain this one in the audience.

What's going on here? So GBTC is the largest Bitcoin UTF at this point, although it has outflows Yeah, it has outflows every day. It won't be the largest forever. Within a week or two, Ibit, maybe a month or two, I'll be there. Yeah, but there's a lot of people that are stuck in that GBTC product because they don't hold it in a tax-advantaged account.

And it's 150 basis points. The nearest competitor is the lowest competitor is like 20 basis points, I believe, which is bit-wise. and so you can't really get out of it if you're in just a traditional brokerage account because you'd be especially if you're sitting on a massive gain. So this is a little bit of a carrot to folks. So my understanding of this product is that if you hold GBTC, some of your GBTC will be put into this new BTC product.

And you'd have to imagine that the fee on this product will be quite low. It'll probably be competitive with bitwise. So it doesn't solve the problem necessarily for you. you're kind of stuck in GBT, but you'll, you'll average down your fee. Grayscale is being very economically rational by keeping the fee high on GBT because, yes, they've lost a lot of AUM on a Bitcoin basis, but the price of Bitcoin has gone up. And so the revenue profile of just that product is probably in the neighborhood of $300 million a year right now. So they are generating the most revenue of any of the issuers right now.

Yeah, so a clever strategy, I think, by Grayscale. I found a very perturbing piece of news this week, which was this Nigeria Binance situation. And honestly, very disturbing. So Nigeria invited two finance executives to the country. The main one is this guy, Tigran Gambarian, mispronounce that. He's a former IRS federal agent.

He's actually quite a decorated federal agent, led a lot of these crypto investigations while at the IRS. And then he joined Binance to head up, I think, their compliance team, and was invited to Nigeria. Then they detained him kind of arbitrarily starting February 26. And Nigeria appears to be unhappy that there's some kind of informal crypto dollarization occurring in the country and they are holding Binance response. and they're asking for $10 billion payout in order to secure the release of these two guys.

So they basically got Shanghai and they're held for ransom. And the Biden admin is nowhere on this. And they're aware they've done nothing. And I mean, this guy's a decorated formal federal agent basically being detained extrajudicially in Nigeria. So super disturbing situation. That is, I mean, I don't know what the angle here is in Nigeria because they're trying to pass a law, but it seems like the Nigerian version of the SEC is involved in this, but there's also, like, the army is involved in this and the equivalent of the Department of Justice is involved in this. So it's really difficult to understand what exactly is going on. But when you really get down to it, it's what you said, is that there's a U.S. citizen over there that is being held hostage for something that Binance did.

it's a former IRS official who now works in the compliance group at Binance. So there should be a priority making sure that this guy gets extricated out of Nigeria. I mean, does Nigeria have a case here? It's very unclear to me what they're actually alleging. They're saying that Binance had products in market that are hurting the fiat currency of Nigeria. I mean, this is something that's going to actually happen, is crypto dollarization will, we've been saying this for what years? Cryptidololarization will predate on all these weeks.

currencies and you will see this informal dollarization happen, force some of these nations with weak currencies into dollarization, formal dollarization. That's what happened in Ecuador in 2000, not via crypto with ordinary cash. Stable coins, of course, make this easier. This will happen. I don't know if you can really blame crypto. I mean, you would have to imagine high inflation rates in Nigeria are like a fiscal or a monetary thing first and foremost maybe crypto helps at the margin but I don't think it's fair to hold finance responsible I don't think it's fair to kidnap executives and demand a $10 billion ransom it's not good so I mean contrast this with the WMBA player Brittany Grider Griner the Griner the U.S. traded this like arms dealer for her and

prisoner swap. And that's a WMBA player. This guy's decorated federal agent and there's nothing happening. Yeah. Yeah, we've got to get that sky out of there. Ugly story. Yeah, really not great. Not great.

Well, in other geographies, though, it was actually an eventful week in a pro-crypto way. Obviously, Nigeria is going in one direction. But Hong Kong's central bank has created a regulatory framework for stable coin issuers. we had in Indonesia we had the primary regulator there the financial services authority that's the ojx they issued new regulations for digital asset companies those will come into effect on January of 2025 it seems so there's a lot of positive stuff going on internationally right now too this one paper i want to call your attention to which uh is from this guy john griffin of griffin and griffin and shams fame he's the guy that wrote the paper that was filled with errors about how tether is driving the price of

Bitcoin, right? Yeah. Yeah. So he's written a new paper called How to CryptoFlow's Finance Slavery, the economics of pig butchering. That doesn't have anything to his swine. It refers to romance scams. And yeah, look, this guy's body of work is not good.

Okay. It's not good. And I reread the Griffin and Cham's paper recently. it's like the, it's just the most preposterous thing you've ever read. So. But it gets cited in all of these studies, you know, all these federal agencies that do studies, they cite Griffin and Shams and it's been thoroughly debunked. Constantly. Yeah. The main debunking, if you want to read an academic debunking,

it's Viswanath, Natraj, and Lyons. We actually interviewed Viswanath Netraj some years ago. And they explained how Tether actually works and how the flows between Tether and Bitcoin Price interact. And they find that Tether doesn't influence the price of If you remember in the untethered paper, Griffin and Shams alleged that tether is unbacked and that there's a loan entity that basically prints tether. They think it's affiliated with Bitfinex on an unbacked basis and boys the price of Bitcoin, especially when Bitcoin's selling off. Empirically, they're wrong on that.

