On The Brink with Castle Island - Weekly Roundup 03/22/24 (SEC v Debtbox, ETH security drama, Blackrock's BUIDL token) (EP.512)

Episode Date: March 22, 2024

Matt and Nic are back for another week of news and deals. In this episode: Nic's Columbia scandal Stablecoin growth ETH Foundation subpoena from the SEC ETH ETF prospects Blackrock releases their tokenized Treasury product with Securitize Are private blockchains obsolete? Fidelity amends their ETH ETF prospectus to add staking Japan's pension fund is learning about Bitcoin More GBTC outflows More bad boys Kyle Davies wants a debate Content mentioned:  Brian Armstrong, What is crypto good for, anyway? Bitwise, 12 Real-World Stories of How Millions of People Are Using Crypto Services Today Sponsor notes: Appraising Growth in Digital Asset Markets In Coin Metrics State of the Network Issue 251, we leverage market data and datonomy™ sector classification to understand recent shifts in digital asset markets.

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 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. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And the episode is brought to you by Coin Metrics. And here is the Metrics Minute. For today's Metrics Minute, we're looking at the recent growth in crypto markets.

With Bitcoin rallying, touching 73K, its 90-day correlation of the S&P 500 and gold has strengthened, actually, believe it or not. Bitcoin futures open interest on the CME had an all-time high of 11.4 billion in March showing the deepening liquidity of the Bitcoin derivatives market. Market sentiment has shifted to a more risk-on environment without coins representing 58% of overall global trading volumes. Bitcoin share dropping. The seven-day average of trusted spot volumes from Bitcoin is near $26 billion, which is just shy, just a billion dollar shy of an all-time high reach in May 2021. Weekly tethered denominated spot volumes reach a record of $53 billion in March as tether supply crossed $100 billion. Salana has also seen a surge in activity with its weekly spot volumes climbing past the previous

peak to over $5.6 billion. That is your Metrics Minute. Good Metrics Minute. All right. So you just got back from a college lecture. This market must be back. Colleges are asking you to lecture again. It was better attended than last year. This is actually a yearly tradition. I give a guest lecture. at Columbia. I think three years running, I've done it. And I got in trouble last year, if you remember. Because the professor Omead Malikin tweeted a picture of me lecturing. And in the background was the one slide where I had controversial stuff where it was talking about like Bitcoin security budget and various proposals. Oh yeah. To, I guess, deal with that.

you know, some people don't think it's a problem. Some people do think it's problem. Long-term issues of the security budget. And it ignited a firestorm. Everyone thought I was, you know, corrupting the minds of the youths with my, uh, take my heterodox takes on Bitcoin. People don't like that. Yeah.

That was, you were excommunicated for like the third time out of Bitcoin after that. I mean, how many times can I be fired from Bitcoin? It's like, and. It's like Groundhog Day. It just keeps happening. So how'd you play it this year? It was mostly just stable coins. This year is all stable coins. And honestly got a great reception from the students. They like the stable coins.

People like dollars. It turns out. Who knew? Dollars are good. I have a whole bunch of new chart. I have like a stable coin chart book. I don't know. I guess I can publish the slides. I've got it open right here. So there's some interesting stuff here. So the stable coins, if you just look at them compared to sovereign nations that own treasuries, doing pretty good here. Yeah, they're the 16th largest. If you counted stable coins as a sovereign in terms of ownership of treasuries, they're head of Saudi Arabia, Korea, Germany, Mexico. And then one interesting one that caught my eye as well is if you think of stable coins is you compare them to a money market mutual fund, they would be the 14th largest money market fund.

bigger than Invesco. Wow. Bigger than UBS, bigger than TRO price, like Mason. That's pretty good. Yeah, pretty respectable. So depending on who you listen to, stable coins crossed $150 billion in supply yesterday. That's according to Artemis, actually.

