On The Brink with Castle Island - Weekly Roundup 10/06/23 (Reviewing Going Infinite, SBF's tungsten obsession, the Bitcoin lab leak) (EP.458)

Episode Date: October 6, 2023

Matt and Nic are back for another week of news and deals. In this episode:  OTB gets some critical feedback The boys cover Walter Isaacson's Elon Musk biography Is Elon going to turn around the Twitter acquisition? Bourgeous capitalism We review Lewis' Going Infinite SBF was tungsten pilled Su Zhu is jailed for contempt of court in Singapore Is FTX solvent again thanks to Anthropic? Does ETH futs ETFs mean that ETH isn't a security? Bharat Ramamurti, one of the architects of OCP 2.0, leaves the White House The Economist covers the Bitcoin lab leak hypothesis Coinbase gets a license in Singapore Content mentioned in this episode: The Economist, Did bitcoin leak from an American spy lab? Sponsor notes: Coin Metrics STATE OF THE NETWORK — Q3 2023 Wrap-Up In Coin Metrics State of the Network Issue 227, we take a data-driven look at the most important events that impacted the digital assets industry from Q3 2023

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 Conjecturee easing. You've printed a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called the 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. And here is the Metrics Minute. For today's Metrics Minute, we're looking at the state of crypto markets in Q3. Following a big surge in Q1, the total cryptocurrency market cap approached 1.09 trillion in Q3, down from $1.2 trillion in July. Bitcoin and Heath have recorded year-to-date gains of 63 and 40% respectively. Maker rallied 185%.

Saul rallied 104% year-to-date. Even Ripple, XRP, is up 53% year-to-date. Grayskills, GBDC saw the discount tied in further in August to 20% following a lawsuit outcoming NCSC. The market cap of USDT and USDC stands at 84 and 23 billion respectively tether now has a majority on tron 44 billion on tron versus 39 billion on ethereum like an exchange trends binance's share of spot volumes dropped by 25% in q3 spot volumes overall are down finance u s spot volumes shrink by effectively 100% that's your

metrics minute bitcoin up 63% year to date you wouldn't know it. Yeah, I mean, looking at sentiment, you wouldn't really know that Bitcoin's trading at 28K right now. I mean, it's quietly rallying. Saturday morning, I was reading the hard copy of the Wall Street Journal, and they had a long page of like every asset over the year, not individual stocks, but buy commodity and then buy asset category within equities. And Bitcoin was not on the list. I was like, how is Bitcoin not on this list? Bitcoin is up more than any of these things all year. Convenient exclusion right there. Very convenient. It's orange juice is performing quite well, if you were wondering. I think orange juice is up like 25, 30% on the year. What's the film where there's

their trade on orange juice futures, trading places? Oh, the trading places, yeah. I actually never seen that. Good? Yeah, it's a really good. That's a good movie. It's probably doesn't age well from like a jokes perspective. But yeah, it's good. So I got to start this podcast with some critical feedback we received over the past week. Okay. Yeah, people didn't like the last one about the VESPA. Is that what it was?

I think people liked it. A lot of people seem to like it. But we got to cover both sides here. So let's see, comment came in from Stallwart State on Twitter. On the brink, worst waste of time podcast this week, giving zero Fs to knowing about narcissist Nick Sneakers, Vespa woes, and airline tickets. Guys, if you don't have any content, just come back next week when you do Nick need psychological help.

People don't want to hear about the VESPA. I think I was the one that was complaining about the sneakers. Look, I mean, we can't take a week off, okay? We have a social contract with Brink Nation. No weeks off. There's no news. We just got to fill the time. Sorry, guys.

We have recorded this on Christmas Eve, Christmas Day. We've recorded this on Thanksgiving. We've recorded this on children's birthdays. We will record the podcast every week that we can, although there was one week where we recorded, didn't release it. That is the lost tapes. We gave out all the alpha. Yeah, that was like early days.

Yeah, I think we told people to buy Salana right before it went up, right? Well, there's no worries about this week. We don't have to have any side chat because there was an Avalanche of news and developments. Tons of news this week. Fully provisioned. You know, the book that everyone is talking about, the best book of the year,

Walter Isaacson's Elon Musk book. That's the one. That's the one. So have you finished it yet? No, it is great, though. I'm actually very impressed by Elon. It's giving me a new appreciation for Elon without a doubt. That guy, man, is a complete savage.

What a great book that was. I can't even know what the best part is, man. I didn't realize how close Tesla and SpaceX were to both failing in 2008. Yeah. Both of them. The one thing I really like is that after he was fired from PayPal by Teal and Sacks at Al, he forgave them.

And then they later basically bailed out. I think it was Tesla in 2008 with a big... Founders fund invested in SpaceX, I believe. Was either SpaceX or Tesla, yeah. Yeah, so he was smart not to burn those relationships. forever. That takes a lot, especially for Elon. I mean, you imagine his pride was pretty wounded after that.

That was a cool anecdote. I like the, you know, you always hear like, oh, Elon had all this wealth from these emerald mines in South Africa. Not true. Turns out that wasn't true at all. In fact, that was just his dad being kind of a fabulous. Yes. And so it was cool that the author set that record straight a little bit.

