On The Brink with Castle Island - Weekly Roundup 08/05/22 (BlackRock jumps in, CFTC oversight bill, ETH PoW forks?) (EP.338)

Episode Date: August 5, 2022

Matt and Nic return for another week of deals and news. In this episode:  Is there any hope for ETH PoW forks? Is Ethereum unforkeable? More 3AC shenanigans of the week The 3AC Toyota Century situation The 3AC boys have some unexpected supporters  A bipartisan bill proposes giving the CFTC oversight over the spot market What's up with the croissant diet NYDFS fines Robinhood Crypto Michael Saylor steps down from this CEO role at Microstrategy The SEC charges 11 individuals involved in the Forsage ponzi The other Nick Carter is in trouble for endorsing Safemoon Another cross chain bridge is hacked What happened with this Solana wallet hack? Matt loses the tip of his finger Coinbase partners up with Blackrock Sponsor notes: Subscribe to the Coin Metrics State of the Network newsletter

Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of Concentive easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called a 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. Here is the Metrics Minute. Today's Metrics Minute is all about EIP-1559. So since that upgrade was added in August 2021, 80% of Ethereum transactions are consistent with that standard, with that transaction type. since that upgrade 2.56 million ether have been burnt and there have been sufficiently high fees since then that there have been 29 days since the London hard fork when eth emissions have actually been negative that's your metrics minute speaking of Ethereum have you been following this Galois capital merge fud I mean I don't know if it's fud I mean

there have been meritless forks in the past. Maybe there's a theorem proof of work. There's something to be said for that. So, I mean, it's clearly going to happen, I guess. So maybe FUD's the wrong word.

But I've always thought that there's going to be a fork around the merge and that you'd have a proof of work chain that sustains. It's hard to imagine that not happening. I think there'll be a bunch of dueling chains, basically. But the problem is that

obviously stable coins are not willing to duplicate their supply because that means that they would be under-reserved. So the stable coins are going to pick ETH 2.0 almost certainly. I mean, without a doubt, in my mind. And then there's all this defy infrastructure that's built on top of those stable coins, which would go that route. And so, you know, maybe in 2018, There was sort of a small enough sort of defy infrastructure that a fork could work. But today, there's so many structures built on top of this that just aren't compatible with a fork. Right? Yep.

Yep. So, I mean, could, you know, maybe the game, Goloa, I don't know if everyone's familiar with Goloa capital. How do you pronounce that? Galois or Goulat. Galois. You have to go lean into the French. Galois. Maybe Galois Capital is basically taking a roundabout way of saying there's risks with the

ETH merge that haven't been fully anticipated or by the market. That's plausible. But is it possible that another fork really rivals ETH 2.0? Absolutely not. I think if the merge fails, then whatever failure means, they'll just go back to the drawing board, return to the sort of default chain. and try again. Yeah, I think that's exactly right.

I mean, it's hard to imagine a rival proof of work for getting adopted right now. I mean, if that's what you're looking for, you have Ethereum classic. Or just launch a proof of work fork from scratch that doesn't have, not a fork, but a chain. If you like Ethereum in its current form, you like the proof of work, et cetera. Launch it from scratch, then you don't have these replay issues. You don't have this duplication of all these defy contracts, which would fail instantly without the collateral, right? Like, dye would immediately collapse because die has a lot of USDC in it,

and the USDA would not be honored on the fork. You know, there's all these kinds of situations like that. Then I think you would just launch a new equivalent from scratch as opposed to clamming lineage to the ether history. The good old fair launch. I haven't seen one of those since Grin. That didn't really work out so well. Yeah, it's about time.

Whatever happened to Grin, is that still a thing? I think the blockchain is still producing blocks. Grin, man, what happened? Trace Mayor. He really had me believe in Grin was going to be a thing. I don't know what happened there. I haven't heard from Trace in a couple years now. No, I think I subscribe to his podcast still,

but he hasn't released a new episode in about four years. Good podcast while it lasted. I think Trace was kind of before my time, actually. He had this great intro to his podcast saying that he was an an eneons. investor and they started listing off the company some good companies i think it was crack in blockchain dot com maybe ledger x some some stall ward really that was that was the intro to the podcast it was like trace mayor is an executive and bitcoin entrepreneur and he's an investor in like and he rattled them off and they're all good companies i would have i would have been proud to be an investor in a lot of those

companies. Forget our intro. We should just rattle off the names of all of our portfolio companies in the intro for this show. Yeah, just give shoutouts. Just to, you know, 60 companies. Just investors in Hoseki. Let's go. And all of the, all of the non-crypto companies, we've angel invested in all the beverage companies. Oh, Rosal Luna. Yeah, Rosal Luna. Shout out Rosaluna, yeah, top-tier mescal. Yeah, if you're looking for a mescal, I mean, this is not investment advice or drinking advice, but we're both angel investors in a company called Rosaluna, top of the line, mescal. I actually had never even tasted it before I made the investment, but that's, you know, shoot or shoot, right?