The block has it at a 155. But we'll just say that yesterday was 150. Well, there's a lot of news this week, and I'm very sorry to report to anyone that is a U.S. taxpayer, you owe some money after this week. I don't know if you saw this story. Debt box. Oh, yeah. You paid for this. U.S. taxpayer is paid for this. We're going to get into this. We probably wait until after the deals, but you're on the hook. You're going to be getting a bill for the SEC acting in bad faith and deliberately perpetrating

falsehoods in a case where they are now accountable, which means that the U.S. taxpayer is now accountable. So take out those wallets. Yeah, write a check to the SEC for losing to debt box. That's the deal. That's the social contract in this country. Pay taxes and the SEC spends it on spurious litigation. Have to send it in via ACH. It would be a lot easier if you could just send a stable coin,

but the SEC is standing in the way of the stable coin bill. But that's a whole different story. So we have done a bunch of episodes with Coinbase. leadership actually on this podcast. And you did another one this week. Yeah, I sat down with Jeff Longelhofer. He's the CISO that stands for Chief Information Security Officer of Coinbase. We talked about cybersecurity, talked about all the things that you should be doing to make sure that you're staying safe when you're interacting with not just Coinbase, but with public blockchain. So I had a good time with that one. I always get really freaked out when I talk to these cybersecurity guys

because I'm like, do you read my emails? These guys are all very hardcore people. It's a big responsibility. I don't know how many assets Coinbase has in their vaults right now on the order of 150 to 200 billion. It's kind of terrifying when you think about it. Not that I think they're doing a bad job, but it's just, it's genuinely systemic. They're protecting a lot. But the new Coinbase login feature with Pass Keys, we talked about that a lot. Pass keys are just so great.

Like the user experience on pass keys is exceptional. I'm playing around with the new hardware wallet from Square. And it also involves a similar type of login flow, just a lot easier. So it's NFC based, right? Yeah, this one is, it's a hexagon. I'm holding it right now. I guess when we go to video, we'll be able to see it. But it's a hexagon.

It does not have a mnemonic phrase that you need to write down. So a lot of this is just stored in the cloud through Apple, which is really interesting. But the user experience is quite good. It looks like a really fancy marble coaster. Yeah, I'm kind of worried that if I leave it around, someone's just going to use it as a toy in my house. So I'll have to put that in the same place. Yeah.

Yeah. No, but the aesthetics are on point. Good job. Really sleek design. I really like it. All right, so let's get into some deals the week. Man, there are a lot of deals this week. Yeah.

So chunky one to start. here, actually quite a few big ones. First up is figure markets, of course, digital asset marketplace. They raised 60 million from Jump, Pantera, Lightspeed, and CMT. Then we have succinct. This is a zero knowledge proof infrastructure company that raised $55 million from paradigm, geometry, bankless, and others. Then we have espresso systems. I think we did an episode with them a while back. They are layered to roll up as a service project. They raised $28 million from A16 Z crypto. D2X, which is a crypto derivatives trading platform, raised $10 million from 0.72, GSR, TRC, and Tioga

capital. Next up we have Nian. Is it pronounced Nian? Like Nian cat? Remember Nian cat? No, what's Nian cat? You don't remember Nian cat? There's not much to remember.

It's like a, I guess, I don't know. It's like a animated cat that had a song. associated with it. No, not my time. Not my vintage. I'm not even going to, I won't sing it for you guys. Don't worry. Anyway, Nian, a crypto gaming company,

there is 3 million from mechanisms, Fermian, and others. Then we have a company called Kleeck, which is a compute coordination platform. They raised $8 million from Polly Chain, robot ventures and bankless ventures. Bankless ventures, getting on the board here. I love, love it. Shout out bankless.

Yeah. They're getting active. Next up we have Pallet. They're an NFT exchange on the say blockchain. They raised 2.5 million from Spartan, GBV, and others. Then it's Pollyhedra, which is an interoperability protocol. They raised 20 million from Pollychain, Anamoka, Hashkey, and others. Then we have merch.

