The Wolf Of All Streets - BTC Hits Yearly High | US Gov Wants More Power | Crypto Town Hall

Episode Date: December 1, 2023

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Scott, are you on stage? Only in my mind. What stage are you on? No, no, it's glitching, bro. It's glitchy. DJ, I'm DJing right now actually and hosting a panel. So we got zero speakers on the panel. Pretty good day, huh?

Yeah. It's just me and you. It's just me and you. Not even mine. Talking about bio, we could have a biohacking breakdown. Man, you know how many crypto people I've seen in where I do biohacking? Like today I saw a gentleman, I probably should name him here. It's like everyone that comes, if they visit Dubai, they come here.

It's like a known place. The guy that owns it is a big guy in crypto as well. And everyone that lives in Dubai is in the crypto space, at least knows about this place. So it's pretty impressed. You seem to be the odd one out here, Scott. Dude, I live in a relatively small town in Florida where the only thing we're using for biohacking is deep fried food. I'm happy for you.

And beer. Very happy for you, man. Thank you. Yeah, but we couldn't do it. I mean, I guess you could theoretically do the basics, certain supplements and correct temperature and sleep monitoring and stuff. But I can't go sit in a hyperbaric chair with poor needles. Food, as I said, food, sleep, stress is pretty much 90% of slowing aging. By the way, Suzu's back back i didn't know he's back and open x obviously did really well he tweeted about it yesterday not sure if

you saw the news i saw i mean i guess we can call that news it's so stupid it's out of jail so that moves the price of the coin i mean it should no hold on it no it's not so at least we know but he was always he was always only going for a brief time. It's not like he's going away forever. You have to release him. Good behavior. No, no, because I get it. When it comes to legal things, I'm not the expert.

But someone was telling me today, someone that knows CZ well, he's telling me like Mario, what we're worried about is that obviously he's not allowed to leave the US. And then while he's in, even if they're jailing him for a short period of time, let's say six months, in that six months, they're worried that they'll find more charges to keep him jailed for longer. Not sure if this is a concern. I don't know if we have any lawyers on stage, but that's what I said. I don't think so. We got to bring Joe.

I'm going to invite Joe Corla. Sorry. I think that this is pretty much settled, man. He'll get his sentencing, but I don't think that the DOJ is intentionally digging deeper into Binance at this point. But can they? So that's what I want to understand.

Like, the settlement, does it still leave the door open from a legal perspective for them to be able to find more charges against CZ? I'm sure it does. Joe, welcome. Joe, did you hear the question? Is it the settlement that CZ has? Is that kind of almost indemnifying from anything else, anything new they might find?

Yeah, the word is not indemnify, but there is a general protection that's more of a civil. But it does protect him from criminal liability other than tax fraud, because that's going to be discovered a lot of the times after the fact for anything that happened previously at Binance. So the way it works is effectively that when he's entering into this plea deal, the government's going to say, you know, this is for all crimes known and unknown, that type of thing. So, so yes, no, the idea that this would somehow, you know, his, his, his place, wherever he is at, wherever he's residing in advance of the sentencing hearing in March, which is going to be February, it's not going to impact whether they can bring additional charges or not. And keep it in mind that, you know, the monitor is not going to get in there until after sentencing anyway. So that monitor, you know, if they were to discover uh you know additional bodies buried there additional potential crimes it would be very challenging to bring uh additional you know uh charges against

anyone at that point just because of the the protection that the plea gives you that's the whole reason why i think it was very smart to enter into this deal right why you're removing why sorry i cut you off because you dropped out so i thought you glitched but i'll ask the question though joe that why um why keep him in the u.s though what's the concern there why could i know that's not the topic for today but why couldn't he come to dubai uh well the government's position is that he presents a significant flight risk so they believe that if he were to leave the country uh he might get second thoughts and disappear. You know, he's facing time. We're not on a plane then. Yeah, he's facing time.

And, you know, I mean, listen, if you deal with clients after they, you know, sign in the dotted line, sometimes they get second thoughts and reconsider. And, you know, I think that's the concern of the government because, you know, part of the reason why I think they're going to show a little bit more leniency than you would expect is because they didn't have to extradite it they didn't have to track them down they didn't have to go through you know foreign governments similar to what uh you know happened with SPF that takes a lot of time and is resource intensive yeah so what about turns out Mario that uh but turns out that a bunch of crypto bros playing lawyer and pushing narratives were wrong. Never happens. I know it's shocking. I remember it was it was hilarious. People were tweeting that, you know, they move $4 billion in Tether that that was so totally absurd like that. Because, you know, based on what we now know about the settlement. Yeah, like they were going to pay the government in Tether,

and Tether was going to go, and the United States government was going to go to Tether.io or whatever it is and redeem, totally. And as you said, we know the settlement is a stepped payment option, so it's not all at once. Whatever, we get to have our fun there. That's very interesting, by the way, just the step payment, because apparently in some of the filings we've seen that was specifically requested that they needed time to gather the funds.

