On The Brink with Castle Island - Weekly Roundup 08/06/21 (Infra Bill Chaos, Gensler's Speech, BSV 51% attack) (EP.235)

Episode Date: August 6, 2021

Nic and Matt return for another week. In this episode: Gensler makes a landmark speech Gensler asks for a futures-based ETF Will the crypto taxation in the infrastructure bill be sufficient to pay for the new spending? What explains the 11th hour language in the infra bill? When does the Bitcoin lobby become a meaningful voter bloc? BSV gets 51% attacked Sponsor notes: This episode is brought to you by Withum, a top 25 accounting firm with a cutting-edge Digital Currency and Blockchain Technology practice. To learn more, visit  withum.com/crypto. Eventus, the leading global provider of multi-asset class trade surveillance, transaction monitoring and market risk solutions. Its award-winning trade surveillance platform is easy to deploy, customize and operate. Eventus is proven in the most complex, high-volume and real-time environments and supports many of the industry's leading crypto exchanges including Coinbase, Gemini, ErisX and OSL. Find them at onthebrink.link/eventus

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link slash with them. That's on the brink. dot link slash with them. 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 quantitative easing.

And 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. Busy, busy week. It's all regulatory all the time here. Well, this is the foremost regulatory-focused crypto-pact. Cryptopon. podcast, is that, is that fair to say? Can we say that? Well, I don't think that we're like the smartest regulatory people. We just happen to speak about regulatory issues because they're quite pertinent, I guess. We don't shy away from the issues of the day and the issues tend to be all regulatory for whatever reason. So no one wants to talk about the regulatory issues, but everyone's

talking about them this week. So we have a lot to get into with the infrastructure bill and Gensler's speech this week. So a lot to talk about. But I guess before we, we do, You had one of your heroes on the podcast this week. Yeah, we had George Selgin, of course. I was very, very pleased about that. I'd been trying to get George on the show for a long time. Actually, we'd previously agreed to do the podcast like a year ago. And it just took this Gorton and Zang paper to really give me a very good reason to get George on the show.

And he went off, you know, he went off. Gordon and Zang. You know, you can't, you can't mischaracterize American monetary history and expect to get away with it like that. Sorry. Hey, don't take a shot at the Wildcat era without your facts. It's kind of weird that they didn't clarify their position in that paper. Well, I mean, it's just, it was very incomplete. Like, yeah, sure. The free banking era in the 1830s to, you know, 1860s was not perfect, but that, you know, there's a good case to be made. that the cause of those failures was actually the state regulation, not the lack thereof. Additionally, there's other case studies of less safe air banking outside the U.S., in particular

Canada during the similar period, which were very stable. And so it's just not a fair or complete historical read to say that private monies always fail because there's plenty of examples to point to. It's just very anglo-centric to limit the analysis just to the U.S. what's going on outside your window right now you have an infrastructure bill protest is that what's going on i was actually thinking of going down at the state house to protest this bill uh but yeah i don't know just uh it's like there's a lot of stuff going on out there a lot of stuff going on well uh selgin was great it would be great to have him back on the podcast at some point i think he could be a recurring guest

he's a fascinating guy yeah i mean i it's no secret i've learned more from Soljan and White than virtually any other, you know, monetary economists. Certainly they're the most important currently active economists as far as I'm concerned. And we've had them both on the show now. So I'm very happy about that. You know, hopefully we can get some more of their colleagues from Cato or from, you know, from George Mason or something like that on the show. That would be great.

Well, as usual, it was a very, very, very busy deal week. So why don't we hop right into it? First one up is a portfolio company of our Zen ledger, which is a cryptocurrency tax software company. They raised a $6 million series A from Blackcelerate, Mark Cuban, borderless capital, Vestigo Ventures, Castle Island Ventures, and a number of others. Next up, we have another Castle Island portfolio company,

Matrixport, Crypto Financial, Market Infrastructure Company. They raised $100 million in a Series C from DST, Tiger Global, and others. Next one up is Loda. This is an Australian crypto lending company. They raised $15 million from Framework Ventures, Spartan Capital, and one block. Then we have Lolly, the very well-known Bitcoin Rewards Company. There is $10 million in a series A from Acru, banana capital, 776 ventures and others. Next is an M&A. So Voyager, which is the crypto brokerage firm, they're a public company.

