The Wolf Of All Streets - Institutions Are Getting Ready For The Next Bull Market | Friday Five

Episode Date: September 8, 2023

Breaking down the top 5 most important news of this week in crypto with Nathaniel Whittemore! Nathaniel Whittemore: https://twitter.com/nlw ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   ►►OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $60,000!  👉 https://www.okx.com/join/SCOTTMELKER  ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #FridayFive Timestamps: 0:00 Intro 1:50 Solana & Visa 7:00 Crypto accounting revolution 12:00 Genesis Trading 25:00 Ethereum Spot ETFs 31:20 LBRY case 37:30 IMF & crypto 40:15 Wrap up The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

This has been one of the biggest news weeks that we've had in the crypto space in a very long time. Everything from Ethereum spot ETFs being proposed to all the nonsense happening around GBTC, Grayscale, Genesis, and DCG, Visa and Solana doing a partnership, and even more. There were so many stories and it took us a lot of time to actually cut them down to our Friday Five. I've got my co-host NLW here with me today to review the top five stories of the week. You guys don't want to miss it. Let's go. What is up, everybody? I am Scott Malker, also known as the Wolf of Wall Street. Before we get Let's go. How's it going, guys? Yeah, so it was pretty challenging this week to get down to a top five, in my very humble opinion. So much so that I kind of like listed a few honorable mentions here.

I'm not even in the top five, apparently, as JP Morgan moves into deposit tokens for settlements. Stake was hacked by North Korea. Once again, how can we stop North Korea from hacking us? We have apparently the U. the US authorities and FBI looking into DCG and the IMF saying not to ban crypto. And those aren't even in our top five stories. Pretty crazy week, I would say. But what is, is Visa tapped Solana and USDC stablecoin to boost cross-border payments. Do you want to dig into this for me? It seems that they already were piloting this for quite a while. They've been doing it on Ethereum, but that they've now moved on mostly to Solana because it's faster and cheaper.

Yeah, I mean, I think there's a couple of things that are interesting about this. One is, you know, I think the overarching is Visa just absolutely plowing ahead with the integration of crypto rails as part of its normal course of business. I think what's meaningful about moves like this is that you're sort of moving out of the realm of, oh, it's a cute pilot project for the sake of headlines into this is just another option to settle transactions, which is the core business that we're doing. And I think putting kind of a fine point on that is the fact that this wasn't like, I don't believe at least that Visa sat down with the

Solana Foundation and cooked up something big. This is just Visa tapping into existing public infrastructure, making a decision to do it, which is exactly what you'd want to see in the normal course of sort of crypto adoption is again,, not sort of headline-driven partnerships, quote unquote, but just integrations of infrastructure. And I think that's what we saw here. Yeah, I agree. And Kai Sheffield, who's the head of the Visa side of this, did a great thread on it and said exactly what you just did.

He basically said, listen, this is how, in this thread, you guys should dig it. He said, this is how Visa works, right? When we settle a transaction, it's between the merchant and the bank. And this is just a better way to do it that we're piloting for anyone who wants to use USDC. They're effectively saying what we've known all this time is that there is a better way to do this, a faster way that eliminates intermediaries and settles even quicker. I mean, it seems like such a layup, but like you said,

this didn't require them going to the Solana Foundation or calling a CEO. They just said, there's an existing technology here that can make our business better and are adopting it. I think this is just absolutely huge. And yet again, one of those things that's not making noise in this bear market or this crypto winter, whatever we call it, that will be in a year, one of those narratives that we look back on and go, holy crap, Solana is working with Visa. And this is how Visa is settling their transactions as we see Solana go up by a few hundred percent. I really think these are going to be meaningful stories in a year when the bull market picks up. I think one of the things that is going to be sort of fascinating to see is Solana has had a real trial by fire,

which it was always going to. Anytime you have an alt layer one that rises to be sort of the darling of a bull cycle, it has to then go through a bear cycle and see if, was it just venture capitalists taking advantage of a new narrative to make a bunch of money or does it have actual staying power, right? And Solana had it extra hard because of its association with Sam and FTX and Alameda. And so the fact that you still have people building on it that range from, you know, small projects all the way to sort of Visa, I think is testament to the fact that it's sort of gone through and is working its way through that trial by fire. Yeah. In fact, I mean, from a market perspective, you would think that because

of the relationship with SBF and FTX, that it was almost beaten down more obviously than it should have been and should be one of those that actually has further to rise, right? I mean, the reversion to the mean for Solana, when you see the things Ethereum doing and that Matic further to rise, right? I mean, the reversion to the mean for Solana when you see the things Ethereum doing and that Matic and Polygon, these partnerships, should be tremendous to see. There's still a ton of building happening on Solana. For what it's worth, that's been my assessment of a lot of,

