On The Brink with Castle Island - Weekly Roundup 04/28/23 (First Republic in trouble, Hong Kong embraces crypto, did crypto cause the banking crisis?) (EP.420)

Episode Date: April 28, 2023

Matt and Nic return for another week of news and deals. In this episode:  What's the deal with south shore bar pie? We review Consensus in Austin Nic's 2022 Coin Center dinner incident Nic's gas siphoning incident First Republic appears heading for collapse Why was First Republic given time to save itself but not Signature? Block partners with Yellowcard for cross-border African payments Open Exchange's purported investors deny investing in the business Coinbase is setting up operations in Bermuda Coinbase is suing the SEC for clarity Hong Kong embraces banking for crypto firms NYDFS Superintendent Harris denies that crypto caused the Signature collapse The Biden admin is backpedaling on whether crypto contributed to the banking crisis House Republicans probe financial regulators for info on de-banking of crypto The FBI has searched the home of FTX's Ryan Salame We reminisce on FTX' Crypto Bahamas conference Why is flare gas mining better than the alternative? Nic's music royalties situation Nic resolves his differences with the Bitcoin 2023 conference Content mentioned:  The Hong Kong Monetary Authority, Embracing new opportunities and accessing banking services Letter from Reps Hill, Huizenga, and McHenry to key financial regulators TVP, The Emerging Bitcoin-Native Venture Capital Landscape Sponsor notes:  Coin Metrics presents State of the Network Foundations: Blockchain Addresses: This week's State of the Network kicked off the new Foundations series, which looks to present various technical aspects of blockchain technology in an approachable way. In the first report, Coin Metrics breaks down the concept of an 'address,' the fundamental unit of identity in the world of crypto.

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 Concentive 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 a Bitcoin. Bitcoin.

Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. In this episode, is brought to you by Coin Metrics. And here is the Metrics Minute. This week we're talking about Coin Metrics' new foundation series in their state of the network. In this report, they break down the concept of an address, the fundamental unit of identity in the world of crypto. So taking an Ethereum address, it's a unique sequence of 20 bytes, which means there's two to the power of 100.

160 possible addresses. Far larger the number of stars than the universe. There are 130 million ETH addresses. 100 million of them are user-controlled and 30 million are smart contracts. On ETH you have externally owned accounts and smart contracts. On Bitcoin, there's a few more types. The transparent nature of these addresses allows you to audit the holdings of the entire ecosystem. So if you look at ETH addresses by size, you can see that 83% of ETH's supply is held in wallets with 100

ETH or more. For more on that, check out their foundation series in the state of the network newsletter. That's your metrics minute. So we got a lot of positive feedback last week on Bailey's heating and air. A lot of people getting their air conditioning done this week. And a lot of small businesses reached out around sponsorship. So it was kind of a crazy inbound week. There was one I really, we should consider.

It's called the Lindwood Cafe in Randolph, Massachusetts. it's best bar pie, best social bar pie in the world. Teddy Fursaro at Bitwise is always talking about how good Connecticut pizza is. The Linwood Cafe is going to start taking Bitcoin payments and just phenomenal social bar pie. So I think we should consider them. Well, hang on a second, Matt. Are you doing more ads for free on this show? This is a free.

No, I'm just saying we should think about maybe doing some small business ads and we're getting a lot of inbound. The Linwood Cafe just wanted to know. what the quote was. I said, I don't know, we don't really have a quote page, but I have had that pizza. It's phenomenal pizza. It's literally the best pizza I've ever had in my entire life at the Linwood Cafe in Randolph. Well, I mean, that may be the case, Matt, but we can't just do the ads for them without them signing on as sponsors. So it's true. No more saying nice things about random small businesses. All right. We're going to be hostile to small businesses henceforth. So actually, I do have a comment on that. Why would you call it?

pizza pie. I'm against that. Pizas are pizzas and pies are pies. Pies are sweet. I don't understand the nature of this. Has everyone who listens to this podcast had Salshore Bar Pie? It's a it's a type of pizza that as far as I can tell is only in Massachusetts. And I don't understand why. When I lived in North Carolina, they just couldn't get pizza right down there. The entire state of North Carolina, you can't find a single good pizza in the entire state. And I thought it would be a very good idea to bring Salshore bar pie to North Carolina. I don't know. I've never even heard of this.

