The Breakdown - Dimon & Democrats Ready for War Over CLARITY

Episode Date: June 1, 2026

A centrist Democratic group is spending six figures to brand the CLARITY Act as "Trump's crypto grifto." Jamie Dimon is on the same side. David walks through what's actually happening and why crypto might need a Plan B. Plus: the SpaceX pre-IPO perp that flash crashed 45% on Hyperliquid, and Cardano canceling its annual conference. Enjoy! TIMESTAMPS: (00:00) Intro (01:10) Anti-CLARITY FUD (13:43) SpaceX Perps (16:58) Cardano FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW › The Breakdown Newsletter — https://blockworks.com/newsletter/the-breakdown Get top market insights and the latest in crypto news. Subscribe to the Blockworks Daily Newsletter: https://blockworks.co/newsletter/ DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

It is Monday, June the 1st. I'm your host, David Canales, and this is the breakdown. As usual, I've got some quick stories for you this morning to get you ready for the week ahead. We're looking at Anti-Clarity Act FUD. There's a new ad campaign trying to sway senators to vote against clarity as it moves past markup and into the final stages of debate.

We're going to see what's going on there. We're also looking at SpaceX pre-IPO perps getting briefly wrecked on hyperliquid. We're going to take a look at why there was a full. slash trash on space IPO purpose and what's going on with that. We also will be looking at Cardano, not getting enough money, or at least not getting the green light from its community members, from its Dow, to fund its annual conference.

We would take a look at that and the concept of zombie chains and some other things. But in any case, enough jibba jabber. This is the breakdown. Let's get to it. Nothing said on the breakdown is a recommendation to buy yourself securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are opinions, financial advice. Host and guests may hold positions in the company's funds or projects discussed. Okay, first let's jump into this Clarity Act FUD coming out of a centrist democratic group called

New Democracy. And apparently they have spent six figures on some ads which will run across digital streaming and traditional television ads aimed at educating voters about the crypto legislation push and sparking conversation on what issues congressional Democrats prioritize ahead of November. I'm going to play these two ads. They've got two ads on their website. I'm going to play some of them just to give you some context about the specifically the stuff about crypto that they're going for is really it's really all about Trump. While you're looking over there, guess what Congress is up to over here? Bringing down the price of groceries or spending a billion of your tax dollars on Trump's ballroom, lowering your health insurance premiums, or funding a $1.7 billion

dollar slush fund that could pay off January 6th rioters. And now their big new priority? A crypto bill, letting Trump and his family rake in billions. Congress needs to put Americans back on the agenda. Tell your senator, vote no on the crypto-grifto. Okay. So, I mean, off the bat, they're kind of conflating whatever's happening with world liberty, financial and the stuff that's in the Clarity Act, which I find a little bit annoying. This is the second one. Donald Trump is using the presidency to make himself richer. Trump, family, corruption. The orgy of corruption. Congress should be putting a stop to this and making life more affordable for the American people. But what are they doing instead?

Passing Trump's crypto-grift bill. And even some Democratic senators are going along with that. Tell your senator to focus on affordability and vote no on any crypto bill that doesn't stop Trump family corruption. It's just odd because they call it Trump's grift bill or Trump. Trump's Crypto Griff Bill when it's really mostly pushed by crypto insiders and crypto lobbyists, but in any case. Okay, so those are the ads that are playing. The details of them, they're going to be played in 11 states inside Washington and in 11 states, including Maryland, Arizona, Virginia, Nevada, Georgia, New York, Pennsylvania, Michigan,

Colorado, New Mexico, and California. And yeah, to give context for some of that, I mean, in two of those states, in two of those states, I believe it's Maryland and Arizona. The Democratic senators in those particular states, Angela also Brooks and Ruben Gallego, hopefully I'm pronouncing that, right, Ruben Gallego. They actually signed on to support the Clarity Act when it was mostly, I mean, all the Republicans pushed it through that voted in the markup. the Republicans pushed it through plus two Democratic senators. So the idea behind these ads is apparently it's not so much to swing any kind of midterm elections in order to get the senators that might be on board with crypto out with anti-crypto senators in. That's not really the direct push here, I believe.

