The Breakdown - SBF Trial, ETF Progress, JPM Onyx Milestone: The Crypto Weekly Recap

Episode Date: October 14, 2023

NLW and Scott Melker cover the most important stories of the crypto week. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

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 Saturday, October 14th, and that means it's time for the weekly recap. 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 at the show notes or go to bit.ly slash breakdown pod. Hello friends, happy weekend. Today I have another conversation between Scott Melker and I. This was recorded yesterday morning, and there are a couple things that I think you will find valuable in here.

One, although we do spend a fair bit of time on the SBF trial, as opposed to just giving the play-by-play, which I've been doing on the show, this is a lot more a subjective reading and interpretation of the events, what they mean for the industry, what I think we learned. So in true weekly recap fashion, I think it does a little bit more of that. Now, the second topic that I think will be of interest to a lot of you is JPMorgan and real world assets. We had some interesting news there. And finally, there is a little bit of ETF intrigue and what might be happening on that front.

So friends, I hope you enjoy this. Let's dive in. NLW men, how are you today? I am good. I'm having a great week better than a lot of the weeks of people we're going to talk about today. I'll tell you that. For sure.

I don't think Sam's having a great week. And there's someone else we have to give an honorable mention to who's finally having a week. And that, of course, is Steve Erlich from Voyager Digital. You guys may not have seen this, but he's being sued by the CFTC for fraud, for neglect, negligence of customer assets, for lying about FDIC insurance, for taking risky bets while saying that customers' assets were safe and they were only taking safe bets. He told this to me personally via text message and phone and on interviews almost until the last day. I was unable to withdraw crypto, unlike everyone else who could have gotten their assets out because Voyager had done me a favor and put protection on my account that

they refused to lift for two months that I asked them to when I saw problems with Celsius. I have a personal feeling about this, but I think the worst part, and Nathaniel, maybe as someone who's slightly outside the situation, give me some perspective, but the worst part is that Voyager declared bankruptcy to protect the executive. from criminal charges, right? It was pretty clear at the time. They could have just liquidated the assets. We would have gotten roughly 75 cents on the dollar, but instead to protect themselves from suits that had already been filed. So those would be erased. And suits they knew were coming, every insider knows this. They decided to declare bankruptcy. We ended up getting back 35% of the assets, but really 24% of the

value on the day that it happened. This is a civil charge, of course. So he still is criminally protected. but to see him get in trouble anyways, after doing all of that to us, just to protect himself, gives me extreme mixed emotions. I mean, how do you view this as, like, I guess a third party who was not luckily a creditor to Voyager? Yeah, so a couple things.

One is, I think that this is going to get us nicely into, I think, the SPF case as well. The consequences for this set of executives is incredibly important for the evolution of this industry, right? And I think that the mixed emotion of it probably should have been worse, but at least there is this set of actions, which could result in not just penalties financially and things like that, but real prohibitions on what this person is able to do in markets in the future is important. I think that for a little while, and this is sort of, again, a preview of what I'll say about SBF too, for a little while, I think that the crypto industry is going to have to just deal with the fact that, there is more evidence that it's just sort of full of scams and frauds like the critics have always claimed. But in the long run, what these cases are actually serving to point out is that it's not just the industry being inherently or a priori dirty. It's specific people making specific decisions to lie, to commit fraud, to change balance sheets, to do things that regardless of the industry would be fraud.

fraudulent, would be criminal. And ultimately, in the long run, especially as a new wave of actors comes in, both from the traditional financial sector and a new class of entrepreneurs who are going to specifically, I think, position themselves as the opposite of this generation of folks. It will be important that we have on record that what happened was specific instances of fraud and criminal behavior, not just that's what happens in crypto. It will also be really important as a deterrent for future actors who come in to realize that there is punishment for these actions, even if it's in the unregulated wild west of crypto. Yeah, listen. That's a very important part because we've seen Mishinsky, we've seen SBF, of course.

Maybe BlockFi, we haven't seen anything yet. I don't know if there's anything to see there. But it is nice, at least, to see this in the press and that people don't see Erlich completely skate by as if nothing happened and there was no dereliction of duty here. What's crazy is the guy hasn't spoken. a word since any of it happened. And he had a statement today. The talented management team at Voyager created and maintained our platform in full compliance with the existing regulatory structure.

