The Wolf Of All Streets - Coinbase User Data Stolen! Customers To Be Reimbursed | Crypto Town Hall

Episode Date: May 15, 2025

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Hey everybody, welcome to Crypto Town Hall, every day on X at 10 15 a.m. Eastern Standard Time to be more specific every weekday on X and occasionally on a weekend when there's big breaking news. The biggest breaking news of the day seems to be the announcement from Coinbase. I will scroll down and find it right now. But for those of you who didn't see it, this was a tweet from Coinbase, which I will pin in the next later. Cyber criminals bribed and recruited rogue overseas support agents to pull personal data on sub 1% of Coinbase MTUs. No passwords, private keys, or funds were exposed. Prime accounts are untouched. We will reimburse impacted customers. And then there's a blog that you can visit for more information. I don't know about all of you,

but I live in the United States and I receive probably three to five text messages or emails every single day telling me that my 2FA on Coinbase or Gemini or another exchange has been hacked, that I need to change my password, that I need to contact customer service. Some of these exchanges I don't even have accounts with. But we've seen reports that Coinbase customers lost as much as 40, 50, 60 million dollars just last month on these phishing scams.

So of course we can debate endlessly whether it's the responsibility of the platform when people are randomly sending phishing links to anyone in crypto who has an email address or a phone number because this is not. Coinbase being hacked when people lose money and give their information to a scammer and also largely this is a result we could argue of the Bank Secrecy Act and and quote unquote protections put in place that require this massive level of KYC AML, which means that these platforms have to keep all of your personal data.

And we know that one day your personal data will be hacked and released on the dark web, whether it's by Ledger, Coinbase, or any phone company, or anyone else who has your personal data, all topics that I think are worth digging into today. But this is a case of probably a minimum wage employee being approached and bribed with a hell of a lot more money than they would probably make in a year and giving up personal

data as a result. And this happens all the time. You know how big likely SIM swapping is of a problem in the United States. I've been sim swapped twice before I joined a Fonny, the private phone service that can't be sim swapped, but twice by T-Mobile and both times somebody basically social engineered and or paid off a person at T-Mobile to basically just give them my data and my phone number. They say, here's a thousand bucks. You're not gonna make a thousand bucks this month. Here's Scott's information.

So I think that's what's happening here. Dave, you had your hand up. We can start there. We can dig into any part of this, but interesting that you had, you know, the CEO of Coinbase, Brian Armstrong, literally making a selfie video to explain all this on X.

Yeah, I mean, look, the Coinbase response was the exact right response. The sad part here is that, you know, this happens. I mean, I don't know anyone who doesn't get phone calls, texts, emails that are phishing. And the reality is, is there is no way anybody should ever put information ever in any situation from an inbound phone call and inbound, you know, email or inbound text, never,

like literally never. And you know, I've had legit phone calls where I basically said, Listen, I just don't, we're not going to give you any information. I actually think you probably are from Citibank, but it doesn't matter, because they knew stuff. And I'm like, you know what, I don't care. I will call the number that I know. And if you're answering it, awesome. You know, and funny, you know, and you could always tell the difference, right? Because if you

say that to people, what do they do? You know, the scammers or they'll argue with you and the other people like, Oh, yeah, that makes sense. So do that. And it's funny. And so, you know, you know, my wife and I, we've talked about this, and we understand it, we don't fall for it, but so many people do. And some of these are really crude, but when they get your information, there's so much stuff they can do. The real problem here, that's going to be, and I hate to be Pollyanna about it, but you

can take your time and count down to when the class action lawyers are going to go after Coinbase just because of the data breach. Exactly. And wait for the, if it were the Gensler SEC would have been already today, they would have already started building a case about how they didn't display non-public, you know, blah, blah, blah, blah, blah. Maybe this administration will be better about this.

But look, this is not a crypto thing. And that's the thing that's interesting. blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah,

blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, up, so let other people talk. Yeah, go ahead, Tony. Good to see you. Hey, Scott. Great to be here. To follow up on Dave's point, you know, it is not a crypto specific issue, but we have the solution, so I'm a bit disappointed on CoinBusiness part. We got to start putting data on the blockchain. They should be innovating some sort of solution here, be leading the charge.

You know, it can't be the excuse, well, this happens in every industry. We have the solution. And I would expect more from Coinbase as a publicly traded company, the largest exchange in the United States. So we've got to figure out a solution here because how can crypto, which has all these solutions, and we talk about data ownership and data on chain still be facing these problems. It's interesting, Tony, and I'm going to go next to Ryan and then to Douglas. But I had, I know Yago is actually joining later Bitcoin OS and we just happened to be talking about this this

morning on YouTube. To your point, this technology exists, whether on Bitcoin or elsewhere in crypto, obviously with ZK Proofs, that you can effectively prove data without sharing all of it. You can give a yes or no answer. Yes, this person is who they say they are. Yes, they're evade. Yes, their credit score is good. Yes, they're viable to open an account, whatever it is, without giving all that data using crypto. But like I said before, even in the United States, if Coinbase tried that, I don't think they can because legally, the KYC AML regime would never allow that, at least for now. Go ahead, Ryan.