It's just an inspirational book. The world needs more people that are just willing to take these huge bets and to try to do things that are in the physical world. I mean, the something one line really stuck out to me is no car company had been started in the last hundred years and not gone bankrupt. Last one that had done that was Ford. Yeah. And Elon was like, you know what, I'm going to do it. I'm going to do it anyway. I don't know what the word for it is, but it's like the first order thinking of just completely reimagined.

So the anecdotes around the car molds and okay, this is just how cars have always been built. Well, what if we could just do the entire undercarriage with one mold? Like, what would that look like? And just questioning every input. Why do we do it? Well, that's the way we've always done it. The story about the fact that they used an atoll in the Pacific, I for, I think it was in Malaysia, maybe like a very remote Malaysian island for their space ice.

I think it was a U.S. property. but yeah, it was way out in the middle of the Pacific. That tickled me to no end. I mean, I think that was a mistake in hindsight, but it's a very amusing thing of these engineers taking up residence basically in hammocks on a completely remote island in the Pacific to launch these rockets.

It puts the Twitter acquisition in a lot more context because it just seems like he cannot have, like, quiet days. He just always needs to be doing something. It totally reframed Twitter for me. The X.com thing as well, of course, like PayPal was X and the big debate was, is PayPal just going to be a sidecar companion to eBay? So they kind of really constrained vision or like the unconstrained vision, is PayPal going to be a new kind of digital bank for everyone worldwide?

That was his big vision. That's kind of why he was forced out. That's clearly what he wants to do with Twitter. Clearly. So he sees this whole thing as unfinished business. Is it going to work? I don't know. In fact, they've made some baffling decisions to Twitter lately.

The fact that you don't get headline previews in links now is crazy. I hate that. Why did they do that? Because they want all content to be native, I think. So they don't want you to link out. I really don't like that. Yeah, that's a bad idea. Yeah, but it's,

it does reframe for me the Twitter acquisition completely. You know, we talk to a lot of LPs and a lot of investors in the institutional community. or questioning some of the investors in that Twitter round. And, you know, you invest in something and immediately you have to mark it down 50, 60, 70%. It's a terrible look. But if you're in one of those funds that did the Twitter deal, it's almost like you need to just deliver this book to your LPs this Christmas because it puts it in context.

Why would you bet against this guy? You know, I was listening to my new favorite podcast, which is the Dwar Cash podcast, which is incredible. And Mark Andreessen did an episode, and he said, what And Andreessen is trying to do is create a new model or go back to the old model of capitalism, which he calls a bourgeois capitalism, whereas one owner who administers a whole thing, as opposed to what we got recently was kind of managerial capitalism where the managers just represent the shareholders, and their incentive is to not rock the boat and to not take risks because they just want to keep the thing steady.

And he thinks Andreessen thought the only true source of innovation is when there's one owner, operator, and administrator that owns the thing for the most part and runs the thing. So basically like Elon with his businesses. It doesn't extrapolate to everyone, though. It's, you know, you wouldn't want, say, someone running an exchange and like a prop desk at the same time. Yeah, you need the right guy to do it. But it's very, it was very interesting to hear Mark Andreessen say what venture capital is trying to do is go back to the old model of capitalism, kind of like the pre-shareholder governance model, where you'd one person with complete agency.

So I kind of buy that, actually. Like, you look at like the aggressive steps Elon is willing to take with Twitter, nobody else would be able to do it that way. They would just want to keep it completely stable and running as it was. Well, you can see why Isaacson wanted to do a book about him. He's really the, you know, Jobs Musk. It's a very logical. There's a very small group of people that have really had that type of impact on the world.

So speaking of another narcissist running a tech platform, you read another book this week. You've been reading books. Oh, my gosh. I ruined my Thursday. I stayed up all night on Wednesday reading this Michael Lewis book. And I have to tell you, it's not a very good book. I mean, it's a very frustrating book. The reviews are in.

think everyone smart that I saw reviewed it said he set out to write one kind of a book and then he didn't really go back and rewrite it after the collapse like he set out to write for lack of a better word a hegiography of sam and post collapse he didn't really revise it i mean the thing comes off is pretty defensive of sam overall so this is probably the best take i saw on it it's from Sri Ram over at Andresen's crypto fund. He says, the core of Michael Lewis's book is the author unable to reconcile himself with the fact that he has spent hundreds of hours essentially with a conman. And I think that's it, right? I mean, you spend that amount of time with someone. You can't, it's got to be very difficult emotionally to just say, actually, he was just a con man. And I just

spent all this time traveling around the world with this guy. And I got played. Yeah, I think you have to treat him like an unreliable narrator, you know, like, what's the marginal benefit of spending an extra hour with Sam? I mean, the guy's skill was the reality of distortion, you know? I mean, I went through, I took notes on the book. Do you want to read some of my, you want to hear some of my notes? I have one passage I want to read, but yeah, let's dig into your notes. I mean, there's just some odds and ends here.

