On The Brink with Castle Island - Weekly Roundup 05/29/26 (Was debanking real, SoFiUSD, WSJ gets free banks wrong, trouble in ETHland) (EP.722)

Episode Date: May 29, 2026

Matt and Nic are back with another week of news and deals. In this episode:  The CEO of Lead bank says debanking was made up Which aspects of debanking were real? The SEC scraps its 50-year-old gag rule The WSJ gets free banking history wrong in their attack on stablecoins What does history tell us about decentralized monetary issuance Why stablecoins aren't vulnerable to the same issues as free banks SoFi launches SoFiUSD and mixes a stablecoin with a tokenized deposit Sentiment is bottoming in Ethereum David Hoffman sells his ETH Are stablecoins parasitic to L1s Can L1s accrue value sustainably? The DATs are troubled Is AGI here already? AI cost discipline Content mentioned in this episode:  Nic on Substack, Stablecoins are private money. There's nothing wrong with that

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

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

round of quantitative easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called a Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. We have a busy week of just. People having bad takes. Wall Street Journal, bad take.

CEO of Lead Bank, bad take. We got some bad takes to talk about this week. Yeah, the Lead Bank one is confusing because you'd think she would know better because she's right in the middle of all this. Yeah, so to set this up, the CEO of Lead Bank came out and said that de-platformings from the banking sector did not happen. But she said it in more aggressive language. Yeah, Jackie Ruses, Rises.

So she was attacking debanking. She said in no uncertain terms, she doesn't think debanking is a thing. I kind of get what she's saying, that banks were firing clients, as they're allowed to do. They can fire a client due to their own assessment of the risk. So I think her view is that what we call debanking

is kind of this case-by-case thing where banks might fire client for reputational reasons, risk reasons, and that that's kind of valid under accepted banking practice. However, that's not actually what we were really complaining about with the whole debanking thing. So, and now lead, I don't think they were really known for banking a lot of crypto firms, were they? Well, I think they started getting into the industry by being the back end to some of the

stable coin players. right so weren't they the back end of bridge yeah famously and now i think a few more so i think maybe they weren't serving crypto firms directly in during the heyday of the debanking 23 24 yeah i never really heard their name much i think they are no one more for doing fintech banking bang as a service so what we were complaining about and this is actually going to become relevant again we're going to do it. We're going to dredge this issue up again. We're dredging it up. What we complained about was a industry-wide prohibition driven by the bank regulators, going to the banks and saying you can't serve crypto. And also the destruction of the two

major banks that were serving crypto in March 2023. That had the net effect of basically bringing it borderline impossible as a crypto firm to get banking from anyone. right so this is a full industry-wide thing if you were doing crypto activities you had to report that to the fed if you were rolling out crypto products the ftic sent you a pause letter i mean these are real verifiable things that happened and then if you were known to have a lot of crypto deposits you were forced below a certain threshold the number i've heard bandied about is 15 percent but it's basically below a material threshold thus meaning yes, some crypto firms were able to get banking, but they couldn't be a large part of that bank's

depository base, thus making it just much harder for crypto firms to be banked. And of course, ruining the business model and ultimately doing Silvergate and signature. So that's what we complain about. Now, you know, some conservatives will say what they were deplatformed, you know, under Biden, you know, notable conservatives. That's certainly true. I also acknowledge that. Is that the same type of thing? That's a bit different, I would say. So maybe she's attacking that.

But what we have alleged, that's verifiable. That's real. It's a matter of congressional record at this point. Yeah. I mean, there were multiple hearings on the matter. Multiple witnesses testified under oath. Do we have the full story? No, actually.

We don't have the full story. but the things I just said, those are verifiable. And we're going to do another episode on Silvergate soon. So I'm still mad about Silvergate. So very pertinent to that. The SEC has scrapped its 50-year-old gag rule. So it's Rule 202.5E ended the longstanding practice of basically barring defendants from publicly talking about what happened or denying accusations against themselves.