Yeah. I mean, we do have the technology in the space, but everyone has to remember that Coinbase is not a blockchain company. Coinbase is a centralized entity that is essentially a bank. And if someone hacks into my Coinbase account, they're going to get access to my $15 of Moudain coin. And I'd be like, oh, well done. But I don't keep anything in centralized exchange, specifically for that reason, is it's not a blockchain company. I wanted to give a quick shout out to Naomi Brockwell, who does NVTV, because she's been

scouting this from the rooftops for years, making great viral videos about personal security and cybersecurity and how to protect your data. And we need way more education on that, because a lot of people are thinking like this is a general banking system, and it's not. It's digital cash, and when people get access to it, it's gone. Right. No, it's interesting in the, yeah, Naomi has made great content around this. I think my first knee jerk reaction was self-custody solvess, right? That's a, uh, kind of a brainless, uh, thought about it when you consider that if you are in the United States, certainly at some point, you have to assume that

people need an on and off ramp, they need to buy and sell their assets somewhere. They need a way to get cash out. And that puts you squarely into all these centralized exchanges, whether you like it or not, and that KYC AML regime. So I mean, you can try to self-custody and live only on Bitcoin, but it's very, very difficult. Most people need an off ramp. It is difficult. And it's an off ramp. It is difficult. And it's a problem people are trying to solve. Ledger has been trying to solve it, trying to make more user-friendly applications.

There's a handful of wallets out there that are trying to be better at self-custody. But no one's really created that general use. No one has that technology where it makes the general public feel safe to hold their life savings and the majority of their net worth in a single key. I know Bobby Lee has his hardware wallets and there's lots of different types of wallets out there, but I don't think anyone's really figured out, even tying it to biometrics, I don't think anyone's really

figured it out yet for that mass adoption. Yeah. And even beyond that, for the simplicity part, once again, you also need to somehow be able to get cash, right? So at some point you're attaching to the bank. Yeah, I know we're agreeing. I'm saying, but at some point you need to attach to the banking system and that may be more or less difficult depending on the jurisdiction that you're in. Tony, go ahead. Just a quick follow up. I feel if this type of situation keeps happening to the crypto industry, it's going to force more people to go to ETF route.

They're going to go to the Black Rocks with Deladies. And as they build more crypto products, ETFs, and the ad staking and all these things. We've got to solve this because I'm a big believer in self-custody and I feel like we're going to lose that aspect of crypto and that great benefit if we don't solve this. Douglas, I'm sorry, I forgot you had your hand up and I said you were next. Go ahead. First, great points, obviously, from Dave, Tony, Ryan. I think that one of the most entertaining parts about today was that I thought that the Coinbase response came directly from the Mel Gibson movie Ransom. It's so good.

Where essentially he turned around and he said, listen, we're not going to pay your ransom. Instead, what we're going to do is we're going to pay that to people who find out who you are. And it was almost a direct ripoff from that 1996 movie. So that's really the biggest thing I took from it. Obviously, I think I agree with Scott that I think every day we get multiple phone calls, texts from Coinbase and lots of other exchanges that we have no relationships with whatsoever. And that seems to be the nature of the game. And it's a shame that has to be the nature. And it'd be great if someone came up with a solution where we could just blow it all off.

Yeah, it's interesting, Tony, I agree with your point about ETFs, and obviously people going with the quote unquote, more secure products. But to what David, I were discussing earlier, you earlier, people can still socially engineer access to your Schwab account, right? Or your bank account or others. But I think that you definitely do have probably better insurance and systems in place to protect you from that after it happens, if it does. It's not really. I mean, it depends that at a big level,

at a large level, yeah, probably, because it takes as long as you recognize it within a few days, it takes so long. But here's the funny part, be careful what you ask for. Once we finally get stablecoins done and stablecoins are underlying all the banking rails, then that's gone. Once the actual transfers of money within the banking system speeds up because they're using newer, better technology, and it has huge benefits to this, I'm not suggesting they do anything about it, but it does make transfers and electronic payments far harder

to reverse. Right now they're not that easy to reverse. In fact, with Zelle, they tell you that easy to reverse and in fact with Zelle They tell you they won't reverse it but that's generally limited to like five thousand bucks a day or something but You know people do need to understand that it's just as big of a deal in the banking system as it is with anything else And as stable coins come in it's gonna blur the line. So this as I said, it's not a crypto thing It is a thing and it's something that is very important

as I said, it's not a crypto thing. It is a thing and it's something that is very important. Ryan? Yeah, I can see us going down the route where as AI technology gets better and better and better and these AI agents get better and better and better, we start hearing the mantra that they can be trusted more than your own brain where you're going to misplace things, you're going to forget things, but these AI agents will never forget. So once we start having personal security AI agents to handle our keys for us, I think that's going to be a big shift in the industry. I was just going to say, I am not killing. And frankly, I think I'll be one of the last people to put my eyeball on, you know, on the world coin scanner on the orb or anything like it. I don't trust it and it's gonna be a long time before I even think about trusting it.

But one doesn't it doesn't take a rocket scientist to realize that at some point you're gonna end up using biometric encryption for everything that you do and it and that's where the real hack or the real danger is, right? Because at that point, you know, all bets are off. So it really becomes a question of can it be, you know, can this thing be secure that way? But you know, I'm kind of going down that rabbit hole. So I'm gonna let's pull it back. Well, Dave, I think that's a good point. It's funny, because I think everyone's once again, knee jerk reaction about the world coins and the identity verifications by biometrics is just that this is dystopian. But I'm not,

I'm also not like, uh, I'm well aware of the irony of that as I stare right now into my iPhone that I just unlocked with face ID right after getting off of my webcam while live streaming to YouTube. Right. There's once again, it's like, when we go back to point base, I don't think point base could have prevented this because you're always gonna have human beings that are not getting paid much protecting data

that can be incentivized to do it. I also like don't know that WorldCoin and these things or whatever iteration of biometric data is avoidable as we all give our biometric data intentionally and voluntarily all day, every day, everywhere with our devices. I don't really know what the final answer there is, but I do think that biometric verification is what's coming. Does anybody have any more specific thoughts on this? Because I want to pivot, if not, any more thoughts on the Coinbase situation. It's quite a few more news stories.

