The Wolf Of All Streets - $27 Trillion Into Crypto | Celsius Selloff | Crypto Town Hall With Meltem Demirors, Joshua Frank, Bruce Fenton, Simon Dixon, David Silver, Joe McCann & Others

Episode Date: June 28, 2023

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Yo, yo. Hey, everybody. Just getting all the guests up on stage, of course, making sure that our sound is good. Give me a thumbs up if you guys can hear me. I was going kind of between a few headsets here trying to figure it out. Good. Thank you, Ram. Thank you. I hope everybody's having an amazing day. This has been an insane couple of weeks here in the news cycle. I know that Dave and I, we spoke pretty extensively yesterday. Josh, good to have you. Meltem, hi. Hello, everyone.

Meltem, you're like our topic today. You made a whole topic out of you. How's that? 27 trillion into crypto. It's based on a thread that you wrote. We're going to get into it in a little while. I don't want to... That's just in the U.S., by the way.

That's just in the U.S. I brought receipts today, so know. That's just in the U.S., by the way. That's just in the U.S. I have more. I brought receipts today, so there's a lot to talk about. Oh, yeah. I can't wait. Yeah, they're going to pin. They might have already, but we're going to pin your tweet up there at the top in a minute and get going.

Like I said, we were like, what should we talk about today? And we're like, 27 trillion is a big number. Let's do that. And so here we are. Josh, what's up, man? How are you today? Doing well. Nice traveling you on. Yeah, you were traveling pretty extensively there for a while, right? Yeah, trying to figure out where people still have money.

So on a world tour. Where is that? Yeah. Did you figure it out? Great question. Let me come back to you. Can you tell me if it's Dubai and Hong Kong? Because that seems to be where we're at right now. There's a lot of excitement and enthusiasm outside of the US for digital assets right

now, which is great. I think the question is, obviously, regulation is a piece of it. But the other question, I think, which is important from an institutional perspective is where are the allocators coming in from? Where's the capital in slowing? Where are sovereigns and pensions and endowments and funds of funds excited? And I think that question is still up in the air. I mean, it's certainly hard for crypto companies to raise money, but I think it's even harder for crypto funds to raise money. And that's, I think, one of the big impetuses that I'm watching for the next bull market is, can funds raise a lot of money to deploy into the

space? I believe. I'm a believer that they can, certainly. So guys, we're going to get going here momentarily. Just as we're getting started here, quick market update, Bitcoin trading, I'm seeing about 30,800. I'm watching it, of course, on the TIE dashboard, Josh. Once Josh got me on the TIE, dude, I don't literally even need anything else. It's unbelievable. I appreciate it. Not to be marketing on your behalf here, but it is literally all day, every day.

But yeah, I mean, the market's effectively flat. Pretty small moves here, but it's hard to not be excited after you saw sort of that pop from the 25,000s up to about 31,000 in a week. So a lot to talk about as to why that's happening and what we're going to look to. Of course, guys, I just want to mention, you can see it in a pinned tweet above. We have an amazing sponsor today and partner, Link2. You can look into them. And we're going to talk about them quite a bit later. Just wanted to give them the quick mention at the beginning because someone we're really, really excited to be partnered with. But Melton, I'm going to give you the floor. We're going to pin your tweet above. And we're going to talk about it here because, yeah, $27 trillion just dying on the sidelines here waiting to pour into crypto, right?

Well, let's maybe just run through kind of the picture. So I'm Crypto Grandma. I've been in this industry since early 2015. And so, you know, the narrative for a very long time has been the institutions are coming. And in 2017, you know, there's going to be this wave of institutions. And again, in 2020, there's going to be a massive wave of institutions. And that wave hasn't really come yet. I think the wave has been more of a trickle. But in the last really six months, I think we've seen a lot of movement. And the interesting thing is, you know, the BlackRock

news around BlackRock filing for a spot Bitcoin ETF was huge news. But there's a lot of other stuff going on. And so yesterday, I was kind of sitting there and I was like, huh, you know, if I just zoom out, right, I think zooming out is very helpful. And we just look at what's going on. And so yesterday, I was kind of sitting there and I was like, huh, you know, if I just zoom out, right, I think zooming out is very helpful. And we just look at what's going on in the more traditional institutional asset management and banking world, what does the picture look like? So I put together a quick chart, I used to be management consultant. So we love our nice little charts. So obviously, BlackRock is one of the largest asset managers in the world, $9 trillion in assets under management. They have filed for a Bitcoin spot ETF. That's big news. But if we look at the other largest financial institutions in the world, Fidelity, nearly $5 trillion in assets under management,

they very quietly in the last month launched a full-stack crypto solution for all of the wealth managers and advisors on their platform, which is huge. Right now, they're offering Bitcoin and Ether trading and custody, and they built that all in-house themselves over the last eight years. JP Morgan is doing tokenized USD and euro transfers. Morgan Stanley is providing their high-net- worth clients with access to three funds, two run by Galaxy, one run by Nidate. Goldman is doing OTC trading for their high net worth clients with Galaxy. BNY Mellon is custodying and enabling the transfer of Bitcoin Ether using Styroblox. We, my firm CoinShares, partners with Invesco on an ETF in Europe and Galaxy partnering with them on this filing for an ETF in the US. We also have an equity focused ETF in Europe with named, they manage $27 trillion in assets. Now, is the entirety of this $ a moment, you know, anywhere from a 1% to 4% allocation to Bitcoin. And we've primarily

focused on allocation to Bitcoin, because I do think for most investors, Bitcoin is the best understood. The Bitcoin network has been operating for over 13 years. I do think it's the asset that a lot of people who are a little bit more risk averse are most comfortable with. But that's not to say that over the long term, there won't be allocation to other assets. I just think for a lot of people, the starting point is Bitcoin and or Ether as well. I think there is a lot of interest in Ethereum. But in our research, we've focused on, you know, in a portfolio, what is the optimal allocation to crypto. And so what we sort of found through our brilliant research team is anywhere from a 1% to 4% allocation provides optimal diversification benefits and sort of

balances the risk and reward. And that's sort of assuming that you're rebalancing on a quarterly basis to keep your overall portfolio weight at 1% to 4%. Now, I know a lot of people in this space are probably saying, that's crazy. My allocation is closer to 50% or 100%. But I think we just have to remember that we're talking about, I always say people like my dad. My dad is a very smart human, 65 years old, but he is scared of crypto. He doesn't want to use a ledger. He feels much more comfortable accessing assets through his

Fidelity account. He's a client of Fidelity. He keeps his money there. And so the ability for someone like my dad to have exposure to crypto through an advisor or a platform they already trust where they already manage their assets is a huge unlock. So I think that's one really important thing to focus on. So 27 trillion, if we look at just one to 2% of move of that moving into crypto, right, that's a $500 billion right there. If we see 5%, you know, that's closer to $1.2 trillion. So that's a lot of money. And I love what you know, I believe it was Dave who said this, but I love what he said about, you know, it's all about the flows. One thing we look at and we publish a weekly report of coin shares on fund flows are many flowing into structured crypto products which are accessible on these platforms

and traditional brokerages um last week we saw the biggest week of inflows in almost a year 200 million of inflows 90 of that was into Bitcoin products. And so I think it's really important. There's a lot of sentiment out there and media headlines, news, what you see on Twitter, that's sentiment. But the translation of sentiment into action is captured through flows. And so it's very important to look at where the inflows are coming from and where those pools of capital are. I always think it's funny. You'll look at people tweeting about assets and they're like, oh, this is going to be huge, the moon, blah, blah, blah. And I'm like, okay, I love that. But where are the flows going to come

from? Who are these buyers? Where are these flows coming from? What channels are they coming through? And so what I really wanted to do here is just illustrate there is a huge amount of capital that is now going to have access. And so we're starting to see the beginnings of where some of these flows that we think will fuel the next cycle. Right. If we believe in this four year cyclical Bitcoin having drives markets theory. I think that, you know, starting to see the emergence of this pool of capital and it's getting connected to crypto. And then the last piece of this is in the last column in the chart Ires, the Fireblocks of the world. And I think that's very promising as well, because firms are partnering with crypto native institutions. And I do believe that many crypto native institutions are now too big to be acquired by traditional financial services firms. And so it's very exciting sort of thinking about a future where over the next three to five years, we could see more publicly listed crypto companies. We have coin shares are publicly listed. Coinbase is as well. Obviously, Galaxy is as well. And there are a small handful of others, but we really don't have a lot of publicly listed crypto firms. And so I'm very excited that we'll see more crypto firms going public potentially and becoming larger financial institutions.

So I'll pause right there. But I think this is all very interesting. And then maybe later we can also discuss the international picture because obviously the U.S. is a chain market. But if we look at the top 15 banks in the world by assets under management, only two of those banks are in the U.S. The majority of them are in China and outside the US. And so it might just be fun to sort of postulate what the picture globally might look like. But I'll pause there. I know I've talked quite a bit. No, that was great. And just since we do break news here, and guys, we will vet this, obviously,

but it is being reported just in 4.2 trillion asset manager Fidelity to file for spot Bitcoin ETF. That rumor was circulating already over the last two weeks. I think that rumor started circulating actually the minute that BlackRock filed. But Scott, we have to remember Fidelity already filed for Bitcoin ETF, right? Yes, of course. Yeah. So it's just a refiling, right? And I think, you know, I'm optimistic Vanguard, by the way. They got rejected.