It's more to just put pressure on the senators that in those states to vote against the clarity act, or at least make the deliberation so difficult. but it just has no, no realistic chance of passing finally. So like I'm not really going to weigh in too much on the Trump stuff. You might have noticed from my accent, I'm not American. I'm an Australian guy living in Europe. So, you know, the jury's out on whether anyone would pay attention to my opinion on Trump in any case. But what I find particularly interesting is that this FUD campaign is happening alongside a FUD campaign being waged by Jamie Diamond, the JP Morgan boss.

because, yeah, last week you probably caught it, but just to give you a re-tap on what's happening between Jamie Diamond and Brian Armstrong. I'm going to play a clip real quick. One sec. This is a clip from last week. If they don't do it thoughtfully, it will be a huge problem. So are you happy with the way the Clarity Act is turning out?

No. No, because it allows them to effectively pay interest on deposits, stable coins or something like that, without the protection that they should have. and it doesn't do anything for AMLBSA. It has almost no legal protections. So no, the banks will not accept it that way. And the ABA, the small banks, the credit unions,

not just the big guys. I'm not worried about stable coin, but if it happened, I'm telling you, I would have nothing to do with it, and it would eventually blow up in its own. But that's my personal thing, but I do understand the concern of all the other banks. Well, the markup is coming. I mean, what are you going to do about it?

It is. We'll fight it. If we lose, we lose, we'll live. Okay. But it will be fought. this will not be, no one's going to bow down to this guy, okay, or that company. And he's the only one. And he's spending hundreds of millions of dollars in watching this thing.

He said he's representing the whole industry. He's full of shit. Well, we're going to watch that one. Wow. So, I mean, if you know J.B. Diamond, I mean, this is totally on brand for him. But in general, I just find it fascinating that you have the lefties, you know, the Dems funding this anti-clarity fud campaign. At the same time that you have Jamie Diamond pushing similar rhetoric, except not so much

it's not styling this as like a crypto-grifto-Trump thing, but is at least on the same team as these Democrats or these Democrat supporters that are really pushing for the Clarity Act not to go through. So, you know, I mean, and, you know, we can debate whether Coinbase is is truly representing the entire crypto industry, if you want to call it an industry still, or not. But regardless of that, there is so much writing on the Clarity Act. And I'm not just talking about, you know, the sunk cost fallacy that I spoke about maybe last week or the week before, that could see the Clarity Act be pushed through regardless of what concessions

that need to be made for developer protections and so on just to get it through because so much time and energy and in Coinbase's case money has been thrown. I mean, I don't just want to pick on Coinbase, but there's a ton of other lobbyists and lobbyist group Super PACs, whatever, that are funneling a ton of money into supporting to get the clarity I'd push through. At some point, those groups will not just want to cut their losses and cancel it. They're going to want to get it through at all costs, I would bet. So while all this is happening, I mean,

I just want to throw back to Das, New York, when Blockworks hosted this conference, and there was a ton of senior regulators there. I mean, we had SEC Chair Paul Atkins there. We also had CFTC Chairman Michael Selig there. And I'm just going to play this clip. I'm sorry I'm playing a bunch of clips this morning, but I just want you to pay attention to what he's saying here too. We're really excited.

Well, thanks to the president's leadership. We're really excited to have legislation really at the cost. I know that there have been several breakthroughs in the past couple days around the yield issue with the Clarity Act, and we're really excited to get this thing across the line, and it's all hands on deck to try to make sure we get this done, hopefully, in the next few months, and have it on the president's desk for signature. But the legislation, I think, is very important to future-proof what we're building at the SECC and at the CFTC. We have a lot of regulatory authority under our statutes, and we've started to clarify things. like we just discussed the broker issue, the taxonomy of different types of crypto assets, what sorts of offers and sales are subject to the securities laws, which are not.