But, Clinton, since we have you here and obviously you're the CEO of Crypto Tax Audit, you deeply understand something that just because you're here, I want to ask you about. I've heard from three people in the last week, basically, that they've recently gotten very vague letters from the IRS. This is under the Trump administration, which I didn't think was necessarily going to happen, saying you may have under reported your crypto taxes if you'd like to file an amendment, please feel free to, but with no direct evidence or claims that that was the case, it seems like there's this widespread letter potentially going out just to people who had some sort of sufficient significant exposure to crypto saying, hey, fishing for more taxes. I don't really understand what the letter is. I'm curious if you've heard of this.

Oh, it's big. It's big, Scott. Thank you for asking about it. These are letters. They're identified as an IRS letter number, 6173 and 6174 and 6174A. So if you get a letter, that's what it says. It is a real letter from the IRS. It does feel like a phishing letter. It feels like a phishing letter because, as you said, it's a very vague, we know you had crypto accounts. You might want to check your tax returns and amend them. And who isn't afraid of the IRS? Who isn't insecure? I've had our phone, we get calls all day long, several of my staff all day long, people asking about this. Who's not afraid they didn't do something right in a previous year or they didn't trust their accountant or they didn't even file at all. So it's a big fear. Now let's break this down. Why are

you getting these letters? Most of we've identified the primary reason is that the IRS has information from Binance and the former Poloniex exchange that if you had a Binance account, they've been able to link it back. And the way we imagine this is they kind of they looked at what addresses you were shipping things. Really quickly, Clinton, finance US or literally a Binance account? Because in theory, Americans are not international. Oh, okay.

Because that's interesting because we weren't supposed to be able to use it as Americans. Go ahead. Well, you weren't. I know. In 2019, they said no, no more. But they hadn't really started KYC. And a lot of people were going in through VPNs looking like they're outside the US. So I think what happened because, you know, the US sued Binance, they put CZ in prison. And this is why he only got four months in jail, because he turned over all this data. They've linked it back. Okay, you shipped from a Coinbase account to Binance, that Coinbase account, oh, that was linked to Scott. Oh, go to Coinbase, oh, Scott, yeah, here's the social security number. Bingo, you're getting a letter. So you can kind of see how they're putting this up. They've done this before, back in 2019. The IRS sent out these letters.

What they do is it's basically a scare letter. Because they do not state what year is in question like a typical audit. And the second thing that's extremely offensive to me in the US government engaging in just bald-faced fear is that you can only amend a tax return for three years. That's right. So if you're filing on April 15 each year, you can't even amend your 2021 tax return. It's already been three years since you filed it in 2022. So in 22 and 23, you know, we're down years, 24, not a lot of people didn't sell. So most people are afraid of 2021, 2020, 2017, the big money years, and they're terrified. If you call the phone number on there,

everybody should know that the IRS records the fact that you called from that number and anything you say in the background is all recorded attached to your account. Our advice is in general, you should do nothing. Ignore it, right? You're not going to go out of your way to prove that you were wrong when you made your best effort. Right. So, but a lot of people's, everybody's situation is different. And it always surprises me. I talked to so many people, different trading styles, people got in at different times, did different things.

So if you feel like maybe you're exposed because they could initiate an audit afterwards, that's their bail threat, then I would suggest calling our office and talk to your personal situation and see what makes sense for you. One thing that we're recommending for people is we have a service we call Tax Shield where we actually pull the IRS in your IRS information on a weekly basis under the power of attorney so that they know it's not used against you and we monitor for flags we've can see these flags occurring actually as much as six to twelve months in advance you mean the IRS

flagging you for a potential audit, basically? Right. They flag your tax return. They have a whole group that decides who's going to audit. When they decide they're going to audit, they put a flag on Scott's 2022 tax return. And then the examination department, it goes into their hopper and eventually gets assigned to an auditor and the auditor gets around to it when he can. Because they're having a little bit of a shortage of auditors right now, because of the recent layoffs, you're really looking at about a six-month time frame. But we can see that and let

you know about it ahead of time. We can amend the tax return and prevent the audit from happening in the first place. Because the last thing you want is your face on an auditor's dark book. Yeah. Another question. I think there was a sentiment that with the quote unquote new IRS, it was effectively being gutted and they wouldn't even have the resources for these type of audits. I listen, I know technology and AI will take that very easy. But I think a lot of people thought we were in a Cinderella. I think a lot of people thought we were in a Cinderella period right now where they were somewhat safe.

Well, hey, look, there's there, there's been a lot of layoffs. Most of the people that, I mean, I saw a recent news article, 31% of all auditors laid off. That's probably true. And they were probably all new auditors. All right, so it takes several years for an auditor's, you know, beginning to get capable of doing a complex audit.