They're a blockchain fashion startup. They raise 6.4 million from Liberty City Ventures, 6,529 Capital, and Christie's. This one is actually spelled with 2Ms and merch, and I think in the newsletter I just put merch. But yeah, this is an exotic merch? Merch. Merch. Merch.

Okay. Then we have Morph, which is a layer two blockchain protocol. They raised 20 million from Dragonfly, Pantera, Forsy, and a number of others. Then we have buy dot social, a decentralized social trading platform. There is 3 million from Web3 Vision, Wagmi Ventures, and QF Capital. Wagmi. Wagmi. Okay.

I haven't heard that in a while. then it's 10th surplus. I thought we left that one in the last cycle, but Wagmi, yeah. I guess, yeah, I don't know. That didn't go so well. Everyone is saying wag me right into the FTX meltdown. Turns out, not everyone.

We were not going to GMI. Not everyone was going to make it, it turns out. We left a lot of people behind. Then we have TensorFlowx, which is a company that builds at the intersection of AI and blockchains. They raised three million from a number of folks, including collab currency, canonical crypto, DCG, and accomplice. Then we have Mastico, a privacy protocol that raised 18 million from peak XV, hashkey, and Marana.

Yeah, peak XV, you didn't want to jump in with that. That's peak 15 now? Well, maybe it is, maybe it isn't. I can't just assume that it's Latin. I guess that's right. Peak XV. Peak XV. Then the last one is Kemet Trading, a derivatives trading platform that

raised 5 million from further ventures, QCP, and flow traders. Busy, busy deal week. All right, well, let's start with the most scandalous news of this week, which is a little thing known as Debt Box. Debt Box. And this is not a good one for our friends at the Securities and Exchange Commission. So this one has been brewing for a long time, and I thought NLW did a good job on his podcast talking about this specific case,

which I guess we won't get into too much. I don't know that much about debt box. They were doing some sort of a token sale, but the backstory here is that the SEC made a bunch of allegations about the company to a federal judge in order to get them basically shut down. So they were saying, hey, we have evidence that these guys are getting ready to flee the country. They're going to take the money. And it turns out this federal judge in Utah, which I should say is it's not like this is a Republican anti-SCC judge or anything. This was an Obama appointee. This federal judge said that the SEC engaged in gross abuse of power

entrusted to it by Congress, that they acted in, quote, bad faith in that they were deliberately perpetrating falsehoods. So this is the division of enforcement at the SEC getting called on the carpet by a federal judge for lying. And so the agency has been sanctioned, which means that they need to pay damages to this company as well as all of their legal fees, which as we said at the outset, that means that the U.S. taxpayer is in the hole because a bunch of rogue SEC enforcement people, led by Gary Gensler, just decided to make up a bunch of stuff against this debt box company,

which is a small company that I don't even know if these guys had venture funding or whatnot. They certainly were not on my radar. But what the heck happened here? I mean, and it's also notable that the SEC had initially sought to just withdraw the case and then Debtbox asked for it to be not withdrawn, right? And that's when the judge imposed the sanctions on the SEC. Judge denied the motion to dismiss, and there was some thinking that this motion to dismiss

would allow the SEC to bring another case with actual facts, but the judge was having none of that. Yeah. Obviously, this is quite a scandal. I enjoyed Miles Jennings' take, so Miles is over at Injuries and Horowitz. He said, recent events have changed my mind about working with former SEC crypto enforcement lawyers. Anyone still working in that division is complicit in the ongoing abuses of power.

Debtbox won't be the last example. We won't work with law firms that one day hire these people. So that's a pretty powerful statement from the largest capital allocator in the crypto space, also one of the largest capital allocators in venture capital period around what's going on at the SEC and how folks in this industry should think about working with some of these people. Yeah, I mean, I understand the sentiment. I'm not one for collective responsibility, though. So I know that there are good people working at the SEC.