So is there's a subcategory of pizza. It's a pan pizza. It's a bar pie. So it's a pan pizza. It has virtually no crust. So the cheese goes almost over the sides. And you cook it in like a 10 inch little dish. And it's a cheddar cheese type of base.

It's cheddar with mozzarella. Delicious. I don't know. Town Spahn, Stodon. Linwood Cafe and Randolph, The Venus, Poopsies. There's some very, very good establishments. This sounds like total gibberish to me. I don't know what any of these words mean.

Longtime listeners of the pod will know what I'm talking about. We have a lot of South Shore Bar Pie fans of the pod. Brink Nation, chime in. I don't know what this is, but is it good? It's in a different category of pizza. I wouldn't even compare it to like these New Haven pizzas, which are also very good, but those are in a totally different phylum of pizza.

So today I was having lunch with a dear friend, and he asked her for an order of fries. And I was like, well, you can just have my fries. And I commented that I didn't eat fries because of the seed oils. And this waitress looked at me like I had a third head. Really? The seed oil thing. And I thought the seed oil discourse was mainstreamed.

but she had not heard of it. She didn't know about the seed oils? Wow. I know. So I forgot to bring my seed oil sensitivity card with me to the restaurant. Normally I have those on me. That's good. There's a little explanation.

Well, we're taping this. I'm back in Boston, but we just came off two days at consensus. Quite a time down there. I would say the atmosphere here was more muted than last year. It was. A little more restrained. which is probably for the best. The Coin Center folks put on an awesome dinner last night.

I had a lot of fun there. So that is always good. The Coin Center dinner is one of my favorites. Should I even tell the story about what happened last year? I feel like I'm still in trouble for that. Yeah, you might as well. Yeah, I think that's a good story. So I had to atone for my behavior last year.

All right. So I don't know if I'm meant to say this, But last year, I didn't, I wasn't planning on going to the Coin Center annual dinner, which is always great. And my friend Alex Gladstein, I don't mean to throw you under the bus, Alex, but this is what happened. He told me, well, Nick, you can just show up because one of my guests isn't coming. And you can just have his ticket. And that guest happened to be the chess grandmaster, Gary Kasparov. and so I was like, well, are you sure?

Like, I think they know who Gary Kasparov is. I can't just show up and tell him I'm Gary Kasparov. He's like, no, no, no, it's not a problem. You can just show up because he's not coming. And so I'm like, you know what? I want to go to the dinner and I'm just going to do it. So I showed up at the registration table. I'm like, hello, yes.

Yeah, last name's Kasparov. Gareth, some people call me Gary. And they're like, yep, yep, you know what? Here's your wristband. Go right in. And then I ran into one of the coin center, employees, Antony, in fact. And she knew that I was not Gary Kasparov. And she was very, very upset.

In fact, there's actually a photo taken by the event photographer of her berating me. I mean, I probably deserved it. Now, did Gary Kasparov show up? No, no, no, no, he didn't. He just couldn't make it. So it's not like I wrongly took his seat or anything. But I did get in no small amount of trouble for that. So we atoned.

We bought a table this year to make up for it. Well, that's right. So we felt bad, you know, given the Kasparov incident. And we did buy a table. So it was good. There was a magic show. Yeah. So I kind of have a bone to pick about this.

So every year there's a great speaker. It's been Wences in the past. Hester Purse did one. Brian Quintens did one. It's a very serious thing. And this year there was a magic show. The magic show was, all right. So I didn't understand the rope part.

The rope part didn't hit. The ID card and the block of ice part was actually pretty compelling to me, old man. I was going to ask you, how does that work? So this guy did a magic trick where he took a business card from one side. of the room and all of a sudden it was in a block of ice on the other side of the room. How did that happen? I think it's just magic, Matt. I don't think we can analyze this through the lens of science and empiricism.

I think we just have to embrace the mysticism of it and accept that it was in fact magic. Well, I don't know. Was there a double entendre with this? Like you guys are all a joke, so we're going to do a magic show for you this year, post-FTCs? I think that was it. Yeah. I couldn't really tell what the connection was between crypto policy and magic. Yeah, I didn't really get that.