Does that factor into what I think is about to happen here, where you're going to just start hearing from more of these bank executives talking about kind of the bad old days? 100%. And also, I think some of these settlements finally took place. But yeah, we're going to hear from executives that were affected during those crises who couldn't say anything. They could not say a thing.

So, I mean, imagine being pilloried in the press and by members of Congress and sued by multiple, regulators and your life's work is destroyed and you can't publicly defend yourself. That's just awful. Not great. I do want to kind of correct the record a little bit on some of what we were saying last week about the SEC. So Bloomberg had had this article that was hinting that the innovation exemption that the

SEC is supposed to be rolling out around tokenized securities, that that was going to to allow folks to tokenize without the issuers permission. and it seems like that has been rolled back. So I think the report that we were reacting to out of Bloomberg is overstating the impact of what will happen here from a market structure perspective. SEC has delayed the rollout of this innovation exemption. So I think we just don't know exactly what this market structure is going to look like yet around tokenized equities and stay tuned. But it seems like this kind of SPV galore market structure is probably, not what we're going to get.

Should we talk about the other bad take of the week in our beloved Wall Street Journal? Yes. What's Greg Ip is that the, who you're referring to? Yeah, I don't know how to pronounce his last name, but I guess we'll say Ip. So this guy's the lead economics commentator with the journal,

believe it or not. Greg Ip, he has an article entitled Stablecoins are private money, that's why they're a risk to the economy. What's funny is he never actually makes the case for how they might be a risk. So nowhere in the article does he say, and this is how they're a risk.

He just compares them to free banks. You know, I love free banks. Wildcat era. Yeah, so we've heard this one before. And then he compares from like every central banker and every establishment economist, from Paul Grugman, from Elizabeth Warren, the BIS, the ECB, the Fed,

Biden's treasury official. We've heard this before. Stable coins are like free banks and hence they're bad. And it's just wrong on so many levels. I mean, we've been over this. We've been over this. Do we even have to repeat ourselves

at this point? I mean, where to start? So you wrote a substack on this. You also posted on Twitter. What's the logic here between substack and Twitter? Yeah, I mean, it's a nightmare, honestly. No one reads my substack. No one. I can't can't get anyone to read it.

But I can guarantee that my sub-sac goes to people's eyeballs, right? Because it goes to the inbox. Yeah. To Twitter, I have half a million followers, but you kind of can't guarantee that your tweets get seen. So it's like Twitter gives you this sort of stochastic probability

of reaching a big audience. Sub-Sack is a guaranteed guarantee of reaching a small audience. Right. So I do both. And as a consequence, no one reads anything I write. Total nightmare. I'm stuck in algorithmic hell. That's tough.

I mean, I'll jump in and we've talked about this so many times on the podcast, how this is not like the free banking era. I guess there's arguments around just people's understanding of what the free banking era actually was, is one line of criticism here for Greg. Yep. The other thing is just comparing stable coins to private money when these things are effectively government money funds under genius. And so to me, it's just a,

it's a very bad analogy. Yeah, so he compares stable coins to free banks in the U.S., which free banks in the U.S. were not free in the pre-Civil War era. There were two big problems with them. One was a restriction on branching. It means all banks were unit banks. So it would be the bank of Wisconsin serving one town. That's obviously fragile. If there's a bad harvest or a drought or some other local factor, that banks going bankrupt.

because they can't diversify. Secondly, those banks were forced to hold state bonds. Now, let me ask you, what happened to the states in 1860, especially the Confederate states? Well, there was a war of northern aggression, I believe. Well, you're in Massachusetts, so I don't know if you can call it that, but there was an enormous civil war, economic cataclysm, right? All those states went bankrupt.

What do you think happened to their bonds? They did not perform well, although I'm sure the equivalent of bow post was buying distressed bonds at that time. They might have done it right in the end. So the bonds go to zero. Now, if you're a bank in a Confederate state, forced to hold state bonds, what happens to that bank? That would be a failure. Yeah, so the bank fails.