Yeah, everyone got rejected, right? But Vanguard is like the big daddy here, refiling right and um i think you know i'm optimistic vanguard by the way rejected yeah they everyone got rejected right yeah but vanguard is like the big daddy here right so vanguard schwab those are the uh so the in order of aum obviously black rocks first with 10 plus 10 trillion then we have um uh vanguard with 7 trillion and what's cool about vanguard is vanguard is very focused on low cost product, right? And a lot of 401k plans and sort of retirement plans are run through Vanguard. Vanguard's a big one. Schwab's a big one. Those are the two I want to watch. And then Fidelity is fourth on that list with about $5 trillion, I believe, $4 to $5 trillion.

Yeah. I mean, the Fidelity news, it was conjecture, of course. But like you said, they'd filed before. And everybody who watches Fidelity knows they've been in the space for longer than any other institution. I mean, they're in here eight, nine years already. They've been Bitcoin mining since 2015. I mean, if there's any institution that sort of led the charge here, it's been them. I mean, you said you're a crypto grandma. Vinny, does that make you crypto grandpa? I think you've been around just as long.

I mean, what do you make of what Meltem just laid out? Hey, how's it going? Yeah, just maybe about two years more than Meltem. Hey, Meltem, good chatting. You know, I agree with Meltem. I'm just not sure what the time frame is going to look like. That money seeps into the economy over a period of time. It sounds like it's all going to go in, you know, in one go.

So the real question is like, what's the ramp time for the allocation to get to a trillion dollars? Is it a year? Is it two years? We also have the halving approaching as well. So that takes some self-pressure off. And so the balance between money coming in, less, you know, less available for sale through the miners, those have to be offset. And obviously it's a timeframe. But I think I'm pretty bullish

on Bitcoin right now. I think Bitcoin is probably going to hold some highs in the next two years, if not sooner. But yeah, it's really the time function um zinni i want to tell a quick vinny anecdote so vinny and i have known each other pardon for eight years now i've had the pleasure of working with vinny um a funny story back in 2015 i remember vinny called me in like june of 2015 i think vinny do you this? You called me and you were like, hey, Gemini had actually filed for a spot Bitcoin ETF. And Vinny, you were so convinced that they were going to get it. Maybe it was 2016. But I just remember, Vinny, you and I had this crazy phone call where we really thought Gemini was going to get approval for their spot ETF. So that's how long we've been talking about this.'s been seven freaking years so then you're

obviously jaded though so what are you where do you put these guys now there's time having seen it so many times melton my my memory does serves me correctly i remember i remember chatting about it and i was i was skeptical about them getting it i was like i was excited i was like this is awesome but these are the problems and then i wrote a blog post after the book was still up where i just said that it was 20 early 2017 march and i can go look it up but i literally said that there's no atf coming i was doing a bit well so so this is actually so this is actually good no no no look i don't need to cage match with vinny um i think he would demolish me but um i think one of the interesting things is what's going to happen here. Like the SEC is in a bit of a pickle because this week a double levered Bitcoin ETF launched. shares, about a billion in AUM, but that's based on the CME Bitcoin futures, which obviously is not a great gray scale, obviously not great trading at a discount, used to trade a premium.

We have all these wonky products out there that are really not good for consumers, that are really not good for retail investors or any investors, frankly, because there's a lot of inefficiencies in them. So the SEC is in a bit of a pickle. If they approve the BlackRock ETF, right, then it's definitely going to look like collusion. We all know BlackRock, very close to the Biden administration. So if they approve the BlackRock ETF, it's kind of going to validate all the tin foil hat theories out there, right, and speculation about corruption within the SEC. And if they don't approve it, right, we're in the situation we've been in for, you know, eight years now, where we continue to have no efficient structures for people to access Bitcoin in like this traditional product wrapper.

So I do think the SEC is in a bit of a pickle and maybe Vinny, your thoughts on this, but they're kind of in a weird category too. I agree. I think the door's been open now like i was skeptical up to the point where gary gaines said oh it's not a security it's you know whatever commodity whatever you want to call it but it's done the doors can open like now everyone's just running to the door so i don't think there's any they can walk us back at all and so i think it's inevitable it's just a matter of time right now. Joey, I'd love to get you involved in this conversation.

You're pretty close to it. What do you think are the odds here? And what do you think the importance of all these filings is? Yeah, I think the odds are pretty high in Lajue. Historically, I've been super bearish on all these Bitcoin ETF filings. But I think at this point, I would handicap it at something like 65-70%. I just think that

the players who have filed this time, or refiled, or whatever, are much more serious than in the past. And then also, I just don't think there's really any credible reason at this point to say no to it. That's sort of my view there.

Right, but it's not a credible reason per se, but it's the same reason they would have given before, right? So I think the point is it was never a credible reason, I think we could argue maybe. Yeah, I think that's true. I've always thought that they should have approved them. But I think if you kind of look at these recent applications, they're pretty kind of ironclad. I think I agree. Gensler, of course, they could claim some reason to not approve them. But I just think given kind of

the number of institutions and kind of like the caliber of people who are filing this time around, I just think it's pretty likely that they do actually get approved this time. Josh, I saw you lift your mic. Yeah. I mean, I think that the thing is, they can't just go and approve BlackRock and not approve everyone else, especially all the other asset managers that filed before. That would be pretty bullshit because there are... I mean, like BANEC, you know, had already filed before many times, right? And that's still a large asset manager, right? So I think, you know, if they're going to go and approve, everything has to get approved, right, at the same time. So, you know, you can't just say, like, there's nothing, at least from what I've seen, materially different around BlackRock's ETF filing than anyone else, except for the fact that it says BlackRock's name. They're claiming that the difference is the surveillance sharing agreement with NASDAQ, but Cathie Wood very quickly came out and said, listen, anybody can add that provision to theirs.

And oh, by the way, we're actually in line first. So, right. They very clearly have to skip ARK. And I mean, Gemini has been using NASDAQ or was at least using NASDAQ smarts for five or six or seven years. And they, you know, the Winklevoss twins applied for an ETF years. I mean, there was an announcement of them using NASDAQ smarts, I don't know, maybe 2016, 2017. So that's not necessarily new. Yeah, I think we all agree. It's the name. Go ahead, Joe. I saw you lift your mic and then Dave. Yeah, I was gonna say, I think the one new thing this time is that Binance US isn't really a player anymore in the US markets. And I think my personal view is just that I think the SEC wanted them out before they'd approve a Bitcoin ETF. That's just my poker read there. Go ahead, Dave. I don read there. Go ahead, Dave. I don't disagree.

Go ahead, Dave. Yeah, I mean, I think that there's a couple things here. The first is I think it's fairly likely that if they approve BlackRock, they're going to have to approve others, some of others. But there is some differences. Their focus on Coinbase, while amusing considering it's one week after the Coinbase suit was filed by the SEC, is different. The whole notion of market of substantial size, Coinbase is almost twice as big as the next largest US competitor and close to 20 times more volume than Gemini. And so arguably Gemini doesn't qualify for that. So whether they have NASDAQ smarts or not, it doesn't matter. And I don't think it's about NASDAQ smarts vis-a-vis Solidus Labs platform,

Aventis platform. I think a lot of these exchanges do surveillance. The key here is the willingness to share that information. And I think that that makes it. And the other big deal is what Meltem said before, which is who is going to actually invest? Who is the target? I mean, at post FTX, when you talk to financial advisors, so-called normies, as people refer to them in crypto town hall, my brother's a normie, although he follows this stuff. The fact is, is he tells me that clients were spooked by FTX for obvious reasons, don't want to get their coins stolen. And let's be blunt. If you put your money in a BlackRock ETF, I think every client's figures that no matter what happens, they're going to be made whole. And that may not be the same with a lot of the others that are filing. And I think that that's kind of a bigger deal. I mean, I think that the thing about BlackRock's filing is about trust and it's about client trust in the system and the ability to actually overcome what happened last year. Yeah, I think that makes a lot of sense. I want to focus, I think we've all kind of talked the idea that the BlackRock ETF could or could not get approved

pretty much to death, but I want to go back to what it really means if it is. I mean, Meltem laid out the case, obviously, for this $27 trillion. That's not specific to a BlackRock ETF itself. But let's say the BlackRock ETF gets approved in two weeks. What do we see for the subsequent month after that? Because I think there's an expectation we would see this massive flood of money. And as Meltem's pointed out, every time we've had an expectation of a massive flood of money, we haven't generally seen it. Can I just maybe, oh, sorry, Dave, go ahead. I was just going to say, my bet is a mass speculative wave that then at least half of

that retraces because the money is a very long-term trickle, then a flow, then a flood that could take years to materialize because it's necessary but hardly sufficient to bring all the money in. Yeah, I mean, BITO did get a billion basically, I think, in the first two days or something when they launched the futures ETF. So at least at that time, there was an appetite for it. But Meltem, then Josh, please. Yes.