They agreed to acquire Coinify, which is a payments company for $84 million. Then we have Liberty X, a Boston-based company. We had Kyle Powers on the show before. I recommend that episode. They have been doing Bitcoin ATMs for years and years and years. They also do payments and remittances. They were required by NCR, the publicly traded ATM firm. well I guess they do all kinds of stuff but really really great outcome and a really cool to see

NCR getting into the crypto game too Liberty X that's it's such an original Boston crypto Bitcoin company they had the ATM terminal and cell station which for a lot of people that worked in the financial district was the first time they'd ever heard of Bitcoin and you'd have Chris and Kyle just like standing at the ATM just keeping an eye on on it, just doing a lot of customer research in the early days. So it's great to see them with a great outcome here. Then we have Jump Capital. They acquired Certus 1, which is a blockchain validator and infrastructure company. Pretty interesting move from Jump. Jump, of course, getting a lot, a lot deeper into all sorts of aspects of crypto trading, namely in the Defi category. They're very,

very active in the Salana ecosystem. So I guess makes sense, you know, that you'd go out and get this capability and bring it in-house around running node infrastructure and validators and just becoming a lot more proficient in some of the technical aspects of running a trading operation over here. So it makes sense. Totally. It's interesting to see, you know, investment firms bringing this capacity in-house becoming more vertically integrated. I mean, maybe that will be completely.

normal behavior in the future to have maybe even venture funds like operating their own sort of engineering divisions in terms of running nodes and validators. Next one up is on ramp invest. This is an integration platform as a service company for crypto assets. They raise $6 million from Coinbase Ventures, Fox Ventures, Galaxy Digital Wisdom Tree in Rittoltz wealth management. Then we have sense financial a company building a protocol for fixed interest rate trading, there is $5.2 million from Dragonfly robot ventures in Bain Capital. Next one up is Maker's Place. This is an NFT marketplace. They raised $30 million in Series A financing from Bessemer, Pantera, Uncork, Coinbase Ventures, and Sony Music.

Then we have Massari, very well-known crypto data dashboards, analysis company. There is $21 million in Series A funding from 0.72, Coinbase, Uncork, CMS, Alameda, Winklevos, Capital, another those huge congrats to Ryan Sulkis and the team over there. Next one up is Trust Token. This is a defy lending protocol.

They raised $12.5 million from Block Tower, A16Z, and Alameda Research. Lastly, we've core chain B2B payments company. There is 1.25 million from BlockCelerate, Ulu Ventures, and Connecticut Innovators. Just a lot of deals. A lot of deals happening this week, huh?

Yeah. So the pace unabated despite some of the what look like regulatory headwinds, which are emerging. Yeah, so let's get into that a little bit. So SEC Chairman Gary Gensler, he made some comments this week to the Aspen Security Forum. And I like how they do this at the SEC, where they immediately publish the text of the speech. I think they even published it as he was speaking. So you had the full transcript and then you could watch on YouTube. I was surprised that not a lot of people were actually watching this.

This seemed like a very critical speech. I mean, if you put this in the pantheon of SEC-related speeches, I think we're going to look back on this as being a very important one. Yeah, I agree. I think this is up there with the Hinman speech and with the Dow report in terms of critical junctures in the SEC's relationship with the... industry. I think this could be could well be the most important one in hindsight. It seemed like a real statement of intent. I mean, we sort of knew that these were

gunslers views. But the fact that it came out and said, you know, he's going to ask for, especially in the Q&A portion, which wasn't transcribed, I don't believe so. I said he's going to ask for many more resources to actually go after the crypto industry, vastly increase the scope and aggressiveness of their engagement. That that seemed pretty pretty, pretty material. Yeah, so I guess let's just get into it. So he did the speech, he had the Q&A. Also the same day, the SEC released a kind of a social media video of Gensler,

and this was popular on Twitter. So definitely go check that out. We'll link that in our newsletter as well. It's about two minutes and 30 seconds, just talking about cryptocurrencies, really emphasizing that he's technology neutral, but this is all about investor protections. And so I think some of the, maybe the way to hop into this is just some of the categories of companies or protocols that might be impacted by some of the rhetoric here. And off the top of my mind, it's protocols and token teams are really kind of in the crosshairs here.

