On The Brink with Castle Island - Weekly Roundup 11/27/25 (Who we are thankful for, S&P downgrades Tether) (EP.687)

Episode Date: November 28, 2025

Matt and Nic record a special Thanksgiving episode of OTB. In this episode:  What's the deal with deep fried turkeys? Polymarket gets CTFC approval Klarna is launching a stablecoin on Tempo Upbit is hacked Berachain drama Tether gets a downgrade from S&P Robinhood is spinning up their own prediction market with Susquehanna Are Visa and Mastercard moving fast enough? Who are we thankful for?

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated.

The federal government loans American International Group, AI, $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 quantitative easing. And print a couple trillion dollars, and all of a sudden, people start to worry.

So out of this worry, we have something called a Bitcoin. Welcome to On the Brink. I'm Matt Walsh. And I'm Nick Carter. recording this one in suboptimal setups on Thanksgiving morning. I'm meant to be smoking some ribs right now. I don't know. It's like 30 degrees outside.

Who knows what temperature of those ribs are? I have an unpopular opinion. I don't think we should be just tied to turkeys for Thanksgiving. I actually don't. I'm well-known turkey hater. I feel like that's a very popular opinion these days. I just don't think, I mean, I do have 25 turkeys in my yard, so I think my opinion of turkeys is clas.

True, you clouded my contact. Yeah, they're awful, awful creatures. And I'm not sure it's not a delicacy. They don't taste great unless you're just covering them with butter and gravy. So can we talk about the deep fried turkey thing? First of all, I've never met anyone that's deep fried a turkey ever. No, never had one. So I don't think, first of all, I don't even think that's a thing.

Second of all, all these PSAs we get every year with the firefighters and they're like dunking the deep fried turkey into a vatom. oil and then the whole thing catches on fire it's like well of course like obviously it's a frozen turkey you're not meant to do that so naturally it's going to expel the oil and then they're like dropping it in with velocity like with force and so then it catches on fire and then they're like oh well you know we should it we told you it's like well nobody does that you would have to be the biggest moron in the world to drop an iced turkey into a deep fire yeah and like you're not dropping it from, you know, 15 feet either. Like, you slowly lower it in. So who are these people that are dunking the turkey and the oil like that? It must happen. I mean, I don't know why we'd have the PSAs

other than the firefighters just want to light things on fire sometimes. I believe that it happens, but also they're getting way too into it. So we both started our mornings with a run. You did a 10K road race. That's pretty hardcore. Yeah, we do the turkey chase here in Bethesda. And it It's a 10K, and I think normally a turkey chase is meant to be a 5K. Yeah, I did a 5K this morning. Yeah. So here, there are 3,000 people that do it every year in Bethesda. It's a huge deal.

And it's a 10K. Like you can't get away with just a little, like you have to run 6.2 miles. That's a lot for Thanksgiving morning. It really is. And then you feel kind of wiped out the rest of the day. I like the idea, though. I like the idea of getting some exercise before your ribs on Thanksgiving. We've got to introduce that in my family, the ribs.

All right, well, we'll do our normal Thanksgiving run down here. Maybe we'll do a little bit of who we're thankful for at the end. Okay. So we will start with the deals, meanwhile. So first up, we have from the Castle Island portfolio, two announcements, Fortify, the wallet infrastructure company. They were acquired by Paxos. Really excited for Josh and Dima, a great outcome for the Fortify team.

And Paxos, really smart acquisition for Paxos, too, I think. Paxos building a juggernaut over there. And lots of wallet infrastructure acquisitions lately. Definitely. That's a space that's rolling up. You know, all these MPC providers, I think they're, you know, actively consolidating as a industry category. Next one up is Monad, which is an investment of ours. It's a layer one blockchain.

Last week, they raised $187.5 million on the Coinbase platform in the first token sale in the United States. And then they launched live this week. So congrats to the Monad team. Yeah. huge week for monad, over-subscribed token sale on Coinbase, launched MainNet, long-inticipated mainnet, and I think it went pretty smoothly. Like people weren't even really yelling at them. No, I thought it was a great, well-orchestrated sale there. Yeah. Next up, you have Calshy, the prediction market. There is one billion from Sequoia,

capital G, A16C, Paradigm, and others. Busy week for Calci. Did you see their subject to a class action suit and they have some litigation going on in Nevada. They have a big relationship with Robin Hood. Robin Hood announced a separate JV with Susquehanna to launch a new prediction market this week. So Calhese is having a busy Thanksgiving. Yeah, I don't think the question of whether prediction markets are legal in 50 states has been settled yet. I don't either. I don't think it should be, frankly, not to be a hater, but if gambling is regulated at the state level and it depends on a state-to-state basis. Why should prediction markets be exempt?