All of that is great and it's really important work, but the legislation can help lock that in. And my biggest concern is that three or four years from now we have the next Gary Gensler coming in and he really just takes an axe to everything that we've built. We can't allow that to happen. So, I mean, I really don't want to, again, be a Clarity Act to Duma or whatever, but it has become very messy. I mean, set the midterms aside that the Democrats could have a ton more influence over the direction of American lawmakers and all that kind of stuff moving forward. If they do take control of the Senate and the House, set all that aside, what is going to become incredibly pragmatic? moving forward throughout the rest of the year is perhaps some kind of plan B's, plan C's,

in order to expand the crypto space and operate on its own without relying on regulations like the Clarity Act to pass in whatever form that they do. Because just like Michael Sellege said, anything could happen over the next three or four years into the next election season, past President Trump, where we have Democrats running everything again, are the rules and regulations enshrined by the Clarity Act going to stick, perhaps, but relying on that for the future of the crypto spaces, we head into the next phase of tokenization, bringing institutions on chain, all the assets on chain, whatever you believe in. there might need to be seriously pragmatic approaches

in order to build internal frameworks for the crypto space to operate in that aren't reliant on a friendly SEC, a friendly CFTC, a friendly White House administration. I don't know what that's going to look like. I suppose it comes down to some kind of self-regulatory body that does it itself that gives the SEC, the CFTC,

no real cause to, if they do turn antagonistic again to start clearing house in the crypto space once more. So I would treat all of this as like a warning of what the next, the split in the timeline could be where we end up in a totally hostile regulatory environment again. What is our pathway going to be through that? And it could be the case that we won't need to explore those options, but it's starting to feel very pragmatic that we might need to. But hey, that's just my take on Monday morning.

So without feeling too pessimistic about the future of crypto, we can jump onto the next thing. All right. Okay, so this story about SpaceX pre-IPO perps on hyperliquid, flash crashing 45% on faulty oracle data and liquidated hundreds of users reports unchained. Pre-IPO perps are a huge deal right now when it comes to the utility and use case of crypto rails and especially hyperliquid. And I just want to separate pre-IPO perps outside of tokenized stocks, because tokenized stocks are their own kind of beast,

and they've been kind of caught in a regulatory limbo right now. But pre-IPO perps in particular, everybody is super excited about these and with good reason because, yeah, I mean, when you have fellas like Elon Musk and so on, kind of really perfecting the art of engineering and incredibly high pre-IPO valuation in order to, to create, you know, one of the momentous liquidity events in modern history, when you have all that happening, it feels incredibly important that you also have some balance there to have

retail participation in the potential upside for that and not just only super hypercapitalized investment banks and VC funds and company insiders and so on. So there's a lot riding on the success of pre-IPO perps on crypto rels. I don't want to undersell that at all. But this is what happened last Thursday. And I'm going to pull up the chart as well so you can see what's going on here. But the space, the space as U.S.D.H. PIRPS contract on hyperliquid. And it's not a hyperliquid market as well. It's from a, from a third party called Ventuals. It, there was a 45% crash from almost $2,300 down to $12.50 last Thursday. After the off-chain Oracle data feed used to price the synthetic contract mishandled SpaceX's recent five-for-one stock split,

The faulty data treated liquidations across 405 users and nearly 1,400 trades. So apparently there was pricing inputs coming from notice.co, which is an off-chain data provider that aggregates private market activity. So it seems that notice.co didn't really get the memo on the 5-for-1 stock split, or at least it didn't convert that information through the Oracle and into the Ventual's feed. Venture said it's going to compensate affected users within 48. hours and said it has taken immediate steps to prevent this from happening again on any of the pre-IPO markets and the price rebounder. We're going to take a look at that in a moment. And yeah,

it's just particularly pressing because SpaceX is due to go public, it seems, on June 11, or at least the pricing is expected on June 11th. And it should go public shortly after. So let's take a look at the chart so we can see exactly when this happened. So here's the chart up on my screen. You can see this massive, massive red candle down. a couple of days ago and a huge spike in volume at the same time. So you can see that the price has recovered since then, so everything's sort of back to normal, I suppose. I mean, at the moment,

