On The Brink with Castle Island - Weekly Roundup 06/17/22 (Celsius chaos, Market contagion, the Fed's Quandary) (EP.326)

Episode Date: June 17, 2022

Nic and Matt are back for a truly chaotic week in the markets. In this episode:  Is DeFi's transparency a vice?  We reconsider the need for a lender of last resort?  We debrief on Consensus How will the Celsius situation resolve? Fidelity doubles down on digital assets Is the Fed trapped by inflation?  Was the Celsius situation foreseeable?  Where does the next marginal buyer come from?  Another crypto lender goes down  Class action lawsuit launched against Binance US Circle is launching Euro coin  Bill Gates dances on our grave  Content mentioned in this episode:  All Falls Down, by Nic Carter and Allen Farrington [pdf] On Impossible Things Before Breakfast, by Nic Carter, Allen Farrington, and Ross Stevens  Sponsor notes: Subscribe to the Coin Metrics State of the Network newsletter    

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 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. In this episode, is brought to you by Coin Metrics. Here is the Metrics Minute. Today's Metrics Minute is pretty apropos. Cryptoender Celsius pause withdrawals from their platform, as you know, sent the token sell from 35 cents to 15 cents and 30 minutes. As of June 13th, their Maker Vault held 24,000.

WBT worth around 500 million. Their WBTC vault represents around 85% of all die, the stable coin die generated with that vault type. They are a large holder in Lido's staked ETH token. As of June 13th, they held 450,000 staked ETH, world worth over 500 million. And other news, Tether Free Float supply fell below 70 billion for the first time since October 22. 2021. Overall, the total stable coin market cap is holding at around 140 billion total. That's your Metrics Minute. Well, that was the Coin Metrics Metrics Minute. What going on. Coin Metrics is a good follow on some of these topics, checking the on-chain movement of some of these market participants that are not doing very well. Yeah, that's the interesting thing about

our chaos is a lot of the stuff is just visible on-chain. whether it's Celsius or Terra or even three arrows apparently liquidation points are visible. I'm starting to think that defy is actually too transparent. Are you getting this as well? It's like maybe too transparent for its own good. Yeah, I think this would be a good billions episode where you just see these three arrows positions and these Celsius positions on chain. And there's just a sort of a target there where people are just going to keep going after the position.

and they smell weakness and just liquidate them. Yeah, you don't want the people that are counter trading you to know exactly what your liquidation threshold is. That's sort of the opposite of what you want. So, yeah, I'm sorry. Maybe Defi is going to kind of rethink this. Well, I don't know. I guess defy with some like zero knowledge systems on top of it would be more appropriate.

Certainly there's other ways to trade this market. I think the centralized exchanges don't have this issue, obviously. But yeah. Well, you still have ordered books and you still have that stop chasing on, you know, bitmex and stuff like that. I think, I guess the theory is, is that if you knew that everybody was looking at your liquidation thresholds, then you would be derisking much faster and much more aggressively as you got close to those. But, and so actually, that's what Celsius was doing. Celsius was sort of topping up their accounts as Bitcoin crept down and they were getting closer to these critical points.

But so I guess that's sort of the theory here. Yeah, they've been paying down their margin too. So it's a great point. And there's also no lender of last resort in the crypto market. It's the most open market there is. Yeah, I didn't. I did think this to myself yesterday would be like, wow, it would be really great if there actually was a lender of last resort here. Just calling Bernanke and Paulson and let's do a Sunday night meeting here.

We'd be so owned by the TradFi guys if we started to say this. So we can only think it. We can't say it out loud. Yeah, no, you can't talk about that. Lots happened since Consensus. Consensus was, I thought we're going to debrief on consensus as part of this show. But it feels like it's been a year of activity since then. Was the last show we recorded was at Consensus.

It was at consensus, but consensus hadn't even really started yet. We recorded in the afternoon before the fireside chat, before the kind of the main show even started the next day. Well, so I thought you had a great fireside with Abby, and her conviction did not waver at all. Yeah, I thought it was terrific. I mean, there were a lot of fidelity people there. I thought she spoke very candidly about the 401K offering.

