On The Brink with Castle Island - Weekly Roundup 07/04/24 (Chevron overturned, prediction markets, revisiting Silvergate) (EP.541)

Episode Date: July 4, 2024

Matt and Nic return for another week of news and deals. In this episode: Will Biden step down? The importance of prediction markets in elections Can you insider trade on prediction markets? What does the SCOTUS repeal of Chevron mean for crypto? SEC sues Consensys Stripe and Coinbase partnership Circle achieves MiCA compliance for USDC and EURC Will Euro stables ever be popular? Silvergate settles with the SEC, SF Fed, and California Why the Silvergate story remains a huge scandal Polkadot's strange spending habits Bozo of the week Blackrock puts IBIT in their global allocation fund Matt's SEC-fu The SEC's new website Stoner Cats in retrospect Sponsor notes: State of the Network's Q2 2024 Mining Data Special In Coin Metrics' State of the Network issue 266, we provide our quarterly update on Bitcoin mining

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. Guest 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 is an expression of their personal opinion. This podcast is for informational purposes.

What down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, AIG, $85 billion. dollars. 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 constituted easy. And print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called the Bitcoin. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And this episode is brought to you by

Coin Metrics. And here is the Metrics Minute. In today's metrics minute, we look at the Bitcoin mining ecosystem. Bitcoin miners earned $3.77 billion in Q2, 2024, making it the fifth highest quarter for revenue since January 2020. A massive UTIXO consolidation by OX drove minor fee revenue to $38 million over three days, contributing to 40% of minor earnings, similar to previous spikes from ordnals and ruins. Following the Bitcoin having the Bitcoin's 30-day average hash rate drop 7%. percent showing signs of minor capitulation. ASIC efficiency has dramatically improved since 2013,

with the latest models nearing 12 joules per terra hash compared to about 10,000 joules per tiered hash for the first commercial ASICs. That's your match experiment. All right, so we're recording this on a Wednesday, July 3rd. I guess we'll get this out for the holiday, give people something to chew on in the morning. July 4th. July 4th.

I mean, news is changing so much. We're going to talk about all the political stuff, and it's going to be dated as soon as we say it. Well, happy birthday, America. You did it. Another year. We just about survived. We may not make it a following year, but we made it this far.

Made it this far. What's your favorite Fourth of July tradition? You grill out, put some meats on the grill type of guy? I'm a big-time griller. I am too. I'm the guy that demands control of the grill at the barbecue. It's a big responsibility, but I just lock in, you know. I've got big grilling plans.

I've been on a big kilbasa kick. Do you ever do that? Oh, yeah. Yeah, I lived in Poland. Love kilbasa. For three years, all I ate was kielbasa. That's how he's going to that. I'm looking forward to that.

So a lot has changed in the past week. We were recording this, I guess the day of the, first presidential debate could be the last one um and uh a lot a lot has happened yeah you know i'm feeling very unburdened by what has been and uh focused on uh what can be i am too i am too i think that's really well said that was eloquent yeah that's like it's a great who came up with that love it i don't know a really good speech writing team i i think it is not an exaggeration to say that by the time we record this podcast next week, Kamala Harris is going to be the president of the United States.

I don't know if I agree with that. I don't know. So it's clearly... She's going to be the, probably going to be the nominee. Given this set of circumstances, I am not sure it's possible for Biden to remain the president. You know, you're dealing with a thing where you'd be saying, I am not of cognitive might to be the president for four more years.

And the logical question is just going to be, well, can you do it today? And the whole country saw that debate. And I think the other aspect is it probably makes Harris considerably stronger in a general election if she can run for president as the sitting president. So according to the prediction markets, which by the way, how useful are, I mean, How great are prediction markets? We're getting granular informational updates. We don't have to wait for polls or pundits anymore.

Prediction markets really coming to their own now. So you and I were in a meeting yesterday at 2 o'clock. We got out at 3, and Harris had jumped up on the betting markets by, I think, 8 points during that meeting. So you immediately knew something was up. And then you started to see all the leaks. The Obama camp leaked something last night, a number of other elected officials started talking on background and then some on the record.