And then decades, centuries later, that's held up as a failure of the private sector, like a failure of the commercial sector to risk manage? No. Those banks failed because they were already fragile because the unit banks and because they were forced to hold garbage state collateral. I mean, just read the history, guys. So what is touted as the free banking era was not free banking in the U.S. Now, if you want to go to real historical episodes, you can look at Canada at the same time. Canada didn't have the central bank until 1935, but they had no bank failures during the Great Depression. America had 9,000. Canadian banks were allowed to branch.

They had clearing houses. Their notes traded at par. There were no bank runs, no banking panics. Canadian banking was genuinely unrestricted. And it worked fantastically well. It was a decentralized system. There was no central bank, right? So if you want to look at free banking and say, well, the private sector can't issue money responsibly.

Canada is a direct counter example to that. Same thing in Scotland. you know, during a period of over 100 years, early 1700s to mid-1800s, the Scottish banking system worked fantastically well with virtually no failures. It was totally decentralized, no central bank. They created private clearinghouses. The notes were mutually accepted at par. Meanwhile, England, so same macroeconomic conditions, right, in the United Kingdom,

England was having bank panics and crises nonstop. They had a central bank. So again, another counter example to this notion that free banking is inherently unstable. So that part of the argument doesn't work. You know, I think if you look at history, you can see, yeah, private money certainly can work. Now is a stable coin like a free bank?

Certainly not. Right, it's not really. No. Why in the American system did banknotes trade a discount? Because if you in Philadelphia get a banknote, issued by a bank in Wisconsin, it costs money to redeem it, right? You just physically go there to redeem and get the gold. So that should obviously be baked into the price.

And that's how it worked. People say, oh, they traded a horrible discounts because redemption had a cost, guys. Look at the, there's so many books written about this. So stable coins not like that. Yes, there's maybe a 10 basis point redemption cost, but that's it. Stable coins obviously are not equivalent to unit banks. They are global by nature. And so, you know, technologically, they're not subject to the same pressures that the free banks were. So I don't see the analogy. And then he compares them to money market funds.

Okay, so everybody knows about the reserve fund. Do you know the reserve fund was the first mutual fund set up in 1971? Money market mutual fund, that is. So why did the reserve fund collapse in 2008? was holding commercial paper from Lehman and Bear Stearns problem. It was more of a corporate bond problem than it was government bond problem. So is that analogous to a genius regulated stable coin? It is not. I mean, when you would require the U.S. government to default in order for these things to break. Yeah. So reserve fund sold 60 billion, give or take. They had 700 million in Lehman commercial paper. That gets zeroed out overnight. I love how people say it broke the buck, it traded at 97 cents. Is that that bad? Well, in the tether context, right? If

tether traded at 97 cents, it would still be used by millions of people every day across the world. And it has, right? So to me, money is an adjective, like moneyness, different things of moniness, including money market funds. They are not money per se, but you can write a check out of a money market fund, right? So it has money. So the worst aspect of money market funds, I don't find to be that bad. The total loss to depositors was one cent on the dollar in the end. One cent on the dollar. People complaining about that, really? I mean, come on. Have you even heard of crypto? So the thing that Greg I poutes is horribly bad about money market funds. It's not even possible with a genius

stable coin. It's just not. And then he said the craziest thing I've ever read. an op-ed, which was under Genius, stablecoins can be collateralized by Bitcoin repo. Did you see that? I didn't even read that part. I mean, that's not true, though, right? It's just, it's false. It's just straight out false. So Michael Barr gave a speech last year, and he said, well, there's this loophole in genius.

First of all, the implementation isn't set yet, so any quote-unquote loopholes would, like that would be closed. Second of all, he said it could be backed by repo backed by Bitcoin if Bitcoin was considered sovereign money by a foreign country. At that time, El Salvador had all, which is the only country considering Bitcoin to be legal tender. They'd already untenderized Bitcoin. Right. At the IMF's behest. Yeah.

And earlier in 2025. So that wasn't even true when Barr wrote it. certainly not true when this off-ed came out this week. So it's just false. Seems pretty coordinated, right? The day before you had this big New York Times article about prediction markets and, I don't know, some bad press coming. It's surprised that this one got through the editors. Yeah, I mean, this guy's like the most senior economics reporter.