Secondly, the IRS has shifted their focus to just going after big rollers. They used to audit small taxpayers a lot because there's an immense amount of fraud with child tax credits, earned income credits, but they've laid off, they're not doing that anymore. They're focused on high-end people. And this is actually very newsworthy right now.

We have just seen the first audit initiated on people who have moved to Puerto Rico to take advantage of the tax incentives there. Do not have to pay capital gains tax. We're seeing our first audit on this come through. Of a single individual or the group in general sort of? A single individual. It's a single individual.

You can move to Puerto Rico that it's happened to. Well, Puerto Rico is the US tax haven. If you live in Puerto Rico, your capital gains that you experience after you've moved to Puerto Rico, if you get the right approvals, are no longer taxed by the US government. So there's a lot of whales down there. Okay. And they have massive holdings. Ryan's giving you the fist because he's a Puerto Rico guy down there. Exactly. So no, but I mean, I've been to Puerto Rico several times.

I've talked to people and there's an immense, there's a complex set of residency rules that you have to comply with if you're going to satisfy this. They're US residency rules, not Puerto Rican so much. And this is what the IRS audits. If you violate residency rules, not Puerto Rican so much. This is what the IRS audits. If you violate those rules, then they can deny you the Puerto Rican tax-exempt status, and they can then tax all those gains.

There's a lot of money there that they can go after. The big role is this particular guy, he was sent to eight digits in sales or in gains that year. So this is in it, they're looking on, it's very interesting. So anybody who is a Puerto Rican resident wants to talk about that. They should schedule a call. We can debrief on how to prepare, how to transition, how to protect yourself. But this particular audit's going, when you live in Puerto Rico, you're subject to audits

for up to 10 years. Actually, if you live outside of the United States, it's 10 years. You're a massive target when you make the move. I think people understand that and you have to do it in a very, very compliant way, Ryan, go ahead. Did you know, is it just become this better than you guys? I was having such a great morning. Yeah.

So the birds are chirping, the sun is out. Like, man, this conversation took a turn. Yeah, people in Puerto Rico, this is a conversation we get into so much. Everyone is highly aware of the auditability or the audit risk. And people have GPS trackers on their phones to track exactly where they're at when they're there. There's a

constant discussion going around of the closer connections and what do your ties to the US look like? What properties do you own? It is well on everyone's radar when they move down there. That being said, the incentives are insane. And you know, I even got to tour a research and development facility the other day, where they had a $40 million buildout on it, and they got $20 million back in research and development credits. And it's just the tax incentives are just mind boggling. But it is it is a sacrifice, you you do have to cut a lot of ties to the US mainland to make the move.

Yeah, that didn't even end it. I think it used to be a lot more casual. Now it's just become exceptionally strict. Everybody's aware of it. I was actually, of all people, I was having a conversation last time I was there with Peter Schiff at a bar in Toronto. He was breaking down, to your point, the links he had to go to prove like anytime he left Puerto Rico that he wasn't working.

Yeah, he wasn't earning a single dollar of income when he stepped off the islands to make sure that he was being compliant. It's pretty, it's pretty wild. But just circling back, Clinton really quickly just as a TLDR, these letters are very real, they're going out, but in your opinion, they're purposely vague targeted at largely people who were exposed via Binance data becoming public, or at least becoming available to the United States government. And getting a letter doesn't mean you did anything wrong. They're effectively trying to get you to call in, get on the radar and maybe see what you cough up.

Good summary. And you know, back in 2017, everybody had a Binance account. And you know, everybody has a lot of fear. I mean, we know that three fourths of taxpayers aren't reporting all their crypto income. So you know, there's a lot of fear there. But the key thing is, don't be bluffed into disclosing problems in prior years by calling up and talking about anything further than three years back, because then you're opening yourself up for them to come after you.

But if anybody has a concern about their case, they should call me. But I know this was never meant to be the topic today, but I find this so interesting. So they have the fact that you had an account probably in 2017, 18, but how savvy are they in actually calculating what you theoretically owe based on what you actually did on those exchanges back then? The rules were so even unclear at that time. There are tools that the IRS is using and they're called cluster analysis, where they can look at your addresses and start to tie together a picture of the total amount of Bitcoin that you have. This is described in the court case that was

filed against Bitcoin Jesus. I forget his name off the top of my head. Roger Veer. Roger Veer. They describe exactly how they do this, but they basically build a connection chain of all the different networks, addresses that are talking to the same one, and then can analyze the behavior, determine if this is a transfer between your own accounts or maybe an income. They can also see what you're disposing, so they can get a general size of how much money you're moving. They don't really know how much is profit, right? But they can see how much you're selling. So the more higher frequency you are in your movements,

you will look like a bigger target to the IRS. Really, really interesting. Gary, listen, I got you on stage. You actually, you and Clinton should be friends, but with Node 40, this is something you're looking at actually all day with a company that you're heavily invested in, right? Is that fair to say? Yeah, yeah, for sure. I mean, it's a huge area that, you know, you can't,

and I'm glad Clinton's up here because I wanted to actually get to this capital gains thing, but we can get to that. I think that's a horrible idea, by the way, that we would treat crypto differently than any other commodity. Good reason to sell your crypto. Yeah. Oh, totally. I think you'd have a major sell-off. Major.