But it was really the prediction markets that were first. They're well before the news. Yeah, someone knows something. I kind of find it a little bit amusing. I mean, the people that know something are the staffers, right? Like the people, so is that considered inside information? Yeah. There is such things inside of trading on commodities, by the way.

common misconception that there's not. There is such a thing as that. Well, the news is getting out, whether it's a staffer that is trading themselves on Polymarket or maybe they make a phone call to a friend and just say, hey, this is actually happening. The news is getting out and it's getting out hours and hours before the mainstream press actually reports it. So right now, Biden is down to, what is it right now in terms of his chance of winning

the general? On election betting odds, he's at 10%. Kamala's at 18.7%. She's in terms of being the nominee, she's at 43% on polymarket, which is remarkable. I mean, we don't actually have confirmation of that, but the market is acting like she really is the presumptive nominee now. Yeah, so right now in election betting odds, she's at 43, Biden's at 31 still. Then you have Newsom, Obama, Clinton, Buttigieg in that order. Something is afoot here.

I suspect that by the time people are even listening to this podcast, it's possible that Biden has stepped down. And she's not, in my opinion, not to get too political or whatever. I don't think she's the best candidate on the Democratic side, but there's a weird thing where only she can marshal the funds that have been raised. That's right. If it's someone else, they just start from scratch on the fundraising side. Yeah. So there's a strong incentive to. keep her. There's 200 million reasons plus to keep her. Now, I'm getting ahead of ourselves by a lot here,

but what is her stance on cryptocurrency and what is her stance on the SEC and the FTC? I think there's a lot that we just don't know about her. Yeah, we have absolutely no idea. I can't imagine she would have stances that differ that much from Biden's, though, but we don't know. Maybe it's to her benefit that she's not on record with really anything about she's never mentioned the word Bitcoin in any tweets. She's never mentioned crypto, never mentioned blockchain, never mentioned digital assets. So it's kind of a clean record. If you were advising her, maybe you'd be saying, look, we need to drive some differentiation here from Biden. And one of the places that we could do that potentially is this emerging technology sector. You could come out as pro-crypto. You could tell Congress to

send you these bills and you could actually sign them into law. You know, could you sign a market structure bill here in your first week in office and actually get the whole crypto industry, the 50 million Americans that hold crypto, get them on board with your agenda? This is really one of the most fascinating episodes in American political history right now. I mean, have we ever had a nominee replaced this late in the process? I don't think so. I don't know about this late, but LBJ stuff.

down, right? So that was a conscious decision not to run. But this is very, very late in the process. I think that happened well before. So one thing I want to address is this idea that's now being kind of recond, which is we only just found out that Biden was cognitively impaired or presumably has dementia. That's so not true. Like anybody with eyes knew that he was declining as early as four years ago. I mean, you remember, he didn't make a lot of appearances in the 2020 campaign. I can't wait to read these books, right?

You'd think that a lot of this will start to come out and people will start to go on the record. I just resent the idea that we just found out and it's as some kind of surprise because everyone has known this that has been actually watching his public appearances. So I find it odd now that the press is characterized it like, oh, we just found out with the debates.

Like, no, there's been a concealment effort deliberately, in my opinion, to hide his cognitive decline, he's going to cling to power. So I would just want to go on record and say, everyone with eyes knew this, and it's ridiculous that we're pretending like we just found out. All right. So there's a lot to talk about this week. Why don't we start out with some deals of the week? First one up is from the Castle Island portfolio.

SendBlocks, which is a blockchain data management platform, they raised $8.2 million from us, Potango, Illuminate, and Laser Digital. Congratulations to the SunBlocks team. Next up, we have Sentient. They're a decentralized AI research platform. They raised $85 million from Founders Fund, Pantara Framework, and others. Then we have Mamori, a Web3 security firm that raised $5 million from blockchain capital, Velocity Capital, and Web3 Ventures. Then we have Protea, a distributed cloud computer. computing firm. There is 15 million from Dragonfly, Hashkey, Web3.com ventures. That's a new one,

and index ventures. Then we have OpenLedger, a data-centric blockchain for AI. They raised 8 million from polychain, borderlist, finality, and hash-3. Then we have Redstone. They're a cross-chain Oracle provider. There is 15 million from Arrington, 7X, and the Spartan Group. Next one is Lombard, a liquid-staking protocol for Bitcoin that raised 16 million from polychain, Babylon, Dow 5, and Franklin Templeton. Then we have Astria shared sequencer network. There is 12.5 million from DBA, placeholder, and Rockaway X. Pi squared, which is a protocol for zero knowledge proofs.