And, you know, I deal with major settlements, right? Significant ones. And yes, there's frequently liquidity issues and you have to gather it together. But given the size of what we know about Binance and how long it apparently, they've said they need 15 months after February. So you're looking into May of 25 to get that together. That seems a little bit excessive. I was trying to find some sort of analogs

where this is a similar situation where it's taken that long, given the size of the company. I can't really find it. That's curious to me. And it's also curious what what assets they're going to liquidate to satisfy that. Joe, is there anything to the fact that SEC was like missing

from the press release and stuff and and then we had the headlines? Yeah, looking that they I mean, the SEC is still going for the jugular they their their view is that i mean they released this sort of you know skeething comment about how they believe binance has committed ftx style fraud particularly you know trying to draw them into that and when you're when you're raising that sort of claim right uh you're basically saying the numbers aren't right that there is there was you know shenanigans you know, the assets they held on behalf of customers and trading using it and customer assets, you know, we'll see,

they're fighting again for more discovery. And the real key thing for them, that I think they don't want to give up this and they don't want to be appeared as, you know, waving this, this claim is that they're going to get the monitor in there. The monitor is going to have full access to every employee record book, everything. So it's going to be very challenging for them to, you know, have done something wrong and then cook the books in reverse and have it not be found out by the SEC. And that is still hanging out there. And, you know, if they did commit serious fraud and manipulation, right, That's billions of dollars of potential additional claims that can be sought by the SEC. Stephen, before we kick off a market update, anything to add on this topic? Yeah, the only thing I would add is, generally speaking, they would have done an innocence

proffers, because there's this compliance program that they're putting in place that joe's talking about so they would have had to say these are all the things you know they put it out all out on the table and so if cz didn't put something on the table scc aside you know that doesn't mean that they can't bring you know from my understanding they couldn't bring additional charges you know if they find things while they're in the compliance program. So, I mean, that's one thing. That's the SST, but that's the SST. You would never plea to that for any past conduct without protection. Any lawyer recommending the client plea to a crime, giving prosecutors

access to effectively, you know, the de facto double jeopardy to charge you with other crimes. Now, to your point, right, there are requirements in the memorandum that says that he has a continuing obligation to cooperate with the government, right? And that can be a cooperation against other entities, other individuals potentially that have not yet been charged their finance, other people with knowledge. So I would agree on that part. But, you know, it's it's it would be very unusual for there to be curious is that this Western District of Washington, the U.S. Attorney's Office there, like, you know, you would, Larry, you were saying, like, why is he charging Dubai? It's a good question.

Like, those two Estonians that did the $500 million fraud, right, they weren't even in the U.S., but they got extradited here. And that's a very sophisticated country in terms of crypto you know enforcement like there seems to be in my opinion some kind of international agreement like the u.s long arm seems to like trump other countries even when they never even set foot in the u.s no no first okay i think no so so you've got multiple violations of the bank secrecy act the bank secrecy act is a u.s law it is something that the united states gets the police and no other countries are going to enforce u.s law you've also got violations of the International Economic Powers Act and the Emergency Economic

Powers Act. And that is for straight up funneling money through Iran and money laundering through Iran. So you've got these money laundering charges that are formed in basis of US law. Very different from the allegations of wire fraud in like the FTX suit, which most countries have a wire log analog, so wire from analog. So you've got the depth different, you know, charges and the information. And I don't really understand why you think other countries would be enforcing US law. And

basically, the jurisdictional hook is because they knowingly interact with US customers. And they have the messages where CZ was specifically saying we're targeting the US market because that's, you know, 20% of global value. Another attack factor I've seen is those, I know a couple of companies which I won't mention, but those that have omnibus accounts. So if they did OTC trades or they connected via API to the Binance exchange for their customers. Binance is requesting all the data for all the customers of every underlying trade of the partner that used Binance as well.

So it's going pretty far. Yeah, but the president should remember, though, just for those, if this activity, if the money laundering activity moves to some other foreign exchange, and that exchange is somehow interacting with U.S. customers, we now know the position of the DOJ is that they have full jurisdiction over that. So, in other words, I'm not going to name specific exchanges, but if exchange B now gets more money laundering activity from Iran and Hamas and nefarious actors. And there are some U.S. customers interacting with that platform. The OJ's interpretation of law, and they will bring charges based on this, is that they believe they have jurisdiction over that entity. It can be incorporated anywhere. It can be in any country.

It doesn't matter. That's their view. So I just saw a piece that just came out on Bloomberg. The timing is perfect. It's GMT-Bussell 729. That was a few hours ago. I'm not sure if you guys saw it. So apparently CZ has been in talks with – I haven't read the article,

but apparently he's been in talks with his executive team about stepping down for months since May. And let me read what else it says. I'm going to read out exactly what it says. According to Bloomberg, CZ has been mentioning his readiness to resign during regular Binance leadership calls since at least May. A key moment in the case came in the summer of 2022.

It's a separate point. When investigators obtained internal communications wondering who that's with, showing that CZ had direct knowledge of specific details of the company's violations of US law, it's kind of incriminated him directly. So it's a long Bloomberg article. I'll put it at the top in a bit.

But just moving away from CZ and Binance, because I know we've talked about this a lot, Scott, I want to get into the market as well because we just hit – I don't know, we hit an all-time high for this year. Is that true, Scott? Yeah, that is true. Almost $39,000, just sub 39,000. I think it was about 38,900, depending on the exchange that you were looking at. It's been pushing up into this area for seemingly a couple of weeks now. I'm not looking at the chart at the moment, but I think that we all know why this 38,000 to 40,000 area is so key, being that it's sort of the pre-Luna level.

Just a matter of if Bitcoin is going to go ahead and break a quote-unquote bearish ascending wedge, which it always seems to do, and push up. In a bull market, Bitcoin usually doesn't give you those big dips and lower lows that you want. And I really think that Max Payne right now is on the sideline. It just keeps pushing. And that's what we see when Bitcoin is looking bullish. What was, before going to Gareth Bidder, what was BTC prior to Luna? Was it exactly 40K or just above 40K? I mean, it depends on which day you look at, but it was right here, 38 to 40.

