On The Brink with Castle Island - Weekly Roundup 07/18/24 (JD Vance VP nom, ETH ETF green light, Larry Fink evolves) (EP.546)

Episode Date: July 18, 2024

Matt and Nic return for another week of news and deals. In this episode: Nate Silver joins Polymarket JD Vance is Trump's VP nominee Ethereum ETFs get the final go ahead Should crypto users be single issue voters? JD Vance's crypto platform Does a Trump Vance admin imply a devaluation of the dollar? JD Vance and seed oils State Street is exploring their own stablecoin Possible SAB121 carveouts Germany is done selling their Bitcoin The CSW story is finally over Jamie Dimon for Treasury secretary? Trump is due to speak at Bitcoin Nashville Update on how voting works in Congress Was Trabs a whistleblower? Sponsor notes: Charting the Course to Mt. Gox Repayments In Coin Metrics State of the Network Issue 268, we trace Mt. Gox's journey, analyzing BTC wallet flows and liquidity in the wake of Mt. Gox repayments.

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.

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

Bitcoin Metrics and here is the Metrics Minute. In today's Metrics Minute, we're looking at the journey to Mount Gawks repayments. So Mount Gox evolved from a trading card platform to Bitcoin exchange in 2010. At the time, accounting for over 80% of Bitcoin's trading volume, it peaked at $99 million in daily trading volume in December 2013, driving Bitcoin $2,000, before collapsing in February 2014 with $850,000, Bitcoin lost. a full decade later, creditors are finally receiving repayments. While it's associated with the entity now hold 90,000 Bitcoin down to the 140,000

bitcoins initially recovered, Bitcoin's market depth ranging between 50 to 100 million of liquidity within 1% of price, and daily volume of $12 billion on liquid exchanges suggests adequate liquidity to absorb potential creditor sales. That is your metrics minute. All right, so we're recording this on a Wednesday, which means something big will happen on Thursday. I don't know when this will come out, but caveat that it's recorded on a Wednesday. How's your week? You seem every week now you tell me that you think Biden could be out of office by the time the podcast comes out.

Well, inevitably, it'll probably happen on one of these weeks where we record on a Wednesday. It happens on a Thursday, and people are listening in on Friday morning and wondering what our take is. and it'll happen eventually. Yeah. Well, it hasn't happened yet, although the lines are moving. What does Pollymore could say right now? I think he's a 50% chance to win the nomination right now, and he was like 70 to 75 about 12 hours ago.

And this seems to be on the news of Schumer and Jeffreys, making some moves behind the scenes, as well as a Biden interview with BET, where he said that he would only step down if the medical reason arose, which those can always arise pretty quickly. Yeah. Well, on the polymarket topic, Nate Silver has joined them.

That's pretty remarkable, I've got to say. Yeah, so Nate Silver was hired as an advisor to polymarket. This has to be, this is an enormous crypto hire. It's got to be one of the most high profile crypto hires that we've ever seen in this industry. I mean, especially for a relatively new firm, not the polymarket isn't established. the biggest prediction market, crypto one at least. But still, I mean, somewhat untested, somewhat uncertain from a regulatory perspective, just a huge hire.

I mean, Nate Silver is the prediction guy. Do you follow him on Twitter, on X, I should say? No, I don't think so. So he's gotten a lot spicier this election cycle. So he was, he founded 538. I think he sold that to the New York Times, and he's not there anymore. So he must have earned out and left. but he must be free now to say whatever he wants.

He's picking fights on Twitter with the DNC at the moment. Yeah, I mean, big congrats to Shane and the Polymarket team. Also, Polymarket itself, volumes have just taken off. People love betting on politics specifically, as it turns out. What a huge category. Yeah, and I saw Deribit is adding a market for political betting as well. So it's logical, right? It's one of these things where I find myself checking Polymarket every single day.

Yeah, the Vance nomination, which obviously we have to talk about, I would say polymarket was ahead of that relative to other sources. So, you know, these crowdsourced market-based prediction markets, not to be redundant, they may not have, there may be alpha embedded in that because insiders might want to use the most liquid venue to express, let's say, non-public information that they obtained. So there may be alpha. But I would say the best benefit of these systems is just latency. Yeah. Because views get expressed so quickly faster than polls can be made or that the pundits can weigh in. It's just real-time information being incorporated. So it's a great market story. Yeah, you go on there, you see that

something's moved and immediately you hop over to X to figure out what happened. And then maybe two hours later it would be on television. Yeah. So I think polymarket's going to play a big role in the election. I think it's the kind of clearinghouse for political information. I think that's right. All right. So this week on the podcast,

Wyatt sat down with Chris Dufus of Fontbank to discuss stable coin adoption in emerging markets, the use of airtime. So that was a good episode. We have a busy podcast slate coming up the next few weeks. bunch of episodes in the can right now. Yeah, we've been cranking them out. So stay tuned. Fond bank's very interesting.