I mean, it's not the craziest big market, but obviously users were affected directly by this. It currently has open interest of around $2.5 million. And the volume during the crash, I mean, this is, I've got it on a day candle, but the volume over the crash seems to be about,

you know, shares of the pre-IPO, which converts to around $3.5 million worth of volume. So, yeah, a small amount of users were affected, but obviously quite a lot of money spread across those users, depending on how big the cohort. So cool that Ventures is going to make everybody whole there. But it does kind of highlight that, yeah, the pre-IPO stocks are super interesting and everything like that, but it's still quite shallow markets out there, shallow markets out there, at least compared to, you know, more liquid liquid stock stock order books and coin order books.

But yeah, just flicking through the other order books for other pre-IPO stocks on hyperliquid. This does seem to be at least the first or the biggest instance of a flash crash like that. So I suppose that is noteworthy. But it is still a reminder that, you know, some of this infrastructure for decentralized exchanges and so on does still rely on centralized oracles when it comes down to it. So something to look out for moving forward when it comes to, you know, participating in these kind of experimental pre-IPO markets. But that said, there is, but that said, they are still serving a decent function

because I have the anthropic chart up on my screen here. You can see a big green candle upwards following the news that it had reached a $965 million valuation after a series E. I believe I got those figures directs. So they are operating as intended in other parts of hyperliquid, at least for now. But I would watch out for all these pre-IPO facilitators updating their Oracle guidelines as these pre-IPO markets become more important for the use case for not only hyperliquid, but crypto overall in the tried-fired context.

So, all right, on to the next one. So I just wanted to chat quickly about the Cardano Foundation canceling its annual conference after a failed funding vote. And this was apparently its second attempt to secure funding from the Cardana's community to fund its annual conference. And so the proposal sought to use 7.8 million ADA worth 1.84 million to fund the event. Yeah, so about 65% of votes were cast in favor of the proposal,

which was just short of the two-thirds needed for the threshold to pass. Kadana Foundation said this. I mean, this was in Coin Telegraph, but I have the tweet up here. It says governance requires not only participation, but also a commitment to accept collective decisions. The Cadano community has spoken. We respect the outcome.

So following the outcome of the Treasury proposal votes, the Cadano Summit 26th will not take place this year. They are heartened to see how close the vote came to being passed and how the community was. And I read every bit of feedback led by the DRES who voted. We also pleased to see, that Amergo's token 2049 proposal passed. So they're going to have a smaller event within token 2049

as a way to get the community together. So I mean, okay, this is what, and this is how Coin Telegraph described it. The vote follows a months-long dispute between Charles Hoskinson and many so-called delegated representatives or D-REPs who have pushed for tighter spending from the Foundation's Treasury. So they had voted against a similar proposal on May 9th that sought to use about 14 million ADA to fund the event.

So they tried another proposal with about half of the tokens to see if that would get through. And this one also didn't get through. Only 10% of DREPs voted in favor of the proposal, prompting the foundation to lower the, so that was the original proposal. So you had a much higher voter turnout for the second one, but still not enough.

And I mean, yeah, I just don't want to pick on Cadano too much because I think we have all picked on Cardano a lot already. And whatever your opinion of it is cool. I mean, you know, we can debate that separately. But what this reminds me of is this Forbes piece from 2024. And March 2020, it's over two years ago now. But this was, yeah, Forbes putting out this piece naming and shaming 20 blockchains that they described as crypto's billion dollar zombies.