It was the area it was trading in right before that. Oh, yeah. I remember. Price action effectively erasing all of the contagion of 2022 is a pretty big. True. Gareth? Gareth, are you there? Yes. Sorry about that.

I was on mute. So just looking at charting and the data, we continue to kind of pop above this 38,000 level. In fact, six of the last eight days, we've hit 38 or pierced 38,000. So today we're making the highest of the highs. But two days ago, we had made the previous higher of two highs, of the highs. So I think the key is going to be where do we close today? I think, in fact, I was on maybe a week ago and we even talked about needing to close on the daily above 38,000 to kind of trigger that next wave of buying in. Today looks promising, but again, we still have a long way to go until that daily close. So again,

for everyone listening, it's that 38,000 closing high. You need to close above that level. And if that does happen, it should trigger the next breakout that should take us probably again, 42 to 43,000 would be your next stopping point. Okay. And what happens? So once we break the 40,000, what will be the next resistance level? The 42 to 43. $40,001. $40,001. What is it? 42 to 43? Yeah. There's some resistance in the 42 to 43 range.

And then after that, the 48 level is probably the biggest standout to me. That's multiple trend lines converging. And it's the Fibonacci 618 level at around 48 to 49,000. So for me as a technician, if we get into the 40s and then that spot approval occurs and we see this mega spike, I'll actually probably be trying to short around that $48,000, $50,000 level for that pullback. And again, just a short-term trade, obviously, but it's such big resistance up there that it's basically like the same as that $31,000, $32,000 level. It's going to take more probably than just one hit of that level to get through. Do you expect the $40,000 mark to be stronger in terms of resistance than the $38,000? No, I don't think so. I think on the chart basis, I think the $40,000 is a good even number. So it's going to have a little bit of a psychological impact on investors. But overall, it's the $38,000

seems to be the bigger one. And then the $40,000, you'll have this kind of general stopping point. I'm sure there'll be some people that are like, oh, let's take a few profits here. It's been a great run. But I think it probably gets through eventually and goes to that $42,000 to $43,000 level. And that'll be a pretty strong one. And then past that will be $48,000. Yeah. The $48,000 one is kind of like, that's the one that I'm looking at is like, holy cow, that's the behemoth of them all. And what's the other side of that?

The support levels, if we can't break through the $40,000 market, we break down below 38K. Yeah. So if we were to start trading below 36,500, that would be a break of a key upsloping trend line. So 36,500, that would be a break of a key upsloping trend line. So 36,500 right now. And if we break that, it opens the door to retracing back to that 30 to 32 level. So that 30 to 32 will be just as strong support as the 48 will be. I mean, they should, they're both 48 resistance, 30 to 32 is epic support now. Yeah, I'm curious, before we go to Peter and other panelists, just get the audience's thoughts on where they stand with the current market.

Because it seems, I'll ask one more question, Gareth, as Ryan is talking about a retracement that's long overdue. Do you agree with that position? I do. I do. One of the things I look at from traders is I gauge social media and I gauge sentiment. And sentiment now is very lopsided to the, you can't lose money. The spot ETF is going to be approved. Then the halving comes and it's the easiest no-brainer trade. So just throw all your money into the long trade.

And that's always a warning sign to me. When everyone thinks it's kind of in the bag that it's going to make them a fortune, that's usually where the market will want to flush those weak hands out first before going to those levels. Yeah, I saw an article. I'm going to find out. I don't know why I closed it. JP Morgan saying there's just too much excitement around NFTs and DeFi, the revival of NFTs and DeFi. I'm going to try to find that article and read it out. But otherwise, where is P3? They say, yes, you are. How are you?

I'm good. I'm good. You know, Bitcoin, a couple of points I want to make. First, you know, periods of short-term uncertainty on daily charts are usually resolved in the direction of the trend of the weekly charts. Periods of confusion on the weekly chart usually resolved in the direction of the trend of the weekly charts. Periods of confusion on the weekly chart usually resolved in the direction of the trend of the monthly chart. So it's, you know, bull markets climb the wall of worry, and that's really what we're seeing. So I am really not going to pay too much attention to short-term stuff. I'm not a believer in trend lines. I don't like

trend lines. You know, some people do, all the more credit to them. I tend to look at what the horizontal levels of resistance and support are. And you take a look at the Bitcoin chart starting in January of 21, all the way through May of 22. We've got a lot of resistance overhead. So it's not surprising that this market may not back and fill support. I don't think we'll see Bitcoin back under $30,000, but we could definitely see Bitcoin back off into the low $30s. To me, it really makes no difference whatsoever. On the whole, that's what I plan to do is continue to hold until the market proves me different. I think we're in a big bull market run again in Bitcoin, but I'm not looking for new all-time highs

until the third quarter, late the third quarter, fourth quarter of 2024. So I don't think the market's going to be in a hurry to do anything. Scott, you agree? Third, fourth quarter of next year. 100%. I mean, I think if you just look at the chart, look at the cycles, obviously, you usually start to really see things revving up, you know, six to eight months after

the halving, if you believe in the four year cycle, and that's when that would be. I think Bitcoin spot ETF hype has obviously driven us ahead of where we maybe would have been. But if we follow the cycle, no guarantees we will obviously but you know i think that the uh end of 2024 is when you start to really see the excitement then the first half of 2025 is when it goes parabolic if it follows that yeah but do you do you think the if a cycle constantly repeats itself don't people eventually don't invest those traders start preempting that cycle and acting before it.