They raised 12.5 million from polychain, black cell rate, and ABCDE capital. ABCDE. Lastly, coin DCX. They're an Indian crypto exchange. They acquired Bit Oasis, which is the Dubai. based crypto exchange. All right. So let's hop back into some political type of stuff.

I guess maybe not political, but judicial, but definitely will have a lot of impact on the crypto industry, I think. On Friday, the Supreme Court overruled the 1984 case Chevron versus natural resource defense counsel. So this is, of course, the Chevron doctrine, which we've talked about on this podcast before. This basically says that if Congress has not directly addressed a question, that is at the center of a dispute, the courts are, it's not a tie goes to the runner anymore in terms of the courts deferring to the administrative agency's interpretation of that law.

And so as a result of that, these admin agencies, the SEC, the EPA, will have less power to interpret laws and propose rules. What do you think this does for our industry? Yeah, I mean, this is absolutely momentous. Supreme Court decision. One of the ones that will live in infamy or what's the opposite of infamy for me? Yeah, it will last. Depending on the impact of day. Big deal. We've been anticipating this. We've been looking forward to this for months. And we thought it would happen because this SCOTUS is so skeptical of the administrative state.

And there's been a lot of decisions the Supreme Court has made, the one that everyone's hired up about has to do with presidential immunity. This one is huge. It overruled a 40-year doctrine that let the executive branch effectively. It gave him a huge space to engage in rulemaking without asking for Congress if there was some ambiguity in the rules, which there always is. You can't fully specify all the rules as the legislative body. They can't really do that anymore. that power has been remanded to Congress. Congress has to specify the rule. It was interesting to see folks like Elizabeth Warren pushing back at this

because this means that the Senate has more power now relative to the executive, so she's actually complaining about a loss of power, about a gain in power. But yeah, I mean, this touches every aspect of the administrative state. Crypto, of course, has been a significant. significant victim of this. I mean, securities laws. There's some ambiguity there regarding what tokens are. Are they securities or not? And the SEC has been interpreting that, right? Arguably, they don't have that ability anymore. We don't exactly know what's going to happen. I think we'll need to see courts weigh in in the wake of Chevron on all these issues. But from the looks of it, it seems like a huge

loss of power for the executive and a gain were a new responsibility for the legislative. It's spot on on a lot of elements there. So Elizabeth Warren's tweet was, let's call the Supreme Court ruling on Chevron what it is, a power grab by the far right to benefit the wealthy and well-connected. Corporate interests want extremist judge judges to write the rules at the expense of consumers, workers, safety, and the environment. Now, what she's not saying there is that this directly just says the legislative branch has more power. And we want you to actually pass laws. Now, there are senators, Elizabeth Warren, is one of them,

that just don't have the ability to pass laws. And so this is the type of ruling that would encourage more bipartisan cooperation. So the types of senators that go in there and just try to be activists and basically hire a bunch of letter writers in their campaign office and try to actually exert power by getting to pick who the head of the SEC is, and who pick the undersecretaries at all of these branches within the, you know, the presidential administration, they will have less power as a result of this. This is really just saying, we want legislation coming out and clarify it. Yeah. And it's funny seeing the left appear

troubled by this decision because, let's say Trump wins the election, which is what the odds are pricing in right now. This actually vastly reduces Trump's ability to, use the executive to make rules and it empowers the legislative so it actually makes Trump less of a dustpot assuming he wins so you think they might be even celebrating this now back to your point on these lawsuits so you will immediately start to see lawsuits here in the coming weeks on a number of key issues staff accounting bulletin 121 is is a critical one and so the surface area to get a lawsuit going now and to challenge the SEC's ability to just basically just put a rule out there and a new accounting rule. First of all, the SEC is not the accounting overseer

for this country. They're the securities regulator. So someone will sue the SEC for SAB 121. And I suspect that it's possible even before the end of the year that you would see that move. So I think that's the obvious kind of first thing that could happen here as a result of Chevron. Yeah, and that's a classic example of administrative overreach is, I mean, they violated existing laws, in my opinion, like the Administrative Procedures Act, but that is probably the best single example we have of the SEC going utterly haywire, reaching way beyond their mandate and their scope as a regulator in passing a very far-reaching rule without any kind of consultation or democratic input. But this is one for democracy, dare I say.