That's what the best investors do. I mean, when you meet a great management team and you're just like, these guys are going the distance, you just got to be involved. Yeah. that's one of several beverage companies where Angel invested I don't know what it is about them

I'm in one that's not doing so well there, yeah I remember you got your in-kind dividends in the form of wine from that one no no paid for all those I paid

yeah paid yeah disaster I remember you got a crate of a wine yeah I think I got you a crate one at least a couple bottles I think I just got one bottle maybe, you know, other people got crates. Maybe that's possible.

But yeah, no, not a good, my hit rates, you know, one for two. Yeah, on the angel front, you know, you don't have to disclose them. That's the trick. If they go sour, you just don't tell anyone. It's great. Just, yeah, it's a luxury that these on-chain funds just do not have. But offline investments. Let's hop into some deals here.

First one up is one of. This is a light week of deals. Yeah, it's pretty light. We're also recording this on a Wednesday, which, you know, what always happens, we record these on Wednesdays and something big happens on Thursday. So inevitably, there'll be some big regulatory action and we'll have to hop on and do five minutes. Or three arrows guys will surface somewhere and have like a whitey bulger perp walk or something like that.

Something big is going to happen tomorrow. But let's get into some deals. of, which is an NFT platform, they raised $8.4 million from Amex Ventures. Amex, always in the mix here, like the team over at Amex Ventures. Next up, we have an acquisition by our friends at Masari. They have acquired Dove Metrics, a provider of data and analytics on fundraisings within the crypto industry. Yeah, it's a good acquisition for Masari.

Masari rolling up the industry here. next one up is bits crypto this is a retail oriented crypto investing platform that has raised 1.2 million from HOF capital is that Hall of Fame capital one has to assume hall of fan capital next up we have debt Dow a revenue based financing protocol there is three and a half million from dragonfly capital Baljee Srinivasa and others revenue based financing is coming to crypto in a big way we're going to see more and more activity here we have an investment in that category. I don't think it's announced yet publicly, but stay tuned. Stay tuned. Revenue-based financing in the world of blockchains makes a ton of sense.

And then the last one is Ledger, which is, of course, the hardware wallet company. They are reportedly looking to raise at least $100 million in a new round of financing, so unclear how far along that is. But do you know that Prof G is on the board of Ledger? who's i don't know who prof gis is you don't know who prop gilohs scott galloway scott galway he's like the NYU professor that has the hot takes i didn't know he profjee was his nickname yeah he he doesn't like crypto but he likes ledger that's perplexing i mean he's like he's like a kind of like a no-coiner in all things right like he's just sort of like a skeptic generally right Yeah, he doesn't like technology or entrepreneurs, really, but it's shocking that anyone

listens to him. He's actually quite provocative. He's kind of, there's a, I think it's a New York Times article today, calling him the Howard Stern of something or other. But he is, I find myself listening to all of their podcasts, even though I disagree with a tremendous amount of what he says. So maybe he's doing something right. It's like listening to sports radio when you don't like the host.

You just keep on listening. The people that don't like it actually listen more, I think that's what he's got going on. Some might say that about us. I bet those stuff. I'm sure that our haters listen to this show. People hate listening to us, like no coiners, just listening and just be like, I can't stand crypto.

I mean, the thing that did shock me with all the Bitcoiners getting mad at me was how unaware of the podcast they were. It's like we're not a small podcast, you know, but they'd apparently never listened to it. They didn't know that we'd covered things of other than Bitcoin. Yeah, I think your views are pretty well documented on this podcast. We've been doing it since, what, 2018? It's been a while.

You can't make 300 and some podcast episodes without betraying your views, right? It's like your views are out there. It's like people know what you stand for. They've been disseminated. They know you're a Washington football team fan. There's a lot of things that they know about you. That's right. They know that there's turkeys in your garden on certain days.

It's true. Had your bike stolen from a we work? You know, see, that's what makes this podcast so great. It's the little tidbits. You know, you learn a little thing or two about our lives. That's exactly right. All right. Well, let's bring back the three arrows section.