So let's say the cycle usually, so when do you usually see what month, last cycle, last halving, what month did we see the pump? And then how does that compare to the year before? Well, you had a slow summer, you had a slow summer,

which we have, yeah, I mean, we had the slow summer, which I think you generally see. And a lot of people will point to when MicroStrategy bought Bitcoin, I think maybe August of 2020. I'm not looking at it exactly. But around that time is when you started to see the pump. And then September was kind of slow.

And then the first day of October, you get the October and then it's a raging bull market from there is what we saw in the past. I'm not saying that will repeat. But yeah, end of summer after kind of the dampening volatility of the summer after the halving and things ramp up and then 2025 goes bananas, just like 2021, 2017. But once again, that does not mean it will repeat, but it aligns well with what Pete said. Yeah, I'm just having a look at the equities as well. Tiger, where do you stand on this? I'd love to get your thoughts and James' thoughts as well. James, Tiger? Yeah, sorry. Yeah, I don't see, at least up until like Christmas, I don't see anything that's necessarily like a fat left tail that can hinder the run.

I mean, it's been holding like, I mean, Bitcoin has been holding 37, 8, 37, 7. Okay. So it seems fine. Uh, I wouldn't be surprised to see 42, 45, some point by the end of this year. Uh, I think really the only thing that could get us honestly even back to 25 and kind of break the trend below 33 would be if the ETFs were not approved by January. And if they get pushed to March even, you might actually start getting people doubting whether they're going to be approved or not so maybe that could

lead to a correction um i actually had a question for joe but he's not here anymore but that's okay i i i want joe joe is i'm at him right now he's here yeah i wanted to ask you about the cftc uh going after other offshore exchanges they They put out a press release, I think it was the day or two after Binance was indicted, saying that any exchange offshore that is working with clients on workarounds or allowing access for VPNs. I mean, I think the VPN thing is a little ridiculous,

but I don't think any offshore exchange is immune. But I just wanted your opinion on the CFTC now targeting other offshore exchanges. It seems like Bybit might be in the crosshairs. I don't know. Yeah, there was that sort of vague news about Coinbase users getting letters about Bybit. I don't think that's really a coin-based problem. I think that's a Bybit.

The question was about other potential outside of the United States exchanges being targeted. Is that effectively it? Yeah, because the CFTC mentioned something about that a few days after the Binance indictment. Yeah. So you're basically seeing like two major trends and I expect numerous additional suits that you're hearing through the grapevine about. Number one, the complaints against, and I know you didn't raise this, but everybody should be aware. So it's not shocking. The complaints against Kraken and Coinbase and Binance US, the allegations in there about operating as an unregistered exchange and broker-dealer and clearinghouse, those can be copied and pasted and filed against every major U.S. exchange. In fact, I fully expect every major U.S. exchange that's stealing crypto to face a similar suit sometime,

probably if not by the end of the year, into the early part of next year. So on that suit, I'm actually genuinely curious, obviously for selfish reasons. But those exchanges, how, you know, should it be pretty easy for them to settle those suits or could some of them eventually have to leave the market and have significant fines

that they may not be able to afford? Yeah. Who's even left? Besides Gemini, Joe. Yeah, but even if they left, even if they... FTX US is gone. Binance US is gone.

There's really not... I mean, now you're talking, just to be fair, we're talking about much smaller players, the big ones. Exactly. But I'm curious gone. It's really not. I mean, now you're talking just to be fair, we're talking about much smaller players, the big ones. Exactly. I'm curious about the small ones, though. You have Fortress. I mean, you've got other entities out there. I don't want to name

specific others. I'm thinking of a couple of them. But it doesn't really matter, right? I mean, obviously, there's the potentiality of them resolving it. That goes without saying. They could always do that. But you have to look at their allegations. And their, their, their allegations right now are saying, you don't fundamentally have a right to exist in, in your current capacity. So, so that's, it's not just

like, we don't, we want you to delist these tokens. It's broader than that, what they're actually seeking. And I don't think they're going to cease to exist. What we're seeing, or at least what I'm seeing in my practice, is that exchanges that are overseas that want to access the US markets understand that the US is going to have a very constrained product offering compared to the rest of the world. So you're going to do Bitcoin, Litecoin, Dogecoin, maybe Ether. The New York Attorney General said Ether is a security. I'm not sure I agree with that view, but, you know, neither here nor there. So what we're going to see is a bifurcated market where the rest of the world, including the UK, right, which is very similar to the United States, permits spot crypto trading more or less

unrestricted as long as you've got the license, right? They're not reclassifying the stuff as a security and saying that, oh, if you want to trade shit coins, you have to have a broker-dealer license and set up a transfer agent and basically replicate INX's business model, right? So what I think we'll wind up seeing

is that the US is over regulating this space to the point of absurdity and the rest of the world is saying, okay, well, actually we're going to regulate it, but we're going to let people, you know, let crypto be crypto. You just have to do it with a license, right? So that, that I think is the difference. Yeah, it depends, but I mean, how the court comes down, I mean, the court may completely reject the SEC's position on this, as you know, Preston, I mean, it doesn't have, you know, this is going to be very contentious litigation fought in several different district courts. Yeah, I think the thing, the view, the sort of consensus view among practitioners is sort

of sit and wait. This stuff is going to drag on for a long time. And, you know, it's looking probable that or likely maybe maybe not probable, but likely that there could be a regime change in the United States in the next 12 months, in which case crypto might have might have a somewhat brighter future. But it's more likely that you're going to have a change of administrations, which will help resolve this than the cases will actually resolve this, in my opinion. Yeah, they're going to go very slowly. Yeah, the other thing to be aware of is a lot of, if you go on CoinMarketCap and look at all the exchanges, you'll see about 630 of them listed. A bunch of them are actually proxies for Binance.