The other one that I think will get sued into oblivion here is the changes to the Exchange Act that the SEC is contemplating, which would pull messaging services into the act of being a broker. So that one has not gone. It's in a comment period still. But if they try to push that rule, that update to the Exchange Act rule into effect, I think it would immediately be sued and rolled back. So the SEC would suffer a big lawsuit as a result of that. I think the custody rule, they're also off base. So basically the whole rulemaking apparatus at the SEC right now is in peril. Next up, other piece of news, the SEC announced the lawsuit against consensus last Friday,

Consensus, the Ethereum conglomerate. They charged that consensus is an unlicensed broker dealer, specifically pertaining to Metamask. So MetaMask, of course, is a non-custodial software product. They don't take deposits. They're not custodial. I think this is a tenuous case, actually, given what happened in the partial victory that Coinbase had over the SEC with their non-custodial wallet product. This will be a really interesting one to track. Yeah, this one will probably go in consensus's favor, I would imagine.

they were granted an expedited process. It looks like this could be wrapped up as early as December based on some of the tweets coming out of the consensus camp. On the stable coin front, Stripe and Coinbase have formed a partnership for payments. So Stripe will add USDC on the base blockchain to their crypto payouts product and their on-off ramp support infrastructure.

Coinbase is also going to add the Stripe Fiat crypto on-ramp. This is just more entrenchment of the Stable sector and tighter integration between sort of traditional payment rails and stable coins. Very, very exciting to see. Yeah, it's great. Stripe builds great products, as does Coinbase. So having that partnership on Stablecoins, I think the user will be the big winner there, just more people getting into stable coins, seamless user experiences.

That's really important. Next up, we have ChainLink. They announced a collaboration with Fidelity International and Cignam on a project to bring net asset value data on chain. All right. We like net asset value data. That's good. Good to see that partnership. All right, here's a weird one. So Coinbase has announced that the U.S. Marshal Service, which is a division of the DOJ, they're now a Coinbase customer. So they will use Coinbase to store seized cryptocurrencies. So it's a custody play. Plus they will use Coinbase Prime to sell those assets. So, you know, if anyone in the audience might be confused as to why one arm of our government is suing

Coinbase and saying that their whole operation is an unregistered broker-dealer, while another arm is signing a large commercial deal with them to custody and trade the exact same assets. You wouldn't be alone in wondering what the heck is going on. Yeah, that one's a little puzzling. This was a big piece of news. I thought Circle, they are the first and major, first major global stable coin issuer to achieve mica compliance. So they've been, they've received an authorization as an e-mobile.

money institution from the French regulator and under the new micro rules, the EURC and USC are now compliant in the EU, which I think is a really big deal. That does seem like a big deal. So what happens here to staple coins that don't get the license? You think these exchanges that are based in Europe will just start to delist all of those assets over the next few months? Yeah, there was a wave of concern around Tether in Europe in recent weeks, and I think that's kind of the effect of these things,

is when regulators do create a framework and certain issuers step up and become regulated, then you have a significant pressure and a desire to sideline the non-compliant, non-registered issuers. So I wouldn't be surprised if we saw exchanges in Europe, delisting everything else, including Tether. I also wonder if a byproduct here is that European, like, Euro stable coins actually become more popular, so not denominated in U.S. dollars. I looked at the data again.

EU stables are still so marginal, less than 1% of all stable coins supply. They just haven't gone anywhere. No, they could double and it could go to 2%. Yeah, I don't know. It was interesting. I was looking at a chart recently in Foreign Affairs. They had a piece about the dollar's dominance, and they listed a chart where they showed the dollar's dominance in a few different venues. So as a share of official reserves, invoicing and settlement currency for trade, quote currency for FX. The dollar is between 40 and 70 percent in all those categories.

And then for stable coins, it's over 99%. So it's just so stark. If you eliminate these kind of geographical encumbrances, you create a very liquid global market, people go to the most liquid asset, and that's the dollar. Yeah, I think that'll come down over time, but the hypothesis probably does hold that it will be a very power-law-driven market.

I've thought it would come down. Yeah, well, it hasn't come down primarily because there just hasn't been a large liquid alternative, right? Yeah, I suppose the main catalyst you would expect to, which could change things, would be regulatory. But barring that, it seems like there's this parado principle at play, whereby the most liquid stable coins and the most popular unit of account just totally dominates.

We really need a stable coin bill. I mean, just from the U.S.'s geopolitical interest here, you want this to continue. You want the U.S. dollar to be able to be the apex predator. So the BitTensor network was halted this week, following a security exploit that targeted a few wallets. Yeah, it doesn't sound good. Still don't understand BitTensor. I will admit that. It's an AI blockchain.