The Wall Street Journal has such a checkered relationship with stable coins. You remember when they were banging the drum about Hamas doing such and such amounts, crazy volumes with Stable. coins. It is also just wildly exaggerate. Like the journal is a good publication. Why do they abase themselves by printing easily debunkable arguments? It's that term the gelmans of amnesia, gelman's amnesia, where you read something

and you realize that it's completely factually inaccurate. You know a lot about it. But then you look at everything else that's being written. You're like, I wonder if any of the stuff is also wrong. And the craziest thing is I've seen this argument peddled out so many times. that stable coins are like free banks and thus are bad. I've written four separate pieces debunking this over the last six years. I'm tired of it.

Yeah. Well, some of your Coin Desk articles are not up on CoinDesk anymore. Did you notice that? Yeah, they, I wrote 42 op-eds for Coin desk over the years and they were wiped. They're just gone. I mean, are they in the Wayback machine? Yeah, but that was a tov. That's why I run on Substack now.

that's why I really believe in web three and owning your own digital identity someone's got to make that happen yeah I was just talking with a friend about this this week I think it should still happen I think it will happen almost right own like read ride on didn't work but I think it should happen

actually I saw you you talked about it with a thread guy oh yeah I'm thread guy yeah thread guy that was a good episode yeah so like socialify owning your credentials owning a piece of the internet. Maybe we should give it another shot. Yeah, maybe.

I don't know. It's always darkest before the dawn, right? It feels like a lot of the funds that were just doing those type of deals are not around anymore. I mean, it could not be darker in Web 3. It couldn't be worse. No, it couldn't be.

So it's good time, opportune time to make it happen. All the good ideas happen. They just take some time. But for now, you know, definitely not happening yet. So was it the case that there were only two deals this week? I think there's three deals this week. First one is Hypernova, which is a prop trading firm built on Hyperliquid.

They raised $3 million from Lemnis Cap. Squid is a cross-chain routing platform. They raised $6 million from North Island, Ripple, and Borderless. And if I'm not mistaken, we're immediately hacked 24 hours after announcing the fundraise. Wow. So they raised six and then they lost, yeah, I'm reading this now. So they lost half of that to a hack within 24 hours. That's a tough. That is a tough start to life. Then you have Otomato, which is a on-chain portfolio management platform that raised $2 million from improbable capital. Is it O-Tomato or Otomato? That's a great question. First, big news item of the week. Not a lot of news either. I thought it was notable. So-fi. launch SOFi USD. This is a stable coin, which will operate on the Solana and Ethereum blockchains. This comes when sentiment could not be lower in Ethereum land, at least. Yeah. What is it going on in Ethereum? We didn't talk about this last week, but we had David

Hoffman, just a huge champion in the Ethereum ecosystem, bankless podcast. Great podcast, by the way. You've been on it countless times. He doesn't hold Ethan anymore. He kind of threw in the towel. I mean, David was the number one East champion, in my opinion. He came up with the saying ultrasound money for Eith. Yeah, it's honestly tough to see.

Like, not that we're like the biggest East fans, but a part of me died when I read that. You know, it's like Batman needs his Joker, you know? It's kind of everything that John Feffer was saying eight or nine years ago has started to come true where Ethereum, the blockchain, is very useful to the world. There's a ton of things built on top of it. Most stable coins, a bunch of tokenized securities.

ETH, the asset, not as exciting as Ethereum in the blockchain. Yeah, I mean, I think it's right. And David was saying basically, like, a lot of the appreciation happened. You know, it was like front-loaded. Eith succeeded in a sense. And people realized that early. And then that was baked in by 2021. And then it just didn't go much further after that.