So when I spent a lot of time in China and met many of the exchanges out there, and many of them were Binance, just under a different name, rebranded, API'd in. A lot of our industry took the opinion that any trade under $2,000 didn't require KYC in the beginning. So there was a lot of people, a lot of US users that on border to these exchanges, based upon that assumption, and there's still some exchanges are doing that. And so there's many like proxy exchanges. And that's why I think the fact that Binance is now asking for all the data from everyone that had an omnibus account, and now you've got the supervisor or whatever it's called in there, you'll see like a web of exchanges, I think.

And now you'd expect the wash trading to disappear. Like I remember when there was a massive crackdown on the Chinese exchanges, I think in like 2015 or something. And then there was wash trading of billions of dollars and you had OKEx and all the others at the top. And then suddenly you had a massive drop in volume. And so now you'd actually start to get real data, real volume, which is useful because, you know, we want real data. We want to know how many people, how much volume is interacting with this industry.

So I look forward to that. And, you know, on the US side, all the US needs to do is follow the way the world is going. Financial Action Task Force put out guidance, said that every country needs to have a virtual asset service provider regime. And all the US needs to do is have a virtual asset service provider regime. The only reason that they're not, it seems, is because CFTC and SEC and all the others are in a money grab to figure out which ones can get the checks. And then maybe you'll get a virtual asset service provider regime

and we can have this unified approach rather than saying three assets, a CFTC and the rest are SEC and the rest are money transmitters or something just unify, do virtual asset service provider regime, all the legislation has been written globally and US just needs

to do what the rest of the world. I think that makes sense, US isn't going to follow, but you did give a nice segue I think to something worth talking about getting accurate numbers and we have James here from CoinShares. Before we go on, sorry, because the Colombian president just became a Bitcoin holder, which is pretty cool to say.

It's another president. I think I know how many presidents are Bitcoin holders, but there's another one to add to the list. But where does he buy it? Who takes on these peps? Samson, Samson. I saw Samson Mao was there with him and, you know, was orange, orange billing him in real time. I saw.

But I think the biggest, one of the biggest narratives of the week, and this comes directly from James and from Coin Show's research, is that we had, I believe it was 346 million. I'm off the top of my head, but talked about this morning and inflows into digital asset products this week was the biggest since 2021 ethereum i think has seen 100 million in the past four weeks solana and ethereum obviously leaving outside of bitcoin uh bito the bitcoin futures etf which everyone knows doesn't accurately track spot and is trailing by at least 10 a year still seeing its highest aom james mean, what's going on here? We're seeing massive inflows into this. Yeah, I mean, if we're talking about, you know, technicals and how things might correct,

I don't feel that there's a sense of that in the fund flow data. There seems to be a real positive momentum. In the last month and a half, we've seen $1.8 billion flow into the market, primarily Bitcoin. Sentiment towards Ethereum has been the weakest of all the altcoins this year. And that's seen about now about 150 million inflows. So we've actually reached a point where the net flows here today are positive the first time. So there's a real marked turnaround in sentiment. I'm

not necessarily saying that these guys are great at timing the markets or anything like that. But yeah, I think that's a really positive thing. And I've just been road tripping all the way across Europe for last, just being in Frankfurt yesterday. And yeah, sentiments are really improving. There's so much more interest. People are taking it much more seriously. And just on the point on Binance and regulation, people really see this as this action by the SEC as really just cleaning up the industry, bringing it in line with traditional finance.

Whether you like that or not is another question. By DOJ. Sorry, I just want to be... Yeah, by DOJ. Yeah. And to that point, James, I think what's interesting, going back to what Tiger and Joe were talking about before, I think that Binance action from the DOJ gave some clarity as to how punishment may come down, even if larger entities are charged in the future. Maybe not necessarily from the SEC,

which is civil. But the fact that Binance, which people feared was going to completely be obliterated by the United States government, paid a fine like any other huge Wall Street institution when they do something wrong. I mean, we've seen Wells Fargo, JP Morgan, these guys pay tens of billions of dollars in these fines for money laundering and all these things. To see Binance treated that way and get to continue on with monitorship, that's obviously a narrative for more confidence, I think, on these inflows. And obviously, I think it's not ETF, it's the other way. I mean, it's like Game of Thrones, wasn't it? They basically Binance, the company with the biggest, deepest pockets,

just took the knee and bowed down to the SEC in some respects. And I think that's a really positive thing. And just also, just before other people talk, I think it's worth highlighting with Binance in particular, we did suspect for some time they've been wash trading of some sorts. And if you look at Binance's market share, it started the year at 85% of Bitcoin trading turnover, and it's now under 30%.

They've obviously been cleaning up their act, a lot less wash trading going on. You know, it's it's becoming a lot less theoretically a systemic risk to the industry as well. Yeah, I think I think that DOJ also probably recognized the systemic risk if they were to have seized the exchange, which tells you they don't want to smash it. They want to, they want more control. Control. Yeah, yeah. Remember those reports, Tiger, a few months ago, or basically, it came out on the wall.