Phone, I guess air time, so like phone credits as a form of digital money. Kind of always has been, right? So much more to come on the emerging market stable coin story. Stay tuned on that. All right, so let's hop into some deals of the week. First one up is Partior. P-A-R-T-I-O-R. I guess that's part-

Tior, a blockchain payment network. They raised $60 million from peak, what is this, peak 15 partners, Valor Capital, and Jump Trading. That's a big round. Yeah. Next up we have Bima Labs. There are Bitcoin Back, Stablecoin developer. There is 2 million from Portal Ventures, Draper Gorin blockchain and Sats Ventures. Then we have Caliza, a cross-border payment solution that raised $8.5 million from initialized abstract and DCG. Then we have Heroku, a portfolio management platform. There is 6 million from Whitesar Capital and MMC Ventures. Next one is Pex.

This is a stable coin payments platform that raised 4.5 million from TNB, Antler, and Emo Capital. Then we have Mira, an AI blockchain network. There is 9 million from BitCraft Ventures, Framework, and Excel. The last one is an M&A. So Zodia markets acquired the OTC business, not the whole thing, but just the OTC business of Elwood, which is a trading company. technology firm. A little light on the deals this week, but it's only Wednesday. But have you on the news front. Yeah. So, all right, where to start here? Let's start with Ethereum ETFs. So

Reuters is reporting that issuers have been informed that these spot Ethereum ETFs can begin trading on the 23rd of July, which is next Tuesday. So it seems like that's the date, and I haven't heard anything to refute that. Yeah, where do you figure these ETHs? are going to come out in terms of the ratio of assets versus Bitcoin ETFs? I think probably if I had to just pick a number, 20% of Bitcoin. And with the X factor being the basis trade, right? So the CME trade there, you know, short futures or short spot long futures. Basically the trade that everyone is running on Bitcoin.

that is the X factor in terms of how big the spot holdings will be in my view. But I don't know. I figure it's probably 20, 30% of Bitcoin in terms of demand. So that's roughly in line with the ratio we see of Ethereum ETPs to Bitcoin ETPs and other markets. But that's slightly below the actual market cap ratio of the two assets. Yeah, slightly below. I mean, I think that number could increase if there were just more. basis trading opportunities to start to pop up.

And maybe there will be on Ethereum with eigenlayer and the restaking yield that you can get. And obviously you can't get staking yield in some of these products. So there might end up being a bunch of profitable trading opportunities that arise from this that would drive more flows into the spot market. But I don't know that you can predict that out of the gate. So speaking of Ethereum, Vitalik came out with a blog post earlier today saying that you shouldn't use crypto as a determinant of your political views

which I thought was interesting I kind of disagree with him to be honest with you yeah everyone's entitled to an opinion including Vitalik but yeah just a blog post yeah I mean I respect him as an intellectual and I understand that he's much more likely on the progressive side

and so he's trying to reconcile the fact that crypto has become a political issue and a polarized one in this country. But, you know, I think he's kind of knocking down a straw man, which is he's sort of suggesting that people start with their crypto exposure as the motivating factor and then back into political views. I think it's the other way around. You have some ideological priors, and out of that, you land,

on a political stance and your view on crypto is downstream of that. Maybe. I don't know. I'd say as someone who voted for Biden and regrets it, I think a lot of these administrative actions that have been taking by the FDIC and the Fed and the SEC have really opened up my eyes to a new way of seeing things that are really divorced from crypto. It's just that crypto was the industry that was maligned at that time. But the deeper you go, you figure out that this chokepoint situation has happened to other

types of disfavored industries. And yeah, I think people come at this from their own separate ways. I thought that Mark Andreessen and Ben Horowitz had a good podcast episode that came out yesterday, talked about how they have transitioned from being Democrats into now being, I guess, unaffiliated, but voting for Trump. Yeah. I see crypto is a lens through which you can interpret. and understand executive power and administrative overreach.

And it's a very acute example because it has been politically targeted by the Biden administration. But through that, you can come to understand, okay, the administrative state is hostile to free enterprise in this country. And they're seeking to politicize energy and basic resources. So I think it's a useful lens. but it's not, I don't consider myself a single issue crypto voter. It's just that crypto is one of the things I care about. And it's correlated with, you know, certain ideological beliefs. Yeah, yeah, I feel very similar to that.

