On The Brink with Castle Island - Weekly Roundup 09/30/22 (CFTC comes after Ooki/bZX, the Fed abandons CFTC ambitions, the convenience yield of stables) (EP.355)

Episode Date: September 30, 2022

Matt and Nic return for news and deals of the week. In this episode: What caused the Pound Sterling to sell off? Deglobalization picks up Stirrings of a sovereign debt crisis emerge Explaining Deribit's insider-led down round Can the market recover before Do Kwon, Machinsky, and 3AC are dealt with? Celcius' Machinsky steps down Brett Harrison leaves FTX US 7 states issue C&Ds against Nexo The CFTC goes after Ooki DAO and DAO members The CFTC serves Ooki through a chatbox and a forum post How voting in a DAO can cause you to incur personal liability Why putting a DAO in a 'legal wrapper' might make sense The Fed will not pursue a digital dollar (for now) The 'convenience yield' of holding a CFTC OTB Bingo Would it be good for Bitcoin to be flippened? Sponsor notes: Talos powers institutional access to the entire digital assets ecosystem via a single-point of entry. Connect directly to your preferred prime brokers, lenders, investors, custodians, exchanges, OTC desks and more, or meet them on Talos. Get started at Talos.com 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 to Britain's ailing economy with a new round of Conchistute Ease. 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. In this episode, is brought to you by Coin Metrics. And here is the Metrix Minute. This is the Metrics Minute brought to you by Coin Metrics. After the merge, Ethereum Classic hash rate quickly jumped to over 200 terra-hashes per second.

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Well, it's been quite a week out there in Tradflyland. Yeah, everything's melting down. So what's going on here with the pound? Is that even a thing anymore? Yeah, pounds, whof, not good, not good. We were bashing the euro last week. I didn't realize the pound was going to fall too. It's kind of all happening. Yeah, so I guess Liz Trust proposed a budget, and markets puked at that and yields rows.

I think it contained tax cuts, so let's say it was just sort of reganomics-style budget. However, if you are going to try and do that while you're not the issue of the world's reserve currency, you're in for a bad time. And so investors in the British, British treasuries, I guess they're called guilts over there. I didn't know that. They hated the budget. And those interest rates or yields rose very quickly. And that caused a bunch of British pensions to have financial problems. And weirdly, these pensions had all bought these derivatives. And they faced a ton of margin calls from the investment banks that sold them the derivatives. And that forced the Bank of England to basically resume QE and bail out the pension funds.

So that happened in England. Which is unbelievable that this all happened within a week. The chart looks like UST or maybe one of these like IOT charts, just a very precipitous fall. Yeah, I mean, the rest of Europe's not doing too hot either. The somewhere north of Denmark there's a giant natural gas spill. Just based, you know, Nord Stream. Is it Nord Stream one or two? that has a whole net.

I think it's both. I think. So, yeah, could be both the Nord's dreams. Basically, Europe's not getting gas anymore. Unclear who did that. But the net effect is Europe is going to be a vassal state for the U.S. basically. I mean, they're going to be completely dependent on U.S. LNG imports

in order to keep their industrial sector alive. I don't know if the German industrial sector is going to be competitive on global markets anymore, if they're not getting Russian gas. So the obvious question is, what happens to crypto assets and how does Bitcoin, how does Ethereum play in this? This doesn't necessarily mean that those assets are going to catch a bid. Not necessarily, but I'm seeing green shoots. I'm seeing Stan Drucken Miller came back and he's now sort of maybe pro-crypto again.

All of the established currencies aside from the dollar puking, Japan, the EU and now the UK have effectively reversed course. and they're engaging in explicit or implicit yield curve control, all those three central banks. So they are effectively stopping their hiking cycles and printing money again. So enormous weakness in all those currencies. You kind of have to have a way to stitch it from where we are now to a world where Bitcoin or Ethereum are big, huge global macro assets. And I think the link there is likely a central bank putting it on their balance sheet or a sovereign wealth fund taking an enormous position. It wouldn't be the craziest thing to see a Saudi Arabia-style country make a large purchase. Yeah, I think that's kind of my conclusion is, you know, this events the last few weeks have really driven home the fact that the world is fragmenting into kind of an eastern block of, let's say, Russia, China and India as one sort of industrial and employees.

political entity and then the West. And there won't be that much trade between those two blocks. I mean, the literal gas pipeline, that main economic linkage between Russia and the West was severed. There is now, it's not just an economic war. It's a political war between the two blocks. and I don't really know what that means for currencies or like stability or anything like that. But the sentiment around crypto is kind of picking up. Like the New York Times had this article, currencies around the world are tumbling except Bitcoin. And then Bitcoin sold off after that came out.