Certainly, I was very openly concerned. Yeah, I'm saying like, it was the Wall Street Journal or the Times and had that report a few months ago, that was very strange, where seemingly the DOJ had tipped their hat saying that they were concerned about the market effects of an action, right? And it was never really vetted. But that ended up sort of being a bit of a premonition about what was to come. But I think, you know, we can be concerned about all these other players.

But like, if Binance got this treatment, I don't think there's anything that can be horrid in the future. I think people will pay their fine and move on. But I really think that this contagion narrative is dying because the biggest players have been attacked. And like Joe, to your point, and what everyone was saying, Coinbase, Kraken, Binance, these things are going to take years. We're going to be through another cycle before we get clarity on any of those i wonder if this is a ploy i mean in terms of going after these offshore exchanges also i remember those exchanges are a big source of alts of liquidity right so i wonder if this is a play to force a liquidity to migrate onshore at

least for the american users, as opposed to them flocking to offshore exchanges. I don't know. It seems like that might be an angle. Yeah, it also seems like maybe all these departments and regulators aren't necessarily in agreement with one another. I mean, we have at the top here, US Gov wants more power, which seems very vague, but it's very specific to Deputy Treasury Secretary Wally Adiemo's statements that we've talked about here. But, you know, he went in front of the Blockchain Association, basically said, you know, crypto is being used, once again, terrorist funding. I think he said for like child trafficking, illicit drugs, all the narratives that we've

been hearing, he just reiterated, even after some of those have been largely debunked said the treasury needs more powers for sanctions so as much as we have optimism around the bitcoin spot ETF and there's inflows I think it should be very clear to people that many parts of the United States government are still actively against the industry the anti-crypto army is absolutely not going anywhere. So I do think that we'll see a lot more action coming from all of these departments, regulators, etc. But I just don't think they'll be as impactful in the future.

I don't know if anyone agrees or disagrees with that. The bit I just don't get is that they've already got all the laws and regulations they need. Like exchanges are regulated. Yeah, I mean governments wanting more power is not exactly i guess a breaking headline what's what's the difference it's just operate you know once you're in the centralized world and you're using an exchange is is no different than a stockbroker

or a or a bank or any other financial service okay so so you you have to you have to separate a couple different things because there are the's the discussion, the broader overreaching, you know, money laundering discussion and terrorism discussion, all those sorts of issues. And you got the securities question, which the government is implying. You know, the SEC is interpreting a very, I think, strange interpretation of Howie and his progeny. But that's like a separate issue, right? That has not been resolved. That will continue to be fought. And you will continue to deal with the money laundering, you know, AML type issues.

But then you've got like sort of the third issue, which is that because there is not as much of surveillance and compliance internally within these exchanges, there exists a continued potential, probably higher than traditional markets, for fraud to be committed, a la FTX-style fraud, at these exchanges. They're all really separate, and they all have to be treated sort of with different regulators and different law enforcement involved. But the scariest part of it, the thing that can really disrupt the market, is the fraud aspect.

If there's actual fraud, exchanges do not at the assets they claim to have, those are the destabilizing ones, the FTX style. And I think to the point that was raised, as you get more and more sets of eyes in inside these exchanges, that's where you eliminate some of that potential. And that's what the market really, I think, is concerned about. They're not concerned as much about the SEC side. I think that that absolutely makes sense. And again, I think that we're starting to see clarity. Actually, I had Carlo, the lawyer we often have on here, he's not on here today, sent me a little while ago the letter that Circle sent to Chairman Brown and Senator Warren. Did any of you guys see that?

Because it's really, really interesting. And it is a part of this conversation. I can just read you some select parts. Circle refutes false claims on illicit financing. So obviously, this is USDC Circle. It seems like they're coming out with strong language against this narrative about terrorist financing, etc. These are the few things that they went into.

First, they kind of bullet pointed a few things. Circle has long made combating illicit finance activities a guiding principle of our business. Okay, we've seen the same from Tether saying that they're helping law enforcement to fight against illicit financing. Second, which I found curious, Circle does not quote bank Justin Sun, either Mr. Sun or any entity owned or controlled by Mr. Sun, including the Tron Foundation and Yobi Global, currently have accounts with Circle. Circle terminated all accounts held by Mr. Sun and his affiliated companies in February 2023. So Circle making a point to distance themselves from Justin Sun. So if you want a glaring idea of who might be targeted next, I think that gives you at least a good hint. Third, circles are highly regulated. But really quick, just let me get through these. Yeah,

go ahead. I was just saying, I saw a very funny tweet about this. Someone said, you know, you're in trouble when your former banking providers are saying, listen, he wasn't on the SDN Nationals list when he was banking with us. Yeah, yeah, exactly. And then third was that they made it clear Circle is a highly regulated financial services firm, blah, blah, blah. But here's the one that got me. Finally, no other digital asset company has advocated more than Circle for a comprehensive federal framework to govern stablecoins. Now, remember, this is a letter to Sherrod Brown and Elizabeth Warren.

And here's what it says at the end, after all of this strong language. Circle supports Senator Warren's and Senator Marshall's recent amendment to the National Defense Authorization Act to strengthen AML provisions in the digital assets industry. We also share a broad agreement with Chairman Brown's recent letter to U.S. regulators calling for a stronger disclosure regime in digital asset markets. So all that strong language, but the letter was really bending the knee to Elizabeth Warren. You guys read it. So I found that very, very, very interesting.