I thought she spoke very candidly about some of the challenges that they're looking at in the brokerage space and some of these kind of legacy systems integration issues. But yeah, the vibe was just unwavering, which was great. It's also good timing that Celsius hadn't blown out right then. I mean, that would have, can you imagine? What are your views on Celsius?

That would have been a tough question. So for those that didn't listen, I guess the takeaway is that Fidelity is not just continuing to invest in Bitcoin and digital assets, but they're sort of redoubling their commitment. Hiring a lot of people that was part of the message, for sure. Expanding this across the enterprise, definitely not a lab experiment anymore.

Not that it hasn't been for a long time, but that was a point of emphasis. So very clear that there's a lot going on over there, which is amazing. Yeah, stands in contrast to the layoffs happening elsewhere in the cryptos space, which are reaching almost every large crypto firm. Yeah, and there's a lot of room for pessimism, obviously, but there are other financial services firms that are building a lot of things. I'm down here in Texas right now at a Bank of New York Mellon event, and they're actively building things in the space.

So this is when people build, and we'll see more of that, but obviously a lot of pain this week. You talked about some of it in this paper you put out all falls down. That was a good piece. Yeah, so that one was a terror retrospective. You know, Alan Farrington and Ross Stevens and I had written another piece called On Impossible Things for Breakfast, which was more a general denunciation of bad ideas in defy, which I think was then subsequently followed up by the Celsius collapse. And of course, Celsius was one of the biggest providers of defy liquidity.

The All Falls Down piece of Allen was kind of a specific retrospect. perspective on Terra. And I'm already seeing people trying to sort of sweep it under the rug or forget about it. And I think it's worth examining why it failed so that we don't do it again, basically. So that was the point of that piece. Yeah, that was, what was the reference there, the breakfast reference, impossible things before breakfast? I don't think I knew that one. That is, I believe, a reference to Alice in Wonderland. Yeah, all right. It's been a while since I read that book. Yeah, so that was also the cover art was an Alice in Wonderland reference.

You were on the CNBC and Bloomberg this week, the mainstream media just trying to bash us down. Yeah, they had me doing double duty. And, you know, I tried to strike a defiant tone. And, you know, at this point, we don't have any option but to admit that the sort of the inflation hedge story is maybe not true. But that, you know, that doesn't mean that, you know, it doesn't mean that we're going to stay correlated to this stuff forever. It doesn't mean that Bitcoin is going to trade alongside risk assets forever. I think if you, if that becomes orthodoxy, then there's going to be an opportunity to depart from that and potentially see the decoupling occur.

So yeah, you know, it's just trying to strike a defiant tone and stay optimistic, which I am. We're getting to the point where cash on hand at Apple and some of the largest companies in the world is going to be larger than the Bitcoin market cap here. This is interesting territory. I mean, the total market cap of all crypto assets is less than a trillion dollars. Bitcoin, I don't know what it's worth. About 400 billion. Theorem is about 120 billion. I mean, at this point, Bitcoin is 1 20th the size of gold.

That doesn't seem right. I mean, you know, we're entering, you know, genuine monetary repression. There's just no secrets about that. And the last time, you know, well, gold hasn't always been a safe haven't because it's been illegal at various times when it would have been useful. But I think Bitcoin executes the properties of gold far better than gold. does. So I don't think that ratio is correct. So what do you make of the 75 points? I guess it was a good week to slip it in. People seem pretty pessimistic. And if you're Powell and you felt like you need to get an extra 25 bips in there, probably a good time to slide it in. Think it's going to

work? I mean, I think the Fed is just kind of humiliated, right? They all are now admitting that they got inflation wrong. They have no, they can't wriggle out of that, you know, they are fully admitting they were wrong. Biden is obsessed with inflation. It's all he talks about. So there's clearly a political need here to suppress inflation at all costs. Now, the cost of doing that might be that it sends the U.S. into a depression, right? If you look at these, you know, consumer confidence. You look at mortgage-backed securities. You look at various, you know, yield spreads. You look at the rally and the dollar, DXY rally. These are like depression numbers. There's a lot of these macrocharts that are the worst they've ever been at. Even the financial

assets haven't really responded, I think, with the right kind of magnitude yet. So I I think the cost of the Fed's aggressiveness here might be not just a sentence into a recession, but into really, really terrible recession. And I think they, another thing is I think they realized that asset price inflation, which they caused is massively increasing inequality or did. And so they want to eliminate the Fed put or the view that there might be a Fed put. And they actually want to crush asset prices. the problem with all that is that that's going to reduce tax receipts because that's going to reduce