And there was an explicit reference to his predecessor, Jay Clayton, who had had this comment around every ICO I've ever seen as a securities, unregistered securities offering. And Gensler agrees with that. And he directly said he agrees with that. And he also kind of goes on to say, I believe we have a crypto market now where many tokens may be unregistered securities without required disclosures or market oversight. This leaves prices open to manipulation. This leaves investors vulnerable. Over the years, the SEC has brought dozens of actions in this area, prioritizing token related cases involving fraud or other significant harms to investors. We haven't lost a case yet.

We haven't yet lost a case. So I don't know how to read that other than to say. we're going to be a lot more aggressive here and we're going to continue winning cases. Yeah, fully, fully agreed. I mean, I think historically the industry is called the SEC's bluff and has continued issuing tokens which look like securities with the understanding that the SEC simply cannot keep up, but that doesn't seem like a sustainable long-term tactic, especially if the SEC gets resourced up and gets the ability.

I don't know if it would take, you know, how that would be instrumentalized, whether that would actually take legislation or anything like that. But if they get what Gensler is asking for, it seems like he's, you know, thing about targeting anything that looks like a security, which is a lot of the token industry. And I think importantly here, and this is obviously not something he directly said, but it's going to be interesting to see how they, it's pretty obvious if you do an ICO, you know,

with a throw up beneath address and you're raising from retail. That's an overt unregistered securities offering. I don't think if you do one of these like yield farming schemes here, this will put you in the clear. And so it's just going to be interesting how token distribution mechanisms are perceived by the SEC here. And that will be the thing I think that a lot of folks in the defy side of this market pay a lot of attention to is,

will they bring enforcement actions against token teams that didn't do an outright crowd sale but had some other mechanism to distribute tokens that in the eyes of the SEC would be an unregistered securities offering. Well, it doesn't seem really that convincing that instead of doing an initial sale, you distribute some of the tokens via some mechanism and then sell tokens in the open market, doesn't seem like a particularly meaningful distinction from the perspective of securities laws. Yeah, yeah, agreed. All right, so let's hop to another category here, which he explicitly talked about, which is crypto brokerages and exchanges.

So the part of the speech that I took particular note of was his comment, and I'll start to read it here. While each token's legal status depends on their own facts and circumstances, the probability is quite remote that with 50 to 100 tokens, any given platform has zero securities. So I don't know how to read this other than to say if you're a crypto exchange and a brokerage that has 50 to 100. tokens, there's a really good chance that one of them is an unregistered securities offering. And if you're not registered with the SEC for the trading of securities, if for instance, you don't have an ATS venue, if these things are not kind of compliant with FCC oversight, if they are in fact securities, then the platform itself, the exchange or the brokerage would be in direct violation of the SEC's rulings on that.

So I would take this to mean that we're going to start to see some enforcement actions, potentially against some of these exchanges and brokerages. Yeah, and this wouldn't be surprising by any means. Even the onshore exchanges, the more regulated ones that service U.S. clients, they were engaged in this arms race against the offshore exchanges because your typical crypto trader investor had this choice. Do I go to Binance or do I stay onshore with Coinbase and Cracken, et cetera? And so those onshore exchanges met the call.

They responded to the cornucopia of options available at the offshore exchanges by themselves listing many more tokens. So we saw this incredibly aggressive push into a diversity of tokens. And I think in the midst of that push, you're going to end up listing some assets that look like securities. I think Gensler's right. If you have 50 assets trading on your exchange, odds are. the SEC probably considers some of them to be securities. Yeah, and so what's an example here? It would be something like Ripple, obviously,

something that the SEC deems to be a security. Obviously, that case is still panning out, but a great many exchanges had that asset listed. Number of U.S. exchanges listed, the Dow, for instance, which is also a security. So I think we'll see this play out on a case-by-case basis, but one of the interesting things here is that if you're running an exchange and you don't have, if you're a cryptocurrency exchange

and you don't have securities listed, if you're kind of a full-blown commodity exchange, which I guess at this point, I don't even know what assets would be just commodities. I mean, you have Bitcoin, Ethereum, maybe Bitcoin Cash, maybe Ethereum Classic. It's hard to know. But if you're one of these exchanges that is not listing securities, then you're not under the SEC's regime. And CFTC Commissioner Brian Quintenz actually had a tweet on this this week saying, just so we're all clear here, the SEC has no authority over pure commodities. or their trading venues, whether those commodities are wheat, gold, oil, or crypto assets. So there's maybe a little bit of a turf war here between the CFTC and the SEC here.