All right, so maybe keeping on the politics track, there were a bunch of kind of non-political stories to talk about this week. But while we're on politics, JD Vance was picked as President Trump's vice presidential pick this week. So I guess the logical question is just where does, Vance stand on cryptocurrency and digital assets. We have a lot of data on this. So he's on record with his disagreement with Chairman Gensler on the approach to regulation via enforcement. He was one of these senators that sent a harsh public letter to the SEC after the debt box case where the

SEC fabricated evidence and lost that enforcement case and had to pay, or the taxpayer, I should say, had to pay for the company's legal fees. He voted to repeal staff accounting bulletin 121. He has draft legislation, apparently. The rumor is that he has drafted a digital asset market structure bill. I haven't seen that, but that's been the rumor over the past month is that there's a Vance version of Fit 21. And lastly, I guess in his financial disclosures, he revealed that he owns Bitcoin. He holds it at Coinbase. So it seems like he's a very pro-crypto candidate to me.

Yeah, I think that's undeniable. I actually interacted with him at a conference back in 2021. He was actually quite skeptical of crypto at that time. And since then, he's now disclosed that he owns Bitcoin, which kind of implies that he bought it recently. So maybe he's underwater on that position. But yeah, I think very clearly, Vance is a relatively pro-crypto candidate. That's not sort of the main thrust of his platform at all.

But he's young. He's former venture capitalist, of course, close with Peter Thiel, his protege almost, very attuned to Silicon Valley, and I think quite aligned with the ethos of the industry. Although, you know, he does have some heterodox views compared to the remainder of the Republican Party. So for instance, he is aligned with Lena Khan. Yeah, I was surprised at that. I actually didn't realize that. and he's indicated his desire to break up big tech monopolies and target the largest tech firms that he considers to be kind of detrimental to innovation at this point. Some interesting things he's also said. I've seen some discussion crop up on X.

He has suggested, and this is kind of following Lin Alden and Luke Groman's commentary, that the strong dollar and the dollar is the global reserve is deleterious to America's position. of industrial power. And of course, J.D. Vance is known for coming from poverty in Ohio, Appalachia, and representing, you know, the working class. Well, having made his way out of the working class, I guess, to become an elite. But, you know, he's known for his novel, of course, his memoir. And so he's suggested that a strategic devaluation of the dollar might make sense to rebuild local industry and to rebuild the working class,

which is quite an interesting idea that we haven't heard from many in Washington at all. It's kind of scary because people like the notion of a strong dollar, but I think it actually makes a lot of sense. Yeah, I'm actually halfway through Lynn Alden's book, finally got around to reading that broken money, and that's a point that she calls out. The strength of the dollar has really come at the expense, of the working class in the middle of the country primarily.

So that is definitely not a view that we have seen out of most mainstream politicians. I think it's a very complicated thing to explain to a constituency, actually. I'm not sure that that's an issue that is a hot campaign topic because you just can't talk about it at rallies. It's a very complicated issue. Yeah, I mean, how do you distill the Triffin Dilema

and Dutch disease? into talking points at a rally. I think it comes down to like tariffs and building manufacturing jobs. I mean, I think those are the byproducts of this, right? But it is an interesting and seductive idea and something I've grappled with in the context of stable coins, actually, if you read my latest article on stable coins, I talked about this. Crypto people like to promote the notion of stable coins as a buyer of dollar asset and dollar

debt is good for the U.S. And they're good in a strategic sense in that we have strategic benefits from being at the nexus of global trade, sanctions, enforcement, things like that. But in another sense, the dollar being this reserve is not good for a big portion of Americans. And I am persuaded by the Linaldian, Luke Groman interpretation, which is that it has been good for basically globalism. and for elites, coastal elites, and people that sell services, so finance, et cetera,

and it has been not good for the industrial heartland. And it's kind of a unique take, but I do agree with it. I think it does imply that inflation would not go away under second Trump administration. Oh, yeah, I kind of view that as inevitable. I think inflation will not go away under any administration. Really, you'd have to have to have to have a one-term executive, which I guess Trump would be in this case, just really decide to lean in and fix it.

But there's really not the incentive to do that. You don't want to be at the helm of a terrible economic environment. Yeah. So, I mean, you know, historically VPs don't have that much power, frankly. But so we don't know. Dick Cheney had a pretty good amount of power. Cheney being the exception, I think, So we, you know, we don't know the interplay between Trump's views and Vance's views.

And also, you know, the election is still in the balance. We don't know who's going to win. But this is a macro story that I've seen traders starting to talk about is the threat to the dollar, actually. And, you know, ways to position yourself if Vance's view prevails and becomes policy in Washington. The other thing on Vance is that the, so the mainstream media has picked up all sorts of past comments. from Vance around Trump. He was anti-Trump. I think he called him Hitler or something, right?