And Kadano was among them. And the idea is that these changes are just getting not enough activity to justify their existence effectively. And I mean, on the list was like XRP, Cardano, Bitcoin Cash, Lightcoin, ICP, Ethereum Classic, Stellar, Stax, Casper, Theta, Phantom, Minero, Arweave, Algaran, Flow, MultiverseX, Bitcoin SV, Minna, Tezos and Eos. So like, you know, big names on there. And if you've been around a few cycles by now, they're going to be very familiar. million aims and many of these I do agree with. I mean, Bitcoin SV, okay, we know that chain is dead. There's, there's no question there. We know even a phantom is dead too. That might even be

winded down soon if I, if I remember correctly. Ethereum classic, okay, I mean, I suppose there's some utility in having these networks online as some kind of testing ground. That was the deal with like like coins. You could run tests on on on on like coin to see if new functionality could be added to Bitcoin somewhere down the line because their code bases are so similar. I mean, they're forks and everything like that. But, you know, it just reminded me of this piece. And it's very sensitive. It's a very sensitive discussion because, of course, we, there's no reason really to have chain networks that aren't seeing any use. That part is true. But what is necessary is to have a wide, in my view, a wide array of available technologies that work as backstops for

humanity, you know, in Vitalis crops push in order to have Ethereum be critical infrastructure for humanity in a thousand years down the line. You know, you don't just need Ethereum to service that utility. The utility will be very circumstantial, I believe, when the shit really hits the fan and the wolves are at the door and your backs against the wall and you need to get your assets out or move this from A to B without the totalitarian government watching you or whatever, it is cool to have tens, 20s, hundreds of alternatives that you can use depending on the situation. So if Cadano is among them, it doesn't really matter that nobody's using the chain. It just is somewhat important that maybe it's not Cadano, but there are chains out there

that could facilitate that. And more options is better at the end of the day. But that said, I do understand the push to not just have these zombie networks, zombie defy protocols existing forever just because they were once launched and they'll be online forever as long as there are blockchain nodes to service them. I mean, again, this also reminds me of tweets that came about a few months ago from Haseeb Qureshi, when this is during the defy, a lot of attacks on defy, he was saying that it would be probably worthwhile

to have some kind of wind down protocol or framework for when defy apps, defy protocols, blockchain networks even need to be just concede defeat and that there's no real need to have these networks online anymore because there might be security issues. You know, it might be quantum, it might be AI, and there's no real, real ecosystem of developers and bug fixes and retroactively going and patching these networks

in order to be resilient against the new wave of threats or whatever it is of the day. I've got this Seab Queen on here. He says, I'm not saying let's forcibly shut down protocols we can't or let's only use the largest ones or the team shouldn't build new protocols. What he is saying is that there are a lot of zombie protocols out there with basically the front doors unlocked and no one in. inside anymore. These are like blighted homes and we need to get rid of them or the whole

neighborhood will suffer. The way we change is by changing the norms around shutdowns and giving these founders a graceful way to exit. Right now there is no playbook on how to wind down a defy protocol and we need to make one ASAP. And okay, like Cardano is not exactly a defy protocol, it's a whole chain network. But the idea still stands. But at least in Cardano's case, You do have a community out there defending itself, defending the protocol itself from spending too much money on conferences. No matter how bad a look at might be. But, you know, I would question whether, you know,

if you cancel one or two conferences, can you successfully reopen that conference after a while? I mean, we're going to find out because I'm sure next year they're going to run another vote. We're going to see if the Cardano community can make a comeback with its own annual conference. But at least they are being practical. Maddo in terms of their spending because I would imagine that there's a ton of layer one networks or alternate or alt coins or whatever that are just spending for the sake of spending because

they raised so much money so many years ago and just it's almost impossible for them to run out at this rate, especially when the market is still kind of ticking over. But I just found this interesting. I mean, yeah, good luck to Kadano. Let's see if they can make it out of conference purgatory. There would be many people who would hope that they don't. But hey, what can you do? This is crypto.

All right. So that's about it from me. I hope you enjoyed this morning's content. Leave me a message. Send me a comment. Hit like and subscribe on YouTube, on Spotify, on Apple Podcasts, whatever the equivalent is to interact with the channel. It means a lot to us and it helps us have a lot.

So goodbye and we'll see you next time.