He cited in his piece about it one of my articles from 2020 when I said stable coins would be parasitic to Ethereum the asset. And I think that's true. I think that's totally true. I think it was foreseeable. I wrote that article when stable coin supply was less than 10 billion. I think if as stable coins became the dominant medium of exchange and maybe, you know, fee abstraction became more palatable, that does parasitize, I think, the value prop of the underlying token. And then the other thing is what we certainly saw was,

it's kind of race to the bottom among blockchains. Like people just went to where blockchains were cheapest. It wasn't necessarily Ethereum. And, you know, Tron was a big winner. But does Tron the asset benefit from that salon? It was a winner. Is that good for Seoul? Not necessarily.

So I think the story here is enormous consumer surplus. generation. You know, the users of the blockchain really won. And it's hard to disintermediate and re-intermediate at the same time. Yeah. And it's a tension that couldn't ultimately be resolved. I think there's a really interesting thing happening in the blockchain, L1 world right now, around which blockchains are going to be competitive for tokenized

securities. So on one hand, you have something like Canton. We've done episodes about Canton. obviously it's a polarizing project in some sense, but they have real commercial traction with their use cases. And you have the ability to have on-chain privacy in Canton and the DTC is doing things. Some of the big banks are working with Canton.

And then you have kind of Ethereum, and it's inferior for a lot of these use cases. So if you're moving collateral on Ethereum, you just can't live with a world where that is fully public to all the counterparties. So if you have a prime broker, or moving customer collateral on a Sunday, you wouldn't want that visible to everyone on the network. So Ethereum just doesn't work for some of these use cases. The question is like,

do we need more blockchains that are focused on the real world utility, you know, the real tokenized security use cases? Is it just going to be Canton or are there going to be other proprietary blockchains that get launched? I think a lot of people have thought about this more from a technology perspective and less from a what are people actually trying to do perspective. Here's something that I've been wondering about, value capture versus value mediation. So the DTCC, right, they settle in 2024, they settled $3.7 quadrillion dollars of security transactions. I don't even know where that sits in the hierarchy of billion and trillion. Is it the next one after trillion?

It's a big number. Quadrant. Is that 3,700 trillion? It's all happening on a cobald database. Now, what is the company worth around $10 billion? Well, it's not worth anything, right? It's basically just a consortium that's owned by its members. So it's intended to operate it. There's revenue associated with it.

There's revenue. There's no terminal value because it's an industry utility. They would theoretically spit off dividends to its, it's meant to operate it to break even. So Ethereum settles certainly maybe in the trillions per year, if I had to guess. I think trillions is fair. But now you have DCCC, which settles quadrillions, which I think is three orders of magnitude more. But it captures none of it.

It captures none of it, but, you know, doesn't have a monetary mechanism. I think the value of these blockchains is largely the monetary premium. otherwise you could look at fees paid right like that's a small number though well yeah the revenue number for these blockchains is is quite small i mean i think hyperliquid has the most fees paid and that's an application so i think those analogies crypto people didn't want to consider those analogies very much and it only works if it becomes a money and i think bitcoin's the only one that did that so far yeah i think it works to a certain extent. Like there is a non-zero value in these blockchains because you need

the underlying token to conduct economic transactions on the blockchains. So the tokens are worth something. Are they worth, you know, what Bitcoin is worth or what gold is worth? You'd really have to have a holding preference there. This is kind of what Feffer was always talking about is that the velocity of the token, if it's a high velocity token, it's going to drive the price of the underlying asset down. If I ever wrote that nine years ago. It remains one of the, it's just one of the most intellectually cogent papers I've ever read.

I remember reading it for the first time being like, okay, this is like, I've never thought about this way. This makes a lot of sense. Yeah, I think the moment when it sank in for me about monetary premium new L ones was when I realized that Stabrocoins, we're going to take everything over in terms of M-O-E and D-Fi collateral and fees, which was around 2020, 2021. It became clear to me, at least. And then I think it's just very, very hard to compete in that context. People would rather use stable coins. Yeah, I think that's right. Initially, we were talking about SO-Fi. So-Fi. So they did something

quite clever, I thought. And I think this might become a model, actually. So they have SO-Fi USD. It's on on an Ethereum is a new stable coin. When your stable coin hits the platform, it becomes a tokenized deposit. So it's like a hybrid system. I think this is because you can't pay interest with a stable coin under the new interpretation. Don't you think so? Well, I think the interest, yeah, it's probably a part of the reason. The other reason is that I think from SoFi's perspective in credit creation, having a tokenized deposit is more profitable. Yeah, yeah, you can account for differently. So congrats to Ben Reynolds and the SoFi team there.