He said he's the next Hitler. This was years ago. And there's one way of looking at that as saying a flip-flop, but there's another way of looking at it and saying, there's a lot of people that felt that way that are coming around to Trump. And quite a few of them, I'd say, are in the technology industry. So a little bit refreshing, if you view it in one lens,

that someone is able to actually change their mind on the issues and reevaluate their priors. Yeah, this is one of the big stories of the election that people are now waking up to, which is the realignment of Silicon Valley around Trump in a way that didn't occur four years ago or six years ago. I mean, Trump has seen as really anti-establishment, outsider populist. But now we see, you know, big tech came in on the side of Biden, the last few elections. like Zuckerberg spent $400 million on the 2020 election. Not necessarily to, before you fact check me, yes, not directly on Biden, but it was still

had a specific thrust to it. And, you know, a lot of these elite institutions lean left, I think that's very obvious, whether it's academia, the press, or just the corporate world. But now we see a defection from that. And a lot of folks in Silicon Valley recognize. that the Biden admin and the administrative state overreach, the growth of the administrative state has been hostile to free enterprise in this country. And you see, you know, folks like Elon Musk very clearly switching sides and being, I mean, you know, general partners at Sequoia, you know,

Mark Andresen, Ben Horowitz, lots of folks in the crypto space, of course, you see them coming out in favor of Trump without. any regard for the social consequences or maybe, you know, supporting Trump has been more normalized in elite circles. Yeah. Which I find to be very, very interesting. I find that interesting too, and I think that will continue. Maybe the last thing on Vance from my side, so this is from Warpcast. This is from Christian Dittmeyer. Thanks for listening. He claims, and he's posted a screenshot here, that J.D. Vance is, by his own indication, he does not use seed oils. So that, I mean, talk about a alignment with us, huh?

Although I unfortunately do do the seed oils. I know you're not on the seed oils. Yeah, it's, these stories are going to come out. Vance follows a lot of folks on dissident right-wing Twitter, frog twitters, it's known. And seed oil disrespect is a big part of that. And I think I played a role in that. I don't know how much responsibility I can claim.

But I think that's probably one of the pieces of Vance's platform that we've influenced to a certain degree. agree. So if I'm trying to avoid seed oils, what do I try and do more butter in the pan? That's what it is, right? Butter in the pan and lack, don't do the processed foods. It's like the Tom Brady diet. I mean, there's a lot of ways to avoid them. Yeah, avoiding processed foods and eating out, unless you want to use an app like seed oil scout, which I really recommend, you know, to determine whether restaurants are adherent or not. Yeah, basically the way to avoid seed oils is to cook for yourself.

And the safe sort of oils or fats to use are butter, lard, tallow, ghee, coconut oil, avocado oil, and olive oil, depending on the meal. So those are the kind of safe ones. Okay. All right. We might need to get this written down and maybe included in a newsletter update or something, but that's good to know. All right.

let's hop into some crypto financial services news here. So this just came out a couple hours ago. According to Bloomberg, State Street is exploring, creating their own stable coin. What do you make of this? This is funny because just last week we were complaining about State Street's total inaction on crypto. Well, it doesn't mean they're actually doing it,

but it's good to have the perception that you're doing things, I suppose. Yeah. And it's also unclear as to whether this is a public blockchain thing or an enterprise blockchain, which is what I fear it is. State Street. Hey, it's in Massachusetts. Elizabeth Warren's not going to like this. All of a sudden, you have State Street in your backyard wanting to do digital asset things. Not going to be very popular with the senator. So yeah, we keep an eye on that. Hopefully that materializes into something. And Bloomberg is also reporting something that is obviously near. and dearer to our heart around staff accounting bulletin 121.

So there is a report that came out in Bloomberg law that the SEC is going to give some exceptions to SAB 121, that it will allow certain banks and broker dealers to launch their digital asset custody businesses. And it is very unclear to me, A, if this is true, and B, how this would actually work. So it's obviously a good thing to have Bank of New York Mellon. and the other banks able to come in and actually offer services. I think this makes the industry safer and more resilient for consumers.

But I don't know how you would do this and just say certain financial institutions can play, but we're not going to just broad blanket makes a 121 go away. That just doesn't seem very fair. I don't know by which legal premise they would be exploring a special carve-out here. Yeah, I mean, this seems pretty arbitrary. actually if you're you know permissioning firms on a case-by-case basis to be exempt from this i mean that's not the way to do business as a regulator no it just kind of feels to me that they're getting a lot of heat probably from a bunch of these asset managers that say hey we want our bitcoin at

bank of new york melon and this is holding us back and they're trying to figure out a way to make that happen i just don't know how you make make this happen i mean you would have to you'd have to just make this whole thing go away, I would think. Yeah. So it doesn't seem like a great solution at all. There's a lot of momentum behind the scenes on Mike Flood's bill, apparently. So Mike Flood and Richie Torres, I believe, is the co-sponsor of that, the uniform treatment of digital assets bill, which would be the formal repeal.