Yeah, very interesting to the extent these things are commodities that would seem to suggest that the CFTC would be the pertinent regulator. I think, you know, the actual balance of power in the U.S. securities markets is that the SEC has vastly more, effective power and more scope and a much broader mandate than the CFTC, which is actually pretty small financial regulator, all things considered. But it was interesting you see Quintons pushing back, clearly motivated by the Gensler speech. I mean, and Gensler, of course, was the head of the CFTC. And so he knows, he knows this, right? He knows where the lines are drawn. And so maybe the read between the lines here is a little bit of a power grab between the two agencies and, And who knows? I mean, who knows how this ends up? Could you see a world where the SEC actually

just absorbs the CFTC at some point? So on the topic of securities versus commodities, one interesting maybe bright spot from the speech was Gensler speaking sort of reverently of Satoshi and Satoshi's innovation of Bitcoin, I think there's no question that he considers Bitcoin to be kind of a commodity. On the topic of Ethereum in the Q&A section, he sort of prevaricated, he didn't really give a firm answer as to whether he felt it was a security. So that was kind of, I thought, quite notable. But yeah, it just goes to show how complex it is to ascertain, at least from his perspective, whether these things are securities or not. Yeah, I mean, I think there's some grounds for optimism and some of the things he said.

For instance, on the topic of a Bitcoin ETF, he said that he said that he anticipated that there will be filings with regard to exchange traded products under the 40 Act. And then when combined with federal securities laws, the 40 Act provides significant investor protections. Given this, I hope to review the staff's findings on these, particularly if they're limited to the CME traded Bitcoin futures. So maybe that's a little bit of grounds for optimism that, hey, more enforcement actions on some of these tokens, but the market structure can evolve and we're going to have to see a Bitcoin ATF at some point? I don't know. Maybe that's reading

a little bit too in between the lines. I didn't love this actually because he's kind of very clearly saying that he wants to see a futures-based ETF. So an ETF that holds the security. The futures doesn't really track the price of Bitcoin

that closely. There's costs associated with maintaining the futures which just aren't really present in a spot ETF, but it seems like he's being quite clear that he doesn't really feel a spot ETF is warranted or necessary. And, you know, he's giving us this worst bargain by saying, well, you can have this

40 Act-based futures ETF, which honestly, I don't think investors really want. Yeah, it'll be interesting. It was very interesting that he specifically called out one venue, the CMB trade, obviously there are other futures venues. So we'll see how that goes. I guess on net, none of this is really surprised to me. Anyone who's really been getting good legal advice over the past few years probably understands some of these dynamics

with some of these tokens, some of the exchanges that have listed them. So I don't think any of this should come as a huge surprise. And maybe for that reason, it didn't get a ton of media coverage in the mainstream media. It wasn't like Gensar came out and just went to war with the industry. It just reiterated a position that everyone has sort of figured that the SEC had. Now, we'll see. these enforcement actions, it'll be interesting to see who he goes after. And there are certainly a lot of edge cases. And so the industry will be up in arms if he starts to get aggressive

towards some of these edge cases. If it's just the overt securities offerings, I think everyone will largely understand that. Yeah, with Gunsler and the SEC, I don't think the question was ever what their actual stance is. I think the question is their motivation and political will to impose their views on the crypto industry. And so far, the crypto industry has effectively been implicitly acting under the premise that there is insufficient political will to carry out these beliefs aside from just going after the lowest hanging fruit. My theory is that we're looking at a sea change here, especially if the SEC is able to

get staffed up as these issues come to the forefront. I mean, in this Senate bill that's being discussed right now, a huge amount of the press coverage has to do with the crypto provisions in that bill. So we're no longer a backwater as an industry. And so I don't think we should be surprised when we actually get the spotlight shined on us. Yeah, that makes sense. So I guess on that note, let's get into this infrastructure bill. And so for those in the listening audience who have not been paying attention to this week, I'd say all eyes in this industry have really been on this infrastructure. bill, which the infrastructure bill has nothing to do with cryptocurrency, except that there