Yeah, I think the gaming interests are going to have a lot to say about these prediction markets because no doubt it takes money away from the casinos. Yeah, a huge amount. I mean, it could kind of obliterate the franchise. All right, next one up is Rate X. This is a defy yield trading protocol. They raised $7 million from Anamoka and GSR. Then you've hello trade. There are decentralized exchange for tokenized equities. There

raise four million from Dragonfly and Marana Ventures. Numurai, which is a decentralized hedge fund. They raised $30 million from Union Square Ventures, Shine Capital, and a number of others. Haven't heard much about Numurai. That was a hot project in the early days. Yeah, I feel like they've been around for absolutely forever. Lastly, Vector, a mobile crypto wallet. They're acquired by Coinbase. All right. More in prediction. market news. Polymarket received approval from the CFTC to operate as a regulated exchange in the United States. We just see more and more heat here on the prediction market space. Yeah, and you know

what's funny is the reason they were kind of built on crypto, I want to say, is because they were not strictly legal, you know, first and originally. Well, I think it was a banking issue, right? There's no other way to get cash onto the platform and stable. coins and Ethereum ended up just being the easiest ways to fund these accounts. Which is downstream of legality and regulation, right? That's right. That's right. So do they even need to be on blockchains anymore?

I don't think that this UMA protocol for deciding outcomes really works well. That's going to have to change. Here's an interesting one, Clarna, which is the payments company focused on By Now, Pay Later. They announced plans to launch a stable coin on Stripe's Tempo Block. chain. I think you're going to see a lot more of this. The economics of being able to just monetize some of the float for your customers, it makes a ton of sense. So this is probably the first of many. Yeah, this was, I thought, interesting because you're now starting to see a lot of these fintechs and tech platforms launching their own stable coins. And a lot of people are sellers of

this idea because they think, well, you know, why would you need 50 stable coins? But For that exact reason that you just raised there, I think there will be this proliferation, which is the desire to internalize the float, the interest on the reserves, as opposed to outsourcing it, handing it all over to some third-party issuer. So I think it makes perfect sense. I think that's spot on. It's interesting they're doing it with Stripe. I guess Stripe is probably the furthest along in terms of an all-purpose solution here.

You know, you get the wallet infrastructure, you get the on and off ramps, and then, of course, the layer one blockchain. If I was a Visa or MasterCard right now, I would be very threatened by Stripe's tempo blockchain. So this was an interesting controversy this week. I don't think we've seen the end of it. There was a report from Unchained saying that in BarraChane Series B, there was a full refund right for a $25 million investment from one of the leads, Brevin Howard's Nova Fund. Barretain did push back at this, and it's not entirely clear if this refund right was triggered or not. It looks like maybe it wasn't. But yeah, what did you make of that? So, yeah, this is the Brevin Howard Nova Fund. It looks like they invested $25 million into the B. The report is, it was interesting. It was originally going to be on Blockworks. So it's written by Jack Kubeneck,

and Blockwork shut down their news division, I guess like a week. before this was supposed to come out. So Lorishin and the Unchained team published it. There was a kind of a denial from the leader of Barra Chain, which is Smokey the Bear. Smoky. Yeah, only in Crypto. So he kind of rebutted it, but I didn't think it was a very strong rebuttal.

I mean, one of the things he said in the rebuttal was the Nova Fund is a liquid fund. And so this was in case we didn't launch a token. They had a refund right. But then, you know, the author of this, publish the legal docs and the legal docs say that you have the refund right for up to a year post launch of the token. So if it was just to protect, you know, the downside of not launching a token, why would it be worded that way? So I thought it was a, it was not a very good response from Barra Chain. There's also the issue of was this hidden from the rest of the investors.