I think overall, if you are on the fence about reading this book, I probably just wouldn't waste the money on it. There's nothing in here that is really net new information. And if anything, I think it's super confusing. I mean, I'm someone that was involved in some of the transactions that are in this book and they're not represented correctly. It certainly makes me question all of his other books. I mean, all of the guys that we know that are in the high frequency world have always told us that Flash Boys was incorrectly portrayed. There's kind of nothing real about it. Now, I don't know anything about that world, so I just sort of enjoyed the narrative. But I'm in the, this world, and I can tell you that it is not properly addressed in it. So it's just a bunch of

weird things, too, in the book, I mean, in the preamble, Michael Lewis goes on this book with, or goes on this walk with SBF, and SBF tells him that he's thinking about spending $9 billion to wipe out the national debt of the Bahamas. Like, is there any second order question there? Like, what are you talking about? Where, who's money? With whose money? You're going to do that. How much VC have you raised? Like, what are you actually generating from a revenue perspective? that makes no sense whatsoever, but it's just sort of presented as... He doesn't challenge him on it. He's this big figure that is thinking huge and he just wants to wipe it out.

Also, it's not mentioned, but the friend that introduced them, it had to have been Brad Katsuyama because he says a friend introduced him. He was looking at doing a transaction. And then at the end, Michael Lewis says, do the deal, swap the shares. I'm pretty sure that references the... I think it was a share swap, actually, that IEX did with FTCX, where they both got ownership. So I think you're, I think that's proven. Conspiracy.

True. Fact checked. It's fact. Fact. Now, there's all sorts of people that got money here, which is interesting. Tom Brady got $55 million for three years worth of work. Kevin O'Leary got $15.7 million for essentially doing some autographs and a couple webinars, which that guy made off.

Giselle 19.8 million for three-year contract. Larry David got 10 for that commercial. Anna Winter apparently got a big donation to the Met event, that costume party thing. So there's a bunch of that. Let's talk about the Jane Street stuff. I don't know if you got to that part yet, but I think he wildly overstates Sam's role at Jane Street. I've met a lot of people at Jane Street over the years. Sam was there for a couple of years, but it makes it sound like he was this big architect,

of the strategy that was looking at Trump versus Hillary and trying to take a bet on that election. I don't know, man. I think this makes it sound like he was one of the biggest hitters at Jane Street. I've met hitters at Jane Street, and they're not anything like Sam. Yeah, I've never heard anybody from Jane Street say that Sam had a meaningful role there at all.

People that are hitters at Jane Street, you've never heard of them. They're generally also not on the public scene. I would love to know what the non-compete situation. He clearly left Jane Street to start a competitor in Alameda. And he sort of hid by, and Michael Luz doesn't even touch on this part where he actually left Jane Street. He told them he was going to work for Will McCaskill, the EA guy. And then he just ended up like not doing that and starting a competitor.

So at some point, Jane Street had to have just been like, what the hell is going on here and thought about going after him. Maybe they would have saved the crypto industry. They just sued him on his way out. Enforced that non-competitive. next time, guys. A ton of stuff about Caroline. So, I mean, this trial is going to be, they're going to try to eviscerate her, just take her down.

That was hard to read. A lot of her personal diary type of stuff was in there. Yeah, I mean, it's pretty clear that he didn't care about her at all. And he dressed it up in this utilitarian language. But, I mean, at the end of the day, the guy was a narcissist that didn't at all care about her, just used her and kept the relationship a secret. But I mean, it's just mean. I felt pretty bad for her.

Yeah, super mean. I also as a now I'm a parent, I read these things through the eyes of like, what if this was your kid? And it's got to be really hard to be Caroline Ellison's parents reading this. And also just Sam's parents. Oh my God. I mean, you could argue this kid just never had a shot. His parents are utilitarians. They raised him.

It sounds like his childhood was just kind of a weird existence. I mean, I don't know. I don't think this guy was going to end up. a normal contributor to society one way or the other. It's funny we talk about nature versus nurture, like someone's brought up in a crime-ridden family, broken family, and that kind of explains their criminality later on.

In this case, he's brought up in a two intellectual family that intellectualizes away the moral considerations associated, normal objective morality, and substitutes it for this ersatz, you know, Stanford philosophy, you know,

bizarre, moral basis and that ends up explaining a lot of his actions where he does sort of clearly wrong decisions with a view that there's like a long-term benefit. I kind of buy this explanation of his behavior that he just actually believed in inconsequentialism, which is a bad philosophy in my view. I do too. I think that explains a lot of this. I think his whole EA utilitarian mindset was really the root of a lot of his evil. Yeah. Yeah, I mean, bad guys never think they're bad guys. They think they're good guys, just in search of a greater good.

Really depressing. And then even the brother, you know, we all kind of thought that the brother must have been really close with Sam because Sam gave him a bunch of money for that pandemic prevention thing. And Lewis asked him about his childhood. And the kid was like, I basically like never talked to my brother. Like I'd never really spent any time with him until he started FTX. And we got involved in this pandemic. He was like, I forget what the word.

were, but it was basically like we were tenants in the same house. It's just, what a depressing way to go through life. So the one funny part of the book that we had an impact on was the architecture of the headquarters. Oh my gosh. This part was nuts with the tungsten cube. So full history here. Okay, why do crypto people like tungsten?