But I mean, you know, like we're seeing basically what amounts to a sovereign debt crisis globally. That's what a lot of Bitcoin is sort of thought. happen. It's just that when it happens, it's not really good time for anybody. So it's not like something you can celebrate. No, it's still a lot of pain out there. But interesting times we live in. A busy podcast week, Ria sat down with Christine Kim from Galaxy Research, talked about the Ethereum merge. I thought that was a great episode. Yeah, second on the merge from us. And then you also sat down with Sergei from Axelar to cover blockchain interoperability. very smart guy that's Sergey blockchain interoperability is a very hot category right now

I wonder if it'll ever actually be solved oh I think so there's just so many smart people working on this so many different approaches axelr is obviously one of them but the the amount of talent in the space is just crazy a lot of deals this week as well tons of deals I mean like the deals are not slowing down that's another thing that would be a cause for optimism here just how many things are being built and how much capital is still being deployed into, I'd say primarily early stage stuff. I'm not seeing a lot of series Bs, series Cs, but we have some interesting deals this week. So I guess we'll hop right into it. All right. First one up is Quill, KWIL, their decentralized database protocol.

They raised 9.6 million from FtX Ventures, DCG, and others. Next one is NABIRU. This is a crypto derivatives protocol. They raised $7.5 million at a reported $100 million valuation for, from Tribe, Republic, and Crackin. Then we have Cintra, an NFT marketplace, and social app. They raised two million from Lemnis Cop, FTX, and Corus Juan. Strike is next. This is of course, Jack Mallors' company,

Bitcoin payment processing, I guess Lightning payment processing would be a better way to describe it. They've raised $80 million. It was led by 1031 and a couple endowments here. So Wash You and University of Wyoming, these endowments going direct. Was it University of Wyoming that also did a direct investment into what's now called custodia.

Am I remembering that correctly? So they're no strangers to directs. Yeah, really interesting. And they like their Bitcoin. Oh, yeah. So, yeah, strike one of the most visible companies in the Bitcoin space, arguably. Next up, we have Tactic, a crypto accounting solution. They raised 11 million from FTX, Lux, and exponent founders capital.

Next one is MPCH. This is of course a crypto-MPC company. They have raised $40 million from Liberty City Ventures, QCP, and Mantis. Then you have Eclipse, a blockchain scaling project. They raise $15 million from Tribe to be in others. Chain ML, which is a decentralized machine learning protocol, raised $4 million from iOSG, hashkey, SNZ, and others. Then we have space and time.

A decentralized data platform, 20 million from M12, which is Microsoft's venture arm, framework, and hashkey. This is a cool. I've seen this company present at conferences before. Very dynamic founder. I'm excited to see where space and time goes. Next one up is Nexo. So they have acquired a minority stake in a bank. The bank is called Summit National Bank. So I guess they're trying to move into the U.S. banking sector here. Is that the take? curious given nexus appearance in the news of the week section which we'll be covering shortly get to that they're in the deals and the news by the way this is a newsletter we don't say that enough

if you want to get this deal rundown in bullet point form just go to our website and subscribe to our newsletter at the bottom of the page and we'll send it to you on email too yeah you basically want to be in the deal section not the news section if you're in the news section it's possibility something's gone wrong. I had a couple people ask me where the bad boys section is. You don't want to be in the bad boys section. You don't want a bespoke theme tune. No, you certainly don't want that.

But yeah, being in the deal section is a good place to be. Being in the people that we spoke with on the podcast this week, that's also a good section to be in. That's the good one. Yeah. You don't want to be in the regulatory section. There's plenty of that. There's a lot of.

There's that every week. That's a lot of that. So we'll cover next one in a second. next up we have aqua aqua aqua it's not aqua it's aqua it's aqua there's a lot of agua here right now let me tell you yeah you got rained on down there we're swamped in agua down here i mean it's actually extremely harrowing some of the images coming out of the west coast of florida right now yeah miami dodged the storm everyone told me you know nick don't move to miami this hurricanes Well, you know, I've been here 18 months.