GDP growth. Now basically asset prices feed into GDP growth really directly through the wealth effect. And so equivalently at the same time, yields going up is going to make it much more expensive for the government to finance itself. So then you just get a significant issue in terms of you know, covering the government debt and paying for entitlements. So I just fundamentally, I'm not sure if the Fed's going to be able to hold the course here, send us into a serious recession, you know, push the U.S. government to the brink in terms of the corporate and sovereign debt levels. So that's sort of the issue that I see is, yeah, they may feel emboldened and they may want to hike

And inflation may come down in the short term, but there's enormous cost of that. It's going to be hard to run the Volcker Playbook, just given the debt load of the U.S. government. Now, I guess the counter to that would be a lot of that debt is long dated. And so what you probably end up seeing is a wave of corporate bankruptcies before you'd really start to get into sovereign issues. So maybe they can run the playbook for a while. But you'd have to think that there's a conversation there at some point around, would it be better just run inflation hot here for, you know, five, 10 years here, bring debt to GDP back to a somewhat respectable level and then try to address it?

But that inflation has an impact on every single citizen. I mean, that's not a great option. Yeah, but if you're looking at a deflationary bust, you know, with an asset price bust and and a depression and unemployment, you know, in the 20% range, I think that's worse. and I think ultimately, you know, the alternative would be to impose some kind of yield curve control. And, you know, like we're seeing in Japan and, you know, rely on the issuance of dollars in order to maintain that cap on yields. The thing that kind of scares me is that view that the Fed will be forced into doing this. That's almost becoming consensus.

You know, initially it was just a few sort of outlier voices. but now that I'm seeing that that view is becoming consensus basically. So that does concern me a little bit. It's, yeah, I saw you on Pomp this week and talking about the New York Times Fed correspondents actually coming around to that view, I think, at this point, which is interesting. Yeah, they're certainly changing the story on inflation. They're admitting now that inflation is probably higher than it looks based on CPI,

which is a remarkable term. I would never expect to see that from the chief Fed correspondent in New York Times. Well, a lot to talk about in the crypto market structure. Why don't we hop into some deals first? Not as many this week being announced, but I mean, there'll be some time lag here. How many deals are actually getting closed like this week in venture? Just put crypto aside. Just deals closing in venture this week, not a lot.

Yeah, not many. I, you know, yeah, you're right. I think maybe the next couple weeks where the deal section is going to be a little on the light side. A little light. All right. The first one up is Atmos Labs. This is a Metaverse developer.

They raised $11 million from Anamoka, Alan Howard, and FBG. Next up we have Coin House, a French digital asset service provider. They raised $42.5 million from true global ventures. Next, we have Party Dow. This is a Dow. that allows for you to have fractional ownership over a platform called party bid. They raised 16.4 million from Andresen,

standard crypto, Dragonfly, and others. Then we got Floor and NFT analytics platform. They raised eight million from sixth man ventures, work life, B Capital Group and others. Next is Molecule, a decentralized medical research platform. They have raised 13 million from Northpond Ventures, a centralized medical research platform. That's the most interesting one of the day, I think.