Yeah, that's an interesting development for sure. In other news, MasterCard, they have gotten a New York bit license for their stablecoin business. This comes about a week after Galaxy also got a bit license. So bit license, man, it's always been a hard thing to navigate. And you'll go years without new companies getting bit licenses. And then I don't know if just the clerks go back to the desk or something and start to stamp some of these, but it's good to see it movement here. And the fact that MasterCard was able to get through this process is a net positive.

The British government has sanctioned Justin's son's exchange HTX over suspicion of supporting the Russian government. Justin's son. He can't stay out of trouble that Justin's son. Yeah. And you know, I was taking his side on the World Liberty fight spat, but I can't take a side on this one. It's hard to keep up with all the things that just. Justin's son is doing. We talked about the SEC delaying their innovation exemption. I am very

curious to see what that says. It would be great to get that innovation exemption rolled out in parallel with Clarity Act getting through. Kind of coming down to the wire here on June just in terms of days in the calendar for Senate, but it's, you know, when you talk about what's happening with this bill, obviously you have the ethics language and the Trump family involvement seems to be where a lot of the behind the scenes fighting is right now around Democrats only wanting to get on board with this if there's language that prohibits the Trump family from engaging in the industry. I do think the other interesting thing going on now is these primaries are starting. And so Texas had a number of primary runoffs this week.

Fairshake was active in some of these and unseeded representative Al Green in the Texas 18th. So it was a fair shake supported. Christian Menifee, a new congressman coming in who's apparently pro-crypto. So I think this will factor into the, just the calculus of whether or not you want to be on board with with the industry here, just to see Fairshake on the board with some early wins and a war chest. Is this another case of like a Katie Porter where Fairshake takes the credit slash blame for, for primaring, someone who is maybe not that popular anyway?

I think grain was pretty popular though, right? I think he was in office for an awful long time, and he was definitely, he's very anti-crypto. He was a crypto antagonist. I remember him for getting kicked out of the State of the Union speech. Yes, yeah, he disrupted the state of the union. Like he's shaking his cane at Trump. Yeah.

And also, I guess he didn't like crypto. Yeah, no, he hated crypto. And so now I guess we have someone that doesn't hate crypto moving into that seed. But Fershake only spent, I think, it was like $6 million, $6.5 million in the Texas 18th. Do you want to check in on the Dats at all? Is that of interest to you? Dats are completely uninteresting to me, period, full stop. But I did see that Strive, which is a Bitcoin dat. They acquired $85 million of Bitcoin this week. So they have a thing that's like STRC. Oh, they do?

Yeah. It's called Sata. S-A-S-A-S-T-A-S-T-A. And it's a dividend-paying pervert stock, just like, it's like smaller STR-C. So I'm sure that'll involve as well. STRC, man. Wow. They keep on getting more capital into that, and it looks like they paid down some of their outstanding converts

with some of the proceeds of STRC. Yeah, the Bitcoin market seems to be in a state of real fragility because my suspicion as to why it sold off this week is that Sailor didn't buy any Bitcoin and pay down some debt instead. It's not looking good for Bitcoin that it's kind of dependent on this constant flow. Yeah, I think Sailor's been a big part of the market. But you did have some bitcoins being burned this week. Did you see this?

This was a strange story. So on May 26th, an unidentified party sent 107 Bitcoins, which is about $8.3 million to a burn address across five transfers. I don't know why anyone would have done this. Yeah, Galaxy put their heads together and tried to guess at why. And there was no plausible reason at all. Yeah, I saw that. It was like, you know, was this person being held at knife point?