I'm going to claim some of the credit here. I started doing tungsten memes in 2019 and just kept at it relentlessly. and then other people on Crypto Twitter caught on, and then there was a big Wall Street Journal article with a picture of Narajh looking at his cube. So I'm claiming like 65% of the credit here. So this part of the book tickled me to no end. There's a discussion of what he wanted in his HQ,

and the building was going to be shaped like an F. The design was going to mimic his hair somehow. I don't know what that would have looked like. and the centerpiece of the headquarters was going to be a large tungsten cube, I think the largest one that Midwest Tungsen ever made, 14-incher, I believe. They got that, well, that's a good, I mean, that's one hit thing he did. That's a good taste. So this is what the book says, quote,

A company in the Midwest had supposedly created the world's biggest tungsten cube, a mere 14 inches. It costs a quarter of a million dollars and weighed 2,000 pounds. Sam had apparently ordered up the cube, flown it into the Bahamas, and wanted it displayed on a plinth in his mini-city. The architects were never shown Sam's dense and precious cube, but they incorporated it into their drawings. The Tunks in Cube would be the first thing a visitor to the global crypto empire would see. And then at the end of the book, the last sentence of the book is Michael Lewis goes to a storage container, abandoned storage container, he finds the cube. I'm just going to put this out here right now to John Ray.

I'll buy that. It's worth something. There's salvage value in the cube. Yeah, I will buy the cube. I will have it shipped up. We'll make a little memorial to SBF. That's a, yeah. We'll put it in our office.

That is a famous cube, and it's worth something. I don't know if it's worth a quarter of a mill now, but there's sentimental valley in the cube, so don't overlook that. I think we could charge for admittance to come in and see the cube. Yeah. So we I you know The first thing I did was control F like

Nick Carter like Castle Island Obviously it's very vain to make sure that we weren't in the book To make sure we're not in it And then the second thing I named searched was tungsten Like Oh we're actually We are in the book We're in the book

I mean the Romnik stuff is crazy So Romnik Aurora was the head of product The head of Corp Dev The head of ventures The head of a bunch of stuff over there. He's involved in all of their deals. He should have clearly had a good handle on what was going on. He really gets the kid gloves treatment from Lewis. So Lewis doesn't talk about the fact that Romick led the acquisition of Moonstone Bank, which is this, basically this shell bank that

FTCBot as a way to launder money into the exchange. That gets no mention. I'm sure that'll get brought up in the trial. I mean, there's probably ongoing litigation there. No mention of the fact that all of these deals with the lenders were done with phony representation of ftx's balance sheet to get these lenders to sell themselves to ftx and then there's this crazy passage so romnik's wife worked there too and michael lewis has this great quote it's on page 192 and he says to her what i don't get is how he knows how he knows how to do all this i said to his wife as we walked into the jungle hut number 27 i know she said brightly i ask him that all the time how do you know he just knows Turns out he didn't know. Yeah, no. And it also doesn't point out that Romnik Aurora's venture fund, which was running on the side, Toy Ventures, got $25 million of customer money. So you're spending a lot of pages in this book as a hagiography to Sam

and giving the kid glove treatment to one of the lieutenants, who obviously was just willing to talk to Michael Lewis. But you don't say, hey, this guy got $25 million of customer funds to put in his own venture capital fund, which he was running on the side. He was supposed to be the head of product of FTX. It's just, so that type of inconsistency and just not addressing facts that are out there in the public domain is really just disgusting, I would say. What is encouraging is that I've seen nearly universal pushback against this. And are me, us being big haters of Michael Lewis, this is now like the default opinion, not just on crypto Twitter, also on crypto critic Twitter.

So people are questioning Michael Lewis's credulity here. Yeah, as they should be. I've been encouraged by that. Now, what about this? We haven't talked about the FTX hack in a long time. So they got hacked for $450 million after it was declared bankrupt or maybe the day before or the day after. And that's sort of just glossed over.

We still don't know who did that hack. Yeah, we don't know if it's been recovered at all, right? We don't know if it's been recovered. We don't know if it was an insight. had job. We have no idea what happened there. And that was just sort of, oh, yeah, then they got hacked. It's like, well, do you think that was weird? Like, maybe he hacked it? Like, what happened there? You know, what's interesting is, meanwhile, the value of the FTX claims keep going up. Anthropic. They keep finding stuff. So the anthropic thing is wacky. So Sam put 500 million to

anthropic, clearly on a flyer, clearly with no, you know, real diligence or anything like that. But if we can believe the press headlines from this week, Anthropics now apparently worth approximately 20 to 30 billion. We don't know the exact number, which would in theory, in theory cover the entire remaining shortfall of cloning assets on FTCX. So it would be completely bizarre if in dollar terms, creditors got paid 100 cents on the dollar.

The Madoff recovery was above par. It went over 100% recovery on Madoff. And I think John Ray is going to get this. He went over 100% on Enron too, I think. Actually selling such a large, this would now be a multi-billion dollar stake in Anthropic. Actually selling that might be tricky. And of course, who knows of Anthropics really worth $30 billion?

I mean, frankly, I'm a little skeptical. How many foundation models does the world need? I mean, come on. But that is a remarkable thing. And credit to whoever convinced the FDX leadership today to not sell the anthropic stake. I know. You know, when they took over.