Molecule, yeah, that's an interesting one. I wonder what that entails. Next up, we have the Wild Card Alliance, a Web3 gaming studio launched out of Playful Studios. They raised 46 million from Paradigm and others. Science Magic Studios, which is an advisor for Web3 and NFT startups, they've raised 10.3 million from DCG, Coinbase, Alan Howard, and others. then you've got NFT port they're an NFT infrastructure startup they raised 26 million from

tavet and sten at Tomico and others atomico that's Atomico and the last one is animoka brands they have acquired a majority position and a company called Tiny Tap which is an ed tech business all right let's let's hop into what everyone's talking about this week so a bunch of just market structure issues just a lot of leverage being flushed out this week. So lots of turmoil in the crypto markets. Prices are down pretty significantly this week. The crypto lender Celsius, which is one of the larger lending and brokerage firms in the space, pretty embattled. We'll talk more about sort of the history of this firm, but they froze customer funds this week in what looks to be sort of an attempt to stop a

bank run. Celsius, for those who may not be familiar, has been embroiled in a bunch of kind of scandals and innuendo for a long time. So they have a Celsius token, then a lot of talk around how that token was issued, whether or not it's an unregistered security, what exactly it does. The other issue is that they were putting customer deposits into defy as a way to generate yield. And so they've had some pretty known, I'd say, so all public losses there. Badger Dow comes to mind is one of the kind of the big.

ones where they initially lost customer deposits. They have some sort of a relationship with Tether. There's a lot going on there, and it seems like customer funds have been frozen as a way for them to try to claw themselves back to parity here. At the time of this podcast, it looks like the board of directors has hired a bankruptcy and restructuring advisor, and my guess is that this all plays out in a court of law at this point. So I guess thoughts.

Yeah, it's a nightmare. You know, I received a bunch of DMs this week. And people were like, wow, thanks. You saved my ass verbatim. And I looked back at the chat history, and it was all people that were asked me about Celsius. And I told them like, hey, you know, just as FYI, they're putting client funds and like really risky.

I wasn't proactive. There's people that had to reach out to me and ask me. I told them they put in client funds and risky defy stuff. So, you know, I'd probably not entrust them with any funds. So that was an interesting reminder. Keep your DMs open. Yeah, I guess that's right. I mean, this is a tough one because I think a lot of people in the crypto industry

have thought that things were bad at Celsius for a long time. I mean, they've had a lot of turnover to. A few years ago, you'd see people that come from a traditional trading background go into that place and they leave pretty quickly. There was a lot of writing on the wall. I mean, there was some real money in that thing. There was a pension fund out of Canada that invested in it. So there's some real, there is some real capital in there.

There aren't a lot of crypto venture funds in there, though, notably, which is interesting. So people sort of knew something was going on. You know, unfortunately, there's not really a high ROI to just being out there publicly telling people this thing's going to fail. say Corey Klippenstein and Mike Alfred were sort of the only two that were super vocal there. Just a tough situation. But it was, it's not, it was definitely foreseeable that something would go wrong. There were a ton of red or orange flags, for instance.

The fact they have a mining business. They have a pretty material mining business. That's not a source of yield, right? mining is basically a bet on the underlying Bitcoin. So it's not really diversified exposure. It's also illiquid, right? You can't realize those funds you deploy into mining for the useful lifetime of the ASICs, or unless you sell the ASICs now there's an additional complication is if you're looking at bankruptcy,

it actually becomes very difficult to dispose of any assets because the buyer will most likely, if they're sophisticated, will understand they may have those clawed back, even if they buy them at a fair market price or whatever. There's a term for it in bankruptcy law that I'm forgetting. So now any assets that Celsius is trying to sell now, especially real high. assets like miners, the buyers should be aware that bankruptcy judge might determine that those assets actually belong to the creditors and that the transaction was basically invalid because they were trying to dispose of things knowing that they're going to bankruptcy.

So they're not really going to be able to sell that business if I had to guess and they were trying to IPO it. Yeah, I think the, so this will be played out over a year's time resin. I mean, the interesting thing here is that if you like the assets are going to be immobilized, there's going to be some time to unwind this. And so it'll be similar to gocks in that sense. And like maybe customers will get money back. I doubt they will get back the Bitcoin equivalent of what they put in.

But they, if Bitcoin goes up, maybe they end up getting dollars back that are in excess of where Bitcoin is trading at today. Yeah. So hopefully it doesn't take as long as Gox. I think that was kind of a quirk of Japanese bankruptcy court. There's other case studies like Quidriga and Cryptopia and things like that. The other thing that we don't know yet is the capital stack. So if there's secured creditors, they would come first.

