On The Brink with Castle Island - Weekly Roundup 08/02/24 (Trump's speech, Lummis' BITCOIN Act, CA car titles on AVAX) (EP.550)

Episode Date: August 2, 2024

Matt and Nic are back for another week of news and deals. In this episode:  We react to Trump's speech on Bitcoin in Nashville Is Bitcoin a proxy for Trump's electoral chances? Will there be a "crypto reset" from the Harris campaign? Lummis' Bitcoin Act The US government moves some Bitcoin Should the US government hold on to the coins from the Bitfinex hack? Is the new Bitcoin law civil asset forfeiture? Tether's big Q2 Where are the Tether Truthers? Howard Lutnick's claim about SBF and Tether Bitclout founder Nader Al Naji is charged by the SEC and SDNY California DMV partners up with the Avalanche network Content mentioned: Adams, Ibert, and Liao, What Drives Crypto Asset Prices? Sponsor notes: Withum's Digital Currency and Blockchain Technology Team specializes in crypto-assets, offering accounting, tax and advisory solutions to fortify trust in a dynamic industry. Contact them today to get started. - withum.com/crypto   The Story of Ethereum Staking So Far: In Coin Metrics State of the Network Issue 270, we uncover Ethereum's staking ecosystem, from "The Merge" to "Shapella", the rise of LSTs and beyond.

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

Look 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 to Britain's ailing economy with a new round of quantitative easing. And print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called a Bitcoin. Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. And we have a new

sponsor for this episode. This episode is is brought to you by Witham. So if you are a regular listener of this show, you know that we take our tax accounting and auditing very seriously. When it comes to digital assets, building up trust in relationships with your counterparties like custodians, brokerages, and even regulators is critically important. And that's where Witham comes in.

So these guys are a top 25 accounting tax and advisory firm. They have a team of professionals that is 100% dedicated to the digital asset and blockchain industry. And they work with some of the highest profile companies in our industry, for things like tax advisory, accounting for token sales, stable coin audits, that's our favorite, financial statement audits, and much, much more. So these guys are not just accountants. They are crypto enthusiasts. They've been at it since the early days. And they're the first accounting firm to build out a digital asset practice. Witham is passionate about this space. They're passionate

about helping startups. And they're passionate about helping your company achieve and exceed your goals. Just speak with one of their professionals and you'll see it for yourself. So head over to witham.com slash crypto to learn more. Love Witham. Shout out with them. Thank you for sponsoring us. With them is a big big fan of the pod. They listen every week. So we're excited to have them have them back as title sponsors. That's right. So this week on the show, you sat down with Luke Horstyn at Bitnomeel. That was a lot of fun. A lot of market structure talk. So Bitnomial is a derivatives exchange doing some super interesting things. So talked about how the

market works today. Talked about how we think the market's going to work if we ever get some market structure clarity, maybe get a market structure bill. So enjoyed chatting with Luke. One of the sharpest guys in crypto market structure there is. So the probably biggest news item of the week was Trump's speech, of course, at the Bitcoin conference, but active deal week. So let's jump into that first. Yeah, first one up is Morpho. This is a big one. So this is a defy lending protocol that raised $50 million from Ribbitt, A16Z, Coinbase variant, Brevin Howard, and others. Next up we have Mezzo, a Bitcoin scaling network. There is $7.5 million from Ledger, Arcstream Capital, Aquarius, and Floodesk. Then we have Mintify. This is an NFT trading platform that raised $3.4 million from Arka, Cumberland, and Salion. Then we have hyperbolic, a decentralized cloud compute platform.

There is 7 million from polychain, light speed faction, chapter one, and long hash. This one is called Icebreaker. It's a blockchain-based network for professional networking. They raised 5 million from coin fund, accomplice, and anagram. Then we have Joker Race, an on-chain contest platform. They raised 3 million from Maven 11, Rockaway, and Bankless Ventures. Then it's licorice. defy lending protocol that raised 1.2 million from Greenfield, L2 interactive, and polymorphic capital.