Our team consistently communicated and worked closely with our regulators when literally everybody knows that the risk management team was just left out of every decision. There's been reports of it that it was literally like Steve decides we need yield. We're going to go do this. It's Steve. Everyone said that. And so, like, listen, his quote is the exact one that his lawyer would write up, obviously and send out on a PR release and then we won't hear anything else.

But these people have to at least be punished in the court of public opinion. Even if it's not a huge fine or if he has no money or if he doesn't go to jail, people need to see this in the press. I mean, we saw how much of American politics, like the broad American politics was shaped by the lack of consequences for the financial industry in 2008. A huge part. You're talking to Occupy Wall Street on one side. You're talking about the Tea Party on the other.

You know, this was a major, major impact because, you know, I think that many people who have kind of a historical point of view will point to this as one of the single biggest failures of the Obama administration to not hold to account that group. So, yes, it's brutal to live through right now, but it is an incredibly important exercise to actually, you know, dredge up and figure out who needs to be held to account for what happened in the space. Yeah, I can't really tell if it's cathartic or just makes me angry and triggers emotions again. But either way, I think it's a good thing.

And that has to be our natural segue right here into the what's happening at the Sam-Bankman-Fried trial. I actually signed up for the Wall Street Journal just to keep this update going on the recommendation of Misha, the producer. Never thought I would have a Wall Street Journal a subscription again. But it is really great that they're just giving these constant updates on what's happening here. but nobody's better probably for giving the constant updates on what's happening here than you. Yeah, let me flip it around to you, though. I was thinking about this. I would love, same way you asked me for kind of outside context, I have a lot to share sort of that has a little bit of insider perspective. What's your big broad strokes impression of sort of this testimony this week

from Caroline and where it leaves things? Well, to be clear, I don't think it's really anything new. I think that a lot of it aligns with the assumptions that we had of how things were going. There's been previous articles extensively about the misbehavior there, the alleged fraud and all the things that were going on, but to hear it from the horse's mouth, so to speak, is really impactful. And so the levels that they went to to just work outside the system, to commit fraud, to lie to existing lenders, to lie to potential lenders, to lie to customers, it's very, very clear that this paints a picture of him as an outright criminal master. mastermind from day one. And it's impossible to even look at his effective altruism without looking

it through it that lens. It really seems like as kind of ADHD and Ritalin and Adderall dependent that he was and all over the place, that there was a very direct focus on a goal that he had and he was willing to do anything to do it. Right? They kind of talk about as utilitarian the side of it and that he could lie and nobody else could because he had a goal. I just think from the outside, it's exceptionally clear this guy is guilty, he should go to jail forever, and they should throw every book they have at him to make sure that nobody tries this again. Yeah, I think that the story is getting unbelievably clear, right? And to your point, a lot of it is what sort of has started to become working assumptions from the crypto industry, but that is really,

that has really been articulated now. So if we look at last week in Gary Wang, I think that the biggest impact on the jury from that testimony will be how early these these sort of activity started, right? Gary being asked to code the sort of, you know, the ability to the negative accounts, you know, all the way back in July of 2019. Gary kind of walking through that, you know, first FTX was allowed to, or Alameda was allowed to withdraw up to FTC's revenue, which is $150 million dollars and then that was increased to a billion and then that was increased to infinite right 65 billion that story right so we sort of got the dispassionate version of the story that's just here's how sam directed this to be put into code the use of customer money what we got from caroline

this week is how explicit it was how acknowledged it was that this was customer money how she knew throughout. And it was, you know, by all accounts, eating her, you know, sort of psychologically that she knew that that was the only source of revenue. And so, you know, it was a whole that she was just directed to keep digging deeper and deeper and deeper. And I think that the, the sort of, you know, if Gary kind of gave the timeline, what we got from Caroline's testimony was that to use your word, Sam, really was the mastermind, determining this for, you know, from day one. It seems very intentional that it was the four people, you know, the three who have turned basically state's witness and Caroline who knew what was going on that Sam always called