But maybe we'll go back to like Hester Perth next year. I did meet the magician later. And he did a bunch of card tricks that I was actually very impressed by. Hats off to the magician. Well, good job to CoinCenter. It's a cause well worth supporting. So encourage everyone to check out CoinCenter and everything they're working on in the industry. now more than ever, it's important to support these groups that are fighting the good fight in D.C.

Yeah, they're suing, I think, the Treasury maybe in two different lawsuits, I believe. The latest one is about tornado cash. Yeah, so they've really found their teeth. And actually, it's cool to see the Blockchain Association also sponsored the after party. So there's collaboration among our sort of policy advocacy groups here. we work with all the major ones and it's more needed than ever. If you listen to this podcast, you know it certainly is. All right.

And so before we get to kind of the deals and the crypto stories, you told me something yesterday that just blew my mind. Your gas was siphoned out of your car. So last week on the podcast we talked about there's a gas shortage in Miami. You actually had all of the gas stolen out of your vehicle. what type of third world country are we living in? So we do, we still have a gas shortage in Miami for some reason. They actually pass some sort of emergency resolution where we can use low grade gas,

like worse, more polluting smogier gas. So if Miami is cloaked in a veil of smog, that's what happened. But we have run out of gas. I don't understand why. No one's talking about this. the mainstream press isn't talking about it. And now I've been personally affected even more than I was because someone stole the gas out of my car.

So how does this play out? So you just got up in the morning, went to your car, turned it on, and it was just empty? And I was already concerned because I knew there wasn't any gas anywhere. So I was already trying to figure out if I could scout out gas stations. Then it turns out there's no gas in my car. And I had to drive somewhere that day. And someone had siphoned it.

Basically, it's one of those, the caps on the tank, it's the one in the ones you can just pop open. So someone had stolen the gas out of my car in my garage. And then I was left with this quandary like, what am I going to order gas on Amazon? Like how do I get the car to the gas station? Do I siphon it from the next guy? Like in sort of like ongoing. Domino effect.

Yeah. Like theft to merry go around. But, you know, I just couldn't morally justify stealing gas from my neighbor. So I just had to deal with it. Wow. It's quite an operation to siphon gas. I don't know. It's like being back in the 70s, like gas lines, fistfice at gas stations, I assume. None of it is good. We're going back and we're progressing here. It's not good. I'm very sorry to hear that. What's the prospects of getting more gas down there?

I was able to find, I found an app that tells you when gas stations have gas. And I got up at 5 a.m. to get gas. I had an alert. Oh my gosh. I had to put alerts on for gas. Get up at 5 a.m. There's already a line. People see the gas truck come in. There's a line like a quarter of a mile long to get into the gas station.

It's like I don't want to know what's going on. And no one knows about this outside of Miami. I've just like. Yeah, no. I had no idea that was all going on. Glad to hear your back in action with some gas. Yeah, I'm gassed up now. We're good for at least another week.

So, and then I've got to do the whole thing all over again. Well, I thought we'd be talking about First Republic being out of business this week. And maybe that'll happen by the time this podcast comes out. But it's pretty staggering to me that that company is still not being taken over by the FDIC. I mean, this one is really tilting me like crazy because First Republic, we knew they were in trouble in mid-March. When the banking crisis started, their metrics, you look at their, um, held to, maturity losses in their portfolio, you look at the share of uninsured deposits, they're right there in terms of looking as troubled as SVB did or as Silvergate did. They were actually in a worse

position comparatively than signature, I contend, and yet they were given plenty of time to find multiple liquidity injections. There's that $30 billion liquidity injection. They had full access to all the various lending facilities, the emergency facility created by the Fed. Meanwhile, signature was just taken out on a Sunday night with no notice, no real time to find liquidity and save themselves. And the disparate treatment there raises a ton of questions, I think. And I can't find another answer than signature being politically targeted because they covered crypto. I mean, that's just what I keep coming back to. Well, we know that First Republic was certainly no fan of crypto.

When we were exploring other bank options post SVB, we attempted to onboard with First Republic, and they said, don't even bother. You guys are blockchain-focused venture fund, take a hike. They would not even onboard us as a customer. We were a Fiat in Fiat out business, and they just wouldn't take a look at us. They wouldn't even, they didn't want our deposit. So yeah, I'm not shedding a tear for First Republic. No, no.

And the thing just bothers me so much. They were given so much time, so much flexibility, so much leeway, and they're still apparently failing. And signature was just immediately cut down. So I don't know. It really upsets me, frankly. All right. Well, let's hop into some deals of the week here.