And I just don't know the answer to that. But if it was, they're going to be in a world of heard, I think. Yeah, I mean, that to me is a VC is the main problem is if some other fund had an MFN in that round and this wasn't disclosed, that's extremely problematic, obviously. But also, why would you as, you know, an entity that's raising capital give a full refund right to your lead? That's the thing that mystifies me. I'm completely baffled why they would do this. And he, you know, Smokey, the Berra. Every time I say that, it's just like, what a joke. You know, he said something along lines of they were providing liquidity into the network and, you know, it was a big strategic relationship, but I still don't know why you'd give the refund right. I mean, if this is

really a hot round, just do it without them. Yeah, if someone's investing and as a condition of their investment, they want a redemption right, you know, a year down. That makes it impossible for you as the recipient of the capital to plan, I mean, your burn could just evaporate based on their arbitrary decision. It doesn't at all seem like a provision you would ever grant to your lead. You do see some of these inequity financings, especially at the later stage, where they have these ratchets down or they even have a put-right, where if the company doesn't go public in a three-year time period or something like that. There's a IRR threshold where you basically get your money back plus some interest, some return. But it's all disclosed.

And so you would have no surface area for having one investor getting it and not the others. So I think there's going to be more to this story. I mean, the other thing is this asset has just traded straight down since it launched. Yeah. So you think they would actually maybe be inclined to exercise the claws but of course it's if they could now well yeah i mean the brevin howard nova fund they invested 25 what's that worth today like seven i mean yeah it's but baritain's been a tough launch so i would i would think that you would want to exercise that maybe now the PR is just so aggressively hostile towards brevin and towards baritian that maybe they wouldn't but um bad look all around yeah that's a tough one next up

Up at the South Korean exchange, they suffered a $37 million hack on a portion of their Salana holdings. That was just a couple of hours ago, huh? I was not aware of this until I just saw it in our newsletter. Yeah, so that just happened. Upit is, yeah, they're turning into one of the bigger players in the world here in terms of offshore exchanges. So hopefully everything's all right with that. Did you see this S&P? Did you know that S&P actually puts up credit ratings on Tether?

I had no idea. Yeah, I actually thought the stable coins were not rated. So I guess they are. And it seems like the ratings agencies don't like them. No. It said they have a weak rating. They called out the fact that they have a lot of Bitcoin as part of the backing. What is it?

Like 5% of the backing is Bitcoin? So they call into question what would happen if Bitcoin, I don't know, goes to zero, I guess would be the risk there. I don't know. This one got a lot of headlines, but I'm not sure how big of a deal it is. So this, to be clear, is different from their traditional credit ratings. So they have their own proprietary stable coin rating scale that they created in 2023. It goes from a one to a five, with five being the worst.

and Tether is now the worst out of five, which seems pretty harsh, if you ask me. I mean, they're the biggest and the most liquid stable coin, and they get the worst rating. Like, there's so many worse stable coins than Tether out there. Yeah, well, there's a lot of things that are masquerading, calling themselves stable coins that just aren't stable coins. They're basically just tokenized hedge funds, I suppose.

but Tether's not genius compliance. I guess it would be easy to say, you know, they're weak relative to like a circle or, you know, Paxos or someone like that. Yeah, so Tether didn't like that, understandably. So as you mentioned before, Robin Hood is launching a JVU with Suscoaunted to launch a new prediction market. So they acquired Myax DX, which is a rebrand of Ledger Axe. So how is this going to work? Does this mean that Robin Hood is going to end their partnership? Is it with CaliShee or Polymarket?

I've forgotten who they're partnered with. Robin Hood has just a ton of retail flow here. And so you would think that they're driving a lot of value to Cal She and in some cases, I think Polymarket. I could see this being very successful. Susquehanna is one of the bigger market makers in the space, maybe the biggest in the prediction market space. Robin Hood probably has the most.

retail flow of any brokerage that's gone into this category. Like you don't see prediction markets on Schwab or Fidelity.com yet, I would say, right? Like I would be really surprised if Schwab at least doesn't go in that direction at some point soon. And this to me just looks like Robin Hood wanting to monetize like a broader part of that stack as opposed to giving all the upside to Kalshi and polymarket. So I could see this being kind of a home run. I thought it was interesting that Ledger X, which was previously owned by FTX, and then it was absorbed by MyX, that this is part of the equation. It shows you that that DCM, DCO infrastructure really matters.