you know, we got down to, what was it? You know, 17, 18,000 in Bitcoin, you know, sort of the lows post FTX. And we decoupled from the larger macro to the downside. And I think a lot of what we've been doing since then is to some extent finding where the bottom was supposed to be for this cycle, you know, to the extent that there is such a thing. You know, so it's always been kind of interesting to see people kind of, you know, why are we at 26 or 30 or whatever it's, you know, my feeling has been that it wasn't necessarily some sort of, you know, big move. It was just that reversion to the mean of, you know, this thing isn't totally dying. And we're back to sort of where the bottomyear cycle, we had what would have been the bottom on the chart when people view that metric in different ways, but where weekly RSI was oversold and all this, bottomed around 20. And then all of a sudden we got this sort of FTX black swan, but retraced that across the entire market in just two months. So I really do think that right now, 25K is just sort of fair value, right? It's where price was before and after Grayscale, before and after BlackRock, and before and after sort of FTX. So I agree with that. I think that that means this is just that part of the cycle. Yeah. There's something to be said for people like not being

real stressed out about where the price is too, just as a psychological indicator of that. Like, yeah, it would be nicer if it was 30, but at 30, we're getting kind of excited. At 26, we're just sort of hands up, shrug. I guess this is kind of where we are for a while. Absolutely. So I think the next story, and I think that this one is one of the biggest stories of the year actually, is FASB's crypto accounting shakeup could learn more corporate investment. Michael Saylor and others argue for anyone who wasn't paying attention, you've probably

watched the show, you've probably heard the nuance of this. But effectively, we had Michael Saylor and MicroStrategy buying Bitcoin, sparking the last bull market. I think it's fair to say it was like August, 2020. And that led to the massive run-up Tesla buying, Square buying. And we saw that Michael Saylor sat down with, I believe it was 2000 CFOs of companies. We were all so excited that February of 2021, he was going to teach them all how to put Bitcoin on the balance sheet. Crickets, right? It absolutely didn't happen. And it turned out that was a result of the way that they had to account for their Bitcoin on their balance sheet, which was effectively to peg it to the lowest point it was during that quarter and then take the loss. And even if it was higher, you couldn't take the gain. Well, those rules are now changing

in 2025. So I don't think that this is a massive catalyst at the moment, but this opens up just huge potential in the future. Yeah. I mean, it's funny. I love the quotes around this one because the people who are on the FASB were basically like, it's very rare that we get to do something that's incredibly obvious, time-saving and right. And, but this is that, you know, and that's why it had a unanimous vote. It just, the way that it was accounted for didn't make sense before. And to your point, Scott, you know, I don't think this is going to be a theme too. Anytime you start to kind of look at institutions getting involved in some way, there's a temptation to view every story as it should be a bigger deal

than it is. But really, it's all about the slow accumulation of normalization. And this is just another part of that, you know, no one is going to make the decision to put Bitcoin or ether anything on their balance sheet, because they know how to account for it. But they might have come close and not because they didn't know how to account for it, or the way that they would have accounted for it didn't make any sense to them. So it's kind of a barrier clearing process that I think is part and parcel of where we are in the cycle as well. That's right. Now, if they want to, they can. And before, if they wanted to, they couldn't unless they were out of their mind and wanted to piss off their board and shareholders, right? I mean, Michael Saylor, obviously,

here saying fair value accounting is coming to Bitcoin. This upgrade to FASB accounting rules eliminates a major impediment to corporate adoption of Bitcoin as a treasury asset. Like I said, guys, this is a 2025 thing, but this is going to give those CFOs and risk managers a long time to actually consider this. And then James Lavish, I just want to point out, he did an incredible thread on this. If you're looking to have it explained to you, I think in more layman's terms, this is the thread you want to go to. Now, listen, I think we all are clear on that one. This next story, we had to effectively rope in five different things because this is everything grayscale at the moment, and it's a monster headache in my opinion. But the first one that I think went completely unnoticed as part of the Genesis story is they're shuttering their crypto

trading desk for the US market. This is their OTC trading desk. I'm going to be honest with you, Nathaniel. I didn't know that they still had a trading desk. Yeah, I think that's why the story went unnoticed because people would have assumed that it was just gone already. Right. But I really thought that in their bankruptcy, they had capitulated and that their business had basically wound down, but apparently they were still a major player. And this is important because this is how huge entities largely buy and sell Bitcoin, right? They're not going on Coinbase and placing a bunch of bids. Michael Saylor might be, honestly, but most of them do this through institutional OTC deaths. And this could leave a gaping hole. I mean, Max Boonin, who I love said, so Genesis trading stops