First one up is a company called Theta Nuts. This is a weird name. Decentralized finance platform. they raise $17 million from polychain, hyperchain, and Magnus Capital. Sounds like more like a granola bar brand than, you know, defy company, but I'll accept it. Super strange name, guys. Next up we have Dflow, decentralized finance protocol. They raise $5.5 million from Framework, Coinbase Circle, Wintermute, Cumberland, Spartan, and Z Prime.

Next, we have Credora. They are a provider of institutional credit infrastructure. They raise $6 million from S&P Global and Coinbase. Then we have CADA Labs. They're a blockchain infrastructure startup. There is $4.2 million from Spartan Group, Robot Ventures, Maven 11, Alchemy, Hashkey, and Circle. Not to be confused with Cat Labs,

which is a compliance software company in our portfolio. That's confusing. Yeah, that's only one letter different. Yeah, that's tough. All right. The next one is Giddy. This is a crypto wallet company. They raised 6.9 million from Pelion, Peak Capital, and Clark Capital. Then we have Zodia, a crypto custodian. There is 36 million from SBI Holding, Standard Chartered, and others. Next one is Tiny Tap. This is a crypto edtech platform that raised 8.5 million from Sequoia, China, Anamoka, and others. And lastly, we have Ambos, a lightning network focus company. There is 4 million from VATTCHA.

Baller, Stillmark, Fulger Ventures, and Draper Associates. Some good deals this week. Plenty of news as well. Where shall we begin? Block and Yellow Card announced a partnership to facilitate cross-border payments on blockchain rails between 16 African countries. It was a pretty awesome partnership. So we're investors in Yellow Card.

Chris Maurice has done a great job with that business over there. CNBC also had a profile on Chris. He was hospitalized with malaria. Africa. Talk about this scary situation. Yeah, quite the, quite the story the McKenzie at CNBC wrote. That is harrowing, frankly, what was reported in this story, the malaria situation. Well, he's better now. So congrats to the team over at Yellow Card and Block. Square is really up to some awesome stuff over there. So excited about everything they're building. Yeah, I mean, you talk about product market fit, you know, cross-border payments in Africa where the

correspondent banks, you know, if you want to transact between two African banks, like ultimately it's many hops to get back to the central hub in New York and then many hops to get back to the periphery, it just makes all the sense in the world to go direct and use crypto to settle those transactions, not to mention inflationary sovereign currencies. So per capita, West Africa, I think is some of the highest crypto penetration in the world. So another story that we didn't get a chance to talk about last week, which is such a puzzling story. So this open exchange, which is the fraudster exchange, I guess.

So it's the three arrows guys plus the coin flex guys. So it's the low integrity exchange. They announced their round of financing, which everyone was kind of fading. No one thought that Kyle and Suu could raise capital again. And I'm confused if they did because they announced this round of financing that included DRW, and nascent, and I believe was it SIG, I believe it was Susquehanna. Turns out, as soon as they came out with this announcement that, hey, we raised this money from these funds, all three of them came out and said, we didn't do that round.

We're not investors there. I've never seen anything like that. Have you ever seen a company announce a round of financing with the venture backers? And then the venture backers immediately come on and said, we didn't do that. It's completely absurd. every chapter of this saga is absurd. Not to mention that the founders apparently have been charged with contempt of court in the BVI

for not cooperating with the liquidation process, for God's sakes. And I think what happened was those named firms may have done an earlier round for coin flex and may have still maybe have had some exposure to the flex token, which was rolled into the open. Open exchange in some sort of really odd transaction. And then Open it was trying to represent that they had invested in this $25 million round. But they just didn't.

They didn't invest. Not only that, they also didn't consent to their name or likeness or anything being used to promote open exchange. I mean, and it's good that they came out quickly and denied this because, you know, as we've said, there's a view by a lot of funds that they will never do business with anyone. that invests in something that Kyle or Suzu is affiliated with. So you noticed how quickly these funds came out and immediately just said, no, we didn't do that. That's like giving someone the Scarlet Letter being associated with those fraudsters.

