The Breakdown - Ross Ulbricht Has Been Pardoned

Starting point is 00:00:00 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Wednesday, January 22nd, and today we are talking about a very important Trump campaign promise to many that has now been fulfilled. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it. Give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, the Trump administration has completed its first full day in office. Crypto executive orders still haven't emerged, but Trump did fulfill one of his campaign promises

Starting point is 00:00:51 that mattered to many crypto folk, which was the freeing of Silk Road founder Ross Ulbricht. Yesterday, Trump posted, I just called the mother of Ross William Ulbricht to know that in honor of her and the libertarian movement, which supported me so strongly, it was my pleasure to have just signed a full and unconditional pardon of her son Ross. The scum that worked to convict him were some of the lunatics that were involved in the modern-day weaponization of government against me. He was given two life sentences plus 40 years. Ridiculous. Ross's mother, Lynn, posted a comment to the free Ross group stating, Trump called me himself and read me the pardon, full and unconditional. This is a miracle. The man kept his word, he saved my son. Big thanks to all of you who have so steadfastly

Starting point is 00:01:30 supported this fight. We beat the DOJ and SDNY. We freed Ross. photos emerged of Ross walking through the parking lot, free for the first time in a decade and grinning from ear to ear. And as I said, for many in the Bitcoin community, this was an extremely important fight. Ross served 10 years in jail for the crime of running the largest anonymous online marketplace in the world. While the Silk Road was used mostly to sell illegal drugs, it was viewed by many, especially libertarians, as the ultimate expression of a free market. It began in February 2011, just two years into the Bitcoin journey. The price was still below a dollar, but quickly ran up to $30 per Bitcoin during that summer. It crashed back

Starting point is 00:02:05 down heading into the winter, but Bitcoin would never change hands at a dollar per BTC ever again. To many then, what Ross did was provide the first validation that Bitcoin could be used as anonymous and permissionless money. He set up the largest Bitcoin-denominated marketplace to date and pressure-tested the network for the first time. Silk Road was the genesis of the idea that Bitcoin is for criminals, but also proved that governments were incapable of shutting down the network. Ross himself was an avid libertarian who worked on the 2008-Ront-Paul presidential campaign. And consequently, some people view Ross's case as not just about shutting down an online drug market, but about making an example of a leader in the Libertarian movement.

Starting point is 00:02:40 Jeffrey Tucker, the president of the Brownstone Institute, wrote, The reason why the libertarians cheered Trump's announcement was that the sentence was profoundly unjust and crazy, and because Ross is an intelligent, good-hearted, and wonderful person, whose work in this realm had nothing to do with a fixation on illicit drugs. It was about an experiment in market freedom, which he undertook because the technology allowed it. His purpose was simply to show that free markets work. Nothing more. Now, outside of the libertarian wing of the crypto community, there are very very few who believed that Ross was unjustly convicted. The complaint was instead, rather that a double

Starting point is 00:03:10 life sentence applied to a man only 30 years of age, was cruel to the point of being barbaric. Ross is now 40 and has a new lease on life thanks to lobbying from the Bitcoin and libertarian communities as well as the dedication of his mother, Lynn. Eric Wall commented, when Ross was sentenced to life in federal prison, he had already set in motion the wheels of a revolution so powerful that it would bend the arm of presidents and release him 10 years later. David Bailey, the CEO of Bitcoin Magazine, thinks this bodes well for the Trump administration delivering on the rest of their crypto platform, tweeting, the fact that President Trump followed through on day one

Starting point is 00:03:40 over-delivered with a pardon and called Lynn Albrecht himself to share the news means he plans on delivering on every promise he made to us and more. Donald J. Trump is the Bitcoin president. Now, the distinction between a pardon and commuting Ross's sentence is a little technical but does have symbolic meaning. If Trump had commuted his sentence, Ross would still walk free but the convictions would stick with him. A pardon, on the other hand, according to an 1866 Supreme Court case,