So if they choose to leave and basically come work on the side of the crypto industry, I kind of support that, you know, if it's a talent drain from the SEC to crypto and they understand, how these things works and they can use their skills to protect these startups. I kind of support that. Well, that would be the time to leave. This is the type of thing that if this happens at a college, on a college football team, you have an incident, the head coach gets fired.

If this happens at a corporation where you have this gross misconduct, you're getting called on the carpet for crimes, federal crimes. People lose their jobs. But in this case, nothing has happened yet. This has been brewing for a while. Obviously, Monday it was set in stone. Everyone in the crypto industry has known that this was going on at the SEC just fabricated information in order to get this temporary restraining order and basically get the company shut down.

So this is a big deal. Yeah, it's pretty brazen behavior. And the question is, is this an isolated incident or is this indicative of a broader pattern at the SEC? And what we've heard, what we've heard is that this is actually a more systemic. And there are other debt boxes out there if you know where to look. Now, to be clear, I don't know where to look. I'm just a civilian in all this. But someone listening knows where to look.

That's why we have the tip line. Get in touch. Warpcast. Yeah. Also, hit us up on warpcast. Give a tip. Well, this was another busy week in SEC news. So Fortune magazine reported this week that the SEC has begun to send subpoenas to the Ethereum Foundation and several adjacent companies probing whether Ethereum is a security.

It's important to note that this appears to be in recent weeks. And so it sounds like some of these subpoenas center around the transition to proof of stake. I don't know what to say on this one. I mean, I thought Paul Griewal, who's the chief legal officer at Coinbase, had a great tweet storm about all of the times that the SEC and the CFTC. have already taken the posture that Ethereum is a commodity, including the Hinman speech, including when the SEC approved the listing of Ethereum futures, ETFs.

I don't understand why you would spend resources trying to say that ETH is a security when you've already said that it's a commodity. It doesn't make any sense to me. Yeah, I mean, that's kind of the main takeaway from this is don't panic, I would say, because in matter of fact and based on the things the SEC has said and based on what the CFTC has done, ETH is not deemed to be a security by the U.S. government.

And I think a court of law would acknowledge that if it came to that. My theory on this, I have two theories. One is the SEC just rampantly sends out subpoenas on a kind of scattershot basis all the time. to all kinds of entities in the cryptospace. And it could be the case that that has happened. It doesn't necessarily mean there's any enforcement coming or anything like that. And this is kind of a press storm, which just, you know, people are reporting on reporting and it's being blown out of proportion.

The other theory is the one that is shared in the fortune piece, which is maybe something happened when Eath switched over to prove of a stake, which kind of reset the statute of limitations, because that had expired post-Eath crowd sale. I think it's a five-year statute, which was more than five years ago. So maybe the clock was reset, so to speak, because the SEC interpreted the merge

and the transition to proof of a stake as the creation of a new asset, which maybe they think is a security. So that's kind of the second theory there. But I would say regardless, I'm not too concerned, because, again, the SEC's own posture historically has been that it's not a security. Yeah, that seems pretty flimsy to me to think that the merge would trigger a security's designation.

So you're going to go after everyone who runs an infrastructure note, like a node on Ethereum, to say that they are now underwriting a new security. That just seems incredibly far-fetched to me. Yeah, I mean, yeah, like, I guess the reasoning would be like, oh, it's a new issuance, a new network, new validation model and the significant amount of mutability meant that maybe the efforts of a third party prong is triggered. I'm kind of speculating here. But yeah, that one certainly terrified people on crypto Twitter and I think further reduced the odds of beneath ETF, which at this point people come to agree with us on, even though we got a lot of flack for that initially.

So I've been saying that I don't think the Ethereum ETF is going to happen, but I actually have the opposite view. I think that, yes, there was some panic, but what you're seeing is just the whole industry start to mobilize here. I mean, we'll get to this, but BlackRock launched their first tokenized fund this week on Ethereum. So they have the BlackRock USD institutional digital liquidity fund, Biddle in partnership with Securitize on the Ethereum blockchain.