So whoever that was, credit to them. Good job. Yeah. John Ray's interviewed in the book. He swears a lot. Well, that's probably, you know, it's a thing that journalists do when they want to make you sound bad. They will put in your filler words.

Yes. And, you know, they have a lot of editorial control over how you sound just based on what words include and don't include. It's kind of like the oldest trick in the book. Yeah, I think that's what happened here. But John Ray does kind of sound like a pretty gruff guy, but I don't know. Maybe John Ray here ends up getting 100%.

That's sort of a good way to end a restructuring career. Maybe that's, you go out on top. You'd take the thornyest and trickiest estate ever and recover 100 cents on the dollar. That would be a feat. John Ray, man, he can play for my team any day, just parachute him in as a board member, just ask some probing questions, just tell someone he's absolutely full of shit.

So the trial is apparently ongoing, or I think voir dire has maybe concluded. I think the jury selection has taken place at this point. Oh yeah, it's underway. Jury is in place. One of them fell asleep today. Do you see that? That's the problem is this is a very complex issue and we're relying on presumably non-sophistic at least with respect to finance jurors because my guess would be the ones that

understood this stuff would be people that would be familiar with a case already. Yeah. So there's always, you're always rolling the dice a bit on the jury. Like it's not inconceivable to me that this could be a hung jury. One juror fell asleep while former FTCS developer, Adam Yeddaa, explained how deposits that FTCS work during his testimony in the Sam Bankman-free trial on Thursday. I think that's pretty easy to catch that person up, though. It's like, hey, so I saw you're asleep, just so you know, the deposits thing that we were talking about while you're sleeping, they all went to Sam's hedge fund and please try to stay awake because now we're going to talk about the part where Romnick got $25 million.

So just stay awake for that part, please. Yeah, Matt Levine had a good discussion of this, though, because FTCS wasn't a normal exchange. Of course, there are a margin exchange. And it is possible for a margin exchange to have kind of. negative client equity if clients are highly levered positions move against them and they can't liquidate them in time that is theoretically possible however the problem was the entity that was allowed to run a huge negative balance was the affiliate there's a spot exchange it was the spot exchange was also running a negative balance so yeah i mean yeah but i could see a strategy being like hey guys

It's actually normal in some senses for a derivatives exchange to end up with a shortfall if they don't do the liquidation properly. It's going to be a hard case to win for Sam, but stranger things have happened. But this would be shocking. It's going to go on for the next, what, four weeks here? It's just such a shame that it's not televised. I mean, maybe that's good for our productivity. I'd be glued to that.

I know. Yeah, it's actually a net positive. So that was the Michael Lewis book, Dissection. I bought the book. I read it. Now, if anyone wants my copy, you can have it. I want to give a shout out to Alex Thorne for giving us a shout out in the Galaxy Brains podcast, one of the best podcasts out there.

Oh, nice. Yeah. We're just going to go shout out for shout out. Now he has to shout us out. Yeah. In return. Yeah. Yeah.

Our sister podcast. Yeah, that's true. We're talking about doing a collab. We are trying to put that on. on a live podcast appearance collab with Galaxy Brains. Stay tuned for that. It might be at PubKee in New York, which is my favorite bar in New York, PubKee.

It's a great venue. Yeah. The only Bitcoin bar in New York. My former favorite bar in New York is now out of business called Professor Tom's. That's a Red Sox bar slash Patriots bar in New York. It used to be released. Wow. Enemy territory.

So now it's PubKee, the Bitcoin bar. So yeah, we're trying to arrange that. So we had a busy week. I had, so I recorded a podcast last weekend with Matt Hogan from Bitwise. He's the chief investment officer at Bitwise. He's been on the podcast a number of times. And it was very relevant because on Friday, so after we recorded last week, the SEC approved the listing of Ethereum futures ETFs. And Bitwise came out with two products.

Vanek also has product, pro shares, I believe. So we now live in a world where Ethereum futures ETFs are traded. and Matt did a great job on the pod. I like having Matt on because my father-in-law will occasionally listen to podcasts, but he'll always listen to podcasts with Matt Hogan because he actually thinks that out of everyone in the crypto space, Matt Hogan explains it better than anyone, little known fact. Yeah, that was a great show. Nice to have Matt back on.

Exciting to see the ETH Futes, ETFs trading. To me, that's kind of a regulatory blessing for ETH as a not security. That's what I asked. I asked, no, that's what I said. I asked him about it. I don't, not necessarily. It's, technically speaking, the SEC is just saying, well, the CFTC has recognized this as a commodity. They have a market.

And so we are following the letter of the law and allowing this listing. But yeah, I would agree. How do you go back and say that this is a security at this point? I also think it makes it impossible for the reaction to losing the gray scale case being, hey, we're going to delist the Bitcoin futures ETFs as a reaction. And you can't have any of this. stuff, that that's off the table at this point. That's a great point. I caution to our Ethereum friends, though, remember when the CME product for Bitcoin futures listed in 2017, that was the top tick.

So that was the top. Don't want history to repeat itself there. So Ria also sat down with David Phelps from Joker Ace to talk about token incentive models. That was also a good pod. So a lot of content on the pod this week. Yeah, we're going to continue next week our Stablecoin's 2.0 many series. We have a great episode with a stable coin 2.0 coming out. Stay tuned for that next Monday. It's a podcast, man. We're dialing it up.