was this crazy introduction of a concept of creating some reporting requirements on crypto brokerages in order to raise $28 billion, which in and of itself is kind of laughable. But this was introduced by Senator Rob Portman, who's a Republican out of Ohio. And on the face of it, I guess this wouldn't be all that controversial to say that crypto brokers and exchanges have reporting requirements and, you know, have to report certain types of transactions to the IRS. You have all of that exists in traditional markets. But when you peel back what the actual definition of a crypto broker is, that's when things start to get, you know, really haywire here. And so as the law is currently written now, as the bill is written, that would include minors,

that would include software developers who are building things in defy, people that are running nodes, people that are staking, all sorts of just open source participation in public blockchains would fall under the definition of a brokerage. And so you or I, if we're running a node, would be subject to these reporting requirements, which doesn't make any sense. And so I guess in short, the language is totally unworkable. And luckily, we've seen the industry really mobilized around pushing back on this. And there was actually an amendment introduced, a bipartisan amendment introduced by Senators Ron Wyden, who's a Democrat out of Oregon, Senator Pat Toomey, Republican out of Pennsylvania,

and our favorite Senator, Cynthia Lomas, Republican from Wyoming, and this amendment would narrow that definition and only have those tax reporting requirements on true brokers. So that's a multiple, but that's sort of where we stand right now. What's your take on what's going on? Yeah, it's been really interesting. We see the crypto industry mobilize and encouraging. I don't know if we've achieved the levels of mobilization that maybe some people would want.

We're not that well organized as an industry. We're still young. And I think other financial industries have mature and stronger presences in Washington and can get a line of sight on these provisions and amendments and bills before and not have to act at the 11th hour as we are now. but this amendment is promising. It's certainly promising. I don't know if running a node under the existing language,

as in downloading a copy of the blockchain, would classify you. De facto as a broker because you're not really processing transactions for consideration. So it is really, really unbelievably broad. I'm hopeful that this amendment goes through. it's not clear if it will. The latest update is that Senator Rob Portman has issued a tweet sort of conditionally endorsing this amendment,

at the very least saying the Senate should vote on it. And I think from my outsider's view here is that most senators just don't really care one way or the other. I mean, the tax revenue that's purportedly being brought in by this, by, you know, this, the language relating to, you know, crypto brokerages and things like that is kind of de minimis, frankly. I know 50 billion sounds like a lot, but this is a gigantic, colossal spending bill. And, you know, if you actually look at it in the context of our deficit, 15% of GDP right now,

you have three to four trillion the year. I mean, they're not going to raise enough money from, asset class that is worth $1.6 trillion in its totality, you know, to pay for this bill, let alone pay for the deficit. So, you know, the way we actually pay for things is that effectively the Fed prints money, you know, taxation is not how we fund the government. It's not sufficient, right? The tax revenues do not remotely equal the outweighs. And so what I think I really object to you almost more than anything is the way that this is being sold like oh we have to you know pay for the simple structure bill by tax in the crypto industry it's not going to be sufficient

you that's that's not how we pay for things that since we've entered a fiat era we do not need to balance the budget i'm not saying that's you know a good you know status quo but you don't need to tax yeah so obviously i agree with that the part that i'd love to understand is just to How does something like this get introduced into an infrastructure bill? By the way, this infrastructure bill is ridiculous. There's so much crap in this thing that has nothing to do with infrastructure. And this is completely orthogonal to the intention of funding infrastructure projects in the United States. But how does Rob Portman come up with this concept and this verbiage that would effectively just kneecap the industry and try to sneak this in at the last minute?

I'd love to understand what part of the government is coming up with this language. Is this, you know, an insertion from the Treasury Department who's historically been quite hostile towards public blockchains? You know, if anyone has any insight on that, I actually love to start a dialogue on the, maybe we'll get some Twitter chatter going on this. Yeah, I think we're both speculating, but I, that would be my best guess, that the Treasury tried to sneak this in, you know, this rider at the 11th hour. and take us by surprise. At this point, you know, the state has been trying so many different tax to effectively, you know,

create an enormous burden, almost criminalizing certain activities, which are completely, you know, normal within the crypto industry, like operating a node or, you know, running a lightning node or, you know, writing a smart contract, you know, things which, you know, ought to be protected activities and things that don't necessarily have analogies in, you know, money transmission contexts. And so this is just the latest attempt. I don't think they're going to stop either, for that matter. And so this is just one of many battles that we're going to fight.