To go out there and say that ETH is a security, you are, this is the type of thing that's going to lose the election for Biden. I mean, this is getting to such a fever pitch where Gensler is such a liability for the Democrats at this point that it's just hard to see them going forward on something like this. I think we're already past that point, but really crazy. I mean, there was another flurry this week of amicus briefs in support of Coinbase for their ongoing litigation with the SEC and the Chamber of Commerce filed a brief. know, they're historically not very active on these crypto issues, but they carry a lot of weight

in a lot of different states, especially. So, you know, the animus against this agency is building. Yeah, and it's notable that now we're seeing Democratic candidates taking a pro-crypto stance as well. I think in the Maryland race, we're seeing that. So, yeah, look, it's maybe less of a partisan issue than it was. And, you know, I think even Democrats are realizing that Gensler is kind of be clowning himself in Washington. So in other SEC news, this is just the SEC podcast these days, but three plaintiffs representing the hedge fund industry.

So this is the alternative investment management association, the managed funds association, and the National Association of private fund managers. These are all heavy hitting groups representing the hedge fund industry. They have sued the SEC on the topic of this recent. dealer rule. And they've argued that the agency has exceeded its authority that is granted to it by Congress and acted in an arbitrary and capricious manner in pursuing this rule. So, you know, it's not just the crypto policy here where industries are mobilizing against this agency. Yeah, I think it really was an Overton window opening moment when Grayscale won their case against the SEC. It showed that they could be beaten and that they had made mistakes. And it looks like it's empowered other

groups to be more assertive relative to the SEC. All right. Well, in happier news, so we mentioned the BlackRock launch. This is just a big deal. I don't know how else to put it. So BlackRock getting in this game with Bitcoin first, they also have an Ethereum ETF application on file. And Larry Fink has long been talking about tokenizing other things, tokenizing real world things.

And this is the first at scale, really, institutional focused fund. So this is a token. money fund basically that they launched it will be available with securitize so you kind of on board through securitize but the asset itself resides on the ethereum blockchain just a big deal here yeah a cool ticker name biddle uh congrats to carlos and the team at securitize um they've been at it for a long long time it's great to see them winning and uh it's a big win for the public versus private blockchain concept, that debate's probably settled by now. But, you know, remember back in 2016, everyone was convinced this would be on private blockchains. It's just not,

this is happening on mainnet, you know? Yeah, it's happening on mainnet. I think all of these ideas that were on private blockchains had some degree of merit. I mean, they certainly raised a lot of capital, but a lot of these ideas are possible on public chains if you just have the right on an off ramp. They're also possible on. roll-ups. So I think we're going to live in a world where some of these L-2s are almost corporate-specific or use-case-specific. You've seen L-1 blockchins like Avalanche kind of move in that direction with their subnet structure. But, you know, this is an open race right now. So L-1s and L-2 is really pursuing this opportunity to launch private credit on blockchains. And none of these things are happening on

closed hyperledger, you know, private chains. Yeah. And this infrastructure is relevant today, we have portco's already signed up to use the BlackRock tokenized treasury product. So I think it's a pretty mementos occasion, frankly, maybe not quite on a par with the ETF, but, you know, BlackRock getting into tokenization of real world assets. I mean, that is huge. It's huge. And it's a total validation of what people thought would happen for years and years. So there was another money fund. that was announced in tokenized this week.

So Cignam, which is a Swiss bank, they have collaborated with Matter Labs. They've tokenized 50 million of a Fidelity International Fund, which is a money market fund as well. And they've brought that onto chain, onto a blockchain. This is an L2. So seeing different approaches here, but it's all moving in a positive direction.

Ultimately, these money funds will just compete with stable coins on a number of use cases. Yeah, and we've had Mitya Seimbach from Cignam on this show actually back in 2020. So it's great to see them thriving as well. Interesting development on the ETH ETH ETF front. So Fidelity has amended their spot ETH ETF application to give them the ability to stake ETH within the fund, assuming it's approved.