Like, why would someone just light 107 bitcoins on fire? There's just no good explanation whatsoever. Very strange. And then separately you had a Satoshi era wallet activate and send about $200 million of Bitcoin to Falcon X in Cumberland this week. Elsewhere, DTCC, they announce a partnership with Stellar to use the network as part of their multi-chain strategy to tokenize RWAs. Yeah, that's interesting.

So that, you know, back to what I was saying earlier around, you know, you have this appetite here, I think, from financial services firms to do tokenize. real world assets. And it's just puzzling to me that you don't have like runaway winners outside of Canton in this category. And even with Canton, it's not like everyone's on board with this. A lot of the big by side institutions haven't really made a play yet. So Stellar's kind of walking into this. I see no possible world where Ethereum can be the backbone of this. Do you? I don't know. TBD. So Congress to Stellar. I mean, getting in there, Who knows where it goes, but salty people on Twitter about this.

Yeah, a lot of anger there. The House Oversight Committee launched an investigation into insider trading on both Pollymarket and Kelshi. So they cited suspicious trades relating to Venezuela and the Iran War. There was an arrest of a Google employee who Michelle Spagnuolo, a Google staff security engineer who insider trade on polymarket, apparently used MNPI. to bet on, because, oh, this is so interesting. Do you remember when someone's made a ton of money by betting on Google's top searches of the year? Yeah, I think we talked about it.

Yeah. So this person has been identified. Just don't do that. I don't get it. You're smart enough to work at Google and to make these trades. But obviously, you can't do this. I mean, it doesn't matter that it's not a security.

I think people think inside a trading is only a securities market thing. if you're stealing money from your employer and monetizing it for your own personal gain, that's illegal. You can't do that. Very bad idea. So I don't understand how this hasn't sunk in yet. Staying in CFTC world here for a second, the CFTC has moved to vacate the $5 million settlement from years and years ago with Gemini. So this is reversing Biden era enforcement. And this was kind of the issue, I think, that the Winklevas twins were opposed to Quintenz on. So when Brian Quintenz was up to be the chair of the CFTC,

my suspicion is that this is what the Winklevoss twins wanted him to do, is to vacate this. And I don't know if he was going to do it. Maybe he wasn't going to do it, and that's why they didn't support him. But it's kind of a strange move. You don't see this happen very often. Cashap has been the knee and is now rolling out stable coin rewards,

powered you at by usDC after initially being pretty opposed to stable coins now they're all in yeah it's kind of about time don't you think yeah i mean they should have been doing this at least five years ago yeah it's good to see them moving i mean they could have they could have been a dominant player already in this big miss opportunity i saw that umid molycon from columbia also had a retort to greggip so you guys were kind of tag team fighting their retorts to Dole Grip up this week. Yeah, I mean, this is uncompensated emotional labor, in my opinion, dealing with these journalists' bad take on stable coins. And it never ends. Did you see the quantum news out of Boston this week? What's that? So the news is that MIT,

and I guess the state of Massachusetts have established a new quantum hub at MIT. It's called the quantum systems laboratory. And the idea is to get scientists access to, you know, quantum technology. I think it's like $25 million initiative designed to get more quantum talent around the hoop in the greater Boston era area, which is good. Boston is actually a big hub for QC research. Yeah, got the Q-era team up here. There's a lot going on in quantum world. They're all just sitting in Cambridge trying to break Bitcoin. Yeah, I mean, based on the way these quantum public companies are trading, it's like Q-days are on the corner. It's what it feels like, me. It's just a lot of talent is going into this. And I think AI is probably helping out quite a bit.

Yeah. I mean, AI is solving major unsolved math problems. You had a tweet that went kind of viral this week saying that the age of AI is upon us. I think that's probably right. I don't understand why it's controversial. They made people so upset. But it's like, have you used AI? It is generally intelligent. Is it not? It is. I mean, it's kind of like we always talked about the Turing test, and then we kind of blew through the Turing test, and no one ever said anything. Yeah. I mean, this thing can compose poetry in any language. It can pass any test whatsoever, GRE, G-MAT, bar exam, essays, like any test you want. So that is already outperforming any human. It can write high-quality production code. It can write essays not very well.