trading. Why? And no one on crypto Twitter is commenting on it. But at the same time, we see the news. Coinbase begins offering crypto loans to large US institutional investors. That's the other side of Genesis's business. But clearly, Coinbase is coming into is stepping in to try to fill this Genesis vacuum. Yeah. I mean, it is a big loss to have sort of a prime brokerage-esque service, the most notable one, totally decommissioned. But at the same time, you have to think that any institution worth its salt, any investor worth its salt saw the writing on the wall,

you know, basically probably as soon as withdrawals started being halted in November and started making other plans. So even if there was still business going through there, you have to think that some of that was starting to shift. It does leave a vacuum, but you know, nature abhors a vacuum and so do crypto markets. And especially with so many institutions now lurking around the edges of the space, building infrastructure for it, you have to think that that gap is going to be filled by more than just crypto native companies like Coinbase real, real soon. Yeah. I think we all know that it's going to be the BNY Mellons and the JP Morgans. I mean,

we already talked about at the very beginning that that was an honorable mention because I think we need to see more from that story. But this isn't all that's going on with Genesis at the moment, right? So Genesis Global Capital files for over 600 million in unpaid DCG loans, Cortox. To be clear for anyone who doesn't understand this story, Genesis is a subsidiary of DCG, much like Coindesk is, which is being sold for pennies on the dollar, much like Grayscale is, obviously, who have the Grayscale Bitcoin trust. But this is basically DCG taking a loan from Genesis, their own company, Genesis now suing them because they didn't pay back that loan, suing themselves for a loan that they took from themselves that they failed to pay back to themselves. Is that a correct summary of this? Yeah. One thing that I didn't notice that I had

been looking for was the crypto legal court to explain to what extent this was procedural and sort of something that was not necessarily expected, but made sense in the context of bankruptcy and might actually be sort of all part of the process versus something that really suggested a huge riff or a breakage within these firms. It seemed more like the latter, but my first instinct with legal stuff, especially with someone as savvy at operations as Barry Silbert is that there may be some normal process around it, but I can't really figure that out. Yeah. So we dug in a bit on Twitter spaces, actually, sort of as this news was coming out. David Bailey, obviously, is an activist around GBTC, and we had a few of the

lawyers who were involved. And I think it's a bit of both, to be honest. So when it says Genesis is suing DCG, knowing that Genesis is in bankruptcy means this is the lawyers who have taken over the bankruptcy for Genesis, right? We keep seeing the same thing. We keep seeing these stories of Alameda doing things and FTX doing things, but that's not the original, obviously, executives of the entities making those decisions. So, yes, I think a part of this is trying to claw back some money basically for Genesis creditors. But by the way, apparently getting rid of their OTC desk also makes that much more impossible, much less possible, which was in that first story. But a lot of this is definitely trying to figure out whether what DCG did and Barry Silbert, who is obviously very smart, was fraud or not. And that's why the FBI is looking into this. That's why the Winklevii are sort of raising the red flags. I mean, you think about this,

Barry Silbert and DCG, they knew Genesis was going to be bankrupt, but still took a massive loan after knowing that, right? It was basically a piggy bank. And if you look at the terms of this loan, it's basically very low interest and the interest didn't need to be paid until the entire settlement of the loan at the very end of the loan. So no payments during. So I think it's just a little bit suspect. I don't like to go tin hat, but basically it seems that there's no real wall between these companies. And it was basically the piggy bank for DCG when they saw Genesis in trouble to take some money. And I think that's probably going to emerge as the bigger story. Let me ask you a question, which takes this in a slightly different angle, but I think it's

relevant. When FTX collapsed, the first few weeks, everyone was basically looking for other fallout, right? They were looking for dominoes. And the big one was Genesis, right? That was the biggest sort of thing that seemed like a direct result. The other one that people have had... So subsequent to that, DCG and its potential failure has been one of the two biggest going concerns, right? One of the big things that could knock the sort of industry off its rocker once again. I think that sort of towards the end of January, towards the beginning of February, especially when they announced sort of a provisional agreement, which ended up not being a provisional agreement, the DCG pressure started to come off a little bit. The other big

one is obviously Binance. And on any given day, we could fill all five of these stories with the latest Binance FUD, right? It's just sort of the nature of the beast right now. It is. How, my question, because there's a lot of speculation about this. How much actual damage to the industry do you think there would be in the context of whatever, the FBI actually going after DCG more? And, you know, by that, I mean, how much do you think the industry has sort of internalized and just sort of like, you know of almost cordoned off these things? And maybe we can save the same question for Binance for another week when we actually do that. long period of time that the market has had to digest these possibilities makes them potentially