Even if we win this one, they're going to keep coming after us. And I guess the best thing to do here is become active. And so there's a number of ways that you can do. do that contacting your senator everyone has one everyone in the united states has one uh and just letting them know what you think about this would be a great place to start and so there's a number of ways to do that um and we'll link to some of those in our newsletter but a big hat tip to the blockchain association coin center the eFF a lot of the and a lot of the infrastructure companies including coin base that have been really active in pushing back against this i think the industry has really come

together. What about your local senator? Have you been in touch with our beloved, beloved local senator? I have not been in touch with our beloved local senator Warren. I would not surprise me if she was not going to vote for this amendment. I'm not really sure that we're going to be much help here in Massachusetts with this. Yeah, I see this as a sea change a little bit in the crypto industry's willingness to organize, because at this point, it's clear. that we're kind of under-resourced, under-provisioned. Although, you know, at the same time, there's apparently, according to NIDIG,

46 million Americans that own just Bitcoin. Now, you know, I don't know how reliable that number is, but it's certainly tens of millions. And so the Bitcoin demographic is a real thing. I mean, it's an entire political movement here. It's not just, you know, a merely technological thing. It's political as well. And it is encouraging to see there's a few senators and a dozen or so representatives that are explicitly, you know, pro-Bic hole in pro-industry.

But we clearly have more work to do in terms of mobilizing. So I'm very hopeful that we'll be able to actually start to flex our muscles here because ultimately these policymakers are accountable to us and a very, you know, opaque and, you know, long, long feedback. back loop way. But in theory, they're accountable to their constituents and a lot of their constituents own digital assets. By what year do you think that the Bitcoin block will just become so important that you can't win the presidency without the Bitcoin block? Within two presidential elections, I think. I think that's probably right. I think that within the next, call it, 15 years, it will become extraordinarily difficult to win a national election without being ingrained in the public blockchain ecosystem in some way. Yeah, I mean, I think there's what we're going to see in

this coming in the midterms is there are a number of candidates that are explicitly pro-crypto as part of their platform, and that's going to work to their benefit. On the face of it, I mean, the time to get on board with something like that as a politician is early. And so some of the, you know, I think Lomas is a genius here to hop on this early, consider it a key cause that she is running under. And I think she'll see that a huge dividend as a result of it. And look how much it improved her name recognition and just raised her profile. I mean, that's another thing.

It's like these politicians are many of the especially representatives are very obscure. But then by lending their name and their cloud and their status to the industry, gain kind of a celebrity. You know, they get love bombed by the industry. And, you know, I think that really matters to them. It's like, yeah, who was the, who's the artist that tweeted about Bitcoin a couple weeks ago and got, it was like 30 times more likes than any tweet that he's ever put out? Was it, I think it was Buster Rhymes. Oh, yeah, Buster Rhymes. And stuff like that, you know, if you're a Twitter celebrity and you realize that you just tweet something positive about the crypto.

industry and you just get, you know, unbelievable amount of inbound in life. The dopamine hit there must be insane. Yeah. I mean, think about it from the perspective of the billionaire to, like, what did they used to do to, you know, become publicly known? They would buy a sports team, right? Yeah. You know, so if you're like a hedge fund billionaire, no one knows who you are, but you want to, you know, raise your profile for whatever reason, you buy a sports team and then all the fans of that team know who you are, right? Now, all you have to do is just buy a bunch Bitcoin, and you'll immediately get on the, you know, you become known to this gigantic demographic of people. And it's just, you know, you raise your profile massively by doing that.

Yeah, it's like Steve Cohen. I mean, hey, who's ever heard of Steve Cohen in the context of the Mets? It's all about Masari, you know? The guy just led Miseries around. That's what I really care about. I mean, who cares about the Mets? Well, but yeah, Steve Cohen is the classic example. I mean, I don't know, was whatever, 0.72 or SAC Capital.