We haven't had a hurricane. Knock on wood. It's still early in the season. You know, we beat the odds so far. So, Aqua is a Web 3 community platform for gamers. They raise $10 million from Digital, which is a fund associated with Stevie Cohen. Next one up is Coral. This is a dev tooling company building on the Salana ecosystem.

They raised $20 million from FtX, Jump, Multi-Coin, and others. Then we have ACON, not to be. confused with the artist. A Web 3 onboarding solutions business. There is 10 million from Morgan Creek, Blizzard, and Avalanche. Next is Block Green. This is a decentralized lending platform. They raised 3.7 from Founders Fund, Coinbase, and others.

Block Green, that's kind of like an ESG type of thing, but Founders Fund doesn't like ESG. I wonder what the deal is there. Then we've got three commas, which is, that a reference to Silicon Valley, the show? Or maybe it's just a reference to the number. I think it's a reference to being a billionaire. Right. So anyway, they're an automated crypto trading platform. They raise 37 million from Target Global, Alameda, Jump, and Copper. Next up is Re. This is a reinsurance protocol. They raised 14 million from tribe, framework, Morgan Creek, and others. Lastly, we've Deribut, interesting deal here, the crypto options exchange. They've raised

from insiders at a $400 million valuation. What is going on here, Matt? So this is an interesting one. I don't have any insider information on this, so I'll throw that out as a massive disclaimer here, but I have some theories on what's going on here. So Deribit had previously raised at a much higher valuation. Maybe we can pull that up here. But, you know, it had been, I think, valued a $2.1 billion in its last funding round, which was in the summer of 2021. And it's a crypto options exchange, and it's known to have been spitting out dividends, pretty chunky dividends, I might add. The interesting thing here is that this is a three arrows capital investment. So three arrows, along with another venture fund had had this big SPV into Derribit.

And you can Google around for three arrows and see all the potential shenanigans around the raising of that SPV. But the fact is they were investors in this thing. And so if you look at this and you say, okay, well, how is it the three arrows who, you know, the founders are on the run? They obviously have massive legal headaches. They're going to be getting dividends from Derribut. And I'm sure Deribit's not really happy about that.

And that presents a lot of problems. And I'm sure the other investors in the cap table aren't very happy about that. So then you get to the point of, well, how do we address that? And I don't know if this is what happened, but I was thinking that this might be like a pay to play. And so to explain what a pay to play is. So company is distressed, let's say. And they're going to raise follow on capital. they aren't able to find a new investor to come onto the cap table.

This is how these things usually shake out. Let's say the company needs to raise, let's just pick a round number, $100 million, and they can't do it. So an insider steps up and says, look, we'll lead this round. It's going to be at a down round. And there's a pay-to-play initiative, which basically means if the company's raising $100 million, you do the pro rata participation across the preferred equity stack.

So if you own 10% of the preferred equity, your pay to play minimum is $10 million. And if you don't invest the $10 million, then something happens to your shares typically. So usually what would happen is those preferred shares would get moved over to common equity. And potentially even they would get cut in half or cut in a fourth and moved over to common equity. So it basically wipes out your shares as a preferred shareholder if you don't participate in a pay to play initiative. And the valuation kind of doesn't matter as much in these things because you're basically just restructuring the cap table. And typically what happens is you option up the founders and the key management. And so a lot of things get pushed from the preferred stack into the common and you'd say, all right, well, doesn't that crush the founder?

Are they still going to be motivated? No, you usually bump them up. So you give them a huge options grant. So if this is a pay to play initiative, my system. my suspicion is that three arrows is not going to be able to find the money to pony up on the pay to play and they're going to get wiped from preferred equity to common equity probably at some massive haircut and then you're going to have the founders of deribate probably optioned up and so they they care a little bit less but the interesting thing becomes if you're liquidating three arrows in deribates kind of a marquee position