Like, somebody's got 3,000 Bitcoin at 300 bucks and there's no capital gain. Like, they're going to sell that Bitcoin right then and there because they're not going to wait for the next administration to change that rule. It makes no sense to me. Nonetheless, to Clinton's point, very few people have actually paid much attention to this. They've been almost like, fuck off the IRS, like, hey, this is Bitcoin, we don't have to pay taxes. That's just not going to fly. And I don't think we want that either. You don't want Bitcoin to have some kind of special allocation or treatment.

But most certainly, the guys in Puerto Rico, for instance, Clinton, what do you think an audit costs? The guy's got a million dollars of crypto or whatever. Well, two questions. What do you think the threshold is? What do you have to be to hit the radar? Is it a million dollars? Is it 10 million? And then what does an audit cost? Because I think people in Puerto Rico, they just need to determine part of their cost is going to be buckled up, buttoned down, high

details. You provide more information than the IRS can give you. More clarity. And I think the case goes away because I don't think the IRS today has the tools to actually prove in court the damage done on very complex high-frequency trading. And if they do, it will cost them so much money, I'm not sure it's worth it. Clint, you got any response to that? And if they do, it will cost him so much money, I'm not sure it's worth it. Clint, you got any response to that? Yes. The cost of an audit is there's two phases of it. One is the actual audit where you're talking to an examiner who's making a determination of how much you owe. And then from there,

they decide you owe them big bucks, then you're basically off to tax court. There's an appeals branch, but we usually go straight to tax court. We've defended numerous people there, five people. We win all the time at tax court. But the stakes are much higher. So you're, I mean, we're defending one guy who had $2 million in,

the IRS claimed he had $ million dollars in gains in 2017. And we said, no, he had $36,000 of refunds he should have coming to him. And they have gone back to, you know, your friend Taxbit, they've gone back to them five times to calculate the gains. And they come, Taxbit comes back with a number and my in-house forensic accountants just destroy the numbers.

Totally. Going on forever. Yeah. Every time we beat them, y'all need to understand what he's saying. These systems, they weren't built for scale. They were built to do taxes. And this is not really tax preparation. This is large scale transactional monitoring and making sure each piece connects to the

other piece to allocate, hey, what was the actual loss or gain minus fees? Right? Like, these are, there's so much data. I mean, there was 30,000 coins launched in one month. And, and, Terry, I don't even mean to interrupt,, but and it's, I think, important to note that a lot of these are crypto to crypto transactions, which makes it even more complicated because you're selling one asset into another, not via a dollar, which means that you have to pay at that exact moment, the price of both of those things.

Yeah, that's what gets debated with the with the IRS. I mean, a typical audit, like you said, you're easily into $60,000 to $100,000 during the audit phase, and then you could easily be up to another $100,000 in the tax court phase. It's important to realize that you have to have a strategy for the IRS is definitely just focused on the high-income rollers. The way you asked about a threshold, I think the IRS has visibility to tax filings at Puerto Rico. I think they see those tax filings. When you're in Puerto Rico, you want to report all your capital gains from trading.

You want to put your biggest number in there because it's taxed at 0%. And you want to show that you reported it. You can't claim that. That way you can say, I claimed it. I already claimed it and paid tax on it. Tax is zero. So they can look at the IRS filings at, or pardon me, the Puerto Rican tax filings, see who deducted the most.

And then that drives it. Like I said, this guy was, you know, he's enormous. And that's it. But he was highly compliant with the residency rules. He was extremely compliant. But so we think, why was he selected? Because he's a big fish from the information from the Puerto Rican tax authorities. Yeah. And Gary, how does Node 40 specifically handle this? Our job is to provide granular details down to the penny. I mean, you got to remember, we focus on exactly the type of guy that Clinton's talking about, big players, wholesale players, large family offices.

High frequency. Like, we got a guy that does a billion transactions a year, man. He's under audit. See, this is the problem though. Once the audit starts, most of these sophisticated traders, they're like, okay, we're putting our pencils down. We're not going to trade.

We're going to get through the audit. And the good ones, the good ones don't buy tax bit $99 software. Like how could you possibly imagine buying software for 99 bucks and you're trading a billion transactions a year? You want to have information that the other side, like my goal is settle it to zero. But we have an account, a billion transactions, $589 million worth of transactions,

and we settled it to 98 cents, man. Now, if you can settle something, meaning that we showed all the ins and outs down to 98 cents, so that's just a little friction, it's very hard to walk into a courtroom or into an auditor and go, hey, by the way, I settled a billion transactions to 98 cents. Why don't you guys figure out where I made a mistake or I cook the books? Because you can't cook the books that perfectly. And that's the beauty of crypto. Like this shit all gets settled down to zero. We just have not built between node 40 and fucking tools for this stuff. We don't even have dashboards Y'all still don't most of the people in the speaker panel do not know their average cost of Bitcoin for last year's purchases

That that all changes in the future. We'll have dashboards that show us exactly what we're doing That's fast, but it requires investment man Hey Gary, by the way, I owe you a text. Were you around this afternoon? I'll give you a call. Yeah, I know. Thank you, man. Yeah, no problem. Ryan, go ahead. Yeah, it's funny, Gary and I had this exact conversation in Nashville last year.

And, you know, I've been under audit by my ex-wife for the last five years, so I've been prepared for this stuff under like intense scrutiny. But the reality is, going through all these transactions and doing all the accounting, once you get to a programmatic layer is not difficult. It's just a matter of building the system to do it. It's all on chain. It's all a matter of building the systems to do it. It's all on chain. It's all accounted for, all the ins and outs, all the cost bases. It's just people have to write the software for it.