The views and the listens. Well, I guess not the views, but the listens are going up. Everything's trending up in this market. We've got 63% increase in Bitcoin price this year, and our podcast numbers are correlated. That's true. Yeah. So if you could all make Bitcoin go up for the sake of our stats,

That'd be great. It's like we're going to end up being the Joe Rogan level podcast here if this keeps if this continues. So keep on sending those numbers like on resubscribe five five star five star reviews. I'm told they matter. We don't monetize the podcast. I don't know if they actually matter, but I'm told they matter. They matter.

It was a busy week on the deals front and always good to see. Deals are active. Yeah, tons of deals. So first one up, Fireblocks, which is a big NPC customer. business, they have acquired Blockfold, which is an Australian provider of blockchain services to financial institutions. Then we have Cracken. They've acquired BCM, a Dutch crypto broker. Congrats to those parties. That's an interesting one. So some European expansion there. The Dutch are doing a really good job on regulating, actually. So they've got a clear framework

over there. And it seems like it is to the benefit of startups and US startups, too, I guess trying to enter that market. next one up is it's actually a deal that I missed last week so Mark pinkis who's of course the founder of Zinga he announced a new venture last week it's called reinvent technology partners it's a 33 million dollar vehicle it's technically a series A round that was led by indreason's crypto unit but it's a blank check company and they want to merge with a technology company and take it public and I guess since indreason crypto did it you'd have to think that this would be maybe like a crypto gaming play that they would seek to take public. So that's kind of an interesting development,

kind of a SPAC style deal. Next up, you have Alchemy, the blockchain node infrastructure company, they acquired Satsuma, which is a very delicious fruit. Is that what that is? Well, it's also a fruit. Okay. And I suppose a blockchain startup too. Nice. Next one up is Verisole. This is an authentication company. They raised $3.25 million from Bitcraft, River, third prime, hashkey, and others. Then you have CMCC, a Hong Kong-based Web3 fund. There is $100 million for their latest fund. Wow.

All right. Way to go. Next one is Blackbird, a Web3 restaurant loyalty app. They raised $24 million from Andresin, QED, variant, and others. That's pretty cool. I think these restaurant reservation use cases are very interesting. Pay a little bit more to get the best table. you maybe create a marketplace around seating.

That seems like a very good idea. Yeah, it tracks. It's kind of like an airplane rewards program for restaurants, which is pretty cool, actually. I really like this one. Next up we have L1 advisors, an on-chain asset management firm. There is $1.6 million from Vanek. All right, so let's move over some news.

I guess we already covered the Ethereum futures ETFs, But I think that's a big development. So the fact that you now have the ability to get Ethereum exposure through a brokerage account, albeit with the futures, which are less efficient than Spot, we are kind of building towards a decision here in either Q4 or Q1 from the SEC on Spot Bitcoin. And I think it's, I think it's trending in the right direction. Who knows? Yeah, super exciting to see.

I mean, I think the momentum around the spot ETF is inevitable. I don't know if we're going to see it in the next month or two, but in the next quarter or two, I do believe we are getting there. March deadline. Stay tuned. Stay tuned through Q1. Should we roll out the bad boys? All right. Let's hit it.

All right. What you're going to do? What you're going to do when they come for you? Bad. What you're going to do? What you're going to do when they come for you? All right. So one of the real bad boys.

here, Suzu, Three Arrow's Capital Fraudster, has been arrested in Singapore. He has not been arrested for defrauding U.S.-based lenders or all the other individuals that he defrauded, but he has been arrested for basically not cooperating with these ongoing investigations into the company. And the liquidators are the ones that seem to have made this happen, Teneo. So he's arrested at the airport in Singapore and he was sentenced to four months in jail, I guess during which time he has to cooperate. And you would think that if he's there and he's cooperating, then they're going to just be able to prove the case that he committed fraud, I would have to imagine. Yeah, this looks like a window for the DOJ to move in with their actual case against him, which I

presume exists. I mean, it was a huge fraud. and there are plenty of U.S. entities that were defrauded, and Singapore and the U.S. clearly have a law enforcement relationship. But yeah, at present, this jail sentence is basically for contempt for completely refusing to cooperate with the liquidation, which is why the three arrows claims have been trading at pennies on the dollar. Yes.

Because the principles have entirely refused to cough up any of the funds, frankly. Well, they've definitely got some money. I mean, they have real estate all over the place. Kyle Davies, the other co-founder, remains a fugitive. Where do you think he is? Well, I don't know where he is, but what's interesting is Singapore and Indonesia struck a mutual extradition treaty last year. So that's probably pretty handy in this specific circumstance.

Singapore is a big country, though. Or not Singapore. Indonesia is a big country. Singapore is a small country. But Indonesia is big. and it might take a while to find him. So I looked at what Singapore jails are like. The Singapore government actually does PR around how sort of unpalatable the jails are.