I guess they had the lawsuit, but I mean, was SAC Capital that well known before, or was Stevie Cohen not known before he bought the Mets? I don't think so. Yeah, well, now he's even more popular. Exactly. Something interesting, blockchain protocol news, Bitcoin SV has been repeatedly 51% attacked. and I think it was really interesting to see coin metrics right on top of this. They've been developing network risk monitoring tools specifically to alert exchanges

and service providers to outages like this. And so it's cool to see real-time data on that. But yeah, Bitcoin SV might be in kind of its death throws right now. It's such a, it's a crazy thing. So yeah, definitely check this out. So we'll link this in our newsletter as well. but Bloomberg actually covered it this week. So Coin Metrics sells these tools, I guess you'd call them software tools to exchanges

and brokerage firms that allow them to monitor the network health of any number of public blockchain assets. And so that tool started to pick up some massive irregularities in BSV. And I was just thinking as this was happening, if you're an engineer at one of these third-grade exchanges that still lists this asset, and you're getting that 3 a.m. phone call or beep that you need to do something because BSV is under 51% attack, you need to halt withdrawals. Are you just sitting there and just saying,

why do I work at this place? Like, can I just send my application over to Coinbase or some of the, like a real exchange? Can you imagine being one of these engineers? I mean, I think I would be pretty insulted if I was an engineer and I was asked to support BSV as part of my job. Yeah, it's like, it's just such a clown show of a project. And it's just in the amount of technical debt that this is imposing on any exchange or brokerage that lists it is just, it's hard to calculate.

I mean, but the amount of man hour spent on just keeping the nodes online, keeping the wallet infrastructure up and running. It just, it must be crazy. Yeah, I did see some BSV affiliated Twitter accounts going around tweeting, oh, okay, this is the correct chain, ignore this chain, blacklist, this, this four. and only focus on this branch. And it's just, it's literally consensus formation via Twitter. And that's what happens when Nakamoto consensus fails, when you are a minority on a shared hash function, was there a tiny minority? Any medium-sized Bitcoin farm can, you know, reorg BSV.

So that's what happens when you ignore the security properties of proof of work. and you share hash rate with a much larger, you know, neighbor on your hash function, you end up resorting to consensus by tweet. And that's kind of the weak subjectivity that's been talked about a lot. So it just shows what happens when you ignore all prudence and reasonable guidance. You end up kind of completely centralized. I'm starting to think that that was not Satoshi's vision. after all what you just described.

Doesn't, yeah, I don't think that I haven't seen Twitter appear in the Bitcoin white paper at all. Maybe I should reread it. Well, some interesting other news this week. So J.P. Morgan has apparently launched an in-house Bitcoin fund. Jamie Diamond cannot be happy about that. So this is a fund that's for their private bank clients. And it looks like it's in partnership with NIDIG. But the transformation is complete.

And JPM is now offering Bitcoin products after Jamie Diamond famously. said that he would fire anyone who was doing anything with Bitcoin a few years ago. It's come full circle. Well, congrats and I dig for the success there. And I think it's just another step in the evolution. Bitcoin is becoming kind of more boring. And I think that works to its benefit. And ultimately, JPM realizes they have a financial opportunity in terms of being a service provider for Bitcoin. All right. So I think that's it for the week. I guess this infrastructure thing will be evolving in real time. So hopefully we're not dating ourselves. the time this comes out. But that'll be the big thing to keep an eye on and we'll have an update on that

next week. Well, yeah, luckily there's only about an 18-hour latency between us recording this and it coming out. So unlike other times when we've recorded a day or two in advance, hopefully nothing is going to change on the ground before this comes out. So we'll keep an eye on that. Definitely stay up on it. And as a participant in this ecosystem, contact your local senator and make your voice heard because this is. an important issue and you know you've always thought we have one more boss to beat and it's going to be a multi-year fight yeah you know as we said you know most senators don't really necessarily have a strong view on this it looks like the amendment is likely to go to a vote and so you know

those incremental you know 50 calls made to your local senator do move the needle they just want to quantify, you know, the popular demand for this stuff. So it matters. All right, everyone. So have a great weekend and we will see you next week.