I think this thing's like worthless right now if what happened if my suspicion is correct here that this is a big pay-to-play down round that they did not participate in. I think there's very little value there for three arrows, which if you compound this with the Starkware weren't able to exercise, it looks like two of the crown jewels in the three arrows liquidation are like zeros right now. So I'll pause there, but that's sort of what I think might be going on there. Yeah, because that explains the puzzle of why they would have raised that two, they raised $100 million in 2021 at $2.1 billion valuation. And then why they'd raise $40,400 a year later,

I don't think market conditions justify such a precipitous decline in valuation. So I think your theory that it was kind of a cram down makes sense. Yeah, I mean, these guys are profitable. So my guess is that what's also happening here is that they're, you know, they just didn't want to be paying that dividend out. So there's a quote from one of the founders that the valuation doesn't really matter. It's kind of true. I don't think the valuation really matters that much.

I think that the founders are probably getting optioned up. And I think the insiders who mattered are all participating. And now they're going to reset and they'll continue with the dividend stream. So I think who gets hurt here is three arrows. Yeah. So kind of interesting. We're seeing a lot of these storylines from the, you know, event. of 2022, the credit event, whatever you want to call it, the crypto banking crisis.

We're seeing them wrap up and wind down. And I think we need them to be resolved before the market can psychologically reset. You know what I mean? Like you couldn't have Doquan and Mishinsky and Sue and Kyle running around and not having, you know, dealt with the consequences basically before the market could recover. That's my genuine theory here. And two to three right now. I guess, but I don't know. So the three hours guys are still on the run and they probably have new faces at this point. Doquan, there's a red notice, which is not actually an arrest warrant. I think that was erroneously reported, but Intraple issued a red notice on Doquan, so he's still out there. Machinsky is still not in jail. So I don't know. It's, we're not done.

Well, yeah, it might actually be O for three. But yeah, so yeah, doquan is still tweeting playfully, despite, I guess, you know, the world's police agencies coordinating to try and locate him. But, you know, that's progress. That's progress. You know, the Koreans have finally identified that I guess he committed some sort of alleged crime. I think there has to be one in there. I guess. It's not clear to me from the outside what they're going to get him on, to be honest with you. I'm sure that there's things around the money movement there, but it's it's not screamingly obvious in the same way that it's screamingly obvious for the three arrows guys. I think it's very clear that, you know, there is misrepresentation about the reserves, the system itself,

who was backing it, the timing, the public statements that he made. If you consider it as a kind of a security, then you have to basically be truthful. And you're really constrained in what you can say. And he wasn't in any way. Anyway, we'll see what happens. Yeah, the three eras boys still on the run. Machinsky, however, has now stepped down from Celsius. So I guess that's the end of that story.

Definitely not the end of that story, but it's the end of his legal bills being paid by Celsius, I guess. Right. I don't know. I don't know what to read. There's a lot of bankrupt. There's not a lot of bankruptions. There's a lot of resignations this week.

So, Machinsky's gone, the CFO of Voyager stepped down, Brett Harrison stepped down. So he's the FTX U.S. CEO. And tying those two together, FTX won their bid for the assets of Voyager, and then also indicated they might want to bid on the Celsius assets as well. Yeah, so it looks like the bid here is $1.42 billion. It's $1.3 billion for the customer deposits, and an additional $11 million, up to $111,11 million in consideration. So it's a customer acquisition grab, I guess, is the way to think about this.

So this is kind of long overdue. I was surprised that it didn't happen. But seven state securities regulators, including California, have brought actions against NXO in connection with their earn interest, their crypto interest accounts, which is sort of not surprising. given the various states enforcing against block fine Celsius.

And it was interesting seeing Nexzo kind of floating around seemingly unscathed during the credit crisis and unburied. But yeah, basically they're not going to be able to offer that product in the U.S. anymore. Nexo is such an interesting one. I hear their ads on podcasts, like NLW's podcast has a Nexo ad.

I've never met anyone from Nexo. I've never met anyone that used it. And I've never really met anyone who has like a very informed opinion on it. It just seems like a black box. I've met some NXO folks executives. They seemed friendly enough. But yeah, very little information about that company. I mean, they must have the best risk management on Earth.