Lickrish. Do you like licorice? Yeah, I actually love licorice. What do you think? Red or regular? Just the ordinary. Oh, you like the black licorish? It's great substance, that candy? I don't know what to call it, but it's a root. Is it a root? I find it disgusting. I like Twizzlers, the red kind, but not the original. It's very popular in Sweden.

Really? They were going to Sweden, it's licorice or maybe Finland. They love it. Licorice? You never see it here. Can you imagine giving someone Halloween candy to licorice? They'd just be worse than getting an apple. I personally love licorice.

All right. Anyway. And maybe I'll love the lending protocol too. I don't know. Next up we have breakout a crypto trading platform. There is 4.5 million from Rockaway. Mechanism capital round 13 capital and others. Next one is daylight. This is a D-PIN protocol for energy distribution. They raised $9 million

from A16Z crypto, Framework, Ladis, and others. Then we have Layer 2 Financial Cross-Border Payments Company, raised 10.7 million from Galaxy, Ventures, Accomplice, and Sapphire Ventures. Then it's Rad Labs. This is a distributed meteorological sensor network. I like this concept. It's been a few companies in this category. They raised $2.3 million from Coin Fund, Tribe Capital, and escape velocity our friends up here in Boston. This is a cool category. What a concept. I just, I love it. Just knowing exactly when it's going to start to rain and just having these sensors everywhere,

that makes a ton of sense to me. I'm just, every time I hear about a new deep end, it's like something completely off the wall. I'm a risk to buy all these things, to be honest with you. I think I'm just going to have deep pin stuff hanging off my house. I'm just looking at the release here. So the network monitors weather patterns, greenhouse gas emissions, wildfire risk, soil degradation. How it does that, I could not tell you. But it's pretty remarkable.

I'm a buyer. I like that. I need a sensor. Oh, actually, this is founded by my friend T.J. Who actually lives up the street from me. Shout out T. So you're going to be very well situated. You know it's going to work by you then.

Yeah, the thing about Tej is he's allergic to wearing shirts. So I've never seen him wear a shirt, actually. He's always shirtless. Yeah, that's a pretty common thing in Miami. A lot of people have that affliction down there. Yeah, and he rides a cool motorcycle. With no shirt, yeah, he just rides a motorcycle with no shirt around Miami. That's, yeah.

100%. Him and 3,000 other people. A hundred percent. Shout out Teage. Okay. Lastly, we have Argo blockchain. They're publicly traded Bitcoin miner. They announced a private placement of shares

worth $8.3 million to an undisclosed institutional investor. That's great. Congratulations to Argo and Tom Chippus and the team over there. All right. Next up, we have the Metrics Minute. This episode is also brought to you by Coin Metrics. Let's get into the Metrics Minute. Yeah, not to be overlooked,

CEM Metrics Minute. here we go update on Ethereum staking. Currently, 33.6 million ETH, valued at 110 billion are staked on Ethereum. That's a quarter of ETH supply. The network has over a million active validators, with 4,000 validators in the staking entry queue, down from 21,000 this April. Since withdrawals were enabled in April of last year, deposits have outweighed redemptions by 13 million ETH, 9.8 million,

or $32 billion worth is staked through Lido. That's about a third of all Staked Eth. Over 10 billion of Lido's steeth is used as collateral across lending protocols like AVE maker and Spark, highlighting its significance in the defight ecosystem.

That is your metrics minute. Ethereum, Ben, pretty outflow-y this week, just kind of churning through this ETHI outflow situation, huh? Yeah, net outflows so far for ETH ETPs. Kind of a tough start to life there.