a little bit less terrifying than they would have been if it all piled up, call it December, January. I agree 100%. I mean, we've even seen Binance market share basically go from 80% to 30% over the course of this year. The smaller they get, the less impactful their collapse will be. I think that that's fact. And I think that most serious people are not doing business with DCG based on the same sort of thinking. So to your point, I think the longer this happens for both Binance and DCG, the less impactful it will be, especially if this pushes into just a natural next cycle. I found the tweet I was looking for, by the way, that just gives a pretty good quick summary of this from AP Abacus, who gets all the insiders at the SEC and such.

Update. Attempted to keep it as simple as possible on DCG stuff. DCG knew 3AC was insolvent before anyone else. Bought their GBTC bags. If you guys remember, BlockFi and 3AC were the biggest holders of GBTC. DCG knew FTX was insolvent before anyone else. DCG took out huge loans from themselves. Genesis is controlled by DCG.

DCG knew Genesis was insolvent before anyone else. DCG knew that it had forever to pay back billions in loans through a bankrupt Genesis, which they controlled. Buried DCG went all in on the GBTC and Grayscale, again, a company they control, carry trade and lost while also paying themselves huge fees. Incest at best, fraud at worst. So, I mean, listen, I can't, you know, there's a lot of smoke.

That's all I'll say. There's a lot of smoke. I think it is also notable the degree to which the Winklevosses have been comfortable going full scorched earth. That is a very costly strategy. It's costly to them. It's costly to the industry, which makes it more notable than just sort of a billionaire catfight. Yeah. And so meanwhile, as we try to put a bow, which is impossible on everything DCG, the SEC should expeditiously approve GPTC conversion, says Grayscale. You have Michael Sonnenschein, the CEO of Grayscale, saying that they're basically pushing for an immediate

conversion to an ETF because, hey, why not? We won. And then you have the actual filing here. So in the midst of all of this, another DCG subsidiary, which is Grayscale, GBTC, has won, as we know, against the SEC, and now are saying, listen, we want to get in, we want to meet with the SEC, sit down face to face, and we want this to happen right now. Which I also find curious because, frankly, the worst thing that can happen to DCG as a company is for GBTC to convert to an ETF. All of the money they're making is because GBTC is a closed-ended fund and a trust, and they're charging huge fees to do it. Those fees would go away with an ETF conversion. Yeah. But that, I think, it has to reflect an assessment that the writing's on the wall and that it's going to be unwound some way or it's going to convert.

And there's also a lot of psychological and market signaling that matters. If Grayscale were able to get in there, get the first ETF, that is a projection of strength when they are clearly digging under every couch cushion, trying to figure things out and probably calling in every favor that they have. So to the extent that their business looks like it's rebooted in this very positive way, sort of heading into a new cycle and a new era in crypto, I think that there's value there in terms of their ability to go get capital from elsewhere. So I don't know, maybe that's part of it, but who knows? I agree. If you know that it's going to blow up one way or another, and if somebody else gets the ETF, that GBC effectively becomes completely useless, you need to shoot yourself in the foot

and be the first one to get there and hope that the AUM that comes in because it's an ETF covers the income that you're losing from those fees. But this is a very, very dangerous game and very dangerous situation. And if you want to talk about, I've seen some, I think, bad takes, to be quite frank. A lot of people fear that if they get an ETF conversion and the fund opens, there would be massive selling pressure on the market because all of that Bitcoin unlocked in grayscale and GBTC would basically become available for selling pressure on the market. But that does not really concern me. It's never played out like that. And in fact- Every time those huge selling pressure is going to come, it never does.

Bullish on locks is a phrase for a reason. This is a market that is entirely predicated on being the freest market that exists. It trades 24-7. It trades with fewer intermediaries and craziness than anywhere else. And because of that, it's more volatile, but it's open. So the fear of people being allowed to do what they're supposed to do is nuts. A, B, if you talk to people who have spent this bear cycle interacting with institutional investors, I had Hany Rashwan from 21Co, 21Shares on the Bitcoin Builder Show earlier this week. So he shared a stat that more than half of their funds are within 5% of all-time highs in terms of the underlying coins held. So not in terms of the AUM from a US dollar perspective, but in terms of