into these meetings. And Trubuco, I've got to be in there, man. I don't know where this guy is, but we can talk about that later. Go ahead. Sorry. Yeah. Yeah. And I think that the, you know, so you sort of have a dispassionate set of behaviors that are articulated. Then you have sort of a lot of color about Sam, you know, I mean, listen, Sam's, the argument that he didn't know what was going on was completely blown out of the water this week. And I think that the additional layer is, we really started to get some, some worldview kind of color that I think will help jurors explain or understand how this could be. You know, Caroline explained something that had widely been my assumption, which was sort of an ends justifies the means kind of thing, that Sam

held himself as fundamentally separate from the rest of the world. You know, I, this is sort of the, the biggest, angriest moment in the podcast that I did right after the whole thing went down, where I kind of imagined Sam sitting there, even now as he had been caught, thinking the rest of the world was just too stupid to, to take power the way that he knew how, rather than all of us understanding that every day we're confronted with these decisions where we can do the right thing or do the wrong thing. And we decide not because the right thing is easier to do the fucking right thing. And I think that that's really what was articulated as part of this as well, that he just didn't believe in the conception of lying or fraud. There was no such thing. It was

all just, would it be a positive expected value calculation on his ability to impact things? He was willing to play the most serious game and it exploded. And this is one of the possible outcome. So now he's got to kind of live in it. And I still believe he thinks he's innocent, to be quite honest. And one point that you made is that Carolyn really blew a hole in the idea that he was not the mastermind, right? He's saying it was her fault, pointing fingers everywhere else. What it also blows a hole in is the idea that it was a small hole that maybe was a small mistake.

And then they just sort of, you know, tried to fill it and it got worse. and worse and oh, woe is me. That's actually, to some degree, what I believe happened with Voyager. But I think Steve Ehrlich, and he talked about it even in the past, we offering 9% to our customers. Well, then Doge got popular. A million people signed up in a day and we had to find a way to give a million, now two million people, nine percent. And that sets us further down the risk curve. And the further down the risk curve you go, obviously, the bigger chance there is that you're going to blow up. Victims of their own success, either the customers leave or you have to go further down the risk curve to offer that yield. So maybe in a situation like that, it was a snowball going

downhill that just got bigger and bigger and bigger. This was 2019 before even the bull market for SBF, where he's put these systems in place. This wasn't like, oh, we blew up with Luna, what are we going to do and started committing fraud to fill the hole? This is a fraud from the very beginning. It was a criminal enterprise set up to be that way. I think that the, you know, when the dust settles, what will be clear is that it turns out that for Sam, it was Alameda all along. Alameda was his personal fiefdom. It was his big financial power vehicle to do whatever he wanted to do, an opaque set of accounts that he could direct to politicians, to investments, to whatever. And even, ultimately, as big as FTX got, it was still a subsidiary in his mind of Alameda, which was his personal power bank.

You know? There's a pity bank for his power bank. And that's why he never even considered. It was just a play to get customers to unknowingly fund his various world-changing ventures. You know, I put that in serious air quotes there. Yeah, I know we have other stories to get to, but it's hard not to continue to talk this to death. I mean, there's some incredible highlights. SBF tried Thai sex worker wallets to unlock, unlock frozen funds before bribing Chinese officials.

He ended up bribing Chinese officials to get OK. X and Hobe accounts open that were frozen. I mean, there was literally no length this guy would stop at to avoid doing what he wanted, to your point. I mean, it's really crazy. He tried to go to the kingdom of Saudi Arabia and lie to them about an investment. Can you imagine? Yeah, we haven't even.

Saudi Arabia invested and then found out about this? Yeah, MBS doesn't exactly have the cleanest record of people. who double crossed him. I don't know if that's the highest expected value calculation, Sam. No. No, I mean, what were the most to you? Like, what were the most astounding revelations here? Was there anything like this? I mean, these are, these are small details, of course, Thai sex worker, it makes for a good headline. But like, there are things here that even you were like, wow. I think that the brazenness, I mean, the utter brazeness that like, so there was a, so John Ray in Michael Lewis's book, Lewis focuses on him very, he's more. He's more,