And then the depositors would be unsecured creditors, so they would come last. So there may not be anything left for the... regular folks that were depositing funds into Celsius. So still a very muddy, unclear picture. I mean, Celsius is still moving their funds around and defy. There's clearly some assets there. As we know, you can kind of see it on chain. But yeah, it doesn't seem like at this point it's going to be enough to cover their liabilities. All right. So let's move on to the next big market participant here. And this one, we probably know a lot less about what's actually going on. So we'll try to stay with what is out there.

So three arrows capital, which is a large crypto, I guess I would call them a hedge fund slash prop shop, I think a lot of the money is their own. It's Kyle Davies and Suzu. Kyle's been on this podcast, two really prominent members of the crypto space, and they're enormous. They're one of the largest traders in the space. They appear to be unwinding here. And so there have been some chatter about this for a couple weeks, after.

the Terra Luna collapse, it appears that they had some highly leveraged positions and that they were margined across the Crypto Street, so to speak, over the past two weeks, really. And they became unresponsive, according to a number of people on Twitter. It looks like they've been liquidated out of a bunch of these positions. If you recall, they were publicly a very large holder of GBTC. That was disclosed. We talked about that on the podcast, actually, with Kyle. So that, if they still hold that, I'm not sure if they do, that position is down like 30% versus Bitcoin. And so they have a number of these structural things. They're also in Lido. So they have exposure to Lido, which is sort of breaking the peg with ETH on synthetic ETH there. So a lot to talk about here, but it appears that this

is a highly levered shop that is in the process of unwinded. and the collateral damage here is TBD. Yeah, that's right. I mean, it's sort of unknown what the offending positions were, but if they had a long view and they were utilizing a lot of margin, which they certainly were, they were one of the largest borrowers in the whole crypto industry, it's very plausible that they could have been wiped out.

And that's sort of what the reports are implying right now. And so, you know, my guess is it's a bit of discussion between them and their lenders right now, which just probably explains the radio silence. But yeah, I mean, they were one of the most visible funds in the entire crypto industry. I'm shocked. I'm truly, truly shocked to see this happen. Well, what are you shocked about the most, I guess, is my question. I mean, they were obviously playing a dangerous game on leverage here.

you just shocked that it got to the level where it did, where they took such an outsized position on Terra and they just had such big holes in the book? I'm sure we'll find out what the mistakes were at the end of the day. I just, Suu and Kyle are some of the smartest operators in the entire industry. I mean, that uncommon core podcast that Suu did with Hossu was just one of the most edifying ones out there. Right. I guess being really, really smart and having a great track record doesn't necessarily imply that your risk management is perfect. But yeah, it's just of all the collapses, like the Terra and Celsius, we foresaw and are on the record talking about the issues there, certainly didn't foresee this one. This feels like the long-term capital management equivalent of the crypto space, for sure.

two highly respected operators in the space, some of the smartest people in the industry, very similar to 1997 over at LTCM with Merriweather and all the geniuses over there that went out on a stretcher after the Russian debt crisis. So I think this plays out over, this also could be like a bankruptcy proceeding, right? They have a lot of illiquid positions.

They have a ton of venture deals. I feel like the deal section for the past, two years. It's just been three hours all the time. Yeah. And that's just the crazy thing to me. It's one of the stalwart funds in the industry just eliminated. We don't know what the situation is. Alex Fenevick over at Nansen, who probably has the best insight into the on-chain data out there, says, quote, three AC situations even worse than I thought. A little cryptic, but still lots of questions. Ryan Selkis suggested that DCG would be effectively bailing them out and would be acquiring a lot of their venture portfolio at fire sale prices,

which is kind of interesting. I don't know. I don't know if that's possible. I mean, maybe. It depends on who they owe money to, right? I would think that this would potentially be heading towards a legal process based on who the counterparties are. If there's one counterparty and it's Genesis or something,

like yeah, why not? But it seems like a lot more complicated than just going and buying a bunch of assets at fire sales. Yeah. So that's sort of the backdrop now. I think we'll probably see some more collateral damage here coming out of this is my guess. So these positions will take a while to unfold. There's no Fed here to sort of assist with a de-leveraging, right? Like this is a, this is the purest form of capitalism there is.