I don't think the IRS is skilled in that area, but there are a lot of homegrown private solutions in a lot of these capital management firms that have built their own stuff. But a widely accessible, like what Gary was saying, like a highly in tune that what's gonna settle all the way down to 98 cents, I don't know of very many that are publicly available. I started my little side startup on a side with some engineers called Cryptosleuth,

specifically for divorce lawyers, because I realized like this was such a big thing in the divorce cases where like, you have these lawyers going after crypto assets and no one knows how to make heads or tails of the audit system. But we're gonna start seeing services like this pop up all over the place for crypto asset forensics.

Gary. Hey, yeah, Ryan, I'm so glad you brought that up because I'm the only guy that talks about divorce in the crypto space. 46% of you guys holding crypto will get divorced. And I went through this, okay, and I like I actually should probably do a little show on this because literally, I had somebody going after everything I had when the market was down 76%. So I look like a complete idiot.

But when I walked in with node 40 against 10 lawyers and auditors for a nine hour deposition, my deposition lasted one hour because I removed any questions from the opposing team. Really worth noting that that divorce would take three years to settle. Not one question was asked to me about crypto after that deposition. When I showed them the detail, they were like, fuck, we ain't going there, dude. There's nothing to squeeze. No juice. Very powerful message.

Yeah, it is a powerful message. Nick, I saw you down there giving the thumbs down. So was that to the divorce? I bet. So the, uh, the divorce stat of 50% of divorces or 50% of marriages and a divorce is actually, uh, this 50% of marriages, or 50% of marriages and divorces actually, uh, this 50% of marriage is not 50%. That does not take into account people who have remarried, which the likelihood of you getting a divorce if you're remarrying is higher than first time marriages. Second, 72%. Yeah.

So it's, if you look at the actual divorce rate, it's in like the 20s. That's all. Okay, so guys, 28% of you who hold Bitcoin, sorry. Yeah, brutal, brutal. So listen, let's pivot. The tax conversation wasn't meant to be it, but I think that was exceptionally valuable and actually really, really important. So I'm glad we discussed it.

There were a few other large sort of stories, obviously, MetaMask saying they could potentially have a token is one. And I think they're actually going to be full, fully integrating Solana layer one. I think that's big news. We talked about this next topic a bit yesterday, but I want to go into it more because of how successful it was. eToro obviously had their public offering. It started at about $45 a share. I think they ended up raising at $52. And then I think it closed yesterday, if I'm not wrong, at $67. I think that this is wildly eye opening because A, we haven't seen an IPO perform well in general in America that I can remember

in a long time, especially, and we didn't even have them because of the environment with the last administration. But eToro, I mean, this is like an exceptional, exceptional performance, exceptional appetite for this on the listing. I mean, Dave, we kind of did talk about this yesterday, but now today after a full day of trading that it continued up another 10 or more percent, that should be a pretty big green flag for the industry and public offerings, right? I mean, look, if you're a financial advisor and you've been restricted from what you can offer clients. And there's, and Coinbase's success, it's added to the S&P, it's a sector that matters,

and there's an IPO, and your clients are gonna ask you about it. The likelihood that you're going to be against it, and risk being labeled a Luddite, a dinosaur, or whatever, it really is vanishingly low. So, E-Toro is a consumer-based company with great margins in crypto, in a world where there's literally only one competitor and a comp, and people go, well, it's just like, I hate to say it, it's the unit bias problem, but you're coming to market

at the exact right time, right? Where people say, well, should I buy the expensive thing? How much higher can Coinbase go? Or should I buy the cheaper thing, which could continue to expand and is part of the market at the same time as it's clear proof that there's retail demand and institutional demand to be exposed to our economy. And so yeah, it is kind of a big deal, but these are all like little proof points for what's going on.

And it makes sense. I mean, it's not illogical in any way, shape or form. And it's sort of predictable if you think about it. Anyone else thoughts on this? If not, we'll move on to the market because I think interesting day we're having here. I haven't actually checked most of the morning Bitcoin trading around $101,965 at the moment. All coins obviously seeing a bit more downside than Bitcoin in this case. And I did see this morning that gold was having a really nice bounce, which is usually a pretty good signal. Dave, your mic slipped in. I don't know if you had a comment or if your mic was just up. But talk market, I mean, Follis, we got to hear what are you looking

at right now in the crypto market? Hey, Scott. Hey, guys. Yeah, I mean, look, it's one of those things where I was just seeing so many guys on my timeline, so many so many traders adding risk after BTC had been up only for 30 days and many alts were like some alts, like random random coins like Moudang and like some of the AI agent coins were like two three four or five X off the lows and guys were you know saying this is where you should be you know long your longs we're gonna be trading higher and and that might be true but in my experience you know top longing top lasting entering late with

high leverage is never really the play. And some of those guys are kind of feeling the pain now. There's a lot of coins on my watch list that are down like 30, 40% from the highs. Now, admittedly, they're all big off the lows. But I think that anyone trying to enter those coins late with leverage has been washed, and probably rightly so. With these kind of rallies, it's almost never worth

it to try and chase the move. If you haven't caught a nice entry, don't settle for a substandard entry in order to just participate in the move. That's like textbook FOMO. That's exactly what you want to try and avoid doing. As with all things in trading, patience pays. That's the same in a trending market. It's the same in a ranging market. It's the same in a market with lots of upside. It's the same in a market with lots of downside. Patience always pays.