critical of John Ray than he is of Sam, which is part of the reason people are so frustrated. But one of the things that John Ray said in that book is that there are kind of criminals who are born and criminals who are made, you know, and I think that what's interesting, and this sort of is what you're saying, you were just painting a picture where for a lot of these institutions, they maybe just got in over their head. They made a stupid set of decisions that had sort of, you know, a cascade of impacts that they were caught up in their own, you know, problems. And that's sort of how it went down versus, uh, I set out to, you know, a cascade of impacts that they were caught up in their own, you know, out to acquire, you know, the fact that he was explicitly trying to get Binance targeted so that

their customer, like he was using, he was trying to use the US government to shake down Binance for FTX's benefit, right? By the way, that ended up, we haven't talked about how that ended up being the single thing that ultimately brought him down, you know, it's become, it's become not popular to talk about this fact, because obviously in the wake of, you know, Sam and CZ, like CZ set the train in motion when he sent that tweet about FTT. Let's not deny it. They were playing a very serious game of who's got a bigger billionaire D that they can throw around and CZ bitch-slapped Sam into the next century.

And it was because very clearly Sam had been running his mouth all over D.C. trying to use that very inelegantly. I mean, Sam was a two-bit mafia wannabe, basically, you know? So I think that the brazenness really. really shows up. The Chinese official bribe is another area where it's just, you know, it is not a normal behavior for a kid who's in his first CEO ship within about a year of doing it to be willing to bribe Chinese officials. That is born criminal. And arguably American ones as well, but we don't need to go there. James Murphy met a lawman

yesterday was on the show and we're going to keep talking about this. We'll cook through the other stories in a minute. But pointing out yesterday that the buyout of CZ from FtX was with customer funds and theoretically could be for a massive clawback, right? Well, that's, I mean, that's a, that's a whole thing that another dimension in this story, which is extremely problematic for, for other parts of this industry. And the other thing, so if we're, let's, let's segue to the other parts of the industry implications, that's a big one, right? Is what the estate is going to do vis-a-vis that sort of finance thing. Now, finance is so on the ropes via, you know, vis-vis the U.S., you know, who knows how that'll, that'll happen. But the other one is, there are

now big questions or people starting to ask questions about how much Genesis knew when, right? And what that relationship looked like because, you know, very prominently, part of the most damning testimony from Caroline was that Sam very clearly knew to authorize, you know, to pay back Genesis with customer funds, which creates a clawback situation for them, which doesn't seem that there's any possible way that DCG could handle if that comes this way, you know? So. Yeah. And she created seven fake balance sheets to show to everyone.

which in and of itself, that's whipping away for literally ever. I mean, this is a crazy part of the story that the balance sheet that triggered the whole thing, right? Like I said, CZ,

CZ threw it down the mountain with his FTT tweet, but it was started with the Coindex report. That was the sanguineized of the seven choices of balance sheets, the one that they had cooked that was the least damning

was the one that still damned them in the end. It's insane. A fake balance sheet was enough to cause a complete cascade and death of FTX. Imagine if we had seen the real one. Obviously, we can't even imagine. One question that I have, I guess, last before we move on to will two. Do you think that we'll see any of the politicians brought up in this trial, Gary Gensler,

Maxine Waters, et cetera? I don't think so because the prosecution has no interest in doing that and they've got him buried. Yeah. So, so exactly. So there's a couple of reasons why we won't. One is that. to when you go after ultimately this the the SDNY is not putting Congress on trial right now even if they'd like to

and when you go after that type of target you have to have it dead to rights and I don't believe I believe that there's probably a lot of messages out there where Sam was sort of intimating bribes or you know but I would be very surprised if there was actual sort of full on like Chinese official bribery behavior yet Now, give him one. He just gave them donations. You can do that much easier here. Give him one more election cycle. And I mean, listen, even when it happened, I think to the extent that we want to find

some solace in this situation, the amount of power that Sam was able to accrue in about 18 to 24 months coming from zero, from a standing start is so unbelievable relative to anything we've seen basically in modern history that the horror of imagining him being able to accumulate power for three or four more years before being found out. One, another crypto cycle probably would have cleaned up the balance sheet, but it would have made FTCs able to handle things, you know? It would have gone through that sort of like, oh yeah, they were bad in the past, but like they were able to kind of clean it up.