So, Dave, I agree. I do think there will be some interest. But I think one thing to just sort of keep in mind is for people who are really so. So one thing we kind of think about at CoinShares, right, as asset managers and an investment firm, there's sort of a customer journey that people go through, that investors go through when they're thinking about crypto. So sort of at the top of the funnel is education, which is people learning about crypto, people learning about Bitcoin. Once people go through the education journey, they kind of go through the next step, which is okay, I want to look at my different options, right? So there are structured products which are offered by the BlackRock and Vanguard's of the world, Validates of the world. There's direct investing. There's active trading through what we would

typically see as a brokerage account, like an E-Trade, sort of Schwab equivalent. And then there's sort of different ways to get exposure. I think the one thing I sort of question is for people who've already sort of made their way through the education funnel, who have looked at the options and then decided to take action, there are already a lot of different ways for them to get access, right? Coinbase, I don't recall the latest number, but I think they have something like 30 million accounts. And, you know, we have the SoFi's of the world, we have the Robinhood's of the world. So I don't necessarily think that there is a massive audience out there who is like, Oh, my God, I have no idea how to get exposure to Bitcoin.

And so now that I have one, I think there's a new education journey that's going to start. And I do think Bitcoin is starting to be more legitimized. I mean, the fact that Jay Powell, you know, in his latest hearing, talked about the fact that cryptocurrencies have staying power. He thinks they're relevant and worthwhile. That, I think, was huge affirmation. I think it takes some time to go through that journey. So that's number one. So I don't think it's like, okay, we have these ETFs launching and all of a sudden, you know, hundreds of billions of dollars in inflow. I do think that process, that journey, that customer journey, that investor journey takes time. And by the way, the spaces and

everyone who's in this industry and people on Twitter, people writing and posting podcasts, we are all a part of helping people through that education journey and through that funnel. The second piece I just want to talk about is, to me, the really big opportunity is really not any one manager in particular, but of retirement funds, retirement money. Retirement money is very sticky, right? Retail money, spot money, not sticky. Retirement money, very, very sticky. Because once money goes into your 401k or your IRA, it's there for 30, 40, 50, 60 years. People are making, with lifespans extending, right, with social security benefits, like being challenged, I think that more and more people are starting to recognize participating in

the market, planning for retirement, investing their retirement funds, is going to become more important, particularly now that we've seen rates rising, sort of the 60-40 portfolio construction theory, you know, may not be as relevant going forward. You might have to kind of move a little further out on the risk curve to get those returns. So today in the United States, there's $10 trillion of assets and defined contribution plans. And that's a lot of money. Total retirement assets in the US are $35 trillion. A lot of money. It's in different places, but that to me is the big opportunity. If we can work to get crypto into retirement accounts, that in my view is going to

be the big unlock because the day-to-day volatility of Bitcoin is the price of the investment opportunity. That volatility will likely go down over time just as it did with gold and other sort of emerging asset classes. But what's really interesting to me, that $35 trillion in US retirement assets that people tend to allocate long-term, you don't really day trade in your retirement account, right? You kind of set it and forget it. That to me is a holy grail. So that's what we're not talking about. And that's really where I think the big opportunity is, especially in the US. So I'm excited about that. Yeah, passively investing in your IRA if you're a Bitcoiner from the beginning, that's the unlock because that's

where people are going to dollar cost average for 30 years. Which by the way, I've been doing through like not an advertisement but um through choice so we invested as my former business partner directed yeah self-directed and that's all directed ira i custody my bitcoin with casa self custody which i think is really cool right because they're now starting to see this hybrid sort of keys exactly i have my own keys. Very exciting. Josh? Yeah, I agree. I agree with Meltem on the retirement piece entirely. I would add, though, you know, BlackRock is not going to go out and launch this product unless they have demand. Right. And the same thing goes with Aladdin.

Right. Aladdin's got 100 or 120 customers, which, you know, collectively managed $100 trillion, they're not going to go and launch Bitcoin trading through Aladdin or launch an ETF unless they have some customer demand. There's potential reputational risk, right? And so they obviously have demand associated with it, which is why they're doing it. And the question is, what happens to Bitcoin immediately after? And I think Dave hit the nail on the head. I think you see a tremendous amount of upwards price movement immediately and probably some retracement. But I think the reason that a lot of institutions are on the sideline right now is for a while, Bitcoin was very correlated to the NASDAQ. the excitement around crypto as an asset class partially was because it was uncorrelated or kind of the narrative as Bitcoin is digital gold. Right now, Bitcoin is not correlated to the NASDAQ, it's not correlated to gold, it's not correlated to the S&P, which I think is already from speaking

to large hedge funds, getting them very excited, the ability to introduce a totally uncorrelated asset. That combined with, I think, the speculation that comes from Bitcoin ETF launching, if it does happen, all the new liquidity that brings, I think that's going to actually bring a ton of institutions to the space, even if it takes a while for large allocators to move into crypto. I think that does bring kind of a... It could set forth at least a temporary bull market with a lot more spec editors coming into the space, a lot more liquidity. So we have to assume there that basically BlackRock

has a whole bunch of institutions already committed and lined up to buy this thing because they're not going to just throw it on the market and hope that a few retail customers in Omaha, Nebraska decide to throw it in there. All right. Yeah, I mean, I'd be curious what the smallest ETF that BlackRock has is. I mean, I'm sure there are some that are relatively small as they have thousands.

But, you know, I think they have to view this as, you know, at least being a multi-billion dollar product. Agreed. Joe, go ahead. Hey, yeah, so I just wanted to comment on a couple things. With respect to the demand, a really strong trusted source of mine let me know after that first business week ended, there was already single-digit billions of demand for the BlackRock ETF, according to him. And that's, I think, pretty material. I think that would actually be the tens of billions. If you look at the gold ETF when it first launched, there were tens of billions of demand in the product in the early days. And the fact that there's already single digit billions demand for the product itself have not even been approved is pretty remarkable. I think the other

thing I'll mention is that I joined a little bit late because it's a bit early here on the West Coast. But one of the topics that you guys were discussing was Gemini's ETF submission and some of the characteristics associated with that. I think it's important to distinguish the difference between the SSA agreement that Gemini was putting forth and the one that BlackRock's putting forth. The SSA for, that's the surveillance sharing agreement that Gemini put forth was actually with BATS, the BATS exchange, and not NASDAQ. So there's a little bit of a delineation there. It's important because NASDAQ is a regulated entity of significant size. But more importantly, the SEC said the Gemini didn't meet the SEC's criteria because it's neither a market of significant size, nor is it regulated. I think this is a key thing to understand here is that the SEC has denied previous spot Bitcoin ETFs because the exchanges

were not regulated and they were of significant size. And so the question is, does the SEC view Coinbase as an exchange of significant size given its involvement in the BlackRock ETF? And currently, Coinbase has about a little over 6% global market share with respect to spot Bitcoin trading volumes. Binance obviously has about 50, greater than 50%. But in the US, if you scope it to the US, Coinbase actually has about a 76% market share. So the question is, does the SEC interpret it at a US level or at a global level? And BlockRack obviously thinks so, right? Because they wouldn't have chose Coinbase as the custodian of the market if they didn't believe that that was enough to get approved. The SEC might have a different take on that, but BlackRock clearly believes so. Yeah. And I mean, look, anything could happen. BlackRock has a 99.8% win rate. Everybody knows this at this point with ETF filings. I find it incredibly ironic that they would file for a spot ETF a week after, nine days after a lawsuit was filed with the FCC against Coinbase.

Ultimately, that lawsuit, I think, is going to be settled. So there is the potential that it's kind of a nothing burger with respect to BlackRock. But that is pretty strong signaling. If BlackRock is going to select the only publicly traded and what we would put in air quotes, regulated US-based exchange for the custody of their ETF product if there wasn't actually a reasonable chance that it actually gets approved. Wild timing that the SEC goes after Coinbase on a Tuesday and by a week later, talking about a BlackRock ETF that's utilizing Coinbase. David, go ahead. So I just want to say, you know, what Melton was saying about like the retirement accounts and that. What you guys are really talking about is financial

advisors in the U.S. who are practicing under the Investment Act and the Advisors Act. We're going to, for the first time in crypto, have financial advisors who have a fiduciary responsibility to their clients who are advising, recommending, and putting crypto into their accounts, that is going to be yet another spigot that opens up that's not currently available. But it also would give the government some feeling of comfort that there are professionals who are going to be responsible to their clients for these investments. And for lawyers like me, we're going to salivate for people who are responsible for evaluating. You know, if the ICO craze had happened and your financial advisor put you 95% into ICOs

that were all fraudulent and fake, you'd be able to recover against your financial advisors. If this money comes from retirement accounts, those retirement accounts and those advisors have fiduciary duties to their clients to be careful about what investments they put their money into. While the floodgate of new money that would open up would be fantastic, it would also be fantastic to be able to rely on the professionals who are providing you this advice that if something goes wrong, you have a gatekeeper who would bear some responsibility. I think those are two not often discussed things about getting mom and dad and grandma and grandpa on Mainstream involved. It's going to be a fantastic runway from both an opening up a source of new funds and for opening up a source of responsibility for people who advise you to

go into these investments. Oh my God, David, you're going to have so many more people to see. Exactly. See, guys don't know, but David's a lawyer, right? So we can take everything through that lens when he talks, but it is true. I mean, they would have the responsibility. And that also means that they are just going to have to start actually taking it seriously and take a look, to your point, right? Rightidelity, all of these financial advisors are going to have a responsibility for managing your account. They charge you to manage your account. All these retirement, all these billion dollar retirement funds, you know, all the old class actions used to be the class action lawyers would seek out all of the pension funds to file their class actions when the stock went bad. We're going to see the same thing in crypto.