Starting point is 00:04:03 quote, releases the punishment and blots out of existence the guilt, so that in the eye of the law, the offender is as innocent as if he had never committed the offense. Interestingly, receiving a pardon also opens the door for Ross to potentially make a claim on the Silk Road Bitcoin still retained by the U.S. government. The government still has 69,000 Bitcoin that were seized from the Silk Road hacker worth $7 billion. It seems unlikely that Ross would make a claim on them, and it's far from clear that a lawsuit would resolve it, but it's still worth noting. However, the symbolism goes beyond that as well. Walker, the host of the Bitcoin podcast, wrote,

Starting point is 00:04:34 By pardoning Ross on the 21st, Trump is clearly signaling his implicit support for Bitcoin and the right of all Americans to freely engage in voluntary, nonviolent, anonymous peer-to-peer transactions, as was done on the Silk Road without the threat of violence from the state. For many in the Bitcoin space, this is an emotional event. Many early Bitcoiners were first introduced to Bitcoin through the Silk Road. They've since gone on to lead valuable, productive lives across many areas of the industry. For them, Ross represented the idea that the government could put you in a cage and throw away the key for the choices you made as a young person.

Starting point is 00:05:03 In November, Amir Taki, a Bitcoin developer from 2010, wrote, I owe everything to Ross Albrecht. Crypto changed my life. Crypto became big because of him. He made the ultimate sacrifice. We all benefited from his work. The Silk Road was amazing. It was more than a market. It was an agorist community.

Starting point is 00:05:18 The owner was a pirate called the Dread Pirate Roberts. Every Thursday, there was a reading group discussion on libertarian texts. Dread Pirate Roberts would publish badass manifestos on how the Silk Road was part of a bigger mission to overthrow the U.S. state through free and cap markets. The government did not like it and made an example of him. They put him in jail for life with no early release. Indeed, by all accounts, Ross never sold drugs on the Silk Road and created the marketplace purely as a political statement.

Starting point is 00:05:41 OG Bitcoin or Vijay Boyapati tweeted, Newcomers to Bitcoin may not understand why old-timers care so much about Ross. Let me explain. He embodied the ethos of early Bitcoin more than anyone. He was an entrepreneur who created a thriving marketplace. He believed in radical freedom, including the freedom to trade anything with anyone else so long as it was peaceful and voluntary. He regularly wrote about his views on freedom and why he built the first truly

Starting point is 00:06:02 successful Bitcoin business. He wanted to create a better world and believed his principles deeply. When he was convicted, the judge and the establishment threw the book at him, he was a first-time non-violent criminal, and they locked him up and effectively threw away the key. In the early Bitcoin community, we all felt how unjust this was. It was like they were locking up one of our own out of spite for what we all believed was a peaceful revolution. Now, tens of millions of people owned Bitcoin and many just because number go up. Never forget, there was a deeper purpose here and that getting rich is a nice side effect of that greater purpose. Fix the money, fix the world. Congrats to Ross and his family. A good day here for sure for those who have fought tirelessly for this

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Starting point is 00:07:16 you, check out leaden.io slash borrowing. That's LEDN.com.com. Please visit ledden.com legal for product terms and disclosures. Product availability varies by jurisdiction. Now, in a follow-up to our episode from yesterday, and in related Trump news, the president has addressed his meme coin launch for the first time. During a press conference on Tuesday afternoon, Trump was asked whether he intends to continue to sell products for his personal benefit while in office. He responded, well, I don't know if I benefited. I don't know where it is. I don't know much about it other than I launched it. I haven't checked it. Where is it today? When told he made a lot of money, Trump asked how much. The reporter responded that the president appeared to have

Starting point is 00:07:56 made several billion dollars. Trump played it off as a joke, commenting, several billion dollars, that's peanuts for these guys. He gestured to softbank CEO Masayoshi Sun, OpenAI CEO Sam Altman, and Oracle CEO Larry Ellison, who were all present to announce a massive AI infrastructure investment, which, by the way, if you want to hear more about, obviously go and check out the AI Daily Brief today. The comments hit the Twitter headlines as Trump on his meme coin, I don't know much about it, sending the token plummeting by 35%. The price is now fully recovered, but the event demonstrated how much Trump's statements can move markets. Meanwhile, political analysts are still concerned the meme coin could derail crypto policy in Washington.