I don't know how they didn't have any exposure to this. They're like the only crypto lender that is claiming to not have taken a hit. I think they're literally like the only one. so right after we recorded last week one of the most interesting kind of regulatory actions i would say ever happened the cfTC Dow incident so so it's this it's either the Uki Dow or BZX basically they're the same thing I had never heard of this thing. So I think BZX was hacked and that's why I knew about it. Okay. So there's maybe it was a different BZX. Anyway, so the CFTC filed and settled charges against

the founders of BZX for illegally offering leverage and margin retail commodity transactions, which obviously you'd have to be a futures commission merchant FCM to perform those actions. And then of the standard thing of not having a compliance program. So that happened at the same time. So that sort of first thing is not that surprising. Basically, you're doing something that ought to be CFTC regulated in the US to US entities, and you're not in any way trying to comply. The second thing was crazy.

So they have charged the Uki Dow, which is the Dow, which governs, the protocol basically. So they went from sort of a centralized model to a Dow model. And they charged the entire Dow with violating, with the same violations. And they're seeking restitution, disgorgement, monetary penalties, trading and registration bans, and against the Dow. And the way in which they served the Dow is astonishing. I don't know if it's allowed, really. So what did they do? They put it in like the Discord channel or something? Well, yeah, so I mean, that's the question. How do you serve a Dow?

So what the CFTC did was they went to the Uki Dow website and turns out there's one of those little chatbots where you can provide feedback and they put the notice in the chat box. And that was one of the ways in which they achieved service. The other way was they made an account. on the Uki Forum, the governance forum, and they posted the notice in the forum. It's a good thing they didn't vote because then they would have been part of the Dow. So I guess that's allowed.

Although I guess, you know, there's been interesting ways to achieve service like with NFTs in the past. I think that's one way. And so here's the problem is that Uki Dow is not routers. in an LLC or anything. So it runs the risk. I think Preston Byrne pointed this out like years ago. As a participant in a Dow, just because it's not incorporated in any way, it doesn't mean you're not liable for the actions of the Dow. In fact, I think the legal theory is absent some actual legal structure, you might be jointly and severally liable for the Dow. personally, on a personal basis.

And so I didn't know what that actually meant, so I looked it up. It basically means every individual composing the organization, whether it's a general partnership or an unincorporated association, is liable for the entirety of any, you know, torts the Dow might be implicated in. So anybody in theory that is a member of the DAO and considered part of sort of the leadership or the governance can actually be considered liable in that case. There's really not a situation you want to be in. No, and it's going to be interesting because a lot of these people are obviously pseudonymously participating. Is this going to get to the point where CFTC is looking at on-chain addresses and trying to de-anonymize people to find out if they're in this DAO?

Yeah, I mean, it's not hard to de-anonymize people in crypto because they typically buy E&S names and then do transactions. And maybe it's, they use that ENS, they use a username somewhere else. I mean, I don't think it would be that difficult to identify the key participants in this Dow. Because remember, there wasn't a lot of precedent for this. I mean, DAOs haven't been subjected to this kind of legal treatment in the past, even though you could have anticipated this if you knew a thing or something. too about that side of the law. What's interesting is if nobody comes forward and answers the CFTC's lawsuit, they will probably win a default judgment in California, meaning they will just

automatically win the case. Yeah. So someone. Someone's got to step up. Someone affiliated with the Uki Dow or BZX has to like raise their hand and be like, okay, all right, guys, let's talk about this. I mean, this feels like a case for the EFF or Coin Center or something to pay for some legal bills for some poor soul to raise their hand. Yeah. I mean, you know, does Coin Center want to take up the cause? You know, there are ways that exist to have Dow LLCs, though, of course, there's all

these proposals, there's the Lao, and Wyoming has a law about Dow LLCs. So there are in theory these legal structures that you can put around a Dow such that the sort of directors of that Dow are not personally liable. But then there's the fact that it's less decentralized and less cypherpunkey. And so a lot of these DAOs, we're seeing crypto just don't have any structure. And then this is kind of the risk that you run. Crazy story. I mean, a lot of people are asking for the CFTC to have greater oversight. This might cause some folks in the crypto industry to take a little pause there on whether

or not that would be something that they would like to see. Yeah, I mean, the CFTC was considered the good regulator. That's the sort of the pitch they're making into the industry. This is probably not going to help with that kind of goodwill. As far as a legal precedent is concerned, this would be a really interesting one. but really tough on people that are sort of chronic Dow governors. You know, I mean, these kinds of organizations get sued all the time and just because there isn't a website with the names of the individuals,