I believe other sponsors also followed suit after that. It's certainly more appetizing if there is staking within the product. A couple different ways to read this, I guess. We don't have any inside knowledge of why this happened. But, you know, there's two ways to think about it. One is just that objectively you would want the best customer experience and the best customer experience in a world where you're holding Ethereum is to accrue the yield associated with staking.

You're kind of being diluted if you don't. Another way to read this might be that some of these issuers are not very optimistic about the approval. And so if you know that it's going to get denied and you know you're going to have to fight, just put everything in the application that you actually want and go fight on everything. Yeah, I mean, I don't think either one of us is bullish on it. But as an institutional allocator, I'd be kind of hard pressed by spot ETH if I'm getting diluted to the benefit of everybody else that holds ETH outside of this ETP. No doubt, no doubt.

you would want, if you had a choice between two Ethereum ETFs and one of them was staking, one of them was not staking, you'd be picking the staking one as long as the taxes were clear. So this was a piece of news I'd missed this week. Japan's government pension fund announced Tuesday that it's requesting information on illiquid assets such as Bitcoin as part of their research into new investments for the fund. Well, they called them illiquidity assets. Bitcoin's liquid 24-7. I don't really know if that's maybe that's a lot.

in translation over there, but it's a liquid asset. Now, where would you send someone to do research on Bitcoin? So Japanese pension fund comes to you and says, hey, we're making an announcement. We want to study Bitcoin. Where would you point them? I don't know. What Bitcoin did? Yeah, what Bitcoin did would be good.

I don't know. Jameson Lops website. It's got a lot of good. Yeah. Lop. I don't know. It's not like just go read of book. Antinopolis books.

Antinoplas books. Yeah, go read the Antonoplas books. That guy back in the day, I think his last name was Franco. He wrote a great one. I thought it was called mastering Bitcoin, or is that the Antonoplas one? I liked the Popper book. Even the Popper became a hater. Digital Gold, yeah, that was a great one.

Digital Gold, I thought was a great book. Safedine's book's pretty good. I mean, he's turned out to be kind of a difficult personality, but I thought he had a couple of great chapters. there. Yeah, like there's abundant places. I mean, you could just go to, I think even JPM cell side covers Bitcoin now.

You just go to the cell side. I mean, if you really want to understand the day-to-day, though, you've got to put one of these Japanese pension people on Twitter. Yeah, they got to get on Discord, Telegram. I understand what's really going on in this industry. So in news that should surprise no one, Micro Strategy bought some more Bitcoin.

they bought 9,245, Bitcoin's be precise. Kind of a wild week price-wise, right? Because at the end of last week, we're kind of dipping. And then everyone was kind of seeing this micro-strategy convert and saying, well, they're going to be coming in with $500 to $600 million worth of net new buying, but then the market kind of tanked. And then these guys bought, the market continued to go down. They never get filled in a dynamic where they,

goes up right after. Did you ever notice that? Every time micro strategy buys goes down. It's tough. And I don't think it's because it's bad execution. Like I actually think they're T-wopping in and it seems like it's a very sophisticated back end. But it's just like the market goes down every time these guys buy.

And then, you know, later, of course, goes up. It is notable that GBDC outflows have been accelerating. I mean, they have been substantial. And it's not clear that it's all going into other. ETFs. Definitely not. Because we were seeing net outflows. GBTC has seen over $13 billion worth of outflows since this product was launched.

And some of this has been offset by the fact that Bitcoin's price is going up. But if you just look at it on a unit basis, Bitcoins, they've lost like 40% of their bitcoins here over the first three weeks. This is unprecedented. I think it's the biggest net outflow of any ETF this year. this year in any sector. So Grayscale CEO Michael Sondenshine was on CNBC this week and he said that over time, fees on GBT will be coming down.