So that was not the bill that got pushed forward. This was another resolution that Biden eventually vetoed. but a lot of murmurings that we're going to see this reintroduced, which will be interesting. So there's three positive pieces of news on Bitcoin this week. So I think we'll start with Germany. So they have finished selling approximately 50,000 Bitcoins. Yeah.

And they put out a press release saying that they had intended to sell them in the gentlest way possible, which I don't know, maybe that means something different. in German because I feel like they were just market selling during periods of illiquidity. Yeah, I don't know. It seems like they were using some OTC desks. They were probably T-wapping into this on some exchanges. But, you know, they were able to liquidate it without moving the market too dramatically.

But someone, there is a massive buyer of Bitcoin in this market. I don't know if you feel the same way, but that German Bitcoin just got gobbled up here. Yeah. So, yeah, I mean, look, we're sitting at, what is it, price today, 65? Like very strong recovery. Strong recovery. Germany just liquidated a ton of bitcoins. Things look pretty good.

Next up, Craig Wright is officially done in kind of every sense. I mean, his case has been referred to the criminal port in the UK. He's been forced to put up a notice on his website and his Twitter page saying that he's not Satoshi. I mean, it's as complete a destruction as his point. possible. So it's incredibly good news. Yeah. And so this case now being escalated to a criminal case, what are the implications there? Is he actually going to go to jail for lying about being Satoshi and suing all these innocent people? Well, I mean, he perjured himself repeatedly and rampantly in UK court to a level, I mean, to a degree probably hitherto unseen in terms of a quantity

of perjury and lies under oath. So I would be. surprised if he submits to any kind of criminal case. I think he would probably just choose to go on the run. We don't even know if he's in England. I think he might actually reside in Scandinavia or something. But so there's that. And then there's just, he has to totally repudiate all claims he's made about being Satoshi, which is incredibly satisfying, especially when he considered that he's been a thorn in the side of the Bitcoin industry for eight years. Remember the Tulip Trust stuff came out? out in 2016. Yeah. Yeah. What an all-time hoax. I mean, what a sociopath, huh? I mean, you and I both remember this. There were folks back in the day telling us like, yeah,

what I think there's something to be said for Craig Wright? Like maybe BCH is the real Bitcoin. Like it was maddening. Yeah, real people were saying that Bitcoin cash was going to flip Bitcoin. Yeah. I'll never forget that. I know I won't forget who those people were. And I think we had enough information and know that it was a fraud. But yeah, look, he duped a lot of serious people. And it caused a ton of damage. He began this campaign of lawfare against Bitcoin developers and just regular ordinary Bitcoin enthusiast, Peter McCormack, Hoddle not. These are normal people. And he tried to and almost succeeded in bankrupting them just because they're Bitcoin advocates. So it's a fitting fate for him. I'm really,

really, really glad it's over because for the entirety of my tenure in Bitcoin, he's been a specter that's haunted the industry. I'm so glad that he's gone. Yeah, I fully agree with that. Was there any other Bitcoin news? I've got a couple things. Well, Larry Fink. Did he catch his interview on CNBC? He goes on CNBC to talk about Bitcoin. I might say the way that I saw this was Michael Dell retweeted it and he said it was very interesting. So just talking about... Oh, that's a double trouble. Talking about people that are really

interested in Bitcoin and price of Bitcoin didn't really move when Germany was dumping billions of dollars worth of it. Just file that one away. Should we play the audio for Larry Fink's interview? Yeah, toss it up there. Now, I know you have been a leader

in willing to embrace crypto. You have made it so that people can be in Bitcoin. We hear that you are thinking about Ethereum. These are incredible things. Now, BlackRock is not known as a gunslayer by any means. So you obviously must believe that this may be as an alternative. Is this an alternative in order to be able because of a deficit?

Maybe something long-term people should have? Absolutely. As you know, I was a skeptic. Yes. I was a proud skeptic. And I studied it, learned about it. And I came away saying, okay, you know, my opinion, five years was wrong. Here's my opinion.

This is what I believe in today. I believe the opportunity today. I believe Bitcoin is legitimate. I'm not trying to say there's not misuses like everything else. But it is a legitimate financial instrument that allows you to have maybe uncorrelated, non-correlated type of returns. I believe it is an instrument that you invest in when you're more frightened, though. It is an instrument when you invest in when you're more frightened, though. It is an instrument when you believe that countries are debasing their currency, debasing their currency by excess deficits.