So I don't know. If we could take any solace of the fact that it's every day that it would have gone on longer would have been much potentially worse for the world. Absolutely. Absolutely. And the final thing before we move on, how much impact do you think it has? had on the last market cycle as far as the price of the assets. We saw a revelation that he had told Caroline to keep Bitcoin under 20,000. I kind of reread that. I don't think that's really what he was

saying. I think he was saying sell, keep selling above 20,000. Exactly. So I don't think that he was purposely manipulating the price, as maybe you've seen on X, but do you think that this behavior, and FTT being in the market and all of the VC activity they did with FTC's customer funds dramatically impacted the structure of the last cycle. 100%. Absolutely. I mean, you've even seen post the collapse of FTX how much more organic market movements have looked, right? I mean, it just took out this force like where the,

even without the intention to go explicitly manipulate market prices, which frankly, like, you know, if we got Sam Tribuco's testimony, I would be very surprised if there wasn't some amount of actual straight-up market manipulation attempts. But I think that the lack of that presence has certainly made things a lack of a lot more organic than they were before. Okay. We're going to end up talking about this next week, I'm sure again. So let's just keep moving on. J.P. Morgan debuts blockchain collateral system in BlackRock Barclays Trade.

You guys may have heard about J.P. Morgan Onix. It's effectively their private blockchain that they're using to tokenize assets, which will be able to be used as collateral, but also to then send them from place to place, as we know is one of the best use cases of crypto. Here you go. JPMorgan's tokenized collateral network or TCN was used by BlackRock to turn shares in one of its money market funds into digital tokens, which were then transferred to Barclays PLC as collateral for an over-the-counter derivatives trade between the two institutions. Tyrone Loven, the head of onyx digital assets that J.P. Morgan said in an interview and then just as a corollary to jump into it, first Abu Dhabi Bank completes cross-border payments testing on J.P. Morgan onics. So that's a pilot that they were doing. We now have two huge examples of two massive institutional actors. utilizing this onyx platform to tokenize things to make for a faster, more efficient transfer, and then in the future to be able to use those as collateral. How big is this?

And is this actually crypto, or is it just blockchain? Is it just a private ledger? Is it just a database that we'll never see? Yeah, I kind of both in my estimation. It's big, but in ways that are different than what people think. I think people have a tendency to say, you know, institution X doing a thing that vaguely looks like crypto is good for markets. and I don't think it's quite that simple.

What it shows is that this set of traditional financial actors are very serious about tokenization. I think personally that this set of people have finally groked that it is just almost impossible to imagine a future in which basically every financial asset isn't tokenized because of the value that it offers in terms of new types of derivative products, speed of settlement, like all of these things. Now, what that creates isn't really sort of necessarily huge momentum towards crypto assets as we think of them. What it creates is lots of interesting new opportunities with traditional assets, right? I think that what we will find is that ultimately real world assets aren't so much a crypto trend as much as the place where crypto and TradFi fully blend into some hybrid new thing that is just both of them,

right? But I do think that it shows how serious, intentional, and diligent these institutions are about this, right? Tokenization of real world assets is massively more complex than I think the average Twitter user gives it credit for. It does. take this sort of, you know, immense amount of effort and time. And anyone who's, I mean, I'm sure you've had a tie on your show before. These are, these are people who are very serious and who are going to be sort of diligent about taking the steps. Now, the other interesting dimension of it, though, is that, you know, the BlackRock involvement, part of what made Black Rock's re-entrance into this space so notable earlier this year is the way that Larry Fink

blew apart the Bitcoin versus blockchain kind of argument. You know, he kept trying to be pin down on that with interviewers right after. And he basically said both, you idiots, you know, he talked reverentially about why Bitcoin was a unique and differentiated asset. But he also talked about how valuable tokenization of real world assets is going to be. And I think that this is sort of, you know, it's big because we are heading into a world where there's not necessarily either this sort of big either or between these things. And, you know, I think that that does accrue benefits to even the traditional kind of crypto asset space, even though this isn't really about that. I think there are countless examples in history of large corporations becoming too big and not