Yeah, I guess that's kind of how it was in the Bitcoin space, though. So you just got to churn through those inevitable flows out. But Theorem doesn't have this problem of having the U.S. government with $10 billion worth of Eath. So probably doesn't have the structural flows against it in the same way that Bitcoin does. Yeah, that's just a sort of Damocles hanging over Bitcoin that could drop it.

moment. Yeah, I think it's living life on the precipice out here. Kind of maybe about to drop. We'll talk about that this week. But I guess the big story, so last Saturday at the Bitcoin conference in Nashville, former President Trump gave a speech. And it was a, I guess it was a kind of a typical Trump speech, like a stump speech. I think that probably caught some people off guard. I was certainly a little bit bored. Yeah. Yeah. But this is normal for Trump. This is what people don't at Trump is always like that. So it's just a lot of people don't watch Trump stump speeches, which is fair enough. It's not to everyone's taste.

I mean, I think this could have been a seven-minute speech and people would have been a lot happier probably. But he did come out with some pretty concrete things. So let's just tick through them and then we can talk about them. So first thing he said was he would fire SEC Chairman Gary Gensler immediately. He also said that he would end Operation choke point 2.0. Didn't give you a shout out, but that's your that's your word. there. He kind of, well, that was indirect. It was an indirect shoutout. I'll take it. Yeah. So

choke point 2.0, of course, is the coordinated effort to debank crypto companies in the U.S. It's really bad. He's going to stop that, he says. He also said he would establish a national Bitcoin Reserve, and he would do so by ordering the DOJ to basically stop selling the confiscated bitcoins. So U.S. government now holds over $10 billion worth of Bitcoin. He said, you know, hold on to those, don't sell them. He also said that he would establish a working group in partnership with the industry, and he would drive sensible regulation legislation within 100 days, he said, of taking office. So pretty concrete list of things.

Took a little bit in the speech to get to it, but all very popular. I would say the one that probably surprised him the most was the applause that he got when he said he would fire the head of the SEC. Yeah, and on that front, apparently you can't just fire the SEC chair like that, although maybe you can if there's evidence that he's been derelict in his duty or something like that. So there was some pushback on that front from the legal experts, but I'm sure he can make his life miserable. I mean, it was a, it was not a plas line when he delivered that. He said he would fire the head of the SEC Gary Gensler, and then he started speaking his next sentence, but everyone just, went nuts and he stopped and he said oh i didn't know said i didn't know he said i didn't know he was that unpopular let me say let me say it again they said it again and people went crazy that had to

have really surprised him yeah it's funny because if you think about bit corners i think it's very interesting to see the reactions to the speech bitconers shouldn't necessarily care that much about the SEC one way or the other because you know clearly not a security but so the pause there showed to me that at least the Bitcoiners that were at the speech now do sort of care about the wider crypto ecosystem. Oh, of course. I mean, the Bitcoin ETF would have been approved years ago if it wasn't for this current head of the SEC.

So there's a, and of course, Bitcoin, you want it to be used in more places. So you want these banks to be able to touch it. You want the broken dealers. There's a lot of things the SEC is doing to the Bitcoin community. They're not helping it. Yeah. My point is there was, is and was a faction of Bitcoiners that would actually cheer on the SEC as it would go after Ethereum and other crypto assets with a view that, okay, Bitcoin is clearly

a commodity, everything else is a security, okay, let the SEC do the dirty work and clear this stuff out. The fact that that is clearly not the dominant faction anymore, or at least wasn't the view of the folks in the room at that speech. It was very encouraging, I thought. shows some kind of more moderate stance in the Bitcoin community. So just taking a step back, this is just crazy to have a former president, someone who is running for president again at a Bitcoin conference, making concrete policy statements about the industry.

It's just remarkable to see this. Yeah. And there was, you know, he repeated some parts of the Republican platform on crypto, which itself is quite remarkable. He also mentioned the right to mine Bitcoin. And he had a digression about. which I thought all actually did make sense. Some people didn't understand it.

But I thought, okay, AI high energy industry, Bitcoin high energy industry, bring jobs and manufacturing, re-energizing the American heartline. That all makes sense to me. So he mentioned that. The other thing he mentioned was embracing stable coins, which was novel. That's true. So there were new things that weren't in the Republican platform as well as the Bitcoin stockpile, he says.