I just want to know why they thought they would get away with this announcement. Or did they really think that these firms would just be like, oh, yeah, I guess we invested, you know? Well, I think my theory is that they're going, they were going after some other investors and they wanted to represent that they had DRW on board and a couple of these names and hopefully they could parlay some of these other, you know, family office groups into participating if they saw the logos. That didn't really work out so well. I'm really wondering now whether there was any primary injection of capital into this new

entity whatsoever. I doubt it. Whether 25 million or anything at all. I'd be shocked if there was anything there. All right. So in other news, there's a bunch of Coinbase news. So Coinbase last week, they announced that they're setting up operations in Bermuda. So this happened after we recorded the podcast. So U.S. continues to drag its feet on comprehensive crypto market structure regulation. Coinbase announces this Bermuda thing. This week, Gemini announced that they're also going to launch an exchange outside the U.S. And then Coinbase jumped in this week, and they have sued the SEC asking the court to compel the agency to respond to a rulemaking petition that Coinbase filed last year.

So the rulemaking position was basically so they wanted clarity on the agencies, the SEC's posture on whether or not crypto assets are securities versus commodities. And as we kind of highlighted last week, SEC Chairman Gary Gensler refused to even answer a direct question from Financial Services Chair Patrick McHenry on whether or not Ethereum is a security. So, you know, you're just dealing with a bad faith regulator right now. It'll be interesting to see what the court has to say about Coinbase's lawsuit. So we're going to talk about a couple of these new alternative jurisdictions where crypto firms are migrating, given their problems at home. Bermuda is when I keep hearing time and again as a potential domicile. Not to be confused with the Bahamas, Bermuda actually seems like a relatively credible offshore destination for crypto firms. They don't just take all comers.

They do exercise a very amount of discretion in terms of who can register there. And I think we'll be hearing their name a lot more as a place where, you know, former U.S. firms are setting up shot or at least setting up one of their offshore entities. It's too bad because I, you know, that's not ideal. Ideally, you'd want this to start happening in the United States. But, you know, you're having comprehensive legislation in the EU, in the form of MICA, which seems to be very reasonable, very clear guidance. So the European Union has already jumped in with a comprehensive framework.

You have the UK, the FCA. came out this week and said that they want to work together and create a framework, create some legislation. So that was executive director, Sarah Pritchard from the FCA this week at a conference in London. And then you have Hong Kong. Did you see this? This Hong Kong announcement that not only are they open for business, but the banks are just explicitly allowed to service crypto customers, it looks like. Yeah, this announcement from the Hong Kong Monetary Authority just kind of took my breath away this morning. I mean, it was a mixture of kind of just being impressed at their posture and shame for the U.S. fumbling the ball so badly here and letting Hong Kong, effectively part of China

politically, you know, so clearly differentiate themselves from the U.S. So the statement says in recent months we've actively discussed with banks and reminded them there is no legal and regulatory requirement prohibiting banks in Hong Kong from providing banking services to virtual assets related entities. So this is about a, and there's a whole statement, this is about as strong as an endorsement as you'll see from any regulator, encouraging their banks to service crypto firms. And someone in one of my chats joked that this should be called Operation Breathe Easy as a kind of counterpart to choke point. I mean, it's just the diametric opposite of U.S. policy

where there is a strong discouragement for banks interfacing with crypto-focused firms at all. Yeah, it's really bad. I mean, you have every jurisdiction besides the United States doing these comprehensive frameworks right now. And I guess, to be fair, it's not like people in the U.S. aren't working on comprehensive frameworks. The, you know, Patrick McKenry and Emmer and the House Republicans do have a proposal here that does make a good deal of sense. The Lemmas Gillibrand bill is also an example of a comprehensive framework attempt that, you know, could have some legs at some point. But so there are people working on it in the United States, but unfortunately it's not the majority. And you need to get this passed in the Senate as well as the issue.