Starting point is 00:08:30 Jared Seberg of T.D. Cowan wrote in a Tuesday note, Democrats are going to demand details on whether foreign governments and business interests use token purchases to curry favor with Team Trump. This puts at risk the ability to advance the crypto bill with bipartisan support it will need to become law. However, he noted that delays were already likely and predicted that a crypto market structure bill isn't likely before the 2026 midterm elections. An anonymous crypto lobbyist told the block that the meme coin, quote, distracts from the greater good, adding, there's already an insane amount of reputational risk in crypto. Democrat leadership are already discussing the meme coin. On Monday, former House Financial Services

Starting point is 00:09:04 Chair Maxine Waters said, it represents the worst of crypto and shows why many regulators, advocates and policymakers have long been worried. Through his meme coin, Trump has created a way to circumvent national security and anti-corruption laws, allowing interested parties to anonymously transfer money to him in his inner circle. Buyers could include large corporations, allied nations who are pressed to show their respect for the president, and our adversaries like Russia and China, which have much to gain from influencing a Trump presidency. Holding aside the merits of that argument, I will only point out that Maxine Waters wasn't exactly racing to get crypto regulations done. Whatever the case with the meme coin, the beginning of the Trump era, seems to have triggered

Starting point is 00:09:39 the largest wave of new crypto investors we've seen during this cycle. Google searches for how to buy crypto have reached a new all-time high after barely moving for the past four years. Bitcoin and crypto searches are also maxed out on Google trends. Mentions of Bitcoin on Twitter doubled in the second week of January and doubled again last week. The Coinbase app surged to 21st in Apple App Store rankings on Monday, up from 200 last week. Robin Hood, Phantom Wallet, and memecoin trading platform Moonshot have all experienced similar spikes and downloads. Phantom, the major wallet for Solana, had the most dark increase as new entrants scrambled to buy the Trump meme coin. The app was ranked 357th on Friday, but today

Starting point is 00:10:14 it's sitting at 35th. As crypto influencer Lark Davis wrote, retail is coming back. And to the extent that they are coming back for number go up, well, Bitwise analysts believe that Bitcoin's fair value is much higher if it functions as insurance against sovereign default. Numerous countries have seen sovereign debt spile higher over recent years leading to renewed concerns about sovereign default. While the U.S. is usually the focus of concerns with a debt-to-GDP ratio above 120 percent, other countries are running even more alarming debt loads. Japan is currently at a debt to GDP ratio above 200 percent, and Chinese debt, including regional governments, could be even higher. The average debt-to-GDP ratio across G7 nations is now above 125% and showing no signs of

Starting point is 00:10:54 slowing down. Bitwise analysts suggest that Bitcoin could prove to be a hedge against this risk. They wrote, sovereign default risks have been on the rise globally as fiscal debt to GDP levels have reached new record highs. France's in the UK's fiscal situations are becoming particularly concerning for bond investors. By modeling Bitcoin is a type of generalized credit default swap, Bitwise came up with a much higher valuation writing, in a theoretical model Bitcoin can serve as portfolio insurance against the default of a basket of major sovereign bonds with a current fair value of around $219,000 based on this model. This modeling used the assumptions that the sovereign debt of G20 nations had a weighted default probability of 6.2% over the next 10 years, the current

Starting point is 00:11:31 market pricing for credit default swaps. Bitwise European head of research, Andre Dragosh commented, if default probabilities increase, Bitcoin's fair value based on this model increases even further. Although this price doesn't represent an imminent forecast, this theoretical model goes a long way towards assessing where the Bitcoin price could gravitate towards if such a scenario started to materialize. And so, friends, that is where we will wrap the breakdown for today. Tomorrow we will get into another exciting story, the new SEC running at full speed when it comes to crypto policy. But as I said, that is for tomorrow. Thanks for listening, as always, and until next time, be safe and take care of each other. Peace.

The Breakdown - Ross Ulbricht Has Been Pardoned

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