They're going to move billions and billions, if not trillions, into the system. But all of a sudden, they're going to bear responsibility for the assets they buy. And if they're buying crypto and they're buying investments, think of if someone had done, it wasn't Sequoia who had done the investment into FTX, but it was the California Teachers Pension Fund who had done the investment into FTX. Those investments would leave those advisors susceptible to claims from their retirees under the ERISA Act. It's just going to be a great day when the professional advisors can allow for the investments. And I think it's going to give the government, the regulators, some mechanism of relief that there are going to be all these people now responsible to

Main Street investors. Yeah, I mean, that's a huge narrative, or at least tin hat slight theory, is that Gensler or the SEC will just approve this and wipe their hands of it and say, see, guys, we did something. We did something positive. Bitcoin ETF, here you go. Offload some of the responsibility and then in the future be more dismissive of the rest of the market. I mean, does anyone think that that's what's happening here? I keep hearing it over and over and over again. If not, then we can go ahead and reset here, because actually I do want to talk about next the GBTC discount. But before we do that, I want to definitely give a shout out to the sponsor pinned up in the nest link to the private investing made simple invest in mid to late

stage startups at affordable minimums with link to and you can check that out. Like I said, in the pin tweet in the nest above, and we're going to definitely talk to them at the end. What they're doing is absolutely awesome. Because you know how difficult it is for people, especially in the United States, to be able to invest in private equity. But I want to talk about this GBTC discount down to almost 30%. I think it was 44% two weeks ago. Is this because people think that Grayscale is now going to get an ETF approval because of BlackRock? What's going on here? Why do you think that this is seeing so much volume and why we're seeing this sort of discount collapse? Anyone can feel free to jump in. I feel like that's a rhetorical question. I think the answer is yes. This is a short answer. People

view it as if BlackRock believes they're going to get approved, then Grayscale can get approved and that discount will go away. And people believe that they can purchase Bitcoin at a discount, right? Whether or not that's the case. So is that the case though? I mean, it seems like the Grayscale case is very different from what we're talking about here with BlackRock. I mean, this is being litigated right now. Well, I see Meltem unmuted and she's being formal you know, being formerly DCG, she probably has a good opinion on this. But I, yeah, I mean, look, the thing is, if Grayscale wanted to offer redemptions today, they could do it. Right.

They just not. And did you see, I'm going to pin it up when I find it, but I believe that GBTC and EFE both have a record quarter in earnings. Oh, for Grayscale, you mean? Yeah, for Grayscale. This is the best quarter for them for earnings for both of those products, even though, like you just said, you can't even redeem. Makes sense.

2% of $50 billion in AUM is a very large number, whatever they're taking their rate. And it's all locked. It's all locked in there, to your point. Go ahead, Meltem. Well, I think, again, just not a lot to add.

And I haven't been at TCG in five years, so I have no special insight of any kind. I just think the grayscale narrative. So I myself have tried to trade the Grayscale premium and discount. And it's tricky, right? I recall when the discount went to 30%, I added them to my portfolio, and then I went to 45%. I think one thing with these one-way trusts is it's really a question of supply and demand. And trusts can trade at at a discount a massive discount for a very long time i believe there's one trust out there that's currently trading at a 92 discount so i just want to caution people that you know that the fact that there is now potentially these new

avenues opening up that allow both creation and redemption and will trade at nav where the net asset value is the underlying i i.e. the price of Bitcoin. That doesn't necessarily have any implications for Grayscale. The other thing I just sort of question, if I had a cash cow business that was printing money on Bitcoin and other crypto assets under management that could just remain there in perpetuity, there's really not a whole lot of incentive for me to allow people to redeem, especially when my expense ratio is 2.5% and other people, sorry, my fee is 2.5%. And there are other products out there in the US market, in the Canadian market, in the European market, 95 basis point, 100 basis points, 125 basis points.

So if you have, I believe in the Bitcoin products, they have 26 billion in AUM. If you have 26 billion in assets that have 250 basis points take, there's zero incentive to allow redemption. So I just encourage people to be cautious. Yes, there's zero incentive for redemptions, but then it makes you kind of scratch your head. I'm being a bit facetious on different news. But if BlackRock gets an ETF, there's no guarantee that Grayscale will be able to convert. So I do think it's a tough one to trade right now. It's very sentiment driven. But again, that structural sort of challenge, if there are not being any redemptions allowed, that's not going to change if BlackRock gets an ETF or someone else gets an ETF.

That's really a Grayscale-specific decision. So I just want to note a caution. Yeah, that's exactly what I was trying to hint at at the beginning. It's not like some instant slam dunk that just because BlackRock gets approved, that's good for Grayscale. Josh, did you have something to add? I was just going to add the fact that not only is it a 2.5% management fee, it's 2.5% management fee on NAV. So the product is trading well below NAV, and then you're getting charged 2.5% on NAV. So it's an extraordinarily expensive product. But yeah, I mean, to your point, look, if they convert to an ETF, the ETF game is really,

you know, look, GLD1, right? It's a game of, you know, there'll be one or two really big winners, and Grayscale has to believe that they become one of those really big winners, and the AUM grows significantly, right? That's kind of the bet that they'd have to make. But Josh, like if we see BlackRock get approved, and then we see nine more of these get approved, what will, I mean, is it literally just going to be fees that differentiate or the marketing? I mean, is it going to be a price, you know, basically a race to the bottom of who can have the least bips,

you know, fee? I'm not an ETF expert. It sounds like there are people on the call that understand ETFs better than I do. But remember, Grayscale filed for the ETF before BlackRock did. So, you know, maybe they have a change of perspective since the BlackRock. Go ahead, Dave.

Yeah, I mean, there's a few things. First of all, there's trust. Who do you use, whatever. Who do you have relationships with? Which platforms allow JT ETFs? There's an enormous amount of marketing that goes in. Obviously, the spider. Hey, Dave, you're having a bad connection. So if you can fix that, please. And we're going to move

to Joe. Joe, go ahead. I saw you lifted your mic. Yeah, I lost my speaking ability there for a second. And I was going to comment before we moved on from the BlackRock ETF discussion, but it's actually relevant to the GPTC trade idea. And I also vehemently agree with my friend Meltem on this. Be very careful. Discounts can always go significantly lower. And the outcome of the discount premium trade is effectively a digital option. It's either it happens or it doesn't. And so pricing that is challenging. And I've seen so many people and funds completely blow up on this trade. So I would heed caution on that.

However... Yeah, like BlockFi. I mean, yeah. I won't name names, but you can kind of... I will. And Three Arrows. And Three three arrows, by the way. Yeah, exactly. Yeah. I just saw. Actually, I literally just saw. I'm going to go right back to you, Joe. But I'm trying to find it now. I just saw breaking news come through from Zero Hedge.

Three arrows liquidators seek one point three billion from funds founders. Good timing. So the point I wanted to make that's relevant to the GBDC trade is what we were, I think, discussing previously as to whether or not Gensler, what does he approve? Does he approve only the BlackRock ETF or does he approve all of them or most of them? And my source in DC tells me that this is a really difficult political challenge to navigate. And he has to make a political calculation here. On the one hand, the Republicans are actually arguably pro-crypto, you know, I would say in a general sense relative to the Democratic Party. However, there are members of the Republican Party that are anti-BlackRock because they see BlackRock

getting special treatment. And so Gensler has to make a political calculation on his way out saying, yes, and I agree with you, Scott. Hey, I did something. I kind of fucked up. I didn't protect investors. Now I'm going to cover my ass and do some retroactive after the fact, CYA. But hey, I approve a Bitcoin ETF. Well, the question is, does he approve the BlackRock one or multitude of them? And if he makes the political calculation saying, I'm going to approve most of them or all of them, it likely has to do with the fact that this special treatment view that a lot of Republicans currently have is not necessarily favorable from a political standpoint. That factors, I think, into the GBC trade, where in the case that a multitude of these

spot ETF gets approved, then there's a potential that you can start to see at least perceptions, reality for traders. They may actually start to bid GBTC up in the anticipation that it actually happens. But again, I would caution folks, and it's not financial advice whatsoever, but this is a digital option. This is a digital outcome of what's going to happen with the GBTC trade, and it has a lot to do with Gensler's political calculation. Yeah, I agree. Just back to that breaking news. It's now on Bloomberg and not just Zero Hedge. I'll try to find a tweet for it. But three arrows liquidators seek 1.3 billion from funds founders liquidators say founders incurred debt when firm was insolvent. Yikes. Losses are part of $3 billion owed to Three Harrow's creditors. Some of that's to me if they're Voyager, so they can go ahead and get busy raising that money.