They're wrong that there's a single loan entity that's like manipulating the entire Bitcoin market. The reason this was so popular is because it gave haters of crypto an excuse. like they could say yeah Bitcoin's not going up because of any because of demand it's going up because there's this shadowy manipulator that's manipulating Bitcoin upwards with unbacked tethers and now like tether doesn't have a spotless history of course they settled with NYAG over a loan they gave to BitFenex but this the claims made why Griffin and Sams have never been corroborated that tether was just engaging in naked unbacked issuance that tether was manipulating the price of

Bitcoin, certainly not that there was a lone mysterious entity, which they identify, claim to identify from on-chain data, just completely erroneous use of on-chain data. There's no lone mysterious entity that manipulated the market upwards. It's never been found or corroborated or verified in any way. So there's a fake paper, which unfortunately got cited a lot, and it was published in the journal of finance, which is the best finance journal, which is completely unconscionable. Anyway, not content with that atrocity, John Griffin's back with this pig buttering paper where he basically claims that crypto is financing massive, rampant amounts of slavery in Southeast Asia.

He believes crypto is responsible for this. And he thinks that these slaves, I'm not even exaggerating. This is what he says in the paper, are engaged in romance scamming via crypto. that some of that may be happening like certainly romance scams are a thing of course you can use any digital via rails to facilitate that right slavery and scams predate crypto to be clear crypto didn't invent those things right from what I understand scams and slavery have existed since antiquity and the problem is in this paper he does the exact same thing he does in the Griffin and shams which is look at masses of on-chain data and decide that based on his like pretty amateur view,

that there's $75 billion in flows that are accounted for by these scammers. Now, there's another estimate of what pig-butchering or romance scammers have collected using crypto from a organization known as chain aliasis. I've heard of them. I think they're actually pretty reliable on this stuff, from what I understand. They're multi-billion dollar company, hundreds of employees. They're the best. A lot of federal contracts.

So if you had to guess, would you say their estimate aligns with John Griffin, or it's higher, or it's lower? I would bet it's lower. Yeah, it's 75 times lower. So the guys who are actually the experts? So the literal actual experts that have hundreds of people doing this 10-year track record, understand chain analysis versus sort of like one lone kooky academic, right?

The real estimate is $1 billion over 21 to 23. Now they caveat that's a lower bound but it's probably not 75 times higher. The crazy academic thinks it's $75 billion. I think I'll go with chain analysis on this one. Now why this matters is that

it's just some rogue academic who has a history of putting out really bad pieces but this gets laundered into the media. This gets laundered into the EPA reports, FBI reports. People cite these because it's from an academic. This is the exact same thing that happened with the Hamas Wall Street Journal analysis. It's erroneous usage of on-chain data to support a pre-existing narrative. The narrative predates the data.

The data is found to support the narrative. But you can determine anything using on-chain data, especially if you're willing to look at clusters of a data. addresses and extrapolate from that and determine that the flows are super high. That's what he does. That's his MO. He doesn't rule out false positives. Like chain analysis, that's their entire job, right? Is to characterize entities on chain and determine what the flows are. What flows are illicit, what are illicit. Griffin looks at these clusters of addresses. He's like, oh, yeah, I see $75 billion dollars of the transactions. Okay, I'm just going to assume naively that these are all Romaine scammers.

And yeah, we're just going to call it a day. It was 75 billion of Romaine scams. Same thing in the untethered paper. Same thing with the Wall Street Journal coverage of Hamas. They decide that it was 165 million in flows, even though genealysis and elliptic pushed back at that. Treasury, undersecretary push back at that. This is like a chronic problem we have. Is these these outsiders that aren't good at chain analysis, looking on chain, deciding that the number is extremely high, and deciding that blockchains are facilitating oodles of bad stuff, which we're not saying there's nothing bad that happens on blockchains, but the truth also matters, and they're nowhere near it. So are you on the case here? What are we going to do about this?

Yeah, so I actually have a piece coming out reviewing the untethered paper, which nobody ever really reviewed aside from this one off the Tras and Lyons. So we're going back to the untothered paper and then we're reviewing this paper as well. So yeah, we're going to pick this guy apart. I mean, really, I'm excited to publish it because we need to do something about this. If we don't do anything, his talking points will make it into the press. Then they'll make it into the policy discussion. And that will be used to attack crypto. It's a very well-trodden playbook. They keep doing it. And we need to do something about it you're on the you're on the front lines here this kind of reminds me of all the people it reminds me and myself frankly during deflategate where you just need to

battle back against the haters that are really just making stuff up is it reminds me of you know me defending tom brady yeah i mean that that was a noble cause it was a noble cause similar levels of importance arguably if not more important that that reminds me so are you've paying attention to this NFT Nick guy or whoever this guy is. Where did this guy come from? Yeah. This guy is kind of a fascinating character. He seems to revel in getting community.