being able to pivot when disruption came, right? The block, the blockbusters and Kodaks and Sears Robux of the world that were the biggest companies of their time, but we're never able to catch up with new technology. I think that a lot of these large institutions have learned from that example and are disrupting themselves before they get disrupted. Right. J.B. Morgan may not even believe that this will be the future, but if it is, they're going to be there and ready, much like companies like PayPal creating a stable coin that disrupts their own business, right? You don't want to be the dinosaur that has no plan for this when the time comes. So I would love to say that JPMorgan believes that all real world assets will be tokenized. Maybe they do. But I definitely believe that they think

if all real world assets get tokenized, we're going to be the ones to benefit from this. And I think that you could use some of what the same argument even for a Black Rock Bitcoin ETF to something. 100%. And all these, yeah, all these, all these, large companies are looking to disrupt. Why would Coinbase launch a decentralized layer two to disrupt their own business, right? It just makes sense at this point. Yep, completely agree. Yeah. The next story we have is a disturbing one, obviously. Hamas has raised millions in crypto donations. There's a whole article on how they've utilized it. I can't tell if this is hyperbole, if this is a big problem, but of course, we've already seen Elizabeth Warren utilizing this as a

talking point this week. I think we all know that if there's a technology that's somewhat agnostic, it's going to be used by good and bad actors. You can't really determine who's going to use it and for what purpose, much like if Hamas is making calls on iPhones. You don't necessarily blame Apple or go after them. But this is definitely a problem that terrorists are able to utilize funds raised through cryptocurrency to go through with their terrorist actions. What do you make of this? My sort of, I don't even think it's really contrarian. It's just slightly different take on all of this is it's very easy to dismiss it and say we have it, how much U.S. cash did they use, right? What about the suitcase of cash from Qatar, you know, going through Egypt's borders? It's not that those things aren't true, but it's kind of not the important part as relates to the crypto industry side of the story. What is important about the crypto industry side of the story is things like the fact that Hamas, stopped publicizing addresses to take donations earlier in the year because they were concerned about how it made it easy to target the people who were funding them, right?

Yeah. I actually think, and this is that sort of weird opinion, that as much as there's some sort of narrative blowback, the actual sort of teachable and discussable moment for serious policymakers to understand, like, to kind of rub their nose in the worst. version of this story and understand that it's more complex than just crypto equals bad guys get funding is probably net good for for crypto in the sense of it having to go through this phase. Like, we need policymakers to understand the potential for these organizations to use this, but then why some of them are not, you know? And as much as it's going to make great headlines

for Elizabeth Warren to scream about her bills, there are a lot of really serious people in Congress, almost in spite of themselves, who are going to, you know, maybe have more of a context to address this, but probably come out with something better than what she's trying to propose. So I kind of think like, look, this is an absolutely horrifying moment. To the extent that crypto is using it, we need to reckon with that and understand that it's a part of this, the ecosystem, a part of the capacity of these tools. You know, you don't get people who are living under oppressive regimes, getting to use these tools to get out of their oppressive regimes without people that you don't like using them as well. And there are a lot of really painful tradeoffs that

we have to discuss and deal with head-on. So my feeling is let's deal with it head-on. And once the hyperbole kind of dies down, it's an important part of the conversation. To your point, to be clear, Hamas Armwing announced a suspension of Bitcoin fundraising. That was last in April, from April, from last April, excuse me. And then, of course, we know that finance, other exchanges have been working with the Israeli governments and very rapidly freezing all of these Hamas accounts. But that doesn't make it right.

But, you know, as you said, and we also know, I mean, look at Lazarus Group in North Korea, right? I mean, North Korea seems like their singular source of funding is hacking and exploits in crypto. So it's a problem, but I think one that will be solved. And as one of someone just absolutely put in the comments, that's a human problem, not a crypto problem. I tend to agree with that. The next story we have here, Kathy Woods, Ark refiles Bitcoin ETF. Here's what's new. What is new about this, basically the revised submission from ARC.