This is a classic business school case study type of a situation here where you have a fee structure at 150 basis points. You have major league tax implications to a lot of people that hold it that makes them unlikely to get out of it. But then you have zero switching costs for anyone that's in an IRA. a tax-advantaged account where they can just pop over to bitwise for 20 bips. And you're just doing this calculus around, okay, there's a lot of variables here. The price of Bitcoin going up helps us.

If we have, if we lose all of the retirement accounts, we can still maintain it because we have this tax issue. We're locking people into this hotel California product. But at a certain level that flips and you just have to lower the fee and be competitive. I think this this baby GBT product spin-off thing where you get a little. kicker if this is approved by the SEC. We talked about that last week. That's a clever idea.

But at some level here, you just need to cut the fee. I mean, at this rate, the fund will be drained by July. I mean, the outflows are staggering. There's always going to be someone in this fund, though, because you're paying 150 basis points. If you're in Bitcoin at $400 and you bought it seven years ago, you're just not going to be able to take that tax at you still want the exposure what you really want is just them to lower the the fee yeah i mean it's kind of a race against time they're not going to harvest a lot of fees if the thing is practically empty not an enviable position to be in all right should we queue up the bad boy section oh yeah forgot about this let's rip it Bad boys, bad boys, what you're going to do?

What you're going to do when they come for you? All right, so first bad boy up is our boy, Sam Bankman-Fried, actually. So a little bit of news this week. So he had filed through his attorneys a bunch of paperwork with the court ahead of his sentencing. I believe he's being sentenced on the 28th of this month. And he asserted that there was zero harm because everyone's going to get a 100% recovery from FTX. But you have to remember that's on a dollar basis.

So you're not getting 100% of what you put in Bitcoin-wise or Solana-wise. You're getting that massive haircut. Markets gone up and creditors won't appreciate really any of that. So John Ray gets in the mix. I love this. So John Ray comes in. He submits a brief to the sentencing judge. He didn't have to do this, but he said SBF's claims of zero harm, they're, quote, reckless.

They're, quote, false. He said when he took over as the CEO of FTX, FTCS was publicly asserting that they had about 100,000 Bitcoins. Turns out they had 105 bitcoins when John Ray walked in the door. So sentencing in this case is like I said next week, but John Ray just coming in with the hammer punch. Yeah, I mean, there was harm. I mean, how many businesses went out of business because of FDX? How many folks went bust because of it? You know, there was very material harm. I do occasionally feel some sympathy for Sam, but I mean, look, you. Yeah, he ruined thousands of people's lives.

That's just a fact. All right. So in other bad boy news, Kyle Davies, our friend Kyle Davies, just a serial fraudster from Three Arrow's Capital, just one of the worst people to ever walk into the crypto industry. He went on Laura Shin's podcast this week. And I didn't really know how to feel about this. In general, I think people that have Kyle Davies on their podcast shouldn't. But then again, a lot of people that have Kyle Davies on their podcast are not journalists. And Laura Shin is a very good journalist.

I thought she equipped herself quite well. Yeah, she held his feet to the fire. Of course, the notable part of the episode for me was when she asked him if, what did she ask him? Did he want to apologize or did he have any remorse for, you know, defrauding people to the tune of billions of dollars? And he says no, and then he went on a weird tangent about me. Yeah, oh yeah. He said this guy, Nick Carter, you know, he won't even debate me.

I won't debate him. I won't debate him. These are the things that he's thinking about as he's in exile on the run from justice from so many different countries. He's just saying, man, if only Nick Carter would debate me and I can win that debate, I'll be back. First of all, he doesn't know that I'm actually a pretty good debater. I was the captain of the debate team in high school. You're clean as clock. And yeah, I mean, that's like, you know, that's one of my skills.

And second of all, there's nothing to debate. I mean, what's there to, what could there possibly be to debate? Like, this is between the DOJ and him. Like, I'm not part of that. No. First of all, I don't even know what I have to do with this situation. It was you that, you know, came out with big rant about three arrows early on, which was proven totally correct with time.