I actually invited Dante Disparte to come, but didn't hear back in time. But really interesting. I think that we're starting to see a very large bifurcation here between offshore and onshore and a real partnership with the United States government from certain entities and not from others. I mean, Tiger, you obviously have been sort of on the aggressive side towards Tether. I mean, I think your avatar is living up cause that literally Paolo with laser eyes. So what do you make of this?

Don't bet against him. But no, look, I think, you know, I mean, like I said the other day, I think the outcome of Binance kind of changed my view on how the government might handle Tether. Right. Like I was very, very, very concerned for a while that it was going to be something a little bit more

nuclear, but, but, you know, I think that they might just handle them in a similar way that they handled Binance, you know, cause it's a,

it's a similar situation, you know, like lack of AML KYC protocols and stuff like that. I don't know. I do think that Tether has a lot of problems, particularly on the banking side. It's this large financial organization at this point that is relying on three Bahamian banks that are very small. So I think more of the issue with Tether is US dollar liquidity rather than like what the DOJ is going to do at this point. So, yeah, I would like to see a little bit more transparency from Tether.

I think everyone would. I mean, we're never going to see – I think we're never going to see Tether's old books. Probably not. And I think pre-2020, it was probably a massive mess. I agree. And it's probably a little bit of a, it's probably less of a mess now. I think that just the way, I think what will be interesting is, I don't know if you read the FinCEN letter for Binance that was put out in the indictment, but they were discussing customers A and B. And I think

it was customer B and they highlighted it as a large Chicago based crypto trading firm. Now if I had to take a guess who that is, I would say it's Cumberland, which is a subsidiary of DRW, which is big at equities market making. And I wonder if the DOJ is possibly trying to get information about Tether from big Tether customers. Cumberland was the second largest customer after Alameda of USDT. So, yeah, I think that also a lot of the arrangements that Tether has with these VIP customers like Cumberland and Jump Crypto will probably be scrutinized more. Because I think that a lot of those USDTs might not be fully backed by actual dollars. I think it's like a lot of corporate.

You think that's still? I don't know. You think that's still? Right, because my impression would be that much like Binance. I would love to be able to answer the question, you know. Yeah, I think they're under a major microscope. I think they're under a major microscope, and I think it is very like Binance, as you said, that maybe in the early days when kind of, you know, laws on the road in their mind, it was the Wild West, these companies probably did a lot of things. But under this spotlight and this much scrutiny, I've got to imagine that they're at least trying to be completely compliant, Simon, or James, and then Simon. Very briefly, I mean, Tether has been really tested

during real crisis points in the markets. It's delivered $10 billion worth of liquidity in a week quite easily. We've seen the spread from the peg widen a little bit, but I think it's had a couple

of really big market tests and delivered every time. So we can sit here and pontificate. I think it's the same, by the way. No, listen, they're a Lindy's Law beneficiary. I will acknowledge that. They've had to endure a lot. I just think that if they're going to stick around, I don't think that the current form of their operation can stay the same. I think that they might have to change a lot of things. So, OK, from my perspective, and I think it's the issue of their liquidity and their books are really secondary to the issues that were explicitly raised back at the end of

October in the letter from Senator Lummis, which was that we believe these entities are violating the Bank Secrecy Act, violating the International Economic Powers Act, and we believe they're laundering money. So to the extent there's a risk for Tether, to me me the big risk is exactly what the the information chart contained the charges contained against finance right right and that's and that's what i said earlier but they would just pay it's fine and move on right now we see the roadmap and we know no no no they were not the roadmap would be to get it get it get a monitor in there that's the mom that's the roadmap and what is what is the crypto ecosystem look like with a monitor in there. That's the roadmap. And what does the crypto ecosystem look like with a monitor in it?

Ouch. I think it would be a huge benefit. Yeah, it's what Jay says. So the problem is when you're analyzing these stable coins is you try and put all risks into one risk. So if you're looking, for example, one risk that was pointed out is bohemian banking. Well, the bohemian banks, they tend to use a custody and trust model.

And so when you looked at USDC, it de-pegged because it's using a US fractional reserve bank. And so a US fractional reserve bank introduces a new risk, and therefore you need FDIC to alleviate that risk. But many of the offshore banks, they're not leveraged like that. They're not. They're just simply buying treasuries and doing the same as the stablecoin. So you've got like a stablecoin built upon a trust and custody bank, which is significantly lower risk because it's full reserve.

But then you introduce different types of risks. Well, are they enemies of the US and the US does today try and do that. So then you've got the second type of risk, which is at what point do you consider it a US company? So is it going to be classified that anyone, any American that owns Tether, therefore makes Tether a US company, because that just breaks the entire model of the stable coin? Or is it that you just allowed them to redeem and do the on-ramps and off-ramps? And then you look at the risk. So in terms of are they backed, DOJ went through all their books. They already published all that stuff. And I wouldn't imagine them to have deviated far from

that since DOJ went went through all that. And then you have the attestations on top of that. But has anybody used Tether in order to commit terrorist financing? Well, is there a good AML program on the onboarding and offboarding? And then do they consider any transactions? But Simon, to be specific though, that means to be specific, you're saying has anybody, or it should be saying, has anybody who is a direct Tether customer done that?

Because there's a confusion about people who have a Tether account and people who maybe like are moving Tether between second parties or third party exchanges and that can't be. Exactly. So that's't be. Exactly. So that's where is the U.S. going to break the model and say, if a terrorist organization is using Tether, then that's Tether's fault. That just breaks the entire stablecoin model.