There's some three arrows news. So let's cue the music. Roll it. All right. So this is a very special segment of the three arrows shenanigans of the week. So we have gotten a ton of information about three arrows in our DMs. And who knows? I mean, some of it's probably not right. But, you know, we've got people sending us car listings of cars that are apparently, or a car that is. I was shocked by the car situation. Can we talk about? about it. Let's let's talk about the car situation. I want to talk about it. All right. So,

apparently there's a car for sale. I'm going to pull it up right now. Look, I can't trash the man's taste, but it's a very, it's an odd car. I mean, I don't understand it. It's not, there must be some, like, antique value to it or something. It's a Toyota Century 5.0A. I'm not a car guy. It's an $850,000. car and it's in Singapore and the listing says it's the only one in Singapore and apparently Kyle Davis is known to have this car so it's possible that this is his car but it in likely I mean that if there's only one in Singapore and Kyle was known to have this car and now it's being sold it's most likely his car that's being sold right it's on sale for 850 is Teneo selling this

thing or is Kyle Davies selling this thing and is it payment in Bitcoin or does this How does this work? But it's, I don't know, it's not even, I'd rather have a Mercury Grand Marquis, 1997. But it's just not looking very attractive. So I guess it's like a luxury, like limousine style car that like diplomats get driven around in as far. I'm like, I'm reading the Wikipedia page. I don't get it. How is that worth $850,000?

Color me a skeptic about this thing. To each their own. But all right, a little bit of a detour. because I was saying that we get a lot of people sending us a lot of information these days since we started this segment. A lot of people basically saying, like, how do I get my money back? Which is kind of sad, looking for advice on how to work the system. And then some people pointing out things like, hey, these guys are selling personal property and probably not giving it to the liquidators, which is almost guaranteed to be happening. We did have two people reach out to us in support of the three arrows team, though.

So we want to be, you know, we've been bashing these guys saying that they stole all this money, we're fraudulently lying to their lenders, just generally unethical people. But we want to be equal opportunity here and give their supporters a chance to chime in. So why don't we cut to the second video here? All right. You're just going to have to imagine the visuals here. Here we go. We are the island boys.

And we want to say, welcome to council. Take that money ain't going to run. Hide on the island you have some fun You are now island boys Congratulations all making money I'm going to an island Yeah We love that

So the island boys Who knew The island boys, they're They're supporters They're on an island Somewhere with the three arrows guys Who knew that the island boys Were listeners of the podcast

But Against all odds Against all odds You'll love to see it Incredible That is an expensive joke, Matt. That's an expensive joke, but I respect the commitment to the bit. The Island boys. All right. So in real news here, not that the car thing wasn't real, it very well

could be, but a couple of three arrows things to call out this week. So TPS Capital, this is the market making firm that said that they weren't affiliated with three arrows in a big way, but it turns out they are. Their head of over-the-counter trading, Stefan Chu has left the company, not surprising there, I suppose. The second thing is a bunch of filings this week. There was some Chapter 15 activity. There's some Singapore activity. And then the Tenea liquidators, which again, the liquidation website is 3acliquidation.com. They put out a revised FAQ, and they continue to emphasize around what type of cooperation they're getting from Three Arros. And so effectively none.

So they're saying with very little exception, the Three Aros founders have not been receptive to cooperation. The liquidators have sent email subpoenas to the council of the Three Aros founders requesting that they accept service on behalf of their client. Their counsel has refused. And so these guys are trying to say that they're. working with people to orderly wind this thing down, but they're not. I mean, these guys are not responding to subpoenas. They're not cooperating with liquidators. They have not turned over

the MPC custody setup, the fireblock set up. So they're not doing anything to get people their money back. So don't let them fool you with that puff piece, Bloomberg article that, hey, we're trying to orderly wind this thing down. This is like LTCM. We're going to work it out, blah, blah, these guys are just straight up trying to get away with it right now. So that's unfortunate, but that's the state of play this week at least. That article is so infamous. I'm amazed it got printed. Oh, it's incredible.

It's incredible that Bloomberg would post that. Zuzzi bragging about how humble and he is and how he cycles to work and doesn't go to clubs. Crazy. Well, that's this week in three arrows. I'm sure there'll be a lot more weeks in three arrows. But the Island Boys popping on the scene this week. Incredible. I mean, it really wasn't a lot of content on the three hours front

and then late edition with that submission from the island, gentlemen. A bunch of news this week, though. So why don't we hop into a couple of the bills here? So there's a new bipartisan bill that is being proposed by four members of the Senate Ad Committee that would effectively make the CFTC the primary, regulator for crypto exchanges. This is being sponsored by Senator Debbie Stabnow of Michigan, John Bozeman of Arkansas, as well as Corey Booker, Democrat from New Jersey, and John Toon,

who's a Republican out of South Dakota. This, to me, is a pretty big deal. I mean, you're having a bipartisan group of politicians go on record here and say that the CFTC should get oversight of the crypto spot market instead of the SEC. What do you make of this? Very positive development bipartisan. This isn't the first time we've seen legislative efforts to bring major crypto platforms under the aegis of the CFTC. I like that there's momentum gathering around this. It also comes on the heels of the third op-ed in the Wall Street Journal criticizing Gensler for his approach to crypto.

so really an avalanche of opeds there. I think it makes sense. I think the best ever definition of Bitcoin was the idea that it's a synthetic commodity money proposed by George Selgin. And I think that's correct, basically. Ether, you know, that provides a lot of comfort to the market as well. The ether is enveloped under that standard. Frankly, I think the CFTC is the right. to be regulating these exchanges and spot markets.