What don't you get? Right. All right, so there was some news here on Silvergate. So we talked about Silvergate last week on the podcast. So they have, let's talk a little bit about this settlement here. So they settled with the SEC and the state of California, it looks like. Yeah, they settled with the California state financial regulator. The SEC and the SF Fed, I believe.

The SEC settlement, the SEC wasn't, didn't get any financial, it didn't extract a financial penalty. Based on what I'm seeing, that looks like the SEC is just chasing headlines. Their allegation was effectively that Silvergate lied about their solvency and the robustness of their AML program. So that seems like typical SEC headline grabbing behavior. The other settlements had to do with Bank Secrecy Act issues. So it was a big fine, $40 million to the Fed, $20 million to California, right. later. Those fines are coming out of investors' pockets, so basically wiping out common

shareholders. I think there's a story that hasn't been told about Silvergate, or we in the industry have tried to tell it, but it hasn't really percolated into the press, which is Silvergate did not lose customer funds. They voluntarily liquidated the bank, which is a very rare thing to see. The reason for this was after FTX in January of 23, the local Fed went to them and said, you have to reduce your exposure to the crypto business with crypto clients to a, quote, ancillary amount. And their numerical interpretation of that was a 15% threshold. At that time, Silvergate was 95% exposed to crypto clients in their depository. story base. So the Fed basically told them that their business model was no longer permitted.

And they didn't have a way to continue to be a bank under those circumstances and so they voluntarily liquidated. At the time that, you know, people were stressing the duration risk in their portfolio, interest rates rising, those kinds of financial risks. But the reason they shut down the was not that. They were solvent and customers were 100% whole. They got 100 cents on the dollar back. They shut down the bank because this limit was arbitrarily imposed by the local Fed, which I don't think anyone has even fessed up to that. The Fed just destroyed a bank because they didn't like the industry they were doing business with. It seems really unusual. I mean, it seems illegal. Can you imagine that happening in any other industry. It's not like these are criminal enterprises. Obviously,

FTX was, but there's, it's not like all of these businesses that operate in the crypto space are operating outside the bounds of, you know, the law. Yeah. So it's just, it's a remarkable thing. Can you imagine another industry where, you know, bank regulators would go to banks and say you can only have 15% exposure to this industry. You just, you wouldn't see that. Yeah. So what is happening here, I think is, look, the government executed Chook Point 2.0 against Silvergate and eliminated the bank, which was a major institution serving the crypto space. They also were very important for stablecoin liquidity with the Silvigate Exchange Network, which was not permitted to be sold, which was the same with signatures product as well.

and the government's not going to admit that they did this. And so these settlements now concern pretty marginal issues, allegations around BSA. If you actually read the settlements, there was nothing egregious in there, actually. There wasn't any criminality or money laundering, but short sellers were alleging at the time. Those claims ended up being totally unfounded.

Yes, silver. Overgate did bank certain FTX affiliates, but they were misled, just like everybody else was. They did business with FTX. They certainly had no knowledge of the fraud, just like everybody else. So, yeah, I think this is kind of a cover-up story. We're seeing now fines and settlements that pertain to, you know, pretty mild issues. nothing serious in there at all. And the reason being, no one wants to admit that this was,

they were choke pointed. They were put out of business because they served crypto, and crypto was politically disfavored post-FTX. We really need some people to go on the record in this industry, primarily from the bank side to the extent that they can and tell this story. And I hope that these settlements don't include gag orders around talking about the case because we need to get to the bottom of what happened with Silvergate and signature and all of these banks that were in this space and now aren't.

You know, there's only a handful that will bank crypto startups these days, but there were quite a few more, and it seems like this was a pattern of behavior that we need to get to the bottom of. Yeah. I mean, just extremely bad faith behavior on the part of the regulators here, especially SEC, which wasn't the primary regulator to the bank. went after them very aggressively, initially claimed that they were aiding and abetting the FTX fraud,

took really mild conclusions from the Fed and exaggerated them, and didn't even achieve a financial settlement. And they're also going after some of the directors individually. I mean, another case where the SEC is being totally hysterical and acting pretty maliciously and in a, headline-chasing manner, in my opinion. We might have jumped the gun here. I might have jumped the gun here on the President Harris talk.