maybe those trad-fi guys kind of knew maybe they had the right idea yeah i don't know um i think there's definitely a daisy chain of risk element here though um that has become clear and i remember we were patting ourselves on the backs in industry after terra collapsed saying hey where was the contagion there was no contagion turns out there was a lot of contagion and here it is and we we may not have seen the last of it. But I mean, you're looking at the biggest algorithmic stable coin and sort of the fourth biggest project on coin market gap collapses. Probably the biggest retail lender in the crypto space in Celsius,

maybe the second biggest. And then the biggest proprietary fund, I would say, in the crypto space collapses. Like in any other year, those would be the story of the year alone, any one of those three. I mean, and you're forgetting about like the worm, hack and some of these huge defy hacks that have happened, which in any other year, that would have been maybe the biggest story of the year. So the crypto industry has just taken a number

of punches directly in the face here over the past quarter. Yeah, sentiment to me feels about as bad as it's ever been. And I think what I'm hearing from a lot of, you know, conversations with smart folks is where is the new marginal buyer going to come from? And I sympathize with that. I don't know. The narrative. surrounding crypto that may have attracted TradFi, like decorrelation narratives, inflation hedge narratives, those have been punctured. Yeah, I don't think you're going to have a lot of net new flows coming into the space from Fiat.

You know, you're probably not going to, frankly, have a lot of net new flows coming into equities either. I think it's just a bad macro time here. And so crypto will have to catch a narrative boost here at some point. But I think the other angle is that a lot of people are looking at this and saying maybe the leverage is not fully fleshed out. I mean, if you look at the balance sheets of some of these miners, for instance, there's a certain point where consolidation is going to start to happen here. Bitcoin is going to start to move off of these balance sheets, whether or not it's being fire sold to stay alive or whether or not it's being used to finance M&A.

So we could have another leg down here on just Bitcoin sales by some of these public miners. Yeah, and I don't want to spread fud, but I expect that that drives us down. I think they could be four sellers. Now, a lot of the catalysts people expect to happen that are, you know, spreading the bear case now, like tether collapsing, micro strategy, becoming a fourth seller. To be clear, I don't think those are going to happen. Something outrageous would have to occur. Tether would, I think, only collapse under the weight of some government intervention at this point.

I don't think it collapses under its own weight. So some of these doom bare narrative. I think are basically fantastical. But the miners being forced to sell the Bitcoin they accumulated in the bull market, I think is already underway. And it's going to keep happening, especially if there's a wave of minor insolvencies here. Yeah. I mean, talking about Tether, there's another world where Tether gets, you know, shut down or things get a lot worse. Maybe certain things come to light around who they've lent to, who they've done business with. There's another world where that's actually pushing assets from Tether into Bitcoin into Ethereum.

Folks that own Tether in some of these countries, they don't have really a way to repatriate that money into their native fiat currency and they don't really want to. That's really the product market fit for Tether is holding capital outside of your government. Say if you're in China, for instance. So you probably just catch a bid there for Bitcoin or Ethereum is my guess. Yeah. And I mean, I think a few years ago was maybe plausible.

sort of plausible to say hey Tether doesn't have any assets backing the peg. This year we know for a fact that they were able to process 10 billion dollars of redemptions. So there's clearly something there. If you believe the out of stations,

they have 32 billion in short-term treasuries, which is the most liquid market in the world, although you know, may not be forever. And then they've got 16 billion in commercial paper, which is also considered very liquid. So you would have to see enormous redemptions to challenge them and to get into the more illiquid stuff, of which there is some.