The SEC is just taking it from all corners right now. There was another, so that op-ed that you mentioned was from J.W. Verrett, who was a former member of the SEC's Investor Advisory Committee. And it was a very critical op-ed saying that the SEC's cryptocurrency confusion was the name of the title and took aim at their actions against Coinbase, their regulation through enforcement. And, you know, this is not a partisan issue right now in terms of being frustrated with the SEC. It's both sides of the aisle here. And Gensler's just been on a one-way train to try to get Treasury and just knocking down people in his path.

And it's, I don't know, maybe it's backfiring or maybe he'll end up being the Secretary of Treasury when Yellen steps down towards the end of the year. Who knows? So there was a good thread from Peter Van Valkenberg at Coin Center who actually many don't know is the father. of the anti-seed oil activist movement, at least on crypto-twitter, by the way. I did know that, actually. I did know that. Sometimes I get credit for that, but that's wrong. I got it from Peter Van Valkenberg, who's been on this for years. By the way, very fit guy. You look at that guy, and you're like, that guy does not eat. It's very evident. It's evident. It's evidence. He just not eat seed oils. So he, for a long time, was on a diet called the croissant diet, which is what it

like. And it's croissons because they're made with butter and not, you know, horrible vegetable oils. Anyway, just want to give Peter a shout out for that. You know, that's culturally very important thing. Now that's synonymous with the, with the industry. Chocolate-filled croissons are just plain regular croissons? So chocolate I wouldn't trust. If I had to guess, I would say there's probably soybean oil in the chocolate. So plain croissants, though. Yeah. So he had a good thread anyway. He says that CFTC supervision would simplify the state-by-state money transmission regulations for crypto exchanges. It would render uniform customer protections for the customers of these CFTC supervised exchanges, regardless of the state they live in, and also lessen the pressure on the SECC to try and regulate these exchanges that are trading on securities. So as far as I can tell, would be a very favorable development.

Let's hope we actually finally get some pro-crypto legislation through. This would be huge. Yeah, we need the CFTC to have more oversight here versus the SEC. Although Bruce Fenton put out a pretty interesting blurb. Did you see that a couple hours ago? He didn't like it. He didn't like it. He's critical of the bill.

He basically doesn't want any like oversight though. So I don't know. It's not that he wanted the SEC to. to have oversight. It was more that he didn't want anyone to have oversight was sort of his message. I recognize the benefit or certainly the spirit of the federal model where you do have different, just different, which is the status quo today, where you have the MTLs in certain states, some states don't even have MTLs and all of the MTLs are kind of different.

I actually kind of understand that. I mean, if you thought the state was going to be very capricious, and install extremely onerous federal regulations, that would make it easier to kind of suppress the crypto industry if it was already the case that everything was centralized in Washington. So I get it. The federal system does, to a certain degree, protect the industry. But at the same time, this turf war fight that we're getting

over who is control of these assets and the exchanges is a huge distraction. and we'd all benefit from it being over. Totally. So another positive development, so there's another bipartisan bill right now that's being proposed, and it is working to ensure that the definition of broker in the 2021 infrastructure bill does not include node operators or wallet providers.

Remember, this was a big issue when that bill was jammed through 11th hour. I believe it was out of treasury that some of this language came through. And I think it was Rob Polaro. Portman out of Ohio that originally introduced it. And he's part of the bipartisan group of senators that's working to clarify it, which is good. So the bill is being supported by senators Pat Toomey, who's a Republican out of Pennsylvania, Mark Warner, Democrat from Virginia, who is also on the wrong side of this the first time around. Cynthia Lumas, Republican from Wyoming, Kirsten Cinema from Arizona Democrat and then Rob Portman, a Republican from Ohio.

So hopefully we get that clarity because it just doesn't make any sense to be a node operator and have to register as a broker and report into the SEC. It's just crazy. So Kirsten Cinema gets double plotted on this podcast, A, for supporting sanity on the broker provision, and B, she actually came out against the, um, the elimination of the carried interest tax loophole today. Oh, she did? I missed that.