So Politico is reporting that President Biden was just on a campaign call. His quote was, let me say this as clearly as I possibly can, as simply in as straightforward as I can. I am running. No one's pushing me out. I'm not leaving. I'm in the race into the end and we're going to win. So I could have been wrong at the outside of this podcast.

But the betting markets are saying that. that he is going to drop out. Well, actually, I just refreshed Polly Market, and Biden is now, once again, the favorite to be the Democratic nominee, trading at 39 cents to Camales 35. So that has been immediately priced in. Wow.

All right. Well, I'm glad we were on record. So there have been requests to do a Bozo the Week Award. That's a very popular segment. We can't find one every week, but I think we do have one this. week. All right. So let's cue the old bozo of the week music. Shout out to Rob Salmon for the listener Rob Salmon for finding this for us. We're going to run one. I'm going to say this might be the last

one we do in a little while because a lot of the bozos that we want to call out, we just don't feel like it's in our professional interest to call out. So let's just say that. Oh, is that right? There's some bozos with subpoena power in the world. Well, we're going to be uncowed and move on with the bozo of this week at least. All right, so who is the bozo of this week? Bozo with the week is whoever's in charge of Pocodot. Do you remember that blockchain? I do.

The Pocodot paracains. They're apparently spending $87 million a year over at Pocod. So they have like two years of cash left, which is a staggering run rate. And they're using the treasury of this blockchain protocol to do just crazy things. You know, private jets and what is this coin market cap thing I saw? They're spending money to promote their coin on coin market cap. They spent half a million dollars to get their logo animated on coin market cap.

That's a terrible waste of money. Well, the deal was that nobody else could animate their logo. So uniquely animated on coin market cap. What? This is why it's important to have like actual governance. This is crazy. So they just have this pile of money and it just seems like it's a total grift. Well, actually, I'm looking at it right now and it is the only animated logo on Coin Market Cop.

It worked. I guess a good use of funds. Yeah, I guess a lot of retail probably clicked on that. I don't know. But this is a, I'm sure this is a lot more common than we think, but that's a staggering amount of money to spend. And some of the uses of funds there is just really breathtakingly ignorant. So my understanding is actually that these funds are voted on by the expenditures are voted on by the Pocodot community. So really, we're just calling the Pocodot community a bunch of bozos.

Is there anyone left in the Pocod community? When was last time you saw an interesting startup building on Pocod? The only thing I know about Pocod is I just heard about the parochain auctions for years, like staggering amounts of money being spent on these auctions. and you know I never dug into it at all and I feel totally vindicated in that choice to just not learn about whatever the heck that was. Yeah, that's unlike some of the things that you actually have spent time going deep on.

What was that scam one that you went real deep on back in 2017? Oh, BitConnect. No, not BitConnect. It was the other one. Veritasium. Yeah. You actually spent time understanding that.

Yeah, I did way too much time. I got brain damage from that. And Reggie is still mad at me to this day. He still tweets at me. Because you called him out for scamming. Seven years later. Yeah. Iota was another one.

I spent a bunch of time trying to understand that. What was that the principle behind that? They had the tangle, I think. Yeah, they had a dag. Yeah. That was not much going on on that one either. There's not a lot of return to figuring out how some of these things are nonsensical.

Well, some of them end up being real things, so it's hard to tell at the outset. Well, that's right. And the success, a lot of these things, doesn't correlate with how much sense they make. Like, arguably BitTensor is a good example. I did go deep on BitTensor and decided that it was nonsensical,

no disrespect to the BitTensor community. But it still went up a trillion percent. So that's the thing. The valuation of these things doesn't have much to do with the fundamentals at all. So you're sometimes mid-curving yourself by actually focusing on the fundamentals. But all right, so closing up here on Pocodot, so they have $245 million and they're saying that's going to last them two years. Do they need someone to come in there and just actually sit down and show them how to do a budget? Because that should last you forever.

Yeah, I mean, look, you have, someone's got to sponsor these conferences, and the private jets are not going to pay for themselves. Yeah, that was just crazy. So that was the buzzer of the week. By the way, in the last five minutes, Biden's odds have gone up to 45% to get to be the nominee. Wow, he's back? He's back, according to Polly Market. This is going to be the, we'll go back and listen to this episode,

and it's just going to be hilarious because, Things are changing every 10, 15 minutes here. I've never seen anything like this. Yeah. My prediction is he will not be the nominee. I just don't see how he can recover from this. New York Times-Siena poll is supposed to be coming out today. It'll be interesting to see what that is.