Absolutely. I think we're going to pivot here a bit to topics, speaking of Three Harrow's capital and of course, all of the insolvencies and contagion of last year. One of the big narratives that we're seeing right now is that we're going to see this, well, we've obviously been seeing a massive sell-off in certain altcoins, especially those that have been named in the SEC enforcement actions. And then even more specifically, really Solana, Cardano, Matic, which we're seeing are going to be sold off by Celsius, likely the first week of July, and Robinhood as soon as today. Joey, does any of these SEC enforcement actions naming these coins, does it change your opinion of any of those specific projects at all? Or is it just kind of being shrugged off at this point?

Yeah, I think from the market's perspective, it's kind of being shrugged off at this point yeah i think i think from the market's perspective it's it's sort of being shrugged off um you know the sec kind of really mentioned me that's what the bitcoin and the lawsuit for your success you know that doesn't make it a security um you know they still have to argue that and prove that to the courts um and then i think from the seat where I sit, you know, I'm investing very early stage, you know, when things are basically in the private markets for the most part. And so, you know, I think like

sort of the regulatory environment is going to look completely different, you know, side mirrors from now when a lot of these things are live and trading. But is it shaking or changing the way that you will invest in those early stage projects now because there's a potential fear that they won't be able to operate in the United States or that they could be doing something now that would be retroactively

deemed uncompliant or illegal, anything like that? Yeah, that's a good question. There's a lot of firms that I know that are basically investing mostly offshore and non-US. I think for us, we just want to back the best founders. And so I absolutely can't argue at all whether we're willing to invest in the US or not. I think over the short term, Congress probably doesn't pass any legislation around crypto, but over a five to 10 year horizon, they probably actually do. And so in general, we're not too caught up over the regulatory minutia, especially when you're investing in a sea ground or something new. So I haven't changed our view from US versus offshore.

Meltem, does it change your view at all? I mean, I know that you invest early in quite a few things. Nope. I think Joey is spot on. And I think that the environment is shifting. We're going to get a new administration as well. And at the end of the day, the US is still by and large the largest and sort of most robust capital market in the world. So I think it's just a matter of time. The pendulum sort of shifts. But I think over the long run, which is what I'm focused on, and Joey's been in the space a very long time. I've been in the space a very long time. Up and down, sentiment

shifts, but I'm not concerned. It's inevitable. There's a great quote. I believe it's attributed to Winston Churchill. And I think America will do the right thing only after they've exhausted all the other options. I think that's kind of the situation we're in now. You know, it's too late to put those back in the box. It's too late to stop it. And so I think we'll have to sort of adapt. So I'm very optimistic. But there could be a lot of short term pain, right? So you we'll have to sort of adapt. So I'm very optimistic. But there could be a lot of short-term pain, right? So you sort of have to be prepared. Yeah, if it's too late.

Exactly. I mean, if it's too late to put it back in the box, doesn't that kind of concern you that we're going to be so far behind because it is moving forward so fast elsewhere that it'll be too late to catch up by the time we do get anything? I mean, we talk about maybe we'll get regular legislation in three years five years regulation i mean that's that's a four thousand years look i think the speed of crypto is sometimes very much overstated when it comes to new things launching um and new developments from like technical perspective and from cultural and social trends absolutely crypto moves quickly but if we look at how long it takes to

build companies how long it takes to build narratives how long it takes for these things to sort of permeate into popular culture and into traditional finance like that takes five seven years if not decades and so i just think sometimes in crypto we have this belief that things move so incredibly fast but as i alluded to earlier you know when i mentioned vinnie and i having this discussion about an etf in in 2017 um in reality i think the arc of progress the arc of time moves much more slowly and so uh to me you know it is not a concern we're still talking about the same things we were talking about seven eight years ago we're still working on those things. So I don't think that pace is necessarily matched. The pace of innovation is not necessarily matched by the pace of actual meaningful, sizable, and more importantly, sustainable progress. A lot

of the stuff we see in the crypto space, it explodes exponentially, then it declines. Something has just died forever. And then there are very few things that sort of survive and build meaningful traction. Okay, so that's a great segue to my next question, because you're kind of alluding to these, we can call them bubbles or sort of hype cycles that we have. Metaverse fall and NFT summer and DeFi Summer and all these. What are the next narratives that could drive the next potential bull market? Oh, I think with AI and just the broader demand for high-performance compute,

I think there are a lot of really interesting things happening around just compute generally and distributed compute, like resource sharing, stuff like render, but new models on that. There's a few projects working on distributed GPU networks for AI and LLMs, large language models. I think one interesting trend is quote unquote RWAs or real world assets and the tokenization of things like yield products, credit products, which effectively I think are a continuation of the security tokens narrative, but focused on, you know, assets that traditionally haven't been put on chain. I also think there's a big emerging narrative around deep in or decentralized physical

infrastructure networks that's sort of been driven by or new to interest in investing in physical infrastructure, whether that's electrification, whether that's connectivity, whether that's energy. I think there are a couple of cool projects in the energy space. I invested in one called Daylight, formerly known as React Network. So I just think there's a lot happening that's trying to bridge the gap between things that are purely physical in nature and a part purely digital in nature, which is where crypto has historically been as everything's digitally native and fully on chain. And now I think we're starting to see people looking at opportunities to take sort of these distributed, permissionless, open

protocols that are imbued with a native asset to start to connect back to the physical world. And you know, there's 54 trillion dollars of infrastructure investment that needs to happen over the next 10 years right around the world as part of the broader like movement digitization more digital economies so i think that's all very exciting um and then the last note i'll just add and i see joe raising his hand i know he's a great investor as well so i'm sure he'll have a good perspective but the the last area I think is really interesting is proving like CK proofs and just more implementations of privacy. Historically, the view that everything on change should be public, I think, is a little bit challenging as we start to delve into newer use cases. And so I do think this idea of proving and the utilization of zero-knowledge proofs in a wide range of applications

is really going to blossom. So I've been tracking that closely and very excited about that. Yeah, we're going to go around the horn here. Go ahead, Joe. Yeah, I agree basically with everything Meltem said, and she covered almost everything except for the one thing that I did want to bring up. I just had my annual PBing with my investors in my fund last

week, and this was a topic of discussion is a lot of folks tend to ask me like, Joe, what is the killer app for crypto? Where's our chat GPT moment? And I kind of framed the answer through a different lens is that it's not necessarily about just a specific application. But I actually think that the the next big, you know, step function improvement in user adoption and overall experience is going to be driven by mobile. And so if you look back, you know, call it 1314 years, we saw the launch of the iPhone and Android. And what ended up happening with software developers is they actually had an entirely new form factor to develop applications for, right? So for the longest time, you had a laptop or you had a PC with a QWERTY keyboard and a mouse and

a monitor, and it was stationary, it didn't move. Then all of a sudden, you have this fat, flat piece of glass with GPS, camera, accelerometer that you can take effectively anywhere. And of course, the screen is much, much smaller, right? So mobile-first applications were starting to be developed, the call it 2010, 2011, 12 timeframe, where developers realized, hey, I don't want to just shove my company's website into an app. I need to think about it from a first principles perspective. What can I actually build that's mobile first? Well, if you look at crypto right now, we're kind of stuck in that desktop laptop era. And yes, I know there are a handful of wallets and a handful of apps here and there, but we haven't really seen the ability for folks to really

benefit from mobile. And this also leads into geos that were actually quite bullish on, which is India and areas in Africa specifically. So in Nigeria, they only have about 38% smartphone penetration adoption. But Africa as a whole has a history of using peer-to-peer payments through mobile devices. There was a project called M-PESA that was launched about 15 years ago because most of Africa is literally unbanked. There's no literal banks around Africa for the most part. And so what dawned on them was, hey, what if we could get people to use their phones and the accounts that they have set up with their phones to pay each other in a peer-to-peer manner or pay bills, et cetera. And it was a wild success.

So places like Africa already actually have precedent for mobile utilizing financial services. Well, one step further is now enable crypto in that and you have a rising smartphone penetration adoption curve in Africa with a lot of additional Web3 and crypto development that's happening there. And we actually think, you know, Africa, places like India as well have huge potential for mobile to actually really unlock that next wave of crypto. Joe, doesn't that just mean that stablecoins are the killer app? Well, stablecoins, I've said this many times, it is a killer app. The thing is, is that people don't like it because it's not sexy. I think it's actually pretty remarkable that I can send money to anyone around the world instantaneously on any

day of the week at any hour for fractions of a penny. I think the benefit of actually something like USDC is that it is actually a representation of a real world asset. We've heard this narrative pick up steam, I think like every cycle where we want to tokenize real world assets. Well, guess what backs USDC, US Treasuries and Cash? That's a tokenization of a real world asset. So I actually think, eventually, I think the stablecoin bill is going to get passed. And we've now set the blueprint for how things could potentially work for future real world assets. So even though it doesn't sound as sexy as like, oh, stablecoin is a killer app, ha ha. It's like, actually, it's setting this incredible foundation for, I think, a lot of future world assets that could be tokenized on chain.