And right now, the Elizabeth Warren wing of the Senate appears to be running the country's financial services prerogative. I mean, and it really, really rankles me because let's say this move from China is Hong Kong is sincere. Then crypto firms will organically flock to them and Hong Kong will become a key hub of crypto innovation, basically eliminating or stripping away some of the U.S.'s advantage here, which is very strong. is still the global center of the crypto market, no matter how you slice it, no matter what the metric is. So, and then let's say it's not sincere. And, you know, it's some sort of subterfuge or an attempt to lure Western companies away and get them under China's ambit for whatever purpose. then what Western American policy makers have achieved

is they've just pushed American firms into the clutches of the CCP. I mean, how could that be, how could that possibly be a policy objective in this country? What does that achieve? No one should be in favor of that. If there's one thing that unites the political parties in this country, it's a mistrust of China,

and yet their current strategy directly plays into the hands of China. I don't understand it for the life of me. There's another weird thing going on with the banking stuff, which is a number of bank regulators are now explicitly denying that the crypto market had anything to do with the collapses of the banks recently in the U.S. So Adrian Harris went in front of Congress recently, you know, NYDFS Superintendent Harris, and said, actually, you know, signature, that closure had not. nothing to do with crypto. Wasn't the crypto market's fault. The crypto depositors weren't any more

flighty than any other category of depositors. And then at the same time, you have folks like Elizabeth Warren and Sherrod Brown blaming it on crypto. Gary Gensler specifically said that it was the fault of the crypto depositors. So you have a weird rift emerging in Washington within the administration where some people are saying the bank collapses, this is a crypto thing. They're using that to justify the anti-crypto agenda, basically saying it's imperiling banks. Others are now saying it wasn't anything to do with crypto,

and the banks just failed due to other exogenous conditions. I mean, I have a theory. I think the FDIC knows that they're screwed here. They broke the law in these crackdowns. And so I think we're going to find out that some of the dealings with Silvergate and signature were unlawful. And I think we're going to start to get into that pretty quick.

So there was actually a letter sent to the Honorable Martin Gruenberg, the chairman of the FDIC, and it was from Patrick McHenry, French Hill, who's the chairman of the subcommittee of digital assets in the House, and Bill Hizenga, who's the chairman of the subcommittee on oversight and investigations. So they sent this letter basically wanting just a bunch more details on Operation chokepoint 2.0, a bunch of records. So we'll see what comes out of this. They can obviously compel them with subpoena power here. It'll be interesting to see what actually gets produced. What was actually put in writing, what was delivered on the phone. I guess that's the question.

Yeah, I agree. I think right now the agencies that spearheaded choke point 2.0 have realized that they probably overstuffed. And they're now trying to minimize. the scope of their actions. Also, with First Republic potentially now failing, they don't want the blame for kicking off a banking crisis that may have begun with their anti-crypto actions. So, I mean, this is what I wrote in my pirate wires piece. The second one, did they start a bank crisis in their attempts to destroy the crypto industry? I think the answer is yes. I mean, I don't think that was the only factor. Rapidly rising interest rates was another. But They certainly fragileized the crypto banks.

And of course, I think their anti-crypto agenda was part of the cause of the failure there. Never a dull moment. All right. So in other news, so we've got some FTX news, it's been pretty light. We haven't done a bad boys section in a while. Maybe there'll be some news in the coming weeks on some of the bad boys associated with FTX. But it looks like the debtors. So John Ray and the debtors have reached an agreement in principle to sell Ledger X,

which is the derivatives platform. Looks like they want to sell it to an affiliate of the Miami International Holdings. So the MyX Group looks like it's a $50 million deal still needs to be approved by the bankruptcy estate. But some stuff's getting sold over there. So they're starting the process of selling off the assets. So just breaking, as we were recording, New York Times article, New York Times reports that the FBI has searched the home of Ryan Salami, formerly of FTX. As far as I understand, Salami hasn't actually faced any charges yet, even though he was at the center of Sam's sort of campaign finance ambitions,

which Sam now faces charges around campaign finance. You have to expect there will be kind of another shoe to drop here. I would think so. I mean, I think they're going to be going after a lot of people that were on that executive team and on the board of directors of that company. It would seem very logical. I mean, there's a lot of people. that did deals with FTX that didn't necessarily deal directly with Sam, but that felt like

they were defrauded by people in his orbit as well. Haven't heard a ton about Ryan, and it'll be interesting to see. This is clearly a campaign finance issue. There's a lot of money put towards Republican causes out of Ryan's pocket, it looks like, and where did that money come from? I think we probably know the answer. So what I was thinking about this week was one year ago, this one year ago, this week was the FTX Crypto Bahamas conference. Remember that one? Thank God. Thank God we didn't go to that one,

huh? I mean, we were never in the sort of like inner circle of, you know, FtX sycophants and hangers on, mainly because we never invested. And I hated Sam, as I think I've made that very clear over the years. So I'm just feeling especially grateful that I didn't go to that conference. Tony Blair and Bill Clinton's, at that conference. Yeah, they, yeah, they did a really good job at that conference. You know, there were JV funds being announced around that time. There's that Lightspeed JV fund and gaming. There's all sorts of stuff that you look back now and it feels like that was 10 years ago. A lot of fund managers raised LP or GP from FTX. Not all that has really been reckoned with, frankly. I mean, a lot of people were, I'm not going to say implicated, but they benefited from