This is just amazing. I've never seen anything like this. I think we're going to see an open rebellion and senior Democrat ranks, probably today, in the next week, at least. I would have to think so. All right, so here's a fund. I don't know if this has been reported yet, but BlackRock's global allocation fund, which is just an enormous fund, one of the largest, if not the largest global allocation funds

in the world. They came out a few months ago and gave themselves permission to acquire Bitcoin, the Bitcoin ATFs in this trust. And they released an SEC filing today, and they have. They've done exactly what they said they were going to do. So up there with fidelity in terms of, I think, the only two asset managers who have put Bitcoin EGF products into global allocation fund type of rappers. Big deal. A lot of passive flows into that category.

I feel like no one is as good at finding interesting stuff in these SEC findings as you. You know, I do enjoy it. It's just one of these things I like doing. I like finding esoteric things. infamously, and this is, look, this podcast is a source of a lot of alpha. You, back in 2020, summer 2020, you found micro strategy. Yep, found the micro strategy one. You broke the news.

And we totally brushed it off at the time. We did totally brush it off. The other thing that, I don't know if we've ever talked about this on the podcast, but way back in the day, before we had a podcast, I found the Robin Hood entrance to crypto. So I found that they had applied for some licensing with the term Robin Hood crypto in it. And that made the rounds, but we didn't really have the microphone back then. There's a lot of alpha if you just know where to look, just know how to search SEC filings. Not a lot of people do. I mean, it's honestly pretty hard to use.

Well, they do have a new website. I don't know if you saw that. Really? And there's a crypto section on the SEC website now. And you know, you're probably thinking that they're around for investor protection and education, you're probably thinking that there's a lot of educational videos on digital assets and the role that they play in the financial services landscape, right? That's probably what you're thinking it would be. Okay. So what's what we got on there? It's just basically a page that says that all this is a scam and here's all the enforcement actions. Yep. That is exactly what it says. And there are a lot of enforcement actions. It's basically just a hit list of, you know, bad boys of crypto plus good boys of crypto.

You can't tell because everyone gets an enforcement action. You know what I don't see on that page? A certain case name of debt box. Debt box, man. That will go down as an all-timer. So they shut down the whole Salt Lake office because they were making up stuff in this debt box case. They have neglected to include that in their crypto asset. page shockingly.

We should probably remind them to add that. They do have stoner cats on there, which was an all-time stupid NFT project. I think Milakunis and Ashen Kuch were involved in that. Yeah, I kind of feel the need to go back on record as we do every few months and say that the SEC has a role here, and there is a lot of BS that has happened in this industry with the ICOs and unregistered securities offerings of that nature. And so I think they should continue to do that. I think the best way to do that is to get behind a market structure bill, which would clearly delineate a security versus a commodity, and just give the agency complete lack of ambiguity in terms of where things stand.

And so at that point, there'll probably be grounds for the SEC to go after a couple hundred projects that have no interest in falling into any sort of regulatory framework. But right now it's just a haphazard. The Stoner Cats thing bothered me because it was just celebrities cashing. And of course, it's still happening. Celebrities are still trying to cash it on crypto without authentically engaging into it. And that one really bothered me. I'm looking at the reviews now. People really hated it.

There's one review from October 22 and 1 says, Irresponsible. Couldn't get funding to make a show about. cats that smoke weed. So fund it with something as environmentally responsible as burning down a rainforest. Don't make the show. No one needs this. Oof. Wow. That's tough. This review says NFTs, crypto coin, and whatever bull crap, tech pros keep so virulently pushing, has very little to do with art. Typical scammer mentality. Horrible unwatchable garbage based on a trashy gimmick. trash absolute trash

I mean these people were right as bad show and stupid yeah I never I never watched it all right let's hop over to the warpcast as a reminder we have a community on warpcast here and people are what are people saying people want to know our take on Peter Thiel I guess he came out this week and basically said that

Bitcoin is less interesting to him than it used to be because it's not as cypherpunk anymore black rock has this kind of in and co-opted it and, you know, large institutions are now more in control. I mean, like, Bitcoin was always, well, it wasn't always going to do this, but it did do this. It matured and it became integrated into the financial system and now there's efficient ways to get exposure to it. That's good.