now includes risks of a change to Bitcoin's code, that was a head scratcher for me, as well as how its custodians will handle assets. Can you tell us what's different here and why they decided to refile? Yeah, so this is a really baby little subtle procedural thing that is potentially significant. So basically, as part of these applications, one step is the SEC looking at the applications and saying, what about this, what about this, what about this? Can you clarify this? Can you clarify that? Right. That is just part of the process. This refiled application appears, to be an answer to potential SEC inquiries. We don't know that for sure, but it certainly looks like at all the evidence points to that, like I think that they deal with climate implications at one point,

for example, as well. It just sounds like the type of question that the SEC would have asked. Now, the reason that some people are viewing this as sort of potentially slightly positive is that it seems like addressable questions and the SEC actually engaging with specific things that they want answers to as opposed to just straight stonewalling. And so, basically what the sort of analysts, you know, you've got Eric pulled up here. The way the way they're framing it is like, look, if the SEC is asking, you know, the set of sort of like discrete, specific, answerable questions as part of the process, that's a different level of engagement. It doesn't mean that we're in for sort of an immediate approval, but it means that instead

of just sort of sitting on these things until they deny them, there's actually some amount of engagement, which could be, you know, kind of lightly positive, let's call it. Exactly. This isn't just a blind kick the can down the road, they're actually asking questions and we'll take whatever red meat we can get. And if it's them asking questions, then we'll certainly skin that as a positive, which I think it is. Our final story, BitFinex crypto exchange owner makes 150 million share buyback offer to hack victims. Why does this matter? I have no idea. This is the most confusing story of the week. It is like, it is absolute catnip for the for the tether truthers. But also like it doesn't, I don't think that it makes a ton of sense to anyone else.

So I think that the big thing that people are head scratching about here is it had been widely sort of viewed that Bitfinex and Tether had just the sort of the same ownership structure. They're now saying that it's not the same ownership structure. It's just they share owners. And so that's kind of this interesting new detail that people are trying to parse out. But it's sort of like anytime anything moves with Tether and Bitfinex, there, it's worthy of scrutiny and just that sort of eyebrow raised what might be going on there,

even if you're not coming to it from the standpoint of, you know, sort of assuredness that this is all one big scam or anything like that. I've seen so many, I'll call them bad, takes from people on Twitter about the SBF trial and how inevitably he's going to implicate Tether and it's going to be the end of Tether. And Tether is dead because Alameda was their biggest client and all of this. And it's just a half a decade of this. When does it stop? Listen, let's put it this way.

If, and this is a huge if, this is not me accusing anyone of anything, if Tether are the criminals that the Tether critics have accused them of being, they are much, much, much, much better at it than Sam was. And I don't think that there's really likely any chance that he has sort of, you know, so many goods that he can get himself out of this, you know, but who knows? I think Tether's balance sheets are pretty close. clear and they're making a lot of money. Seems that those high interest rates have helped somebody and their name is definitely

tether. Yeah, I think we covered that exceptionally well today. And I love the nuance and depth of the coverage of the SBF trial, which early in the week, I was like, I'm not talking about SBF this week. It's just too tasty, man. Yeah. You know, unfortunately, we kind of have to. And maybe to just sort of circle up and close out on the point that we started with,

Listen, if you are any human being who is coming into this completely unbiased and asked to watch this trial and determine whether the crypto industry was a priori dirty and something about the code base that it was run on made it dirty or whether a specific criminal person made specific criminal decisions, it's very clear which of those it is. And again, as juicy and as lurid as it is, you know, we always, humans have liked watching that forever. But the reality is that what's gone on trial is really not the crypto industry. It's Sam's unbelievable callousness and lack of interest in any convention of normal human society, you know? Listen, if this guy had stayed at Drain Street, you got to think that he would have found every exploitable loophole. There would have been a different grift somewhere

for him to accumulate wealth and power as fast as he could, you know? Just wouldn't have been this one. I think that's the perfect way to wrap it up. guys, everybody follow NLW, of course, on Twitter and check out the breakdown, which you can do on his audio and video channels where you can also see this. Also, I want to give a huge shout out. I saw you guys talking about it in the beginning to our producer, Misha, and his team for the amazing new thumbnails, which have been super entertaining. And I see you guys claiming that they're AI. They are not. We have an actual human person that does these every single day. And while I don't think they make more people watch the show, I think they're just awesome and they align well sort of with the content. that we have. So a huge shout out to them. They're absolutely amazing. Daniel, man, thank you very much. I will see you next week and see you guys on Monday. Peace.