Yeah, basically on our side of the carried interest debate. I don't think anyone wants to hear from GPs at hedge funds and venture funds about the carry interest debate. That's a podcast audience that's very small in terms of people that would be interested in that topic. But it is a very small loophole, actually, if you look at it in absolute terms, I think it gets disproportionate attention because GPs are not very sympathetic characters. In the words of Bill Belichick, we're on to Cincinnati. What's the next topic here? The New York Department of Financial Services has fined Robin Hood Crypto $30 million for violations

stemming from inadequate anti-money laundering and cybersecurity program. So this is actually, I believe, correct me if I'm wrong, this is the first action that the new New York DFS has taken in terms of finding a company, at least of this magnitude. So pretty interesting. Robin Hood did some layoffs this week. They also came out, Vlad came out and said he's not looking to get bought by FTX. He can go buy his own companies. So Robin Hood Crypto, a little bit of a slap on the wrist here.

Yeah, tough time for Robin Hood. Goodness. Their AML compliance program was insufficiently staffed, and they failed to transition from manual transaction monitoring to, one that was appropriate for their company size. Policies weren't in compliance with the regulators, cybersecurity regulations, failed to address operational risks,

failed to comply with consumer protection requirements, didn't have a dedicated phone number on their site. Not a good one. Listed Dogecoin. Trade execution quality on Robin Hood, crypto is pretty horrible. I will say that. What else do we have here?

So Michael Saylor, the founder and CEO of Micro Strategy, is stepping down from that CEO role. He will remain chairman. And actually, he is apparently full-time Bitcoin now. What that means exactly? I don't know. Interesting, the Micro Strategy shares surged on the move. Yeah, I saw this, and I was a little bit worried that something was either wrong with him or that he was getting forced out somehow.

but he does have those founder super majority share, you know, share class. So I don't think they necessarily could have just booted him. It doesn't look like that's what's happening. It looks like he just doesn't want to run this software business, whatever the hell this software business is. I don't know. I mean, the value of the Bitcoin on their balance is like $3 billion, and the market cap of the company is like $3.1 billion.

So that software business is not exactly going lights out on the execution. Well, they need the software business. They need the business and analytics business because they need to pay the interest on the loans. So they do need that cash flow. How is it that they have not leaned into analytics for cryptocurrency networks or something like that? I guess because he's just a Bitcoiner doesn't care about all these other networks. But I guess good for coin metrics at Micro Strategy hasn't decided to compete on data and services around cryptocurrency networks in the same way that they do legacy software. Yeah, I guess it doesn't really suit Sailor's attitude to run nodes for a bunch of different blockchains.

And, you know, the truth is there's not that much sort of complex economic activity happening on Bitcoin as there are on other smart contract networks. So there's kind of less to do there data-wise. I mean, to be fair, there is a lot of interesting on-chain data for Bitcoin. But I don't know if you could build a whole company around just Bitcoin data specifically. might be able to do like a lightning company at some point around watchtowers and things like that. But it be interesting to see if he starts to get into operating businesses in addition to just buying the underlying. But it looks like he is going to just focus entirely on the Bitcoin part of the strategy, which he should. I mean, that's the biggest part of the business, right?

Yeah. So I don't know if you know this one, but forage. Is this forsage or forage, the Ponzi? that was shot down by the SEC. How the hell is it that we have $300 million Ponzi schemes that I've just never heard of still? It's just unbelievable. The SEC's backlog here of just crazy Ponzi schemes and ICOs.

They could just, why are they looking at Coinbase? They could just go for the next three years on going on ICO drops.com and ICO bench and just going down the line and just taking action against all these fraudsters. It's just incredible. So this is 11 individuals who created,

some sort of a Ponzi scheme called Forsage, and it was a huge fraud. They raised $300 million worth of cryptocurrencies. It looks like it was a bunch of Eastern European stuff, though, two people in the United States, a bunch of Russians, some Eastern Europeans. It's the golden age of fraud. I actually had come across this one when it was active. There's so many, and it's incredible that in any other era, a $300 million Ponzi would be pretty large. Today, it's just, It's probably not even in the top 10, largest Ponzi's the industry is seen. It's really not. And in speaking of ICO scammers, there were two people that were sentenced for a 2017

vintage cryptocurrency. I'm going to pull up what the name of this thing was, but it was an alt-coin called Drop, DROP. And I guess it was from a company called Drop Hill. And they raised $1.2 million. so they apparently weren't even, or 1.9 million. They weren't even that good at scamming people, but nonetheless it was a scam. And these guys were actually sentenced to jail this week.