That was net new information. From my perspective, it was everything you could have possibly asked for from a policy standpoint on crypto. There's basically nothing else that I would have wanted. So he kind of hit all the key points. It was really incredible. Yeah. So if all this stuff happens, this industry looks a lot different to the upside, right? Now, of course, Bitcoin has been down only since that speech.

Yeah. So as it turns out, Trump is no longer the betting market's favorite to win the other. election and Bitcoin is trading like a Trump win ETF, which is to say it's trading down. Yeah, so he was trading at 57%, I think, going into that, and he's had a tough week, and this is a toss-up. This is a coin flip of an election at this point, I suppose. Yeah, I mean, VP Harris is the current frontrunner, according to predict it, I think, and maybe Pollymarket. I haven't checked that one today. But, yeah, so, yeah, we're now indexed to Trump's electoral chances.

as it turns out. That's too bad. Yeah, we're not very hedged. I feel very, we have naked exposure to Trump here. I don't know how we could possibly hedge. I mean, I guess the Harris campaign made some noises about a reset.

Have we seen any, is there a reset? Where's the reset? Are they resetting? Well, yeah, there was some interesting stuff this week. So 28 Democratic Party officials, including, I think 12 members of Congress, wrote a letter to the DNC, asking the DNC to advocate for a pro-crypto policy in the national platform prior to the Democratic National Convention.

So I don't know, maybe. I mean, you're hearing these rumors. I would say they're pretty well-founded rumors at this point that the Harris campaign is talking a lot to Mark Cuban about crypto, which is kind of weird. Like, Mark Cuban doesn't run a crypto business, and he's like just a rich guy that made a lot of. money in the first wave of the internet. Would you maybe ask us? I don't know.

Like anyone that runs a crypto business. Why Mark Cuban? Come on. Yeah. I mean, I guess Mark, whatever, he knows a little bit about crypto,

right? He's gotten rug pulled on a lot of D5 protocols, I guess. But you could go talk to other people that run like billion dollar plus businesses or, you know, manage capital in the industry

and are seeing the issues that startups are facing. I don't, you know, like, there's probably, other people you could speak with. Yeah, so look, if you work for the Harris campaign, feel free to reach out to us.

We will give you some direction in terms of the reset. Also, if you work for the Trump campaign, I would like to be on this council, please, if possible. I don't know how I get on the council, but this is my official request. Oh, yeah, we need you on that council. Council, please. Council, you go in there and you say, I need a stable coin bill, a market structure bill, repeal sub-121, and stop suing everyone. Yeah, our demands are actually very, or our polite requests are few and quite reasonable, I dare say.

I think that's right. All right. So that happened this week. So then Wyoming Senator Cynthia Lummis announced that she has a new bill. It is called the Bitcoin Act. And this one is wild. So she is establishing a framework for a Bitcoin Strategic Reserve. And it's not just that she doesn't want to sell the Bitcoin.

the US government already has. She wants to buy more. So she wants to buy up to one million Bitcoin, which is a little bit under 5% of the total network, and hold it the same way that the US government holds gold. So this is probably not going anywhere, but I love it. Love the idea. Yeah. So I did the math the other day, and I believe the U.S. has about 3.4% of all the above ground gold that's ever been mined. So she not only wants to match that target with respect to Bitcoin, but exceeded, which I guess makes sense. It's early. We can still be the dominant player in Bitcoin.

But needless to say, I think this one is probably unlikely to pass. Yeah, I don't see this getting momentum. We're getting towards the end of the year, too. So the days on the calendar becomes a real impediment to some of the stuff moving forward. So I don't think this bill will move anywhere, but that was pretty impactful. So you have Trump saying he wants a strategic reserve. You have Lummis coming out and saying I want a bigger strategic reserve. And then the next day, wallets belonging to the Department of Justice move $2 billion worth of Bitcoin out of their cold wallet and into a new wallet, which looks like it's over at Coinbase.