He enjoys getting community noted by claiming that cars and apartments and boats are his. Then people on Twitter community note him and say they're not. And it's like a game to him. But he got on the Barstool podcast. Yeah, I saw that. Defending the wall kind of made me think of Barstool. and then I thought of this NFT Nick guy. But has he been around for a long time?

This is the first time I ever heard of him. Yeah, no, this is the first I've seen of him. But whatever he's doing, it's working. Yeah, he's getting a lot of impressions. Choose Rich, Matt. Yeah, well, I try to. I'm choosing, Rich, to be clear. Yeah, it seems like a good idea.

All right, let's talk about Coinbase here really quick. So Coinbase has asked a appeals court to direct the SEC to begin writing rules for the digital asset ecosystem. They have a long filing about the SEC's inconsistent posture towards the industry over the years. And they summarize some of the key points in this really interesting chart that we're going to put in our newsletter. And it's just so funny. So you have this question, is a digital asset a security? In 2018, you have a no from the SEC.

They say a digital asset all by itself is not a security. And then in 2021, they say yes. They say a digital asset embodies and represents the investment. investment contract. And then you have in 2024, they say no again. They say a digital asset is just a computer code. And then five days later in 2024, they say the digital asset itself represents the investment contract. So they have gone back and forth on this issue if a digital asset is a security. It's the same thing on can the SEC regulate digital asset exchanges. In 2021, they said, right now there is not a market regulation for crypto exchanges. And then in 2022, they said,

Congress gave us a broad framework to regulate exchanges, completely contradicting themselves. Then to the question of, is the existing law clear? In 2020, they said, there is no uncertainty about whether digital assets are securities. And then in 2023, they said, we have a clear regulatory framework built up over 90 years. It's just so funny to see this in black and white, the SEC just completely contradicting their guidance over the years. That's incredible. I mean, we know they've been contradictory, but when presented like this, it's just so clear, the level of opacity and contradiction. It's definitely rooting for Coinbase on that. Did you see Coinbase announced a billion

dollar convert this week? Yeah. What do you think they're going to do with that? I think it's a great idea. So in the 8K filing, it seems like they'll use some of it to retire some of the older debt, and then they'll use some of it for M&A and investments into companies, which is kind of what they did last time. So it's a, it's a, it's a, it's a, a really smart, smart move by Coinbase to stock up a little cash right now and probably have the opportunity to consolidate a couple of categories that maybe they're not in right now, where you will have big businesses built, especially as institutions start to come more aggressively into crypto. So give themselves a chance to maybe go get some companies under their belt. So I liked it a

lot. And the other dynamic is that Coinbase has been really smart on the capital allocation front, where they were buying back a bunch of their debt when it was trying to. trading at crazy discounts over the years. So I like it. Good for them. All right. Before we go, we're going to review some comments on Farcaster, warbcast.com slash tilda slash channel slash on the brink.

Yeho Shizzle says, Polymarket better is starting to listen to On the Brink. Of course, posted an image of the Polymarket for the Ethereum ETF approval. It's down a 31% chance by the end of May. I think we were pretty early on that. Now the Bloomberg analysts are also generally in agreement, I think. Yeah, it's not happening. Not happening in May.

So I'm not taking the victory lap yet, but close. Zach Herring says a couple of clarifications regarding Heath Denver. Heath Denver vibes are unique even for theorem conferences. Okay, fair enough. I'd never been to another East conference. So he says, Spork is the ED Dow token. you have to stake for membership and a free ticket in parentheses why unsure so i don't understand something in the water there in dumber i found the aesthetics very puzzling of that conference

i'm still very confused so yeah post on our uh farcaster channel yeah farcaster is a good place to um to go so we have another one from cayemi says unpopular opinion despite the buzz i can't but help but think that the Bitcoin roll up is just a narrative, conveniently sidestepping the fact that a hard fork would ultimately be necessary. So that has some buzz, some people back and forth about BitVM. No, I don't think, I mean, I don't think we need hard forks to scale. I mean, the whole point is that BitVM enables us to build a rollup without even a soft fork.

I mean, and I love, I love that we're having that argument on warpcast, though. Bitcoin doesn't achieve forks. We just don't fork pretty much ever. So if we can build something interesting about forking, we're going to do that. Yeah, I agree. All right, a couple things to check out this weekend. I enjoyed the latest episode of Animal Spirits. They had Chris Kuiper and Matt Horn on from Fidelity.

Another article that I like this week, Jim Myers from Flipside wrote about data, our favorite topic, open data, the unfulfilled promise of blockchain. So check that one out. And I think that's it for the week. So we will see back on Monday. We have an exciting episode, I think, about cybersecurity on Monday, actually. So we'll be back on Monday. Everybody have a safe and healthy weekend.