you know, just because you can't necessarily identify the people and because there isn't a formal organization doesn't mean the law doesn't consider it a de facto organization. on incorporated associations can be they can come to exist even if it's just sort of you're implicitly working together on a common enterprise. There doesn't need to be anything written down about it. So it's going to be an interesting one to keep an eye on. Hey, did you see that Powell came out this week and he said that the Federal Reserve has decided

not to pursue the digital dollar? That's not going to be a thing. That first good decision the Fed's made in you. I mean, thank God. Can you imagine? When was the last time the federal government undertook a massive technology project direct to the populace and it worked? Yeah. I mean, it's shocking that they kind of came to their senses around this. A retail CBDC never made sense, though. I mean, the Fed is not a retail facing organization. No, it just doesn't make sense. They would completely cripple the commercial banking sector. So in a way, it's surprising that it was out there. for as long as it was. But I would think that this would further unleash stable coins as a, just a killer app here. Yeah, I've long been of the opinion that we will eventually get the

USDC, as I call it, a public-private partnership between stable coin issuers and central banks. One way to achieve it is just to give the stable coin issuers direct access to the central bank itself. You could do that tomorrow. You could just say, USDC, hey, we're going to give you a FedMatcher account. Yeah. And then there's no question about the integrity of the reserves or the liquidity, you know? So that basically gets around a lot of the issues. Some of the more sophisticated market commentators have around stable coins is they think,

oh, they're sucking liquidity out of the system or, oh, they're going to become impaired and they're going to have bank run dynamics. if there's a liquidity problem with treasuries, well, very simple solution. Just give them access to the central bank directly, and then they're issuing effectively dollars against that. So I think that would be my desired outcome. I mean, in a world where Japan is just chucking treasuries as fast as they possibly can, here's a bid for treasuries in the market. Right.

The USDC has an insatiable appetite to buy treasuries right now. Yeah, so Japan defending the, the yen by selling treasuries. You know, it's interesting because they are the largest holder of treasuries. And, you know, the UK now also forced to, you know, print to potentially keep yields down. Certainly could happen here. And, you know, the only thing stopping it is just that there's some bit out there for treasuries. But I don't know how much longer that's going to be the case. And in a high inflation regime, I don't know why anybody would be wanting to buy U.S. treasuries. Well, you would if you structurally just had to have a stable coin on a blockchain.

So I don't know how big that market is, but it's a lot bigger than it is today, right? Like the demand for these things is unbelievable. And so if you had a stable coin bill that made sense, I think you'd have a huge bid in the market for treasuries. Well, yeah, you have to find a buyer that's willing to tolerate inflation that's five points higher. Well, I mean, generally speaking, inflation running higher than yields means that nobody wants to hold it. But holders of stable coins don't get any interest payments whatsoever. So they just get the full inflationary hit. Yeah.

But they're willing to tolerate that because, I guess in theory, they're getting access to crypto markets with all of the associated revenue generating opportunities. So then you can you imagine that there's some implicit sort of crypto yield to having. stable coins. Yeah, and you're getting settlement finality. Maybe you value that more on a intraday basis, that type of thing. Yeah, what's the term the convenience yield of cash, basically, right? Because, you know, it's the same for physical cash. It has a convenience yield such that you forsake the interest payments, but the fact that cash has good properties makes up for that. And another way to think about this is this is a structurally legal way to prevent foreign people

from getting those interest payments. It's kind of an interesting, from a geopolitical perspective, it's an interesting thing to think about, is that if you're holding stable coins, obviously not getting the interest payment, it's a huge demand outside the United States. So U.S. corporations like Circle and eventually banks will start to really capture the economic rent there.

And I don't think that a lot of folks that are opting into dollars and not getting the savings account internationally, like really would care that much. They just don't want to be holding whatever crappy currency is in their country. Yeah, because the dollar is crushing every single currency in the world right now. I mean, it's not good for sort of global growth or anything like that. But yeah, you prefer the dollar, even if it's inflationary in the U.S. to a certain degree.