And I don't know. It's hard to tell if they've sold it, but not a great thing. people panicked about that oh one last thing on the lammas bill she had a proof reserve section in there there was i saw that proof reserves yeah crypto audits we love audits and yeah there was a proof reserve section that was great so a lot of people were freaking out about this on chain money movement of bitcoin saying hey they're just going to sell this right now because trump came out in favor of holding it more nuance than that obviously they just the doj just signed a big contract about a month and a half ago with Coinbase to become the new custodian

and trade execution platform for all of these seized Bitcoins. And I guess the question is, are we going to actually be able to see if this gets liquidated or not? Or does it get held in some sort of a wallet infrastructure over at Coinbase where the DOJ could actually just be dumping Bitcoin right now and we would have no idea? Maybe that's what's happening right now because Bitcoin is selling off like crazy. Yeah. And I don't know why. Well, so is Trump.

Also, not. It would be very funny if Trump did win and then the, you know, session between the election and the actual transition, they sold all the Bitcoin just to spite him. So he couldn't fill the reserve. I think that would be amusing. I mean, just if you're going to sell it, just sell it, right? Like, just get it over with. I mean, you get the Mount Gawks overhang that would just kind of.

the chewing through and just all this sell pressure. It's sell it to people that want it. Also, here's one for the legal experts. So the Bitcoin, the government holds, a lot of that was kind of, I guess, rescued from the Bitfinex hackers, right? Yes. Yeah, Razn Khan, right? Who apparently is still around.

She was at my fight. She gave me a high five after the fight. How is that possible? How is she not in jail? She hasn't been sentenced yet. And they just allow her to go to Bitcoin conferences. She stole how much money? I mean, this is like a billion.

She was run. Well, she didn't single-handedly. I mean, like I'm not defending Rouselkan. But she goes around handing out stickers. And to her credit, she watched me fight. So the Bitcoin, the government holds, isn't that sort of the property of Bitfinex in some way? Yeah, some of it. stolen from them, the government found it and now should instead of going into a reserve,

shouldn't that be returned to, I don't know, Bifenex shareholders or something? Yeah, why don't people talk about this more? And why does Bidfinex not have that Bitcoin back? It was seized back from the hackers maybe like a year ago. So as much as I want the government to have all the bitcoins, this kind of reminds me of like, You know when you're driving cross-country and there's like a stretch of road where cops are really aggressive and pulling you over and then there's a weird law in that county about how they can do civil asset forfeiture and just if you have cash in the car they can just take it from you.

Okay. And then they use it to buy like really expensive cop equipment. I didn't know that was a thing. They're tricked out police force. Yeah, there's certain counties. So this is like that. This is like civil asset forfeiture on a massive scale. with Bitcoin. So I'm actually against it. You know, like the coins probably belong to Bitfinex or some

whoever, whoever it was stolen from. It's their property. It's not the governments. Now, did BitFinex, they already sort of made everyone whole, right? Was that the Leo token that got launched? Yeah, Leo, I guess it was kind of a bail-in, or maybe the bail-in was the first time they were hacked and Leo, I don't know exactly the terms of Leo, but yeah, might contractually be due to Leo token holders. Okay, I can never remember if Leo was related to the crypto capital or the hack or there was there was a token out there. So I thought that the users on BitFinex had already been made whole. So maybe it's just BitFinex corporate account. Yeah, it might it might be like the whoever owns BitFinex, which is the same group of people that owns Tether, which I guess we

should also talk about, talk about a blowout quarter, huh? Yeah. So, So let's see here. Palo announced the Q2 attestation. In Q2, they made $1.3 billion in net operating profit. Nice. They have $5.3 billion in access reserves. They hold almost $100 billion in U.S. treasuries now. And Tether Group, whatever the parent co is, holds $80,000 Bitcoin.

It looks like they stopped buying Bitcoin, as far as I can tell. and now they're doing all kinds of proprietary investments in AI, a brain computer interface called BlackRock NeuroTech, no relation to the asset manager. So yeah, Tether continues to absolutely crush it. Wow, that's I guess the most profitable business in this whole industry. For sure. You know, you just don't hear from the truthers anymore.