Sam's Largesse and a lot of those folks just pretend like nothing happened, which is insane to me. Yeah, it's, you were, you guys were complicit, so might want to re-evaluate. Yeah, I mean, you know, look, not, I can't expect all these people to have known that, uh, you know, there was a fraud going on behind the scenes, but it was clear that something, you know, not everything was right. You know, something was clearly a miss there. Well, I think there, you know, attending the conference is fine. Like plenty of people attended that conference and I don't fault anyone for going to the conference.

A trip to the Bahamas. I've never been, but heard it's pretty nice down there. I think it's really the people that got very deep in the inner circle that should have been doing diligence with respect to these joint ventures that really deserve a lot of scrutiny. That's fair. Yeah. I mean, if you were directly raising from these people or bringing Sam on as a GP and your fund, by the way.

That is a real thing. There are a lot of pitch decks that just had Sam, Sam, Sam on every page. These people are still doing business in crypto today. I don't know how the hell that's possible. Excuse my language. Just ugly pitchdeck slides too with that Chiapet hair. Just get a comb. Another bits and bobs here, the good folks at Trammell Venture Partners released a report on trends in the Bitcoin venture capital. ecosystem called Building for the Future. Definitely recommend you check this out. A lot of coverage of crypto VC, but their thesis is that actually Bitcoin VC is outstripping growth pace. Bitcoin VC is outstripping the pace of growth of crypto VC. So we'll put that in the show notes for you. Did you see that World Economic Forum video that highlighted Crusoe energy system and how

their Bitcoin mining operation using flare natural gas is pro-social? Yeah, I mean, well, a lot of crypto people don't like the WEF, but I'll give them credit for this one. What people don't understand about flaring of natural gas at the oil fields is that it's not a full combustion process when it's just happening generically. And methane is a much more potent greenhouse gas than carbon dioxide. which is the byproduct of combusting methane. So you want to combust it as totally as possible. You want a complete burn, basically.

But if you read any of the academia around this stuff, you see that it's often windy out there, believe it or not, in West Texas and in Wyoming, right? So the flare combustion is not complete and you end up with a mix of venting and flaring, right? That's what you get. That releases tons of methane. It's a huge byproduct of the petrochemical industry, and it contributes to tons of emissions.

So if you have an operator like Crusoe come in, capture all the gas, combust it completely, and potentially even scrub some of the other pollutants, that is a far about better outcome for everyone, not to mention that they're able to monetize that and actually do something with it. So it is a total no-brainer. people that are against flare gas mining just haven't looked at the data. It's just as simple as that. There is really no case against it. The only case against it I've seen is people saying, well, we shouldn't have oil extraction at all. I can tell you someone that's lived for the last week without gasoline, that's a terrible world. Okay. Tough world. You need it. Plains, there's no way to have electric

planes right now. You still need planes. Many cars still need gasoline. It sucks and I'll be able to drive of anywhere speaking from experience. It's nice to drive to the beach. Okay? It is. It is. So as long as we have oil extraction, there will be flaring and venting. As long as that's the case, we will need operators like Crusoe to take care of that.

So a very good job there by the WEF and congrats to Crusoe for the spotlight. We didn't talk about this at the outset. What did you think about Alex Thorne's attire to this business formal event last night at CoinCenter? He was wearing a Jurassic Park t-shirt. I thought he stole the show. So I'm all for outlandish outfits. You know, I fully support that. However, this was, I think cocktail attire was in the description.

There was, like, people were wearing suits. There were some, like, jeans and, like, jackets. Yeah. So Alex was kind of a bit of a maverick by wearing an admittedly very cool Jurassic Park t-shirt to the gala. I thought he wore it well. I just don't know if that is allowed at a kind of a black tie. I mean, Eric Voorhees was there wearing a tuxedo and a bow tie. He looked very sharp.