So 2.5 years and 3 years respectively in prison for doing this crypto fraud. So it turns out you can go to jail for some of this stuff. Wow. Goodness. This one isn't exactly fraud, but my namesake, Nick Carter, the other Nick Carter is in hot water over. Bloomberg article entitled The Disastrous Record of Celebrity Crypto Endorsements. What did he do? They put Nick Carter on blast.

Nick with a K. Carter. He endorsed Safe Moon loudly. Oh, man. That's the one that Portnoy. Portnoy did that one. Portnoy did that too. So Safe Moon, it wasn't safe. It didn't go to the moon.

It was more like unsafe underground. So it has collapsed by 99% since he endorsed it on April 18th, 2021. And his reps said that he was never paid. He was never compensated to endorse Safe Moon. He just did it of his own volition. It was just a very bad call. Go on. Yeah.

I don't know about that. They probably tried to pay him in Safe Moon tokens or something. Yeah. So I don't know. Maybe that whole operation was. so sloppy, he never even took delivery of his tokens. But yeah, Nick Carter, you know, hate to see it. He's really, really despoiling the shared name here. I tried to go on that ICO bench website today once I saw that fraud. And it doesn't exist anymore. And then I remember

that ICO bench itself actually got charged with something in relation to pumping and dumping ICOs. So that site is off the internet, which is kind of a shame because one of my favorite pastimes is going on these like crazy 2017-18 ICOs and just finding out who the advisors were. I'm like, oh yeah, William Mugayar, advisor to like 12 ICOs, just all these names, Floyd Mayweather. I heard that name in a while. DJ Khalid, like all these people that were just putting their names on all sorts of pump and dumps. So the, the Bloomberg article is pretty funny though. I mean, Tom Brady's on there. He didn't really endorse anything that questionable. All he did was, he participated in the FTX campaign, and then, like, the crypto market sold off. That was the

best thing Bloomberg could get on him. So Tom Brady, I think, reputation intact, let's say. Yeah, I mean, they're just coming at him. It's just pretty unfair. I mean, you know, endorsegate, we can call this. Matt Damon is the most despised of the, I mean, Southwark did a whole episode parodying him over his crypto.com endorsement. Oh, they don't like that. Yeah. Yeah. People are incredibly triggered by Matt Damon specifically with his campaign for crypto.com. Fortune Favors the Brave. I don't really know much about crypto.com. I mean, it's hard for me to opine on that one, but it didn't seem like he was pumping an unregistered

securities offering. No, his main crime was Fortune favors the brave is not the expression. It's fortune favors the bold, right? Am I wrong about that? Why couldn't he say that? No, it is, yeah. So that's the expression. But could crypto, was that like copyrighted or something? Crypta.com would have changed?

Yeah, that's, so they're going after the Boston guys. Speaking of Brady, did you see that the owner of the Miami Dolphins got suspended until mid-October? It's a huge tampering scandal. So they were trying to get Tom Brady to join the Dolphins while he was still on the Patriots. they were tampering with them. They were also trying to get Sean Peyton as a head coach, just crazy behavior. Really?

Well, I stand with Miami on this matter. I stand with the city of Miami. Well, they knew that they knew that they had a trash situation. They needed someone to come in and fix it. I guess you can't be hand it to them. But you can't be doing that. You can't just be reaching out and saying, come play for me. All right.

We're breaking in here. This always happens when we record on Wednesdays. Something big happens on Thursdays. Coinbase is back. Coinbase is up like 25% right now. They just announced a partnership with BlackRock. The contours of the deal are pretty interesting here. So joint customers of BlackRock's Aladdin platform and Coinbase Prime will be able to get access to Coinbase's Prime platform, which involves crypto trading, custody, prime brokerage, and reporting.

So this all came out Thursday morning at about 8 o'clock in the morning, and Coinbase is just exploding. The stock price is up big time. Yeah, of course we recorded on a Wednesday and we just left a huge 24 hour gap where we thought nothing would happen. And then something happened. People were sleeping on Coinbase. Kathy Wood really sold the bottom there on Coinbase, huh? The bottom was 52 or thereabouts. I don't know what the intraday was in just a few days ago in July.

And now as we speak, it's trading at about $100. dollars, which is really remarkable. I want to put out a call. We need Brett and Brian Foster to come on this podcast. Brett Tedge Paul and Brian Foster. Call for people from Coinbase to come talking about this on the pod. We'll have a follow-up. We kind of knew BlackRock was sniffing around crypto because they had started on this framework for what constitutes like a sustainable Bitcoin miner. So they were clearly intending to do something. I think it's pretty interesting. Larry, think has been historically not a big fan of this stuff. You know, you have to respond to customer

demand ultimately. And that looks like what he's doing. Yeah, I mean, it's interesting. So I was reading on Bloomberg this morning, there was this article about, we talked about it yesterday. There's this article about all the celebrities that were whatever, shilling NFTs and so on. Everybody lost money. And then at the same time, you have like Tiffany, one of the biggest brands in the world, jumping into NFTs in a pretty tasteful way. You have a slew of other brands doing it. It's kind of the same thing in financial services land. Crypto is the most hated asset class.