Now, that doesn't mean you sit and look idly as price action passes you by, you don't execute. I mean, patience isn't just about sitting there and waiting endlessly, but it is about waiting for the right time to execute your plans. So I mean, I've been saying to my guys for the last few days, BTC looks a little bit overextended. All coins look crazy overextended here. I'm looking at coins like we saw Jelly Jelly yesterday, dumped like 50%. There's another coin on my watch, this layer,

which everyone was super bullish on earlier in the month and kind of back into April. I mean, it had a huge run-up. It's now down 70% from the highs. I mean, there's a lot of manipulation going on there. Obviously that's not organic. Yeah, what does it say about me that I've never heard of these things?

It says that you're a sensible trader who avoids trading crappy meme coins and manipulated projects. But there's a lot of coins that guys are entering late, they're entering with leverage, they're trying to catch the last five, 10% of a move when in fact they're far better off just waiting for retraces.

So in terms of what I'm looking at going forward, sorry go on. No, I was going to say perhaps a way to frame this is like the mental model, but you're about to just jump into it. I think for a very long time people were obviously, smart people were selling rips, you know? You would sell every bounce, whatever. Now at least for me mentally, like I see Ethereum making a 40 something percent move. I'm not buying Ethereum there, right? Exactly. I looked at the chart, there's like massively overbought, I use RSI, I look at

bearish divergences, it's on every single timeframe, most fortuitous, topping signal. That doesn't mean top forever. So me, my mental model has now been awesome. Let me buy the next big dip on a lot of these things as opposed to this was the time to sell for lower lows. Exactly. So this is where, as I said, patience will pay. You set your level, you pick the altcoins that you think are going to have a strong remainder of May, they're going to have a strong summer. You set your levels, you say, this is where I'm a buyer on these coins, and you enter gradually that from some people, that means you enter in two or three goes. For some people, it means you DCA with 10 orders or more.

There's a lot of different ways to do it. But the guys who are feeling the pinch now are the guys who entered late, they got bad entries and now the market is pulling back a bit and they're caught a little bit offside. I do think that the market looks fantastic here. I think a lot of coins are breaking structure to the upside, including Bitcoin, including Ethereum. A lot of coins are reclaiming key support levels, and they're looking really hot. That doesn't mean that you start top-blasting stuff on 10x, 20x leverage and hoping to catch another up only move.

Set your levels, wait patiently, execute when the time comes, and you'll do pretty well over the coming weeks and months, I think. Yeah, Nick, you had your hand up. I did. I was actually looking... It was interesting to see the VIX come down as precipitously as it has. It seems really risk offy right now. Excuse me, risk awny right now because the VIX is down to levels that we haven't seen, gosh, in like well over a year, I think. And then gold, there's talk about like the gold pullback, like last time gold dropped 9%, Bitcoin went up 60%. People are saying gold could correct 20% now.

And then what would that mean for Bitcoin? That's kind of what I'm looking at right now. But I, I echo what Phyllis says. Like, yeah, don't, don't be top blasting the, um, moodangs guys. Um, every night, just don't be blasting mudangs period. Don't don't do that. Bottom or otherwise because it's just fucking stupid. 98% of everyone in this room

should just be sitting on their hands and DCAing into Bitcoin. If we're keeping it 100%, like if you actually wanna change your life, don't, unless you're looking at charts, the way Phyllis or Scott does, or even Tom Crown, then don't just just just set it up on Kraken or whatever you want to use and just DCA and pray. And that's it. So yes, but I it

does look it. I mean, gosh, the Trump speech in Riyadh was kind of like a level set for the global economy. It was him. He shook everything. He shook the refrigerator, right? And everything fell out back in March and April. And now everything's calming down. And I really think that this Middle East situation that's going on right now is him just like,

hey, let's all just chill. Let's all just make money right now. So I'm, Follas is saying it structurally looks good. I think on the macro, it looks even better. Yeah, well, I was gonna talk about the macro, but the first thing I wanna give a plug for Follas because if you're trading and you're not listening to the advice you just heard,

you better check, look at yourself in the mirror and say what the fuck am I doing? People who use leverage and are trying to, and are top blasting are, it might work once or twice, but by the third or fourth time, you're gonna lose everything that you put in. It's a fairly classic pyramid scheme. And the funny part is, is that's what all the do or fourth time, you're gonna lose everything that you put in. It's a fairly classic pyramid scheme. And the funny part is, is that's what all the doomsayers,

and I see them every day, are saying is what Saylor is doing, and yet that is not at all what he's doing. This is 10x leverage. It's barely two or three, and it's with a huge balance sheet, et cetera. So you see that. There's this incredible dichotomy. There's almost two markets now.

I mean, yes, Bitcoin leads the altcoin markets, but what Phyllis was telling you about is how much volatility is in the altcoin markets. Bitcoin's volatility, I mean, it's almost like a damn stable coin, right? You know, for weeks at a time, and it's been doing this now for a while, you get these, you know,

we had eight months of a trading range last summer, you know, the last two or three weeks, it's been in a few percent range. I mean, the volatility, you're saying with the VIX collapsing, I don't know, if you measured a B VIX, you would see that collapsing as well. And it's important to understand why. And know, you've talked to you've had multiple guests on this week Scott where they've talked about it Which is there are patient long-term buyers who have gotten progressively less patient, but only incrementally So and all the chart signals all the charters in the crypto world continue to say it looks weak here I'll be able to buy it back in lower and it just doesn't seem to be happening And so you get this market and you know, we're sitting at 102.