Where are the truthers? Don't hear from them. No, you don't. I mean, I think Howard Lut. Nick really put that to bed. And he had a great week too. So Howard Lutnik, the CEO of Cantor Fitzgerald, had a pretty great speech at this Bitcoin conference. He announced that Cantor Fitzgerald is starting a Bitcoin financing business with $2 billion of initial balance sheet capital. I assume this is giving cash loans against Bitcoin collateral. Is that how you interpreted it? Yeah, I'm not entirely sure

the details. But yeah, he had an electric speech. He's great. So he said something in that speech, which was around SBF and Tether Redemptions, which I don't think I heard about that before. Yeah, so maybe we should play the clip because I just love listening to this guy. Yeah, he's the best. Let's roll it. All right, here's the clip. So I'll give you an example. In May of 2022, Sam of FTX had obviously done a deal with Circle, right?

and he sought to try to destroy Tether. So he amassed huge amounts, $10 billion of USDT. And then in May of 22, redeemed it all in two or three days because he assumed they wouldn't have the liquidity. But we had not announced to the world that we were holding Tether's treasuries yet.

And we met 10 billion in redemptions instantly because it's no beginning. deal for us. We deal in trillions of treasuries. It's nothing for us. All right. So he's alleging that SBF of FtX and Circle had a deal to destroy tether and that SBF redeemed $10 billion of tether in two to three days in an effort to cause bank run, but it didn't work because Canter was working with them at that point. So the suggestion is that SBF took $10,000. billion dollars worth of his customer money went out and bought a bunch of tether with it and then went to redeem and it worked am i getting that right yeah but the thing is it's a very expensive way to attack

it because there's a 10 basis point redemption fee for tether so 10 billion times 10 basis points is 10 million dollars i think so he burned 10 million dollars doing this failed attack on tether i mean i i i I trust Howard Lutnik way more than I trust Sam Bankman-Fried, but why would SBF do this? I mean, SPF did all kinds of crazy stuff, so I'm not putting it past him. The part I'm interested in is, was he in cahoots with Circle? That's the new allegation that I've never heard before. Crazy if true. I don't get it, though.

Why would he be in cahoots with Circle? That doesn't make any sense to me. Yeah, so Howard, if you're listening, you're welcome, as always, to come on the show and explain this to us because we'd love to understand it better. Yeah, I mean, anything that makes SBF look bad is, you know, that's the free space on this podcast. I think we haven't talked about that guy in a while. Howard loves Tether so much. Yeah. No one loves anyone as much as Howard Lottnick loves Tether. Well, he holds $100 billion worth of their treasuries. So, yeah, he should love them. So one of the most entertaining,

legal briefs I've read in my life this week was the SEC's complaint against the founder of BitClout and basis, Nader Al-Nagyi, which was also accompanied by a SD&Y criminal complaint as well. Yeah. So not just civil. To tee this up, I guess. So the founder of BitClout, Nader al-Naghi was charged with fraud and unregistered offering of a security by the SEC and the DOJ also charged him with wire fraud and this BitClout was a I guess is a social media platform where you could basically trade people's profiles as you could make money everyone had their own currency based on their profiles they actually scraped Twitter I guess and pulled everyone in so the allegation here is that this was an unregistered security and that he used

corporate funds for personal expenses and gifts to his family I believe his sister and or his wife and his mother are also being charged. What was your take on this? Yeah, I mean, they have him absolutely dead to rights as far as I can tell in both the civil and the criminal complaint. So he's being charged with one count of wire fraud, which carries a sentence of 20 years, up to 20 years. It looks, based on the evidence, I don't see how there could be any exculpatory evidence here that he just took investor funds and funds that are deposited the Bitcoin contract and just embezzled them and distributed them to family members. His wife, by the way, is a lawyer. So how do you think, how do that

conversation go at the dinner table? Like, hey, babe, here's a couple million bucks. You know, don't worry about where it came from. Like, she should have known better. He shouldn't know better, but she shouldn't own better. Yeah. So yeah, he just distributed investor cash to his own brokerage account and then to family members and claimed it was like a gift from a relative overseas or something like that. Yeah, it doesn't look great. I mean, I'm sure there's going to be a defense here and we'll learn more.