Yeah, it does make me think that maybe the moat, I know we talked about a Kalshi funder is this week, maybe the moat is less than it was thought, you know, around Kalshue and Polymarket. Is there, you know, a secret sauce to building a prediction market or is it actually pretty straightforward? Well, I don't know. I think there's value in owning the customer, obviously, and Robin Hood just has a ton of customers. At this point, Polymarket does too, but they're going to have to spend a lot more to get to the Robin Hood size in terms of their customer base. Same thing with Calshy. My guess is Calci has a lot fewer customers than either of those companies. So there's value at the customer level, and there's definitely value on the retail side, right? Like you make so much money servicing that retail flow. And then there's obviously value on the licenses and doing this in a compliant way. We've seen Polly Market make some big acquisitions to try to get regulated in the U.S. And I think Robin Hood is just in a really good spot here. So seems like a really smart move. You know, it's going to be a mostly controlled by Robin Hood, it looks like, this joint venture. So, you know, you wonder to some extent, will they be able to put enough capital to work in this to get bigger? But one thing they don't need is to go out and just buy a bunch of new customers,

because they already have all the retail customers. So I have one request for any of the prediction markets right now, which none of them have made this market, and I need the market to exist. What's that? So if they're listening, if they could go ahead and do this, I need a market for if there is a quantum break of various strengths of SCA, or of ECC-256, or various elliptic curve bit strengths, between now and kind of 2035 so that we can get a sense.

It's a great idea. So I need to know what the market thinks about a full break by 2030 so that you can hedge, right? So if there is a break, presumably Bitcoin goes down. But if you're long in the market, maybe you're even. Well, what do you want as your settlement currency? Do you want bars of gold to settle the trade? That's what I was thinking about.

It's, you know, at that point, we're in quantum world and, you know, all electronic communications are compromised. So, yeah, it's going to have to be in physical bullion, unfortunately. Yeah, you're not going to want crypto. You're not going to want Bank of America dollars. I mean, you're just going to want something physical. Maybe you're going to have to do go racks of ribs. So, like, if, if Calshire Polymarker want to make that for me, that would be great.

I don't know. Is there like an official form or something? But I, that's the market I need. Yeah, someone will have that up within a week, I bet. In other news this week, NASDAQ is seeking approval from the SEC to quadruple daily trading limits tied to options on BlackRock's ibit Bitcoin ETF. I didn't realize that this market was growing so quickly, but NASDAQ, you know, a quadruple, that's a big number. Yeah, I mean, I think the ETFs are going to, if not already, are going to be doing way more

volume than spot Bitcoin. Yeah, I think that's right. and next up, US Bank Corp is testing a new Stabicoin product on the stellar blockchain of all places. A couple interesting pieces this week. I enjoyed Cambridge Associates had a very data-driven approach to the blockchain and crypto venture fund landscape. So we'll put that in our newsletter. And then the information had a good piece. Visa and MasterCard are moving fast into stablecoins.

I would say they're not moving fast enough, though. That's kind of where I stand on that. I mean, they've both been working in the stable coin space for four to five years. They've been piloting stablecoin stuff since 2021. But not much of their stack runs on stable coins, which is, I would say, very different from Stripe, for instance, where Stripe is actually moving money around internally on stable coins. Yeah, I think that's right.

I think you're just going to have to see more M&A, though, out of these bigger card network actors, you know, Visa and MasterCard. Obviously, MasterCard's gone down the path with Zero Hash. We'll see. I don't think that's a closed deal yet. So it'd be interesting to see how that one goes and then, you know, Visa makes any moves. All right. So we have 10 minutes left and as it is Thanksgiving. And frankly, we're both being delinquent with our Thanksgiving responsibilities. We have to do our annual who are thankful for. I've prepared a list. Oh, interesting. I have a small little list too. Who are you thankful for this year, Matt?

Well, I think this has been a big year at the SEC. We have leaders and just people that work at the SEC that have done so much this year in terms of just writing some of the wrongs. So I'm very thankful to leadership at the SEC with Commissioner Atkins and Ueda and Perce and really the whole surrounding cast. I mean, really since the administration changed hands here, we've had just a kind of an outpouring of activity. And the crypto working group is up and running.

They're actually, people are going in and talking to the SEC for the first time in four years. It's a very healthy environment, I would say. Come in and talk to us doesn't mean come in and we're going to put handcuffs on you anymore. So very thankful that we have public servants that are actually trying to promote capital formation in this industry. When I was thinking about this, I was like, who is it that I really admire and just fills me with these warm feelings? And there was only just one choice. and it's Treasury Secretary Scott Besson. Oh, Besson. Nice.