It's not entirely clear where the composition of their portfolio is. And I just don't think we're going to see another $40, $50 billion of redemptions here. It's just very hard to see. And, you know, as you say, like if you look at the profile of tether holders, Tether has much less churn than you. USDC, right? Yeah. The tether holders want to stay in tether. They don't want or they can't go back into the US banking system, right? And that's what people don't understand. They're sticky. They don't actually want to redeem their tethers. Some of them are. We're seeing reduction in balance shoots overall in the industry and so you're seeing that mirrored in stable coins. But you're

never going to see a huge drawdown unless some, so there's some really serious confidence crisis. So not surprisingly on the heels of this market turmoil, you're now seeing big layoff announcements, which is no surprise. So Coinbase and BlockFi and Gemini and a number of other firms have publicly announced their workforce reduction plans this week or last week even. So I think you'll continue to see this in the industry. It's clear that the SG&A at a lot of these firms at these market prices doesn't make as much sense and at these trading volumes doesn't make as much sense.

So I think we'll continue to see it. I mean, it reminds me a little bit of 08 in traditional financial services. I remember the place I was working at in 08 started to do layoffs every other Friday for like five months. It was just death by a thousand cuts. Tough, tough thing to go through. It is interesting seeing some crypto platforms are still hiring. Like Binance said that they were hiring. And Cragkin.

Crackens hiring, even though the Crackin's hiring. even though the Krakins having a bit of a sort of scandal with the New York Times, I guess. Finance is hiring announcement. It was funny. It was a stock photo of what appeared to be CZ, sort of like reaching out his hand and shaking the hand of sort of a new employee. But it turns out it was Photoshopped. So just someone of Binance Photoshoppysad onto a generic stock photo. So they couldn't just go to the effort of photographing him, I guess.

So maybe he's yeah maybe he was not in a place to be photographed. Yeah. Or he's having a bad hair day. There's a new, speaking of sort of like things breaking and going wrong, there's a platform I never heard of before. Just came out today, Finn blocks, apparently sort of one of these FinTechy platforms that takes retail deposits and puts them in Defi. They advertise up to 90% yield on their crypto.

They have also ceased or severely curtailed redemptions from the platform. So these things continue. These dominoes keep falling. Yeah. This is not going to, there's going to be a few more of these, is my guess. So what was the FinBlocks one? They said you can only withdraw $1,500 per month or something like that. Yeah.

So just really curtailing your ability. to get to get funds out of the platform. And I mean, in a bank run situation, that is kind of what the theory prescribes you do, is actually to, you know, declare a bank holiday and see if you can manage your liquidity. And so that's sort of like the orthodox response to bank run, but seems to me that it's a signal, you know, serious liquidity impairments. All right. Why don't we hop over to some other quick news of the week?

So, Binance, US. we've got a class action lawsuit brewing over there. It appears that there's some Terra Luna marketing about how great those yields were. Turns out they weren't great. I think we'll see a few more of those. So keep up the negativity there. On the positive note, Circle, which is the issuer of USDC,

they've announced that they're launching Eurocoin, which is not surprisingly a version of their stable coin pegged to the Euro, fully backed in Euro-denominated financial institutions. and this will be, so I think what, U.S. dollars is probably 99% of stable coins at this point. Yeah. The euro, just trying to catch a bid here. There have been other Euro stable coins. I think the Stasis Euro.

I think Tether has a euro. Nobody ever wanted them. And actually, if you look at what's happening in Europe, here's the thing about stable coins. They don't pay you interest, right? So you're exposed to the inflation and you don't get your interest payment, which is unlike if you have funds in a bank account where you, at least, getting some form of interest, right? So the euro being more inflationary than the dollar, and it's, if you look, the euro versus the dollar, the dollar is much stronger right now,

the euro is going to be a less attractive thing to hold because you're still exposed to the significant inflation in the euro, which, you know, given that they're having a bit of an energy crisis is greater. So I would actually be pretty shocked if the euro did get any traction here. Yeah, it's just a good thing to use, though. I guess you know, you would imagine that there are some use cases there where this will make a lot of sense. So I think it'll be used in more of a B2B context, actually. I mean, I don't even know if the, like, forget the stablequin euro. I don't know if the euro itself is going to be around in five years.

Like we're seeing like Spain and Italy having some sort of like potential default situation here. the ECB is stepping in. You know, all is not well in Europe here. Yeah, Europe is taking it on the chin a little bit. Do you see Bill Gates danced on our grave this week said that NFTs and cryptocurrencies just a greater fool thing? It's a complete sham. He hopped right into the Buffett monger camp.