Oh, really? It's not the conditions are bad. They're just not very pleasant. There's actually no beds that you got basically a bamboo mat to sleep on. That doesn't sound good. Yeah, I mean, that's a country that's committed to law and order, for sure. I mean, Singapore hotels on the other end, top. Notch incredible. I mean the quality of service there my God Singapore restaurants are great

Singapore subways are great I think we got to go back Singapore people are just super friendly yeah it was It was excellent so I look this is a good development and I think it gives US based law enforcement opportunity to to you know pursue their case which certainly ought to be pursued I drove down through Duxbury the other day which is where Kyle Davis is from I didn't see him so I don't I don't know I didn't look extensively, but I don't think he's in Duxbury. No. I mean, as you say, like, there's a lot of, like, I think there's still undiscovered tribes out in the rainforest in Indonesia.

Kyle's there. He's just getting, you know, he's trading wampum. He's probably a king. Yeah, that's what I'd do. I would join an indigenous tribe. There was an heir to the Rockefeller fortune who was like an anthropologist, and he went to visit the tribes in, I think, Indonesia, and he was eaten. He was eaten alive.

Oh, my God. That was a real thing that happened. Wow. It's kind of crazy that there are still undiscovered places on Earth. Maybe they're now going to be discovered by cod armies. I mean, get on Google Earth. See what you can do out there, people. I mean, this is teamwork.

We've got to find this guy. We cannot fully recover as an industry until all these bad boys are locked up. I agree. That's why I think the trial, Suu being apprehended. This is coming at a good time. This is catharsis, right? we can mentally move on from the traumas of 22. And then it's probably up only from there.

I agree. So in other bad boy news, SBF, the baddest of the bad boys, he has sued his D&O insurance company, the name of the company, CNA, over their alleged failure to pay his legal fees. So, I mean, I'll just say this. I know people at CNN. CNA is a great insurance company.

It's totally unclear to me if they write policies that cover massive financial fraud, that you just will pay for it if you just steal all your customers money. I've never seen that in one of their policies. Yeah, I mean, knowing how D&O works in crypto, I would be shocked if they paid this out. I don't think that you have to pay this, CNA. So don't pay. Yeah. Next up, SBF apparently is two private jets that will be forfeited. Didn't know that?

two private jets wow good for him I don't know why you need two I guess they were both like under construction too so he might have been like tricking out a couple planes while this was all going down so that's that's the bad boys section I don't know what's going on in the House of Representatives but we currently have no speaker

no speaker so the interim speaker is Patrick McHenry pro crypto I know that the whip whip emmer Obviously, big ally of crypto is in the running to be the next speaker. I don't know what's going on there. Frankly, I don't have the bandwidth to apprehend what an earth is going on in the house. But maybe the next speaker will be pro-crypto.

Who knows? I don't know. The people that follow this need to, maybe we need to get one of them on the podcast. But you don't need to be a member of Congress to be Speaker of the House. So why don't we just crowdsource this? I don't we just find someone that's very competent that can go in there that's pro-crypto. This is something about American government. It did not know.

Why you can have a non-member of the House who is a speaker that's beyond me. I don't get it. But apparently Trump himself is in the running to be the speaker. I don't get it. I don't know. Who would we pick here? Like Jeremy Aller, he'd be pretty good. All right.

So in other developments this week, there's been some amicus briefs filed in the SEC's ongoing case against Binance, Circle and Paradigm both filed briefs this week. That's interesting. I mean, I guess the big thing is around just securities law. So you come to the defense of anyone. I'm sure that neither Circle nor Paradigm have any vested interest in Binance corporate or anything, but they're just sort of doing what they think is best for the industry in terms of getting on record with these amicus briefs. Elsewhere in news, Barat Ram and Merti kind of an infamous character in the Biden White House. He was a senior member of the National Economic Council.

According to my estimate, he was one of the key architects of choke point 2.0, the banking sector cracked down against the crypto space. He has left the White House. And he was one of the last remaining original Biden team members on the economic side that was still in the White House. So he was basically put there by Elizabeth Warren. and he was a former warrant aide. And he's gone.

Don't let the door hit you on the way out, buddy. Yep. Okay, there's one very funny thing that just dropped minutes ago, which is the economist covered a tweet that I made for some reason. So the economist says this article entitled, Did Bitcoin leak from an American Spy Lab? and it's all very amusing. They cited a tweet I made.

They called me a prominent Bitcoin fan, which, I mean, it's better than what. How about like founding partner at Castle Island Ventures? Come on. Who is it in the MSM that called me a cryptocurrency promoter? NPR did. NPR called me a cryptocurrency promoter. So a Bitcoin fan is better than promoter,

but that's not my title, to be clear, at all. van. Come on. They cited a tweet where I say, I think it, as in Bitcoin, was a shuttered internal R&D project, which one researcher thought was too good to lay fallow on the shelf and chose to secretly release. So we call it the Bitcoin Lab leak hypothesis. And the economist disagrees. They disagree with this hypothesis. I cannot believe this. So they just took this tweet and they just said it was like they didn't even say it was a tweet, it looks like. Yeah, they didn't say it was a tweet. So this is what I expect from like Coin Telegraph to turn my tweets into articles,