I mean, it's got to be Besson. So why am I thankful for him? First of all, he dunked on Liz Warren on Twitter, which was great. He's by far the most competent member of Trump's cabinet, and I feel like we're actually in safe hands with him, and he's a very hard job. He constantly says nice things about Bitcoin, which he doesn't have to do. He is embracing stable coins explicitly,

and he saved Argentina. you know he saved Argentina and ensured that the libertarian revolution in Argentina continue so Scott Besson is my first choice this year I think Scott Besson could go out and raise a stable coin fund very easily he actually tells the story about stable coins probably better than anyone the industry us included

yeah he's just doing a great job all right my next one I might have done this one last year as well but I'm going to put Zach XPT in just the cast of characters that does on-chain sleuthing, because I think we need more of this. And I think this is a public good. So identifying these nefarious actors on blockchains, calling them into the light, doing investigations. This is sort of the next generation of where this industry needs to go from a product perspective, I think. And right now we just have a bunch of lone wolves out there finding these bad actors, tweeting about them. This is just a very net positive for the whole industry. And people

should really be thankful for folks like Zach XPT and others. My next one is the Monad team. So of course we're investors in Monad, so full disclosure. But I want to thank them not just for pulling off a great launch and launching a blockchain and all those things, but specifically for showing the world that you don't need finance to launch your coin. And anybody that works in tokens or, on the VC side knows exactly what I'm talking about in terms of Binance extracting their

pound of flesh from any token that wants a list with them. And it honestly is to change. And I think Monad showed the world that you don't need them. And I think that is actually going to be a real changing of the guard moment when, you know, it'll be possible to avoid that kind of necessary extortion that virtually every token goes through. So thank you, Monad. Yeah, I think this is a great one, and we should be clear that we don't have any inside knowledge, and we haven't asked for any details on how Monad has engaged with Binance. But just what we've seen in our dealings in other projects is Binance is very, very extractive in terms of demanding big portions of total float in order to list the token. And what ends up happening is they just end up air dropping it to their

VIP users or keeping it themselves and dumping. So it's just a super extractive venue for token launches. And to see Monad go out so strong without Binance, which is, you know, Binance is what, like 70% of spot volume on certain assets here. So to be able to have that perform without Binance is huge. And we got to figure out this Binance thing from a market structure perspective. These guys are just really, really bad actors in certain categories. something has to change.

All right. My last one is I am thankful for the listeners. The listeners keep this thing going. So just all of the people that listen to this podcast who, who chirp us when it's not out, I think it was delayed last week. Did you know that on certain platforms? Yeah, I was getting people that use Spotify. We're saying it didn't come out until much later in the day on Friday.

But the fact that we have listeners that will ping us and tell us that is great. So thank you to everyone that listeners. to every episode of this thing. Yeah. And, you know, to be clear, this isn't like NPR where we're like supported by the listeners. They do not support us. They don't pay us ever. So we are supported in the sense that if we don't put out the episode, we get yelled at.

So it's kind of a negative relationship. But we are, yeah. I mean, if it wasn't for them, we wouldn't do it. Yeah, I guess we're two. I would classify us as business people, but this is not a business to drive home. It certainly is not. And then my last one is Artemis, the Artemis team. You guys do a good job with the Stable Coins. And they did a report with us this year on Stablecoin volumes, which was very useful, I think. You know, really for the first time told the story of who is using

stablecoins for what. And they did all the hard work. So thank you. Yeah. just an awesome report. So I think we'll be leaning on the Artemis team and others in the years to come here just to quantify some of the growth we're seeing. Are you thankful for stable coins? I thought you would have said you're thankful for stable coins. U.S. dollars on blockchains. I like that we have them.

Yeah. You know, I have to admit something. I asked chat like who, you know, just to like, okay, who are the main people in stable coins? Obviously I know, but I asked chat. And chat was like, well, if you're doing a thankful for a list, you have to thank yourself. Oh, wow. Nick Carter. It actually said this and I can prove it. I'll send you the chat history. And it's like that would be the most like conceded thing. And I think so they turn the sycophant quotient up to a thousand. Because that's an insane thing to say. It's like,

who should I think? Thank yourself. Thank yourself back in 2020 when you're trying to call these stable coins crypto dollars. You really started. Chat told me to thank myself. Believe it or not. All right. Well, thank you. Thank you for your service. Yeah, my pleasure. All right. Well, I think that is a wrap. Thanks to everyone for listening. We'll be back next week. We got to go back to the meal prep right now. How are those ribs? Yeah, I have some ribs. The ribs are cold. Undoubtedly, very cold at this point. All right, everyone. We'll have a great Thanksgiving and a safe and healthy weekend, and we will see on Monday.