And some countries are. I believe we have countries where you're frightened of your everyday existence and have you an opportunity to invest in something that is outside your country's control. Then you can have more financial control. And so I'm a major believer that there is a role for Bitcoin in portfolios. I believe you're going to see that as one of the asset classes that we all look at. I look at it as digital gold, as I said before. And I do believe there's a real need for everyone to look at it as one alternative to, I would say, the optimism that I have in the world. If you want to hedge hope, Bitcoin is not an instrument for hope, unless you're hopeful you're going to make a lot of money on it.

But I look at it as a vehicle in which you're expressing your financial acumen in something that you're more frightened of the world. You're more frightened of your existence. And I believe there's a great industrial use for it. And I think a lot of people are missing that. All right. So it's a legitimate financial instrument. And he's a major believer that it has a role in portfolios. Larry Fink really came around.

You talk about changing your mind on something. You have to respect it. Now, speaking of that, it has been rumored that Jamie Diamond is a candidate for Treasury Secretary under a possible Trump administration if you were to win. And I don't like that.

However, just as we went to recording, Trump has apparently told Bloomberg that Diamond has re-evaluated his view. views on Bitcoin, which I find, I would find that to be pretty surprising. Yeah, I don't trust Diamond specifically on the matter of Bitcoin, even if Trump is saying it, I don't trust him. But it could be wrong. Now, getting the role as Treasury Secretary is a huge role for obvious reasons, right? You're one of the most powerful people in the United States. But if you're Jamie Diamond, this is an even better

situation because if you get the role in the cabinet, you get to sell out of your holdings tax-free. So Hank Paulson is the textbook example of this. He went from Goldman to Treasury Secretary under Bush, and he was able to exit his Goldman Sachs position without paying any taxes on his stock. So that's just one of the perks. And so you'd have to think that Jamie Diamond would be very interested in this role, as would Ken Griffin be interested in this role. You can really get a hitter just with that that perk. So can you explain that to me? Is he forced to liquidate his position in JPM? Or is there perceived to be a conflict of interest? So he has to sell? I'm not exactly sure if he has to sell or if it has to go into a blind trust. But if he were to get out of it,

he does not have to pay taxes on it for sure. And I think you'd probably would, I would imagine you'd probably get out of it, right? That's a cabinet member perk I was not aware of, but that's an insanely nice perk. It's a great perk. I wonder how low that goes in the totem pole. Like if you just get a deputy undersecretary of whatever, do you also get that?

But that's a... To be clear, I'm interested in this perk for myself, and so if there's any role, whether it's assistant to the intern or whatever, you know, I'm all ears. I don't think everyone gets it. Like I don't think Scaramucci as what was the communications director or something. I don't think he got that perk.

That's not enough? You probably didn't have enough time to sell it with the 11 days either. Yeah, 11 days of T-wopping. So, yeah, those are my three good Bitcoin things. I guess that we have a force now. Do you have another one? No, that was it. I think it's a, and I wouldn't even call the Jamie Diamond thing a good thing necessarily.

I think we need to really suspend disbelief. So Trump is due to speak at the Bitcoin conference a week from now, week from maybe tomorrow, I think. Yeah, that'll be interesting. I mean, I'm astonished he's going ahead with that, actually, given what happened. Yeah, I hope that, I hope the security is up to snuff. Yeah, so we don't have an indication yet of what he will say. but the very fact that he's taking time out of his campaign scheduled to go to a Bitcoin conference is pretty remarkable.

Actually, it really shows how far this industry's come. It really is. All right, so let's talk about some other things that happened this week. So there was an interview with SEC Commissioner Hester Purse in which she said that staking for Ethereum ETFs and the in-kind create and redeem process for the Bitcoin and Ethereum ETFs would be open for reconsideration, suggesting that they would be open for reconsideration if there was a change in SEC leadership. So people kind of made a big deal out of this, but I think that's no surprise. I mean, if Ethereum is not a security staking, I don't think ought to be considered a security.

So, yeah, I mean, if you have a different SEC commissioner, I don't see why you wouldn't be able to have staking in these products. You can certainly have them internationally already. And if you get a change in SEC leadership, getting this in-kind, create, redeem is just a more efficient product. So this seems like a no-brainer to me. The only reason they don't want that right now is because they don't want banks and broker dealers touching physical Bitcoin and physical Eath. So, you know, market structure bill solves that. So I wasn't too surprised. It seemed kind of kind of obvious that these things would get re-evaluated, but people seemed excited about it. So do we know if Trump does win the election, does Hester Peresbican,

is not how that works? No, that's not how that works. I, I think this would, I actually don't think she would become, I mean, I hope she. Forget I said that. I hope she would. But typically, I think you would give these roles to people that helped you get elected, right? So you'd probably be looking at someone who's campaigned hard for Trump. And I don't think it's the normal course that they would just look to another commissioner and elevate them. So is it true that if you donate a certain amount of money?

you can get a low-grade ambassadorship. Like I'm not talking about one of the important countries, but, you know, Moldova or Antilles or Micronesia, something like that.