Yeah, he looked very sharp. He was really raising the bar for everyone. But it was, I'll give Alex credit. It was a great t-shirt. I like it. I feel like if you have the confidence, you can pull it off and he clearly has the confidence. So check out the Galaxy Brands podcast. That's another one of my favorite pods.

It's a top three favorite podcast of mine. They have this section on macro with Bimnetta Bibi, and I just get a kick out of it every week because they say the same thing to each other. He, like, thanks him for coming on. And it's like 20 seconds of the exact same thing every week. It's like, thanks for having me out. Well, I mean, we say pretty much the same thing on this show every week, too.

We do. Yeah. Just 15C3-3-3. Yeah. Genslers got it all wrong. We say the same thing a lot. So that is the only crypto podcast that I'm aware of that has wrapped intros. It's sensational.

And Alex makes all the beats, by the way, for those raps. I didn't know that he, until a couple of years ago that he was a rapper and I was at some conference with him and we're like in an Uber with a few Fidelity people and he just started freestyle rapping and it was breathtaking. Alex is a great rapper. Really? He has a lot of musical talent. Who knew? He's actually told me that we should do a song together. You know, people don't know this, but I play the keyboard.

So I'm actually, I'm a professional artist. I earn royalties for my song, singular. I have one song. And I get a check every month for like half a cent based on the lessons. Oh, do you really? Is it, did you do a music NFT with that thing? Well, I mean, it's just a song. and I think there's an NFT version with Grammatic,

who's actually a real artist and producer, who I really like. Maybe we'll put the link in the show notes. It's a good song. People don't know this about, they don't know this. I mean, officially, I mean, the whole, there's like a registry that you sign up for as a musician and your royalties go through that.

It's a very web sort of 2.0 type experience. Yeah, it should be reimagined. Yeah, there's definitely, I think I've seen about 30 pitches for, you know, music royalties using crypto rails. But yeah, the system works, you know. Please stream my song on Spotify for every million streams. I think I get, you know, about a dollar. So nice.

All right. And we'll put it all. We'll reinvest it all into the content apparatus. Actually, speaking of that, I guess we'll talk about this more in the coming weeks. But we're going to move this to video at some point. So the weekly roundup, We're going to put this on YouTube. This is sort of a controversial topic within the podcast partnership.

Because I just don't know if anyone would benefit from seeing our faces while we record this. Like we occasionally look somewhat haggard. We're not always looking our best when we record this thing. Yeah, I know. I had a 6 a.m. flight out of Austin this morning. I feel terrible. I mean, I record half of these out of hotel rooms. Well, what we've been told is that if you post them on YouTube,

for some reason, you get 10x as many listeners, which is, I don't really understand why, but it seems like YouTube is just the ideal platform for podcasts these days. Humans are visual creatures, Matt. They just like to see their podcast hosts. That's true. Well, I guess if you could see our faces when we're talking about some of these three AC topics,

that's probably worth the price of admission. So, yeah, we're going multi-platform, multimedia, guys. What else? So this weekend in Boston, we have Heath Boston, So the folks at the Boston Dow, Jake Lynch, have put on a great program. If you're in the Boston area, come down to it. There'll be some Castle Island folks on panels. Ria and Sean, I think, are doing panel.

Seth from Groma will be on a panel. There's a lot of good stuff. And also in conference news, I have resolved my differences with the Bitcoin Miami team. I'm no longer blacklisted from that conference. Wow, we're talking about this now. The Bitcoiners want you to speak at their time. conference? I don't know what's going on. So I am officially back into the fold. I am a Bitconer once again. They have invited me to speak. I will be speaking at the Bitcoin Miami conference.

Hopefully nobody takes any of those nasty comments on Twitter to heart and confronts me over my support for ordinals. I don't know. We've been weighing the merits of security at this conference, TBD on that. But yes, I will be speaking the Bitcoin Miami conference. So come and see me. So is your panel going to be around how you have a, like a passion for Alt-Al-Wans? I think it's on choke point, which I guess I know a thing or two about at this point. Oh, that's good. Maybe I'll get booed. Maybe. Yeah. I wouldn't be surprised.

I don't think I've ever been booed before, but there's a first time for everything. All right, everyone. Well, we will be back on Monday with an interview episode. Have a safe and healthy weekend.