Yeah, I don't think it doesn't sound sexy at all. Actually, I think it does. I think it just triggers sort of the anti-fiat crowd, obviously, in the crypto space that doesn't want to hear that people really just want to send $5 back and forth and don't want to do that with Bitcoin. Yeah, I totally agree. I mean, look, at the end of the day, right? Like, why was Venmo such a breakout success? Why did PayPal acquire them for hundreds of millions of dollars? Because it enabled this digital money transfer of the unit of account that people are familiar with.

Dollars, right? It doesn't mean that there isn't a world where we could be using other forms of currency like Bitcoin. I'm a Bitcoin bull as well. But I ultimately think that something like a Venmo is ready to actually be disintermediated or at least improved upon with something like a stablecoin or other crypto assets. Yeah, I agree 100%. Joey, obviously, I mean, Found mean founders fund is huge you guys are looking into the narratives from five ten years from now what what's getting you excited right now and what do you think could sort of drive the next wave yeah i mean you know we're still definitely investing in defy i think it's sort of in a trough of disillusionment right now but

it's it's still one of the areas i'm most excited about in crypto. I think I haven't really seen anything investable in it yet. But I agree there's probably an interesting AI crypto intersection. There was someone, I think it was maybe Tyler Cohen, who published a post about this. It's basically like a 0.99 correlation between how I think about it. The sort of TLDR of it basically is that once these AI agents actually work well, today they don't. You mess around with auto GPT, it doesn't really work. But they will eventually in a few years. And I think for payments,

if you have these kind of autonomous agents that can interact globally across hundreds of countries, it doesn't make sense to have to KYC all of a sudden manually. It doesn't make sense to have to call a bank to do a wire transfer. It's silly make sense to then have to call a bank to do a wire transfer. It's silly if you had an AI

doing text-to-speech and speech-to-text, talk to your bank and then wait 24 hours so it can send money overseas. And I think the last thing is that payments, like credit card payments don't work in a model where anyone in the world can spin up some autonomous agent. You basically need

push payments with no charge back. That's actually a much stronger feature, not a bug in the case of AI. And so I think long-term, I envision there'll be these autonomous agents basically transacting with crypto, which sounds very out there and futuristic, but I actually don't think it's that far off. I think it's a single digit number of years. I think it sounds less out there and futuristic than it did six months ago before everybody saw how fast we could see adoption of AI and how powerful it really is, right? Yeah, yeah, I agree. You mentioned DeFi. I agree, a trap of disillusionment. It's like almost, well, it is literally a four-letter word, but it's almost become figuratively a four-letter word as well.

We just recently saw kind of a big move across the dinosaur DeFi protocols in price. Aave, Compound, UD. Do you think that this could be another sort of DeFi summer narrative rolling in, or do you think this is just traders trading? Yeah, I don't really know what what was behind that movement i mean i think when when i think about defy it's been it's been in such a long bear market um you know we don't really do much kind of liquid stuff at at founders fund but you know my personal portfolio i'm i'm mostly just long e um and then when it comes to

defy you know i think like i I think I'm kind of just waiting for the monthly trend on that to turn positive before buying it because it's sort of been like, if you try to buy it, it's like catching a falling knife over the last three years. How would you define that?

Josh, real quick after I ask Joey, but how would you define that sort of breakout? Yeah, I think I have some trend indicators that I use, you define that sort of breakout yeah i think um i mean i i have like some like you know trend indicators that i use but you know look up pretty much any any kind of trend indicator on on trading view um yeah kind of kind of pick your place in there but i think it's one of those things where like i'd rather buy it up you know 40 percent yeah then ride it yeah 70 or 80 percent more especially and i like that you said versus eatTH, right? Because as you said, you're just sort of holding ETH. It's not like you're not getting the advantage to the upside of this market. Yeah, yeah, exactly. That's how I think about it.

Josh, go ahead. using it. It's such a small number of users. I mean, a lot of these large protocols that we talked about have on a daily basis, not people interacting with the token, not active addresses, not people selling or moving the token, but actually interacting with smart contracts. Most of these large protocols have anywhere from 100 to a few thousand users with the exception of maybe Uniswap. So it still is a relatively small user base of people using it. I think the other challenge is just the fact that these tokens don't necessarily accrue value to token holders today.

And now with all the securities issues, I don't think that's going to change anytime soon. And I think there's also the market, at least from the institutions that I speak to, there is a belief that DeFi is next. They went after the centralized exchanges. They went after some of the token issuers. And now it's time for the SEC to go after DeFi. So I think those are all... There are still ongoing concerns. And look, I love DeFi. I use DeFi. Don't get me wrong. But I think there are still things to be

concerned about. Yeah. You talk about them going after DeFi. Use DeFi. Don't get me wrong. I think there are still things to be concerned about. Yeah, you talk about them going after DeFi. There seems to be that seems to be the rumor that that will be Gary Gensler's next target. What does enforcement action versus DeFi just everyone look like? I mean, is it kind of like the sushi swap situation? Is that the blueprint? Does anyone have any idea? I'm imagining that's what they go after. But a lot of these, it seems like it would be very hard

for them to go after decentralized protocols. Well, D is usually a stretch. Yeah, that makes perfect sense. Josh, is there anything else that you're looking to for the next trend? I mean, obviously you addressed kind of what Joey said about DeFi, but we didn't get to you for what you think could be the prevailing narratives

of the next cycle. I know that this is a little bit, it's not that old of a narrative, but I do think gaming is interesting still. And I think it's not being talked about enough. Look, obviously, it takes a while to build really high quality games. But if you look right now on the Apple App Store, there's a game called Cross the Ages, which is the number one game in around 10 or so different countries that's built on a mutable app. No one in crypto is talking about that. I think we should be elevating narratives like that. And I think through a combination of mobile first gaming, as well as AAA games, I mean, you speak to some of these protocols, whether it be Avalanche, Immutable, Polygon, they all have four or five or six AAA games that are either in the roadmap for the next

couple of months or the next year or so coming out. And I think it will be interesting to see. I mean, if you think about gamers and crypto users overlap very significantly in terms of it's a younger generation. It's very tech forward. So I think that's a narrative that I'm going to continue to watch. And I think, you know, it just makes sense to me. Yeah. What is this?

Scott Dykstra, was that his name? Who had the booth across from you at ConsenSys? That game was sick. Shrapnel or something? Oh, yeah. Shrapnel or something? Yeah, Shrapnel. There's a ton of the games. Shrapnel is an example. There's another game coming out on Avalanche called Gunzilla. I mean, these are games that have had tens of millions of dollars invested into that. They're real games and they're using, you know, blockchains for NFTs and in some cases other, you know, there are other use cases as well. But I think it's a really interesting way to onboard hundreds of thousands, if not, you know, millions of users into crypto.

Joey, you didn't mention gaming. Is that still on your radar? Maybe that's another trough of disillusionment here. Yeah, I think gaming is interesting as well. I didn't mention it just because i tend to kind of understand it less i think from where i invest you know if someone's really something in gaming and sort of like a platform or infrastructure i think that's interesting versus like if someone's building just like a one-off game you know that's that's sort of like a market that i think it's really hard to think about as a kind of you you know, software investor. But there are people who, you know, have made money doing that.

I see, Simon, that you joined as well. Do you have any thoughts or were you even listening yet? Simon, we wanted to talk to you about Celsius and what's happening with, obviously, Solana, Matic, and Cardano. Do you have any color on that specifically? All right. Okay. Sorry sorry i just literally uh jumped it until till me and obviously i know the celsius yeah we've been talking we've been talking about the ets and narratives but the back half was intended to be talking about uh solana cardano

and all these assets that could potentially be sold off now i guess today on robin hood and then on celsius and nobody's more on top of what Celsius is doing than you. Yeah. So, yeah, months and months and months ago, I asked, I tried to get everything converted into Bitcoin and ETH while what dominance was low. And they wait till dominance is at all time high, of course, in order to convert it. So they confirmed in the plan today that everything's going to be converted into Bitcoin and ETH. When we were selling off all the assets to pay lawyers and they were also selling off lots and lots of assets. I was trying to get it all in Bitcoin, but they never did it. We could have filled a big chunk of the hole if they had done it. They'll be doing an OTC. I doubt

it's going to hit the market. If there's OTC demand, I guess, there'll probably be somebody that wants to snap them up. But if it's OTC, it shouldn't rock the market like people are expecting. I mean, I'd be very disappointed. Because Voyager did the same thing, right?

And nobody even talked about it because it wasn't publicly announced. And then they sort of said, hey, we rebalanced. Of course, they also rebalanced when it was when Bitcoin was like 20,000 and went to almost 30 right afterwards, right after the Silvergate at the Silicon Valley news. So it's clear these guys aren't traders, right? Yeah, well, the incompetence in these chapter 11s is just, you know, I guess this is what happens when you put a process that's designed to maximize the value for lawyers, where you legalize the process of spending client money for lawyers, and then you put lawyers in charge of the process. You tend to get these types of things.