Yeah, that's my understanding. Yeah. What would you want? I would ask for somewhere off the beaten track, like Belize, maybe. Somewhere warm. Paragu.

Yeah, warm jungle. There's probably a nice ambassador's mansion. I would imagine. You'd want to go somewhere safe. You'd probably want to go somewhere where you're not going to have war breakout between the U.S. and that country.

Yeah, actually, Belize is a bad choice. Yeah, Belize might be a little tough. I would do Ireland. I would love to do Ireland. We have good relations with Ireland. There's a job creation story there. You'd probably be meeting a lot of interesting people. You'd be spending a lot of time golfing,

definitely spending a lot of time in the local watering holes. Yeah, I mean, for you, it would make sense as a Walsh. and I've heard the Guinness is better there. It is. That's unquestionable. Just better Guinness. Yeah, it just tastes better over there.

Yeah. So I'd probably go Ireland. I think that could be an interesting late career move, being an ambassador to a relatively unimportant country. Well, Ireland is important to be clear. I think Mongolia would be interesting. Oh, is that, do we even have an ambassador to Mongolia? I mean, like not a lot happens there.

it's not like you have to make any important decisions. You could just go, I don't know, horseback riding and falconing, I guess. They have a lot of falcons. Sounds great. Yeah. I like that. All right. So let's talk about another thing that happened this week.

So Bob Menendez, Senator from New Jersey, you know, the reason for bringing this up is because Bob Menendez has been a Bitcoin and a crypto hater for quite a while. So back in the day, he said that Bitcoin and digital currency is an ideal choice for criminals. And Bob Menendez, in case you haven't seen, is going to jail for accepting bribes in gold. So he didn't take his own advice. Yeah, I mean, he is a criminal and he didn't use Bitcoin. But he didn't choose Bitcoin. He would have been caught a lot faster if he used an immutable public blockchain where every transaction is recorded for the rest of history. I think he probably made the right choice to avoid Bitcoin.

He would have been in jail a lot sooner. Yeah, I mean, it's been a good week for Schadenfreude, I guess, between Craig Wright and him. Yeah, I mean, now he's still a senator, so I don't know how that works. Is he really? Yeah. But he can't vote on stuff, I guess. You can't, as we've learned, do you have to physically be in the Senate to vote? Oh, yes.

Did we ever find out how the voting works? Yes. Did anyone message us? We did. Okay. I need to, warpcast. I'm getting a lot of these. spam air drop things in Warpcast.

I don't know if you're getting those two, but people want me to claim airdrops on all sorts of links that are nefarious. But shout out to Michael Cameron, who explained how voting works. So there are voting machines placed throughout the chamber. And again, just to refresh everyone's memory, we brought this up on last week's episode

because one of the representatives erroneously voted in favor of Biden, upholding the veto basically. So on the veto overturned for Sab 121, someone entered a mistaken vote and they came out and said, oh, sorry, I voted the wrong way. So we've got these pictures up here,

and it's a green button or red button. There's a yellow button. There's a blue button. I don't know what the blue button does. It looks like it just says open on it. But there's a yay, a nay, a present, and an open button. And you just sit there and you press it, I guess.

So this poster, Michael, Cameron is very funny to me because he kind of explains why a faulty vote could occur. So he says, quote, on top of the mechanics, members aren't just sitting around between votes waiting for the next one. They have little quests. Votes are the only time you know that everyone is going to be there. It's a great time to walk across the aisle and say, hey, your staff have been ignoring my staff's calls. I want to walk with you on Bill XYZ. This goes both ways. So members approaching and being approached the whole time, there's a lot of yapping on the floor.

he says that on SAV-121 rep, Ferguson was on a side quest and got lost in what the vote was. What a great piece of alpha that is. That's a really great post. So thanks for putting that out there, Michael. But it begs the question, does your staff press the button if you're on one of these side quests? And do you think that Ferguson's staff pressed the wrong button here? Yeah. I mean, actually, this is Jolny created more questions.

Like, shouldn't you have to do biometric verification to prove that it's you? Great. The representative voting. Yep. Agreed. I mean, come on. Like, this isn't, the system is not secure. It's just a button.

It's literally just a button. It's a big button, but anyone could press that thing. So you could just be running up and down pressing these buttons just so in chaos. Oh, okay. Well, actually, I didn't read the whole post. He says members slot in an ID card. into the voting machine and then vote. Right, but if you have the ID,

presumably you put the ID card in there and then you walk away on a little side quest and what if it's just stuck in there, anyone can press that thing. You know, this is more secure than how federal elections work where you don't have to present ID. Very true.