And yet you have the literal largest asset manager in the world now jumping in with both feet. Yeah, it's pretty exciting. Critics are going to be frustrated once again, you know. Crypto is not dead. All right. Well, that was our cut in. Congrats to the Coinbase team. There were a bunch of hacks this week, actually.

In fact, one that's we're still kind of get to grips with as we go to press. Yeah, I mean, there's a good chance. If you're in the crypto space, you might have lost something this week, unfortunately. So the first one is Nomad. This is the biggest one. So this is a cross-chain bridge project. They just raised a big venture around. They were exploited and hacked to the tune of $200 million.

These cross-chain things are tough. I guess there's not much else to say, but this is a big-time hack. So this was a kind of, I'm not going to say. say funny. It's not funny. But this is one of those weird collaborative hacks where then this isn't the first time this has happened. The attackers broadcast a transaction showing that funds can be siphon from the protocol, basically. We're not going to get more complex than that. Other people see this and then they themselves do the same procedure and they siphon the funds to their address. and it happens over and over in a frenzy until it's totally drained.

So it's kind of like you sort of hold up a sign saying, hey, here's how you exploit it. And then spontaneously thousands of people join the fray, like a piran is stripping the flesh off a cow or something. And they just drain the, that's what happened. Like, you know, regular folks hanging out on Discord are like, oh, it's a free fraud, go pick up these dollar bills off the floor or whatever. And so that is actually a fairly common thing.

I can think of three other examples like that. And so how do you take action against an army of people that did that? I mean, a lot of these people will have their public addresses known, presumably tagged by like the TRMs and analysis of the world. Yeah, and I'm sure some of the people doing this, you know, they would have had a public ENS name, identifying them, to the wallet. So at that point, it's probably just best to return the money, to be honest. You remember this was the case with compound, had a hack like this.

Going way back into the past, there is a centralized exchange for the cryptocurrency, Ryeblocks later rebranded to Nano. Do you remember this one? Oh, yeah. I think this one was just like a low fee. It was like a DAG or something. There weren't any fees involved. That was the premise. And the exchange was called Bitgrail, and it basically turned out that you could withdraw more than you held on the exchange. And so the exchange was just sucked dry by its own clients, basically. And so it was described as a hack, but what had actually happened was just the exchange was badly coded.

And so its own users exploited it. So there was just a redistribution of wealth among the users of the exchange. So this keeps happening. when the compound one happened some people did return the funds I think the compound leadership also said that they would like work with the IRS to identify

who had Yeah that was a kind of Robert had that tweet Yeah he had that tweet I think he kind of walked that back But that was a heat of the moment tweet Yeah the interesting thing about all these hacks these days Is that if it's uh you know there's a certain breed of hacker that will return the funds and take a payout as if they were just discovering a bug bounty.

That seems to be happening. I guess it's harder and harder to hide your tracks. Unless it's North Korea state-sponsored hackers, in which case they do not give the money back. So second hack now, there is a very complicated one in the Solana ecosystem whereby certain wallets, I think the phantom wallet,

were being drained. And so these were kind of, in theory, wallets that had been initiated by end users that held the cryptogram material. It's just that somewhere in that process, the private key had been exported in plain text to a third-party server. And from there, basically, the attacker has gained knowledge of all of these wallets. And they drained thousands and thousands of wallets, not a huge amount in absolute terms. I believe, as of right now, it's less than $10 million. But it doesn't look like this is a

Solana network hack. It looks like this is... basically a mistake in terms of this slope wallet in terms of the way that that was set up. Apparently the slope wallet is closed source too. So that's where people are pointing right now. We'll see. It seems to be changing in real time. This was kind of a crazy one because there was a good 12 hours there where no one had any idea what was going on. It took a long time. I got a bunch of inbound from journalists about it and I just had to tell them I had absolutely no idea. and that I would send them the relevant tweets on crypto Twitter when I found out because there's just there's no way to know.

You know, even if you, you know, are quite technical and you're a security expert, et cetera, as you say, the slope and the phantom linked slope wallets were closed source. So there's just really, it's hard to reverse engineer this unless you're the team itself. I guess you, you know, if you're sophisticated enough to use a hardware wallet, that's what you should be doing. in the absence of in the absence of that sometimes centralized exchanges

actually are better for things like this. Yeah, I mean, if you're not brewing your own entropy, you're going to be at risk. If you're letting one of these browser wallets derive the entropy for you,

you are always trusting them to a certain degree, especially if they're close source. So, you know, roll your own entropy. Yeah, just roll the diet. Well, the fud dice. There is a way to do it.