The fact that we haven't seen a pullback below 100,000 in the week and a half since I joked that we may never be able to buy below 100,000 again, ha ha ha, I'm actually stunned by, right? Not even a candle. It's just simply that there's demand and the demand is participating and you're gonna start to see this stuff happen. If you look at the liquidations over the last day, it's fascinating.

Again, you know, Ether had a pretty big move down, you know, like 150 bucks. So, you know, there's a hundred million in Ether liquidated people trying to top glass that. Bitcoin is less than 60 million of liquidations. And we know that that's from people who are doing it on a hundred X leverage and just oops, Bitcoin is less than 60 million of liquidations. And we know that that's from people who are doing it on 100x leverage. Just oops, it dropped a thousand bucks, which is, you know, one percent.

And in a one percent move, they get wiped out. But it's all these that really disperse all coins where people are playing. So it's effectively, the last day, it almost completely resembles a casino, which it often does, but really specifically so. So that when you see 330 million in liquidations, it's really dispersed. I mean, long liquidations. It's really dispersed. And what is that telling you?

That's telling you that people get bored when you get into ranges. And what happens after that is anybody's guess. Although I would say that if you look at what's going on in the world on the macro side, it looks like it will resolve to the upside more like the downside. One last point. I don't know how many people here

are on Arthur Hayes' mailing list, but his method yesterday was really a masterclass in understanding where the liquidity is going to be and You know he likes to tactically trade and will tactically trade but his commentary on why the liquidity situation Is shaping up the way it does? Is extremely accurate to me and and feels right so you know we'll stop it there his basic point is the rally in Bitcoin will happen because of the global liquidity flows and That this cycle will be substantially larger than what people are expecting it to be that that that's sort of the TLDR

But there's a lot in there and I encourage everybody to read it. I Really giggled when I saw that Title I mean it was fatty fatty something and it had a picture of Lizzo. Yeah, you know, his what he was, he made a few plugs in there about the health crisis, crisis, and it is funny. It's look, he's always funny. But his point is, they tried tariffs didn't work politically, it's a loser, they're gonna, they're gonna pivot to, to capital controls in a very small way, in a way that is virtually

guaranteed to be politically popular, and they're going to use other tools at the same time, but it all boils down to liquidity. He just sees all road looking to it, and he's actually calling for Bitcoin a million by 28, which is more optimistic than me. And I've been more optimistic than him over the last year. And now it's flipped. So I find that interesting. That was fatty fatty boom boom.

I just went and looked at that. Go ahead. Yeah, hilarious. Yeah, I mean, my takes on Bitcoin versus everything else is kind of really that. It's Bitcoin and then everything else. And I think what I've been trying to kind of talk about to some of my people is you've got to have a Bitcoin strategy. For me, that's buy and hold. I don't trade Bitcoin, but I literally trade everything else. So when you see these two days of green, what I like to do is kind of go back in there and say, OK, what moved the most? Because chances are they're going to come down, but they're also going to move like that again when you get that 24, 48 hour move. So you saw Ethereum move,

a great way to fast track your Ethereum holdings or get exposure to Ethereum without Ethereum itself. Just go look, Pepe and Brett were like those two meme coins. But again, I think the biggest thing is you got to look at like what meme coins are for what they are. Some people just look at it and say, Oh, this is my next chance at Bitcoin. It's like, as long as you're looking at it for what it is, and you look at it as a trade, and it's a way to acquire more whatever Bitcoin or you want to put that money in the stock market or real estate or whatever. That's the way I kind of approach it. You just got to be real with yourself and what it is.

And so, yeah, I mean, that's kind of my take right now. BitTensorTAL is another one, like the whole AI thing. The SWE ecosystem. I've been trading the hell out of the SWE ecosystem. Assets like Deep and Walrus, if you go look at this most recent push, that's where the liquidity is. So you just kind of, you know, liquidity moves around in the altcoin market.

A lot of this stuff is just recycled right now. We obviously aren't seeing a ton of new retail money coming in. So when the market decides to pump and altcoins go up like that, what moves the most chances are they're gonna move the most again, you know, the next time you get you get that move

Boris The last I love that you guys are so deep in the weeds and understand and can do this that I used to aggressively Trade all coins, you know seven eight years ago, but man, I'm just too old for this shit Like I wouldn't even know how to trade something in the suey ecosystem, but I do own some suey. So at least I've got that going for me, which is nice. I think we're pretty much at wrapping time here, guys. So we're going to go ahead and shut it down. Give everybody on stage a follow.

Don't get fished into sending funds to any idiot who's texting you about Coinbase or Gemini or 2FA. And speaking of idiots not to get fished by, do not get, I shouldn't say this out loud, don't get fished by the IRS sending you a letter telling you that you might vaguely, potentially, maybe in some world owe them money, but they don't know for sure.

But maybe you should tell them that you do. Don't do any of that either. Ignore those letters unless, of course, you just haven't paid the taxes in a few hundred years. Maybe then you should call Clinton. Otherwise, everybody in the audience, give everybody on stage a follow and we'll see you back here tomorrow paid the taxes in a few hundred years, maybe then you should call Clinton. Otherwise everybody in the audience, give everybody on stage a follow and we'll see you back here tomorrow at 10, 15 a.m.

Eastern standard time later.