He got us right when we're down. By the way, how is this guy short Tesla right now? It's like, come on. Do you have anything better to do? Here's a fun fact about Bill Gates. He met with Epstein 34 times on 34 separate occasions. How come no one talks about that? Anyway, Bill Gates should focus on cutting seed oils out of his diet.

We're going to remember who danced on our graves as an industry. This will come back and we will remember Bill Gates, no friend. Yeah, honestly, the boomers have had the last laugh here. This is the last time they get one over us. It's up only from here. I'm calling it. How come Kobe's not doing that podcast on a weekly basis anymore, the up only? It's, um, it can be down only.

That's fine. We're grinding. We're grinding every week. We're delivering you this podcast through adversity, through periods of intense market depression. I mean, we're bringing our podcast equipment on the road. Yeah, we're bringing,

I'm sitting in a hotel room right now, giving the fans what they want. Our numbers are going up through this, through this terrible time. The other podcasts us have no excuse. Come on. We've only missed what two weeks in the whole history of this roundup. Although I did

I just got off a panel. It was a good panel. Did a good panel but the whole like isn't this all a sham questions. These are going to be a little bit more pervasive over the next couple of We're going to have to deal with this. I'm dealing with like a whole horde of no coiners right now

that think I'm like responsible for all the failures in the crypto industry. And so I'm being told that it's my job as a, you know, their words not mine, influencer, to warn people about like anything possible that's bad that could occur in the entire crypto sector. And it's like, well, I couldn't possibly stay up to date with all the, you know, potential scams and frauds and hacks. So yeah, I think that's an unfair standard. It is. Yeah, you could also warn them about the Federal Reserve interest rate policy, but it'd be hard to protect them, I think. Yeah, like everything else is selling off right now. Like, we're not unique.

I figured I'd say something nice about Stephen Lynch on this podcast, though. So he is, yeah, so yeah, he's a member of the blockchain caucus, I think, now, but it's really just so he can, like, hurt the blockchain industry. But he could play a very important role in a hearing that is coming up, actually. It has nothing to do with Cryptocurst. but it's going to make him a lot of friends with the Boston cryptocurrency community. So NFL commissioner Roger Goodell is appearing before the House Committee on Oversight and Reform next week. Don't really know the full extent of what they want to talk about. But if Stephen Lynch can get to the bottom of just the travesty of justice that was deflategate and clear the good name of everyone involved, then I think I'm willing to just have a fresh start here.

And we can start at zero and we can move forward. I think he can completely redeem himself. You're really not giving that one up. I mean, what was that five years ago at this point? Now, people don't forget. I mean, it was longer than five years ago, but it's, you know, that now is the chance for Stephen Lynch. I know you hate the crypto industry, but you got a lot of people looking at this,

this oversight and reform meeting. I think I'm on the other side of deflakeet. I think it was a scandal. It's a scandal in the sense that it was all made up. up and it was yeah it is scandalous for sure it was all made up there's a fix well you heard it stephen lynch you can win us back yeah you know you can definitely win us back um there's a lot of positive developments in the political space this lomas jillbrand thing i don't think it'll go through but this thing is great and i think um having that panel with to me um was a really positive

development out of consensus there seems to be a pretty good support here to get something done. I don't know if it'll be the full, full blown package. Jillibrand is catching a lot of flack on the left for her work in crypto, but she clearly finds it important. And people say, look, these are bipartisan issues. I think there's quite a few folks among the progressives that understand this now. Jillibrand's great. Yeah, this is, I think these are really positive developments. And I mean, she's working with probably the most conservative member of the Senate as well. Right. So who said bipartisanship is dead. I bet those two are fun to hang out with. Yeah, I would watch like a podcast that they hosted. I would listen to that. I feel like I would

just want to like hang out on a ranch with them or something. They seem like they're just fun people. All right. Well, I think that's it. I've got to check out of this hotel room. I got to get going. Well, stay safe, everyone. Try and stay safe in solvent and liquid. You'll hear from us next week. Have a safe and healthy weekend. We'll see you.