And unfortunately, that's been the story of all these cases, 200 million spent on lawyers, and they're kind of just starting to do the things that we were proposing over a year ago. Yeah, so does this mean that Celsius is actually coming closer to some sort of distribution or some sort of final situation here? I mean, Voyager actually did, to their credit, which I hate to give them, release, quote-unquote, 36% of assets back to customers. Of course, that's 36% based on the July 2022 prices

and not now, so it's more like a 22%, 23%. But is that, I mean, are Celsius creditors actually going to start to see some assets? And David, I would love your answer too, you know, as the lawyer that was invoked there. Yeah, so the current situation is we just released a plan um it went through an auction process um and now the disclosure statement has been released and the disclosure statement means um that we get to actually understand the full plan and there's two parts

of the plan one part of the plan is where a company, a group of certain people called the Fahrenheit Group, are soliciting for us to invest approximately 500 million in them, then there's a backup plan where another syndicate of people will just create a mining company and give everyone what's called a controlled liquidation, everything back. Under the first plan, where we have to reinvest in the staking and mining business, we get about 36%. Remember, that's 36% based upon the dollarized value at the time they filed bankruptcy when Bitcoin was approximately $19,000. So if they, you know, I don't think in dollars, I think in Bitcoin. So that's approximately 20% of my Bitcoin that would be coming back. And then if you do the controlled liquidation, you get about all the crypto that's left, approximately 47%. But then there'd be a forced investment in trying to build something out of the mining operation because a billion dollars money was essentially borrowed in order to buy a lot of ASICs at the top of the market. So that's the current situation we're in.

And people are going to be deciding whether they want more liquid crypto up front. And obviously with all the SEC stuff, it's still going to get past SEC. Then it's got to get past anything that happens with DOJ. And I guess the unfortunate situation is it was originally going to be done via a broker-dealer in compliance with security laws. But now they're not really doing it that way. They're making the assumption

that distributing Bitcoin and ETH and various other parts of it won't have SEC issues. But we'll see how that all goes. I don't anticipate getting a distribution until towards at least the end of the year. There's still a few things to settle as well. David, when are you going to start taking on bankruptcy law? You know, Simon and I actually, we didn't meet during the Celsius thing, but we spoke a lot at the beginning of the Celsius thing. I actually, with one of the largest firms in the world, Brown Rudnick, pitched to do the Celsius work. As part of our pitch, we promised to distribute 20% in-kind crypto within the first six months of the bankruptcy. And needless to say,

we got shot down. They hired the other firms that are handling this. But bankruptcy is such an odd beast. And everything that's happening are what we always discuss. If the case goes into bankruptcy, the lawyers are going to get paid. The lawyers get paid like ridiculous hourly rates. It's like a blended rate of over a thousand an hour, whether they're a first year associate or senior partner. And here's a perfect example of what happens. And by the way, I love Simon's term, dollarized value. You know, bankruptcy isn't designed to take apart a crypto company. And more importantly, you know, the valuation on the date of, you know, the instance of where it happens.

I don't find that to be a tremendous issue. Because, Scott, you like talking about this also, that it's going back to the value at the time. It's proportional. So while it sounds like more to people who are listening outside, you're never going to receive 100 cents on your dollars. So a percentage ration, whether it's Bitcoin's value to the dollar, 10,000 or 20,000 is inconsequential because it's all proportional loss to everyone eating off the same pie. But Celsius here, they should be ridiculously pissed off if I was a creditor of Celsius. I would never. And I said this from day one. And, you know, I'm the least financial crypto person on this town hall. But there's the crypto itself does not generate a

yield. There's a five year plan on the crypto general on the mining business, where depending how you value the 200 million lost at petition, I give credit to Keith Chazon for doing the breakout this morning. You know, ultimately, there's they have to come up with about $800 million over the next five years. There's a salvage value of about $500, $600 million. They're still going to lose $200 million over the five years on this plan. And the extra percentage that looks good on paper isn't going to yield anything to the Celsius investors. They would have been better off getting the 20% up front and taking any salvage value today. I think there are a lot of...

Yeah, I mean, if Voyager could have liquidated, we would have gotten like 76 cents on our assets. Exactly. But the lawyers who outpitched us said, we're going to do this, we're going to do that. And what do you end up with as a typical bankruptcy person? And you and I have talked about this before. Bankruptcy is changing because of social media. You know, there's an outcry right now on social media for Celsius to reach out to the

federal court judge who's handling this before the hearing tomorrow. Federal court judges and white shoe lawyers never used to have to deal with people who were typical people in the bankruptcy. And we're going to see the ad hoc groups do a lot of complaining about how money is being deviated for people who are in the earn program. And I think we're going to see some changes before this goes final. Unfortunately, I don't expect them to get more money back than they're anticipating right now. Yes yes it's worse than that dave there's actually a three billion dollar hole um and obviously that's that's after the the distribution um that they're making the whole sound better because the price of bitcoin

if as the price of crypto goes up they dollarize the value and make the whole sound smaller um so they keep the liability at the dollar value. But then as the assets go up, they actually, throughout this Chapter 11 process, they have sold client stablecoins over $100 million of them. And they call it revenue for Celsius. They take money off an exchange. They call that revenue. They manipulate the price of sell token and legal security for X, the price. Uh, and they call that like

additional, you know, additional claims that go out during a market manipulation that's been, that's going to be in court at the moment. Um, yeah, I don't, I don't know which is the biggest, I don't know which is the biggest stamp, whether it's Chapter 11 or Mijinski. They both raped us, Brian. Agreed. I want to move on to less horrid topics than

Chapter 11s and why the lawyers are collecting all of the fees, because this has been an awesome panel, and I think we got a ton of insight, but we do obviously want to focus on and talk to our amazing sponsor here today, Link2. We got both Joe and Ray up. They're going to be talking a bit about what it is. We're going to discuss that here at length, but I definitely also want you to go ahead and follow their account, which is L-I-N-Q-T-O-I-N-C. Joe, Ray,

guys, we got you up here, right when we started talking about Chapter 11 bankruptcies. And last week, we had you guys up, and I don't know if anyone told you what happened when the spaces, usually spaces just crashes on its own, but on that one, I was hosting it, and lightning literally struck my house and took out our power and Wi-Fi. I don't know if that was communicated to you guys, but I'm glad to have you back. Ray, Joe, how are you guys doing today? Scott, we're doing well. Hopefully your house is in good standing. It was in good standing. It took us a little while to get Wi-Fi back, but yeah, it was pretty great.

It was pretty great. What are the odds? Some powers don't want us democratizing access to private equity at Link2. But here we are, resilient, and we're going to have a great space. Thank you so much for having us up here today, Scott. Of course. And yes, we have Joseph Ndoso here in the Twitter space as well. Joe, in order to chat, there's a mic on button in the bottom left-hand corner of your screen. I've got it.

There we go. Yeah, there we go. Great to have you up here. Thanks, Sheree. Yeah, absolutely. Go ahead, Ray. So just, Scott, we're big fans of your work and the team at Link2. We're proud to partner with the Crypto Town Hall community.

And again, my name is Ray Fuentes, Community Director at Link2, we're proud to partner with the Crypto Town Hall community. And again, my name is Ray Fuentes, Community Director of Link2. Like I previously mentioned, we've got Link2's Chief Operating Officer, Joseph Andoso, up on stage. One of the most smartest and brilliant men I've ever had the privilege of meeting. So, Joe, thank you so much for making it up here on stage as well. I paid Ray in Bitcoin to say that. How do you pay? it's off the book now this is actually you know the great thing about being uh around last week to listen to you guys was i i afterwards i was so impressed i said to ray that's that was like the most

intelligent chat group i've ever sat on crypto in all these years. I mean, honest to God. And one of the speakers today actually has a very special place in my memory, Melton, because I remember going to a crypto conference back in 2016 and sitting in a seminar that Melton was teaching about blockchain technology. That was my absolute first introduction. And after that conference and listening to that seminar by Melton, I walked away and said, I'm going to get into that space. And the following year, I was part of the founding team

for a crypto startup called Bosonic Digital, which I'm still a shareholder in. So my way of storytelling, I love listening to you guys because I've been in, at least on part of that journey that you're talking about in terms of taking this amazing digital asset technology to commercialization and to mass adoption. And it's a road that's fraught with challenge, but one that I think at the end has a bright future in front of it. And like all of you, I am long-term optimistic. So Link2, which I moved to help build in 2019, is a private investing platform that is intended to provide really simple, easy, and affordable access to regular individual accredited investors to some of the best private tech companies out there.

But we've invested in over 60 companies. I think what's interesting to you is that just in my crypto background, a significant portion of our portfolio ended up getting invested in the crypto digital asset space. We've made 13 investments so far in that space. Coinbase was one of them. It was one of the six companies we exited during the IPO window of 2021. But we still have in portfolio today companies

like Ripple, Uphold, Chainalysis, Figment, Bitpay. We just closed a transaction on Circle the other day and are offering it on our platform tomorrow Block Demon is another company and I'm slightly embarrassed to say we made an investment in BlockFi that was one of the losses we chopped up investing in this space but we now have on the platform approximately $240 million invested by regular individual investors

since we launched in early 2020. And we're continuing to grow that portfolio and we'll continue to be active investors in the digital asset space. We're investing, by the way, in faculty, not in the token. Yeah, I think that's a very important distinction. I'm still stuck on the fact that Meltem Orangefield. Yeah. She's a brilliant speaker, as you guys know. I think we all just got a master class from her today.