These charging documents are always obviously one-sided. But Big Cloud raised $257 million worth of venture capital from some pretty spectacular venture funds. which in and of itself wasn't that surprising to me at the time, because you remember Natter was the founder of base coin, which later became basis. And he ended up shutting that project down and not launching it, and he returned the leftover capital to investors. And I think a lot of investors at the time really appreciated that

and thought that it showed some great judgment, because that probably would have been in the regulatory crosshairs, that stablecoin. So I think he had a lot of goodwill. And obviously this one may be not so much. Well, because it's so confusing because he showed arguably good judgment in shutting down basis. Very good judgment. I would say he showed great judgment there.

Because the regulatory concerns, you know, I think he raised $130 million for basis. And then he should very poor judgment in second case, based on the fact patterns and all the evidence we have. And based on the SEC complaint, it seems like he lost. about everything about Big Cloud being decentralized and no one entity having control the funds. Like it was just him that had control. So it's kind of shocking that he would go from being prudent with basis to so reckless the second time around. Yeah, it's very confusing to me. And I'm going to maybe defer judgment on this one until we get more of the story because it's just a weird, weird one.

But, you know, these decentralized social media platforms, this is a hot category. So, you know, I had a number of people reaching out to me this week saying, how could all these venture funds invest in this thing? It's like, well, the total addressable market, if you were to actually get this right and build a decentralized, actually build one, is huge. So not surprising that people are looking at this category. Well, and it looks like Farcaster cracked it eventually, and I'm sure there'll be other winners there. It's just Diso or BitCloud was not to be the winner. Not to be the winner. All right.

So you surfaced a story that has to do with Avalanche this week. Yeah, this is maybe the most unexpected story of the week. So Avalanche, apparently the California DMV has digitized 42 million car titles on the Avalanche network as part of a development to modern the title transfer process. So it looks like this is not quite yet live, but we'll be soon. You'll be able to claim your digital title via the DMV app track and manage them without going to the office. And it's all happening on Avalanche.

Honestly, I'm very impressed. I'm impressed that the DMV would actually do this. This is something that people have touted lockchains could be useful for for years. And they went ahead and did it. So props to the California DMV. I think it's a great use of blockchain. I mean, it's kind of surprising to me that we haven't seen title registration take off more. I mean, there's, I guess you can't do a token attached to it.

So, you know, maybe startups haven't migrated to this as much. But why wouldn't every title be appended to a blockchain? It's an immutable database. I've had so many struggles with the DMV here in recent weeks. so anything that makes it less painful is very welcome. The DMV is just, oh, that's the worst. If you ever lease a car and then try to buy the car and you have to go to the DMV,

the amount of paperwork that you have to do is just mind-boggling. Yeah, I'll do almost anything to avoid going to the DMV, including using the Avalanche blockchain. Yeah, I mean, you can use the Avalanche blockchain on pretty much anywhere you use the Ethereum blockchain wallet-wise, right? I guess so. I wonder how they got this deal done. That's a pretty great biz dev feat, right?

I mean, can you imagine how long it must take to sell a project into the DMV? To the DMV. Are the car titles interoperable and composable on DFI? That's the question. Can you borrow against them now? That would be cool. Interesting, if you could. If you get an Oracle data feed into a Kelly Blue Book value

and borrow up to 10 or 20% of your car's value, in a defy pool. That's when this gets interesting. That could be really cool. Another interesting development here. The SEC amended their complaint against Binance, so they removed certain allegations that certain tokens were unregistered securities,

including Solana. So what is your read here? I think this is just a Binance case-specific thing. I think the SEC still has these allegations in a number of other cases. They've named Solana security in multiple lawsuits. So my interpretation on this was just they

Whatever judge they drew in this finance case They thought they would have a harder time winning on this point And so they narrowed the complaint to what they felt like they could win is my two cents on this So also breaking this week circle is rumored to be trading in a five billion dollar valuation ahead of their planned IPO Previously tried to go public via SPAC in 22 at a nine billion dollar valuation before shelving that Spax, man. Remember Spax? Yeah, good old days.