I like to think that I'm still better than AI at writing, but it'll probably be me soon. It can draw pictures, you know, I mean, make video. There's not a lot of cognitive tasks that it cannot do. So how is that not general intelligence? I think that's right. It's interesting in the context of open AI because don't they have that clause with Microsoft where there's some financial trigger around AGI that Microsoft doesn't get the IP. if AGI is achieved or something?

Yeah, and that's the thing is I don't, I don't know if you're going to be able to say this was the day that it happened. I think the people, there's a couple of reasons why people are resistant to this. One is a lot of people have been conditioned to think that once we get AGI, it's going to be this runaway world of super intelligence

and the singularity will happen in a good way or in a bad way. So maybe because that hasn't happened, they don't want to call it AGI. I think the other is people think that, well, maybe humans lose our status as the most intelligent beings in the cosmos if we acknowledge this. And so we have to push it off as long as possible and pretend it's not AGI so we can be the dominant. I think that's just anthropic chauvinism. Like we can accept that we're not the smartest. That's fine. But I think people emotionally don't want to admit it.

I think you just still have such a divergence in society between people that are using AI every day and people that aren't. There was a report in Axios today that some company, unnamed, overran their token bill by half a billion dollars. That's insane. Which I actually don't believe that at all. I mean, how could you not notice that as the CFO? It's a half a billion dollar overrun. There aren't a lot of good tools for monitoring this, though, right?

Like even at Castle Island, it's, okay, who's actually using all these tokens? We don't have good visibility into it. I'm using a lot. I'll just tell you right now. I just assume that the consumption is, is you. It's for a good cause. It's kind of interesting, though, that you don't have these very basic SaaS tools. It is weird. And I think this is part of now we see a backlash to the, like, AI rally. People are now saying, well, the consumption has gone crazy.

And so Anthropic is baking that into its recurring revenue numbers. And the numbers are all fake because it's unmonitored growth. and then eventually when the CFOs reassert control and stop out of band or personal usage at work, the number is going to plummet. I kind of get it. They'll definitely go down at the enterprise level, but I think the number of net new enterprises will go up. So it'll be offset that way.

But you have to have better harness on this in terms of, okay, like, do you have engineers that are just using it for personal consumption? And can you meter that? Can you have them route to open source models, et cetera? Yeah, it's kind of tricky because like how do you verify someone? I mean, maybe you can cap someone's usage, but maybe they deserve more tokens. Do you spy on them and make sure they're doing the right kind of queries? Well, that's what's going to happen.

Whether you like it or not, I think you're going to see mobile device management and you're going to see effectively spyware implemented at the corporate level. I mean, you already have this anyway. A lot of corporations put this in during COVID. just to monitor if people were actually at their laptops. That's where you'd see people hooking up their mouse to like fans and things, just to keep it moving while they're out gallivanting. Yeah, I think it'll happen.

Anything, a lot of people were running super heavy load agents at work that maybe didn't have anything to do with work. Well, it's kind of like when broadband was introduced, most people at home were either not on the internet or they were on dial-up. And that's where on like Monday mornings you see the spike in internet traffic, people would just be getting their online shopping in, things like that. Downloading MB3s on Napster. Those are the days. Yeah, you weren't in college when it was just a free-for-all on the music industry.

Yeah, I wasn't around for Napster. But I think there will be a bit of a whipsaw effect as the enterprise tries to figure out what the hell everyone's been doing with their AI. Yeah, and I think the other question there is that the enterprise level is, okay, so you have rockstar engineers. What is their token budget? Yeah. It's okay. Is this a $200,000 a year per rock star engineer that we're going to just allocate? You're paying them $500 grand already.

Maybe they're able to do the job of 10 people. So you could argue that maybe they deserve a million dollar a year token budget. Why not? Yeah. Yeah, it's kind of wild. I think you're going to have a lot of people grappling with this. all the benefit is recurring to Anthropic and Open AI at this point. And I guess the back end data center companies.

All right. So I think that is it for the week. We'll be back next week with a couple episodes. Everybody have a safe and healthy weekend and we will see on Monday.