No, I wouldn't recommend it with the fud dice. Those are not balanced dice. So they would have a bias. Remember we talked about this. You want Las Vegas dice where there's no divvets. So even regular dice that have the divvets, those are not balanced. We've been discussing making actually the on the brink community on gm.xy Z has spontaneously themselves begun creating digital trinkets. given our inability to do so, they have created 3D renderings of the Fudddyes.

So they've actually basically done most of the work in terms of the trinket we promised. We have the best community on GM.xyZ. So GM.com.c forward slash on the brink. I do have a little update just in the vein of like personal updates. I only have, this is kind of a gross one. So if you get freaked out by like injuries, I. Yeah, this is a good one. Yeah.

I went to the beach. I went to the beach on Saturday and was putting in an umbrella. And they have this crazy apparatus where it's kind of like a weighted hammer thing that's attached to the umbrella and you slam down on it to like get it into the sand. And I got my finger stuck in it, my pinky finger. And I effectively sliced off the entire fingerprint on my right pinky. Just straight off. And gushing blood everywhere had to go to the emergency room. I don't have a fingerprint on that finger anymore.

I just have a gaping hold. And there's not enough skin for stitches. I put like surgical gauze into it and just like wrap it up. And so I basically have like nine fingers right now. That's super gross. Well, I feel like your finger pinkie is your least important finger, right? I was totally. Yeah, totally.

So I was on the way to the hospital. I can you still operate? Yeah, I can operate. Can you still type? I can, yeah, I can type. Non-dominant hand or dominant hand? No, it's my right hand. It's my dominant hand.

All right, that's a little tougher. But yeah, you can type with four fingers. Easily. So I'm totally over it, but I have this like big thing on my finger now. And it's, uh, yeah, it's not great. You're not supposed to get it wet. So if you'd lost, you know, your whole finger at the knuckle, or something, would you have retrieved the finger and then brought it to the emergency room in the hopes

that they would reattach it or would you just leave it for dead? I would have probably tried to get it. Yeah, I would have tried to get it back because I've heard, yeah, I've heard that like, you know, if you get your hand stuck in a snowblower and you, like, chop off the top of your finger, they can reattach it. Yeah. I think the move is to fish it out of the water or the sand. I showed up and I was like just covered in a bloody towel and they're like what happened?

I was like my finger. Does it matter how it happens? I need you to clean my finger off. You don't need to get into the backstory right now. I don't know. There's like this crazy umbrella apparatus. Does it really matter? Just look at my finger.

Honestly, I'm having a hard time picturing the weird umbrella self-digging umbrella thing. I'll have to find a picture of it. It's this thing because it's like attached to the umbrella. So it's a very heavy weight and you slam it. And I just had my pinky in there and just took the thing straight off. I feel like you probably got off easy. Like you could have lost a lot more finger. Oh, totally.

Yeah, totally. Yeah, it was not great. Not great. Wow. Modern technology can't be trusted. See, like our ancestors did not use self-digging parasol. umbrella apparatus. They just used a rock to smash that thing and it's not intended. Yeah, and they just got sunburned. It's like you just get sunburned.

Look, we have to embrace the sun. We can't fear the sun. There's a lesson there somewhere. It's like, you know, just shun the sun. That's right. I'm kind of coming around to that school of thought. Wow. So many deep lessons from this one. Well, hopefully, I mean, your fingerprint, now what do you do if you have to get fingerprinted for federal purposes, you know? Well, I'm no longer on the board of directors of a bit license company. So for ErisX, I was. So I don't think I have any of the need to do any fingerprinting anytime soon.

I used to be a green card holder, and I would get a fingerprint all 10 fingers every time I entered this country, every single time. Oh, yeah. So you would just do nine. Mine would be nine right now. Yeah, it would just be like a bloody mark for the last one. Yeah, it would just be like a huge gauze pad. It would be like five times the size of a finger. That's what they'd get.

That was talking talking fingers. Maybe I'll get some well with, maybe you'll get some well with like flowers from Brink Nation to assist with your group. I just want the island boys to say, you know, sorry about the finger, you know, these three arrows fans, island boys. I, so I have also purchased videos from. the island boys in the past. I don't remember what exactly was some Bitcoin-related thing,

but they just have a quixotic charm to them, you know. I just a huge island boys fan. Always have been. Yeah. I hope they're doing well. I do too. I do too. All right, so I think that's it. We'll be back next week with another episode. Have a safe and healthy weekend, and we will see you next week.