That will affect USDC and everything just as much as Tether. But if they. And rationally, that means it's Apple's fault. yeah and rationally that means it's apple's fault and rationally that means it's apple's fault when a drug dealer makes a phone call to do a drug deal using their iphone exactly i'm not saying they won't take that argument but it's the same i mean look like i also acknowledge that tether actually serves a real purpose in terms of freezing addresses of illicit actors like they've've, you know, they've historically done that. They've made it easy for the FBI, you know,

whomever else to do that. And that's, and that is, you know, that has its value, obviously. I just think that it is, and also here's another angle. Like if the government is going after more offshore exchanges, right? These offshore exchanges are obviously very big distribution channels for USDT. So I don't know if they're going after these offshore changes in a

way to potentially choke off USDT distribution. I don't know. Maybe that's an angle. And to have more trading in USD as opposed to USDT. I have no idea. I'm just spitballing. But I think that it's very possible that Tether, you know, if you have to have a monitor at Tether, it's very possible that they are a smaller operation at some point. And there, in my opinion, will be more stable coins on the market over the next few years. And that is a healthy thing. Well, I think Tether's issue from a legal standpoint is that they're not voluntarily

subjecting themselves to supervision under the Bank Secrecy Act. If I were the DOJ and I wanted to go after them for a particular violation, that's what I'd do. So you can issue stable coins all day long, as long as you do mandatory reporting, KYC, everybody under the BSA, and and comply with the US rules on that side, there are there are FinCEN registered money transmitters. So they have to file a suspicious activity report and have to follow all those rules. Right. But like, how did I guess my question is, and I've thought about this a bit,

but not not terribly much. So tether obviously has a lot of transactions that they don't trace, right? Because you can go get USDT on any number of exchanges, and tether is not going to know who you are, or what you're doing with it. They're only going to check you when you when you check in and when you check out, right? But if you decide if you try to make a withdrawal, and most people, ordinary folks on the ground can't withdraw from Tether. So I guess the question is, is that sufficient that they're doing that and that they're screaming for Americans there? Or is the DOJ going to eventually come back and say, actually, you needed to know everyone who is using your system. I think that's kind of for a 60, 70.

I think they're one of the largest purchasers of U.S. treasuries in the world, which kind of makes it a policy problem rather than just a law enforcement problem if you decide you're going to go after them. Because at the moment, treasuries are kind of not as popular as they used to be. So people don't want to buy them. So if all of a sudden – I mean, if you think about it, one thing that I always said back in the – um so there's a there's an economic crisis back in the 1700s called the south seas crisis and in that the british government actually offloaded all of its debt in exchange for exclusive rights uh to you know ply the south seas and do trade with south america which turned out to be useless one thing i've always thought is maybe it could be possible for the united states to do that with tether and say, listen, let's say Bitcoin goes to a million dollars a coin. And all of a

sudden, there's this need for US dollar liquidity out there. Tether's in a really good position to just suck up all of the treasuries everywhere in the world. And I don't know, maybe the DOJ looks the other way and says, okay, well, get your license, we'll enter into a deferred prosecution agreement. And you can do ABCDE. Because now you're serving this valuable function of converting, you know, Bitcoin money into treasuries, right? Or acquiring treasuries to back up your US dollar, you know, US dollar issuance that you're using, you know, your users are providing so they can go buy Bitcoin. So I'm just going to push back on that just for a second. So as it stands currently today, right, Tether is a very, it's a rounding error in the US treasury market.

I know that it's a lot of treasuries in like an absolute sense, but in like a relative sense, like it's 0.3% of the treasury market. It is a very, very small, it is a $25 trillion treasury market. So I will just push back on that a little bit it yeah if they get so big maybe it becomes more of a concern like if for somebody 50 times bigger basically they have to be 50 yeah that's 50 times bigger you know like you know and you know if they keep growing yeah they're on their way to becoming almost like a shadow G-SIB of some sorts.

But I don't think that's necessarily why the DOJ wouldn't do anything as it currently stands. That's all I'll say. Yeah. I blacked out when Preston said that Bitcoin was a million dollars and we were basically dominating the entire world. So I didn't hear anything after that. Thanks, Preston. Yeah, then you realize you had all your

money in Tether and not Bitcoin. They're just dollars. I think we're good mario yeah i think we're good i think that was a great way to end the week ah you're gonna miss us so much on saturday and sunday mario don't cry and rand's not even here you miss him for another day terrible yeah i'm just reading the article by the block dimshif so jp morgan says signs of it that's what i mentioned earlier signs of a defy you guys talk about tether for the millionth time i'm looking at something more interesting more recent signs of a defined nft revival are only

tentative it's too early to be getting excited about the recent recovery in the defined if the area's theorem does not appear to have benefited much from the recent defined fd revival let's see what jp morgan has to say about it if you think that if you think that jp morgan's opinions on nfts is what's more interesting while we do that while we do not doubt like then again well i'm going to listen to the to the nft bros while we do not doubt this recent revival and define ft activity i like how they put them together in d5 slash nft is like one thing for them literally nothing is a positive we believe that it's too early to be getting excited about it um and then let's see if slash NFT is like one thing for them. Literally nothing to do with one another. Yeah, no.

We believe that it's too early to be getting excited about it. And then let's see if there's any other interesting quotes. The revival in Sears, Robux, and Tesla stock. Yeah. Yeah, exactly. Anyway, this is us reading that. Cool.

I think we'll see everyone on Monday. And to be honest, there's something major on the weekend. Otherwise, enjoy your weekend, everyone. You dropped out, Scott Scott we can wrap it Nast we can end the space