I think this is going to become a new frontier, and diplomacy is stablecoin wars. You know, it's already happening in Europe where they want people to hold EU stablecoins instead of stable coins. People just aren't going to do it. I mean, there's one apex predator of fiat currencies and it's the dollar. Well, I think it just portends a return of capital controls. Yeah. And those often accompany times of monetary repression. You have to force people to hold government debt, basically, and they try and offshore their wealth. Imposing capital controls is going to be much, much harder in sort of this digitally native world. I think that's what a lot of the economists that you're saying, oh, it's just going to be like the 1940s and governments are

going to be able to reset their balance sheets and they're going to force everyone to earn a negative yield and hold real yield, hold government debt, things like that. People just won't be subjugated this time. I mean, you have the opportunity to hold any kind of financial asset you want. By the way, we didn't say it. We're recording this on a Wednesday, so something big will probably happen tomorrow. Yeah. So on the on the on the brink GM app, GM.xy Z, I think slash C slash on the brink, bingo. So basically things that we say a lot on this show. And one of them was you saying, we're recording this on a Wednesday. So we're going to miss important stuff tomorrow. Oh, I didn't see that. I do say that a lot. Yeah. There are some.

some quite good entries. What else do we have out there? Let's pull it up. Okay. So my entry, this is the free space, is using SEC rule 15C3-3-3-3. Yeah, you get to figure it out, SEC3-3. We need some clarity. So that was, that's the free space because you say to every episode.

I-Tunner.eath said, you say three arrows, shenanigans a lot. You say Tom Brady. Tom Brady, yeah. A lot. Yeah. You say Bitcoin spot ETF when I say frankly a lot apparently I don't know I said frankly a lot okay um gauges.eath said uh we tend to say quote fidelity is building a monster over there they are that's building they are building I don't know how much I've said that but that's true I mean

um he also said um one thing we say is quote if you're traditional financial institution you don't have a road mac for getting in the game here what are you doing that sounds really smart do i say that apparently that's that's one of your catchphrases i say this is a regulatory podcast which is true um hate to see it apparently you say that yeah in other news this week i think you say now this is a new submission for me you say well let's dig into that or and we'll keep an eye on that So someone Fonz.Eath says, ETH will flip Bitcoin.

Do you say that? Who said that? I don't know if anyone said that. I think there have been some off the podcast conversations about that, though, not to, not to serve any controversy. I mean, I don't know if it's going to flip Bitcoin in this market regime. However, I do think it would be good for Bitcoin to be flipping. Oh, all right.

So that you're getting out ahead of it. I, um, yeah, I think eventually Eath will flip in Bitcoin, but, uh, we'll see. So my reasoning for that is it will allow the bitcoinsers to purge themselves of the false profits that led them astray. Oh, that could be. And so I think it'll be a good opportunity for a leadership change. So that's why I think it would be good for Bitcoin. Well, this is a lively community. I encourage everyone to hop over to our community.

A lot of good submissions here. Yeah. Look, we have 345 members. We're working on our digital trinkets from a lot of, numbers. So those are inbound. And yeah, it's basically the home of on the brink discussion. Yeah, if you want to chat about it, it's not a Dow, so you won't get sued, I don't think. No doubt. No security is offering, no Dow. No common enterprise, certainly no expectation of profit. Just good, clean fun. By the way, speaking of the Tom Brady thing, I'd like to have him

as quarterback right now. We've got a situation up here. Mack Jones is out. Yeah, things aren't good with the commanders either, I'll tell you that. No, no. I'm thinking of switching affiliation to Miami. Might be the move. No, you can't do that. Well, I live here now, so. I once had a business dinner with a guy that was like from a certain, I'm not going to give it away, but he was from a certain jurisdiction.

And he said, well, now that I'm in Boston, I'm just a Patriots fan. and if you want to lose respect from me in one sentence, that's how you're going to do it. You're just going to move to a new city and just hop off of your affiliation for an NFL team. What type of fan are you? But what if your prior affiliation was the worst team in the league? I mean, it would have to be just so bad.

I don't know what would ever cause me to just stop being a fan of who I grew up rooting for. It just seems crazy. If anything, I'm going to lean more heavily into that. I'm going to find the local watering hole that supports my team. I'm going to do some business there. All right. I'll see if there's any Washington commanders bars in Miami.

I'm not. You're not going to find anything down there. No, definitely not. All right, so that's it. We'll break in tomorrow if there's any huge news. See you Monday.