So can you just walk me through the process of actually doing this for your average accredited investor in the United States? How do they use the platform? How are you able to do this when people generally don't have access to these investments otherwise? So we do it largely by buying stock in the secondary market, right? Because if you think about it, in order to have product available 24 by 7 to an accredited investor, it comes to the platform. You've got to have inventory, if you will. And if you're simply participating or acquiring the stock by participating in primary equity rounds. It's going to be a long wait because you may like XYZ company, but they just did a round

which you weren't in and you'd have to wait maybe two years for their next round to come along. So what we do with that is in order to avoid that timing, is go into the secondary market and talk to early investors, typically, who may want some liquidity for the stock that they've held for a spell. That can be anything like a member of the outing team, somebody that's in the C-suite, or one of the early VCs, like Joey, right? I mean, we've had situations where VCs want to obtain liquidity in order to realize gains, also distributed capital prior to the end of the fund.

So we buy that stock off of them. We use our own. I just lost Joseph there. Did everybody else? Ray, did you lose Joseph as well? Joe, are you still there? I sure am. Okay, perfect.

We lost you there for a second. It sounds like your mic something cut. Yeah. Let me maybe pick up where I left off. So we have put in the stock basically in the secondary market shot, and we buy it from founders, C-suite executives, early investors, VC firms. And then we use our own balance sheet to make that acquisition.

The thing about restricted stock also is that it's not easy to transact. It's always subject to the concept of the issuer. It's not freely transferable like registered stock to the public market. So there is a process that's timed out. And typically that can be anywhere from 45 to 90 plus days where the seller and you basically go to the company and request permission to engage in that transfer, right, of stock from the owner to the new owner, from the old owner to the new owner. And that transfer is moreover subject

to something called a right of first refusal that the issuer has and that the issuer can sign to other shareholders. So in the event of that exercise, that stock ends up getting bought by the company or one of the existing shareholders that wants a stock and will buy it at the same price that you

bid. So as an outside buyer, I can end up in the situation where I sit in escrow for 90 days, and then I end up not having a deal consummate. That's not something that a small accredited investor that's putting in five grand is going to put up with it. It's just too much brain damage, too much legal fees, too much hassle. So in order to shield the small investor from those issues and those risks, views our balance sheet to front the transaction. What? 5 million bucks worth of stock, right? Then we split it into an SPV and then we sell ownership

of that SPV and time. That makes sense. Joe, can I ask you another question? Because I think the next natural thing, how do you identify what's actually a good investment that you're going to offer on the platform? I mean, you guys have clearly been early on a number of unicorns. I mean, you mentioned exiting Coinbase at the direct listing, which if anyone looks at the Coinbase price means that you guys had some savvy there. So how do you actually identify the investments that they're going to open the door to for your customers? We've got an internal investment process, and it's a combination of fundamental research using some proprietary data sources that we have, as well as doing price analysis in the market.

Because part of the equation is not just are we making a fundamentally good investment, but are we getting it at a right price that gives us the kind of risk-adjusted return we're looking for to deliver to our members. So it's a combination of those things, Scott. And if anything else, I think the difficulty in private markets is that, unlike in the public markets, I can go through that analysis and once I've identified what I want to buy and at what price, I can just simply execute. The private markets don't give you that flexibility because what you may want to buy and the price you want to buy it at may just not be available because it's very, very fragmented. And every transaction, it's not a centrally traded, exchange traded

market. So it's fragmented, it's all over the counter. And you actually have to find a discrete specific seller that's willing to sell to you at the price you want. That makes perfect sense. So taking it a step further, Scott, Link2 is comprised with a phenomenal world-class team of approximately 70 personnel and that it with that being said link to is staffed with what's called an originations team that's dedicated to underwriting these world-class unicorn opportunity opportunities before coming to the platform and how fast is the turnaround for someone who wants to come in they see an opportunity that they like and they want to invest in it? You go through the same AML, KYC you'd go through with any virtual dealer, and then we validate your accreditation

or your accredited investor status. And once that's done, you open your account, you fund it, and you're good to go. It's literally click to invest, and most of the investing is done on mobile apps. You can do it on our website as well, but we're mobile first in terms of the platform. So from start to finish, Scott,

from what's creating the account to validating the accreditation process and uploading those necessary docs, that process can be boiled down to less than 48 hours. That's way faster than I expected. That's incredibly fast. That's our motto, Scott, is we've created a technology-enabled investment platform to enable accredited investors globally to point, click, and invest into private equity, which was, as Joe mentioned previously, this clunky time... I don't want to say times suck,

but just a very complicated process. And so at Leighton, we've made it seamless to invest in this hard to reach asset class. And Joe, if you don't mind, you know, there's one thing that I think we could potentially touch on is, you know, because of Link2 and our capabilities of, let's just say, wrapping this equity in these FPVs and Link2 being the entity listed on the cap table of each of these private companies. Can you talk about the friction points that we've alleviated because of this processor? Yeah. I mean, if you're a private company, right, you have a specific reason for wanting to stay private and sort of deferring the go public route.

And one of those reasons, obviously, is that you're not subject to a lot of the disclosures and the compliance that a public company has, given the tremendous amount of capital available in the private market for VCs like Joey. Companies can remain private for a long time, and increasingly they have. The average company in Silicon Valley today is private for more than 10 years. And so the issue becomes that if you're in our business where you're bringing in lots and lots of small investors, that's absolutely counter to a private company's interest in staying private because they can't have their cap table basically run out the number of shareholders to the point where they trip the 2,000 shareholder limit and are forced to become a public company by the SEC and have

to report and disclose and do all the stuff a public company does, despite the fact that they're not listing on a public. So that company wants to stay private, and therefore, one of the things it's got to do is manage the total number of shareholders on their cap table. So we play that intermediation function, right? Where we're able to allow the value of that company to go into the hands of lots and lots of small accredited investors, but we allow the issuer to only deal with us. They don't see any of those small investors

that have to deal with them. They deal only with Blink2. Down the road, the interesting thing about all of this, in the long, long run, a lot of these structures are going to end up having to morph and change and evolve as a result of the changes to the way the securities world functions in the traditional financial structures that today govern them, how those will end up, I think, in the long run being changed and made more efficient by blockchain technology. Our forward vision right now,

we've just started hiring our first cohort of blockchain engineers, is that now that we've got a critical mass of asset value and investors on the platform, we're now starting to migrate the platform to blockchain. And the idea is that we're going to end up tokenizing all of these investment units and then allowing those units to trade. We have an ATS license as part of our broker dealer. So we're going to create a tokenized exchange on our platform and figure out ways to also list those same securities tokens on other exchanges to maximize the amount of liquidity that the investors can obtain.

Very, very interesting. So did I ask you guys, how can everybody find out more and stay engaged with your community? Obviously, after this conversation, everyone knows we did pin a tweet up above, and you can follow Link2L-I-N-Q-T-O-I-N-C on Twitter, which we encourage you to do. But from your guys' perspective, what's the best way for people to check this out? Keep informed about what's coming. Great question. Go to it.

Ray, do you want to answer that? Sure. And feel free to follow it up, Joe. Late2, not only are we democratizing access to these private investment opportunities, but we're also democratizing access to the information around these companies and the market.

So one, of course, you can go to linkto.com, sign up, create an account, and just have real-time access to private market data points curated by one of our trusted counterparts, CB Insights. In addition, we have an omni-channel presence, so we're active on all social media platforms, Twitter, Facebook, LinkedIn, TikTok, Discord, D for all the above. So feel free to look for us across all social platforms as we are continuously not only engaging, but democratizing information across all platforms. Joe, do you have anything to add there? Just if you have a specific question or you just want to learn more

and you want to get me up directly, just, you know, on my email serves, joe at linkto.com. Perfect. Well, guys, thank you so much. Once again, everybody, it is tagged right above so you can check them out and check out everything that they're doing. Uh, so you can check them out and check, check out everything that they're doing.

Really, really interesting guys. I'm actually, I've, I've been kind of perusing the platform looking for myself since we, since I was introduced to you guys. I did. It really is incredibly easy,

easy and compelling. You kick. We, we just need you guys to, you know, give us a gentle, uh, jab when you've got something that you're really excited about coming.

We will. Thanks so much, guys. Absolutely. If there's any other opportunities to engage with both communities, Lake 2 and the Crypto Town Halls, we'd love to pursue and participate and assist. One of your team members said you guys are out in Los Angeles. If there's any way that you guys want to connect in person, I'm a local resident of Orange County. Happy to drive up and collaborate.

Oh, wow. That's awesome. Yeah, I'm currently in Florida. Mario and Ran are filming Killer Whale's Shark Tank crypto show out in LA. As we speak, that's why they've been kind of popping in and popping out. Guys, that's all we got for you today. Thank you so much and to our amazing epic panel, specifically Ray and Joe. Guys,

really appreciate you guys showing up and taking the time to do this. Of course, we will be back tomorrow morning, 10.15 a.m. Eastern Standard Time on Mario's account. Thank you, everybody, for tuning in. Looking forward to tomorrow. Thanks, guys for tuning in. Looking forward to tomorrow. Thanks guys. Take care. Bye.