Akman pulled his IPO plans as well. I saw that. Yeah. IPO window is open at the right price, and it is not open at any price you want. Yeah, it's kind of open about a millimeter, I would say. Yeah. Yeah.

There's a lot of companies that I wish would just go public. Stripe, you just go public? Yeah. They could. I don't know why they're not. I think they just don't want the hassle being a public company. But I think a lot of the institutional allocators that are sitting in Stripe would love for them to go public. So speaking of Circle, by the way, there's an interesting paper this week from Gordon Liao, Chief Economist at Circle. Also, someone at Uniswap, this paper is called what drives crypto asset prices and it decomposes

Bitcoin returns into various factors. And so people always do correlations. This is a much more complex model and rightly so, I think. And so they decompose the price of Bitcoin into four factors, monetary policies and rates, conventional risk, crypto demand, which they proxy with stablecoin growth. and they basically find, I mean, we'll put this in the show notes, I think the whole paper is kind of worth reading. Yeah, so they basically, well, one of the findings is that the most important factor for Bitcoin returns is crypto demand. And it is affected by conventional risk and monetary policy, but to a much, much lesser extent.

So I think it is a good piece of evidence for anyone trying to make the case that Bitcoin has its own sort of endogenous factors that drive returns. And it's not just this sort of high beta levered exposure to the NASDA asset class. So recommend this paper. Interesting. It does seem like Bitcoin's just kind of selling off with everything else today. I think we've got a little interest rate. The market is telling the Fed you need to cut these rates in September. Yeah, I think we're having a little tantrum over the lack of the cut this month.

Yeah. And there's also war is happening. So, you know, that's, that doesn't help. Yeah. And also for Bitcoin, the Trump, I think the Trump trade is clearly on for Bitcoin. I think if he wins, you're looking at new all-time highs. And if he loses, it doesn't look as sunny. Yeah.

Yeah, I think that's probably right. I think you will see a rate cut here in September though. Yeah, I agree. So you're watching any of this Olympics? So I haven't watched a single minute of it because I don't know where or like when do you tune in? I mean, it's all happening in France, right? So like what even, what time zone are we dealing with? I don't know.

They have it on tape delay at night. I think it's like prime time at night. I think it's on from 7 to 11 or something. I don't have like television. I don't know where do you watch it where do you watch Olympics? YouTube TV man cut the cord and get YouTube TV

Okay so I do see a lot of screenshots on Twitter like there was this Turkish guy that won the pistol shooting event or he got silver and everybody showed up with gear and he just showed up in like a T-shirt Yeah I saw that

and casually got silver so it's trickling through it but my only exposure is through Twitter I don't know how to watch it. Yeah, I think you just got to get YouTube TV. And I watched Simone Biles, the women gymnastics, the other night. That was good.

USA dominated that. It's just, I find it overwhelming because there's so many events. You have to just pick one, I guess, and then very closely follow it, and you have to watch it at the specific times. Yeah, I haven't really, I've probably watched cumulatively 20 minutes of it. But I need to figure out how to watch the men's basketball. But Steve Kerr, who's the coach, he says. sat Jason Tatum the other day. He didn't play him for a single minute. It's like, what are you doing?

That's a problem? Yeah. I mean, Jason Tatum's like the best player on the team in my opinion. So there's a big drama on Twitter, part of the culture war, of course, about the women's boxing. I think we get enough trouble in this podcast talking about Trump and crypto. I think we're good on this one. We can sit this play out. We can skirt that one. Yeah, we don't have to fight every culture war here. But yeah, the Olympics. I'm looking forward to watching the track and field. That's, yeah, that's what I want to watch.

I don't know when or how. So if any of you know, please hit my DM and tell me when to turn on YouTube or whatever. Yeah. All right, I think that's it for the week. Everybody have a safe and healthy weekend, and we will see you on Monday.