There should be efficient ways to get exposure to it, even if it's through securities wrapper. Is it slightly less interesting from a return's perspective? Yeah, I mean, eventually the law of not large numbers means it's not going to go up at 1,000% a year. It's just big now. That's certainly true. But there's plenty of interesting stuff happening on Bitcoin itself. In fact, I think we're in a total renaissance in terms of the Bitcoin protocol in L2s. So look beyond the returns and look to what you can actually do with Bitcoin, that's my advice.

All right. I think that's well put. Jack Miller says, I'm interested to see if AI will actually get as much criticism as Bitcoin for the energy consumption. Could see it getting more of a pass for a number of reasons. Yeah. So I looked at the numbers and I saw a projection recently that said that data centers will be 10% of U.S. power consumption by 2030. and AI cloud will be 20% of data center. So 2% of US energy consumption by 2030 for AI specifically.

That is more than what Bitcoin miners are today. There's certainly on the trajectory to eclipse Bitcoin mining in terms of power consumption. And as I've said on here in other podcasts, AI is less able to be a benign consumer of power because it's less interrupable. So you can't really do these tricks the Bitcoin miners do whereby they turn off at specific times

to allow other consumers of energy to consume scarce resources. However, AI is also more obviously useful to more people. So I do agree there will be less bell-yaking about it

for sure. I think that's probably right. Yeah, there is some. Dining haters have definitely come for AI. And the response should be the same. It's no one person's role to determine society's allocation of resources. And it's not even the government's job either. It's not the government's job to politically disfavor, favor certain industries from an energy perspective.

What we should all do is just support cleaner power generation, more abundant energy. Bobby Hall says, love the podcast, but Matt is driving me crazy with his bragging about Boston's championship. Just want to comment, Bill Buckner. I don't know. Who's Bill Buckner? Bill Buckner, whatever. I can imagine what will be, and I'm unburdened by what has been.

And lately, we're just winning championships at an exorbitant pace here in this town. Bill Buckner had a famous error in the 1986 World Series against the New York Mets. They were, you know, basically one out away from winning and it went through his legs. And the curse continued after that. But that's long past. I'm completely unburdened by that. Unburdened by that. We just resigned Jason Tatum.

So Celtics are going to win championship the next three years here. And by the way, the team's for sale. So I don't know. That's a big price tag. But I'd like to see someone step in there and buy it. Maybe a crypto doubt. type of Boston dowsh by that. So Florida won a championship.

We won the Stanley Cup. We, I don't know, I live here. I'm not really a Floridian. I think that that's very embarrassing for the NHL, that a Florida-based team won the Stanley Cup. There was no ice here. There's no ice for thousands of miles. That team is an absolute wagon.

That was a great, great team. And Doug Seifu is the owner of the, Florida Panthers. Noted SEC critic, CEO of Virtue financial, no cryptospace. So it's a great, very happy to see him win another one. If it can't be Boston, I'd love to see Doug Seifu win. All right. And lastly, it wouldn't be an episode of on the brink without another standard chartered price prediction. So latest prediction calls for Bitcoin new all-time highs in August and 100K by election day. So all time highs in August, apparently. I would love to love something as much as standard charted loves crypto. They just love it. They do love it. I think they're doing a great job

over there. I have no idea where they're getting their price predictions. But I don't even know if they've been right over time because no one ever goes back and checks them. But they're saying the coin is going to an all time high in August. And who am I to say that's not true? I would say Trump election would certainly be bullish Bitcoin undoubtedly. But don't you think that that should just be progressively priced in based on the odds of Trump winning? Well, you're an efficient markets guy, but I'm here to tell you that markets are not efficient because venture capital would not exist if markets were efficient. If Trump is 95% on election night, Bitcoin should incorporate most of the rally, the Trump rally. So, yeah. Well, that's an interesting point. Like, Pauly,

Polly Market is probably going to have some impact here on just how quickly these price moves go up or down because you're going to be able to see it over time. But who knows, maybe we just contradict ourselves on this podcast by saying that Polly Market predicted Harris and it was inevitable. And I guess all it takes is one man to say that it's not inevitable. Well, we could also be in a situation where Trump is an underdog on election night or there's an upset and the odds are not clear. I mean, we've certainly had that. so yeah maybe we do have an election night rally all right well we'll leave it there everybody happy 4th of july have a safe and healthy weekend and we will see you on monday