I said they lied to their letters. You said, yeah, at the time back in 22, if you remember, the nervous like, oh, they just made bad trades. They blew up. And you said, no, they were lying. They were committing fraud. We know that's true now. Somehow these guys are still floating around doing like weird little projects and schemes and things like that.

But I mean, I would say we were vindicated and what we said. But it wasn't even me. I was just long for the ride. Well, you're the face of the franchise here. I mean, you've got a lot more Twitter followers. So I think he thinks that if he can have that debate with you and prove, hey, did you lie to your lenders, Kyle? Because all of them are saying you did, and they all have their seats and they're all cooperating with the federal government. So there's that.

Did you go to project treasuries and try to get them to put their capital in the 11th hour onto your platform? Now a bunch of them, including Brian Pellegrino at Ler Zero, is coming. on saying you did that. So that's out there. People are cooperating with the prosecutors, by the way. Third, did you start a deribit SPV and solicit on very strange terms that were to your advantage and not the SPV holders from U.S. investors? Yes. Warbler Capital soliciting from U.S. investors. I mean, the list goes on and on. So these guys are fraudsters. They're on the run as fugitives for a reason. Yeah. I mean, like you don't have the moral high ground here. You're like, Literally Singapore is trying to arrest this guy.

Suzu already spent time in prison in Singapore. I don't even understand what's motivation is to try and do some comeback to her. It reminds me of SBF syndrome where SBF thought if he could win the narrative on Twitter, then he would win in real life. It's not the way it works. It's not a video game. At a certain point, you're so far in the hole. just type out the right sequence of letters and bail yourself out like you are accountable for what

you did he called himself debates can change that he called himself he was defending what he took this fat payday this monthly retainer from the coin flex estate uh and he was saying well if i'm the lloyd blank fine of crypto that's how i used to be a billionaire that's my hourly rate just Lloyd blank find somewhere is just hearing that his name was used like that he's just saying oh man not that not Kyle Davis keep my name out of your mouth I almost feel for Mark Lamb because Suu and Kyle just glommed onto him and just siphon the estate of coin flex and then Mark Lam opposed to have had to don't feel bad for Mark. Yeah he's off doing something else no I don't feel I don't feel I don't feel bad for him no I don't know man I don't understand how

these people are still operating everybody else has been apprehended and they're out here just like still lurking on crypto Twitter. I don't think we can fully heal as an industry until, you know, we have a sentencing on SBF and then we just got to figure out this 3AC guy. I mean, there's very few things that are less overhanging. It's kind of the last one. That is the last one. Let's get it.

Let's retire the bad boys segment, you know? I mean, I do like the music, though. It is. Yeah, it is good music. All right. So we'll give a couple plugs here. So you and I are doing a new webinar with blockchain co-investors called BlockTalk on April 3rd. I believe it runs kind of all day.

So it's 11 a.m. to 11 p.m. There's multiple sections. So we're going to participate in that. We'll put a link in our newsletter. I recommend people check that out. I think we'll give some hot takes on that one. Yeah. And then two pieces of content to look at from Bitwise.

Of course, one of the Bitcoin ETF sponsors, they have a piece called 12 real world stories of how millions of people are using crypto services today. And then Brian Armstrong, Coinbase CEO, what is crypto good for anyway? So we'll put these in the show notes. Love it. All right. So I do think that's it for the week.

Who knows what the next 48 hours hold, though. I mean, we release these podcasts on Friday. We record them on Thursday generally. And this week, there's been five or six big stories every single day. So I do have, I'm doing something very funny and very steep. which will be announced next week probably Matt knows what it is yeah you see you'll announce that next week that's coming out next week I think it's going to be very very entertaining but it's also very stupid okay so stay tuned for that stay it's not there will be abundant amounts of

content you're not launching a meme coin so rest assured no meme coins there's there will be no tokens involved all right so stay tuned for that everybody have a safe and healthy weekend and we will see you on Monday.