but now the economist is doing it. But they're actually misrepresenting my argument. They're saying it's because I think the NSA had this paper on digital cash in 1997. That's not actually the thrust of my argument at all. My argument is the cryptography, the project itself is of such high quality in the origins of the project are so shrouded mystery that it, I think it kind of would have had to have been someone from inside the security apparatus that would have been able to cover their steps so effectively. And also the talent to create Bitcoin, the preponderance of that talent

would have been working for the NSA. The NSA is the biggest employer of cryptographers in the world. So that's kind of my argument. My argument is not that the NSA wrote this paper on digital cash in 97. And I'm not saying the NSA deliberately released it. I'm not saying the US government released Bitcoin deliberately. I'm saying it leaked. Saying they did it internally. And then one rogue researcher was like, this is too good. We have to release this and secretly released it. And then you have this quote from this guy, David Rosenthal, that says, the idea that the NSA would develop a decentralized trustless cryptocurrency as a monetary bio weapon that would impair their own government's functions is implausible.

That's not the point. That's not that this would impair the U.S. government whatsoever. It's that at some, it's a hedge that at some point in the future, the U.S. government has the keys to Satoshi's coins. And the U.S. government flourishes. It's that you end up owning, what does Satoshi own in terms of total supply of Bitcoin at this point? Yeah, let's say roughly a million coins, probably just south of a million. So you own a million out of 21 million coins. So you basically own, you know, that,

that portion of like digital gold. I think that's a pretty fun hypothesis. If the US government actually on the coins, which my made up, to be clear, this is a made up theory. My third tweet thread I said is completely made up. So you could include that in the article if you wanted.

I'm not saying the US government did this deliberately. However, if the US government did have the coins, that would put them into a greater position in terms of control of the future potential world reserve asset. as compared with gold. They certainly don't own one 20-20th of all the gold in the world. Right.

So they're actually very hedged here, if it's the case, so the government has the coins. I think we should just do this segment every so often and just put tinfoil hats on our head, but that's what this is. So the thing that tickled me the most about this is, the economist says, just another conspiracy theory then?

Almost certainly. But the funny thing is the lab leak hypothesis was called a conspiracy theory. and then now it's, I think, probably the dominant accepted theory. Correct. So I'm not saying we're going to be proven true on this. It's just a completely idle musing. But how can you call something conspiracy when the prior lab leak was also discredited as a conspiracy?

And then now is probably considered the most likely scenario. It's, come on. I can't get over the fact that they just won't categorize you in terms of what you do. A prominent Bitcoin fan. How do you describe Nick Carter as just a prominent Bitcoin fan? That's all I am. They didn't reach out for comment. They didn't reach out for comment.

Come on. What's going on, Economist? I'm up for renewal on the Economist. I will renew based on this. I can see this. I can't wait for my dad because he reads the Economist. He's going to read this in the print edition. And he's probably going to complain.

Oh, man. that's classic. All right, what else happened this week? Some dribs and drabs here. So Coinbase, man, these guys are on a tear getting these foreign licenses. So they got a major payment institution license in Singapore this week.

So Coinbase is executing at a high level right now. That's an awesome, awesome get. Singapore is having a big, I think, Fintech regular summit. Festival. I think it's like a Fintech Festival. Fentec Festival this week. so stay tuned.

I would probably expect some more hints as to their regulatory roadmap. Good job, Coinbase. They've their license in Bermuda. They got a license in Singapore now. Spain. They're going everywhere. Credit to Singapore, too.

I mean, Singapore was ground zero for Luna, for three arrows, for a number of other blowups. Unlike the U.S., they didn't just turn against the industry. They created rules. And now companies are flourishing under that framework.

I saw GSR, which is a big player in the crypto trading markets. They also got a license this week in Singapore. So really like what I'm seeing in Singapore. Other news, Two Ocean Trust hired the former Wyoming Banking Commissioner Albert Forkner as their chief risk officer. Big congrats at Two Ocean there. Yeah, that's a big time hire. We've done a number of episodes with the Two Ocean Trust guys, and they're very active

in the crypto markets as well as their kind of traditional business. So that's a big time hire. We haven't talked about Wyoming much lately. I wonder what's going on with that lawsuit against the, what is it, the Federal Reserve they're suing? I don't think they signed on to the custodial lawsuit in the end. Oh, really? I think they thought about it. Yeah, I want to know what's going on with the stable coin.

I think they had a job wreck out for someone to run their stable token initiative. Yeah, interesting. Other personnel news, our former colleague Amanda Fabiano, formerly head of mining at Galaxy Digital, has left to launch a new consulting firm focused on Bitcoin miners. So congrats to Amanda. Yeah, Amanda is, of course, one of the most knowledgeable people around in the Bitcoin mining space. So hit her up. In other kind of just FYIs here, European listeners of the pod might be interested in checking

out this Legends for Legends conference. This is put on by Theta, a large crypto-focused investing firm out in Amsterdam. So that conference is happening next week. It's really one of the marquee events in the digital asset industry. So check that out. We'll put a link in our newsletter if you want to go to that conference. I think that's it for the week. Busy week, huh?

Yeah, a nice change for once. No more cross talk. No more stories about weird stuff that happens to us. All right, everyone. That's it for the week. We will be back with an episode on Monday. Have a safe and happy weekend. Safe and healthy weekend.

And happy. And happy. And happy.