I will say that. I will say that. Very true. That's a fact. You're not wrong. Yeah. Well, we learned something this week. So this just came out.

The SEC has awarded $37 million to a whistleblower who was instrumental in an enforcement action that resulted in the SEC collecting a big fine. Now, they don't disclose the enforcement action. They don't disclose the name of the whistleblower, obviously, or the company. But they do say that whistleblower protection of this nature is somewhere between 10 and 30 percent of total assets seized. $37 million for being a whistleblower.

That's a haul. Being a whistleblower is a great career choice, it seems. Yeah. So the only reason for bringing this up is I saw that and I immediately thought about Sam Trucoco. And we haven't heard much from Sam Trucco at all. Now, some people have thought maybe he was one of these whistleblowers who alerted everyone to the Alameda FTX debacle.

And we'll never know, I guess. But then I did a little bit of digging and, of course, remember that the SEC has not actually settled with. FTX. So they've sued. They were late to the game. While they should have been investigating, potentially they were just meeting with SPF and trying to see if they could give him a safe harbor and some sort of deal with IEX. But that's neither here nor there. But then I went into the old chat GPT and I entered in, give me settlements that would correspond to this dollar value. So $37 million, you know, between the range of 10 and 30%. So you're talking about a couple hundred million

dollars here. And it looks like there's only been a few of these in the last few years. So you have Exelon, which had a 173 million dollar settlement. This is a bribery scheme with Commonwealth Edison to influence Illinois lawmakers. You have McKesson, which had a 141 million dollar settlement in 2022. This is around misleading investors around price fixing for drug manufacturers. You have Alliance Global investors, $145 million. This is a lot of money. This was around their investment bank and risk strategies, not disclosing losses during COVID-19 market turmoil. And then you have JP Morgan Securities, which agreed to a $125 million settlement for widespread record-keeping failures, including failure to preserve work-related text

messages. So my guess is that the whistleblower is from one of those four organizations. Okay, so we don't know who, we don't know which case it was. No, we don't know. never will so I guess the question is would you if you were to blow the whistle on you know affirm you're part of and you risked alienation from all of your professional

colleagues and you'd never be able to go back to work in that industry I mean is it is it worth it you know that's I guess that must be the that's the question for an eight figure settlement you'd have to be really sure that

what you were doing was ethically correct and actually something that could be one in in court, I guess. The moral calculus around this is really wonky to me. And I know the way our justice system doesn't really align with morals on a one-to-one basis. But I mean, if Trabs was involved in the fraud and then at the last minute, he blows the whistle, does that undo his culpability in what came before? Because it seems like it did in the government's eyes. Yeah, it's a good question. And And we'll never know. I mean, he wasn't called to cooperate, right?

So he'd never testified. And there was a lot of rumoring that he was going to be called in the second trial, which was around the Chinese bribery side of the FTX thing, which never came to light. I mean, that just got pushed under the rug, really, around FTX paying, what, tens of millions of dollars to a CCP official to free up capital that was tied up on a Chinese exchange. So I guess we'll never know. Well, I'm not sure we mentioned this yet, but Nishad Singh and Gary Wang are being sentenced in October and November, respectively. And what do you predict there? I would say in the five to eight year range, if I had to guess.

I'll take the under on that one. I think the cooperation from them plus Caroline Ellison was pretty, pretty instrumental in actually putting SBF behind bars. So I think both of them will do, you know, two years, max. In prison or suspended? I think there's a, I think there's a decent chance that they can do it on, like home imprisonment or, you know, country club prison for a year and then probation for a year.

People don't really talk about FTX anymore. I'm glad. Kind of nice. Yeah, I'm glad. And it's funny because go back in time two years, basically everyone in Washington thought crypto was dead. Fast forward two years, it's a hot button issue on the campaign trail.

Now we're being accused of undermining democracy because Fairshake is the biggest single issue pack. That's right. All the critics of crypto have pivoted. This tickles me to no end. Like Molly White, for instance. She pivoted from saying crypto is dead. to crypto is a threat to democracy.

Like how can it, which one is it? Like if it's so dead, then how is it this dangerous threat to a republic? Come on. Yeah, it doesn't make a ton of sense, does it? It's starting to think the critics are not that ideologically consistent. I think they may just be motivated by an anti-crypto animus. I think you're spot on in that assumption. I think you're spot on.

Yeah, shout out fair shake. All right. that is it for the week. We will be back on Monday with another episode. Have a safe and healthy weekend. We'll see on Monday.