how many Bitcoin are in the fund, how many Ether in the fund. And he said, some of that is turnover of, you know, new people being able to smell blood and kind of take advantage of lower prices. But the majority of it is people just not being that freaked out and holding. And, you know, so the idea that somehow this one thing is gonna, you know, open up a ton of Bitcoin, whatever, it's just it never plays out like that. It seems unlikely. And even if it was, whatever. Three days later. Yeah, exactly. There will be an entirely new category of people salivating to get Bitcoin at whatever new floor has just been created. And it'll maybe not bump right back up, but it's not going to be

a long-term impairment. Yeah. Also, I have to imagine that, A, a ton of the people who've had their Bitcoin locked in GBTC all this time are institutions and are hedged in one way or another. So they would be unwinding those hedges at the same time, which would effectively account for it. And there would be an immediate and massive arbitrage opportunity here, just like that cash and carry trade I just talked about that would probably cover this completely. If there's a huge opportunity to buy or sell things at different prices on the same underlying asset, you can be guaranteed that the best traders in the world are going to find a way to exploit that, that that inefficiency is immediately going to be gone. So I agree with you. But you did just invoke 21 shares. If you had the conversation with them,

then you're the man to lead this conversation. 21 shares in Cathie Wood's ARK file for first US spot Ether ETF. Man, the SEC is just under fire right now. How many applications for how many different crypto products can they continue to reject? I think that there's a the pressure i mean we talked about this last week that there's an opportunity for the sec to use the the grayscale decision against them as a moment to sort of pivot basically and say you know we've never been against reasonably structured products you know here's a thing right um i think that that's sort of part of what people are smelling around a potential spot E3 ETF as well. It's just that when you kind of take a step back and you assume that the broad take of sort of the mainstream regulator is what are reasonable protections, what are

reasonable products to be offered, things like spot Bitcoin ETFs and spot E3 ETFs look real reasonable, you know, especially as they have gone, you know, listen, we talked about this last week, too. All of the promoters of those products are taking up that narrative where they said, you know what, it wasn't the wrong call to push these things back in the past. The market has gotten a lot more sophisticated. We've got surveillance sharing agreements that right. Like they are making that argument, even if the SEC isn't. And it's very clear that, you know, the judicial branch doesn't seem to have their back with sort of specious and novel legal arguments. And it doesn't seem likely that the way that policy gets made eventually when it gets made is going to be so strict as to deny or to have it make sense to

deny things like Bitcoin spot ETFs and Ether spot ETFs. I agree. And then of course, right when Cathie Wood, ARK21 shares came in and filed, VanEck couldn't be left out of the party. They came in later the same day. It makes me wonder, you don't see a Bitcoin spot ETF, I mean, Ethereum spot ETF filed for at all. And then all of a sudden, you see two in one day. Is that coincidence? I literally have no idea, but it seems like it takes more than a couple hours to decide that you're going to file for something like this. How was VanEck right on their heels?

Lots of drawers with lots of applications ready to go that have been through the entire internal process. I mean, because this is such a weird, it is such a weird artifact where the broad sense has been borne out that ETFs have such a powerful first mover advantage. I mean, we've seen it with gold and other ETFs where the first one to market just accrues much more than others. It feels like part of the strategy is just to have things. I mean, there's probably other crypto asset ETFs that are sitting in drawers, applications that are waiting to go as well. And it's just sort of a question of when is the right time to actually file them. Yeah. And from what I've heard, speaking with James Seifert from Bloomberg,

who's obviously one of their two ETF experts, the expectation seeing all of these filed is that, A, we know that they say 75% chance of a Bitcoin spot ETF approval by the end of the year. I still think that's aggressive, to be honest. But very, very likely that in October, about a month from now, we will start to see Ethereum futures ETFs approved ahead of any of these other spot ones. And that Valkyrie's Bitcoin-Ethereum blended futures ETF that they applied for would likely be the first because it's the closest to the Bitcoin one. But it does seem that the SEC has almost no argument they can make against an Ethereum

futures ETF because we already have the Bitcoin futures ETF. And by the way, a 2x leverage Bitcoin futures ETF. Yeah. no, I agree. I think at this point, it's much more about politics and saving face than it is about rational decision making. I agree. And so coming into the last story, which is sort of our bucket of regulation and legal that we have happening here. CFTC goes after, I'm going to assume it's pronounced open, other DeFi operations in enforcement. Sweep, it was open, 0x, and Deridex. By the way, I was reading this article and I laughed

because they said they had reached out to all of them for comment, but they couldn't find anyone at Deridex to reach out to for comment. There was no human being that they could track down in all of their research as Coindesk to find a single person who ran or even worked at this place. But these are small fines, $250,000, $200,000, and $100,000, but basically saying that these three offered illegal derivatives trading in the United States. So this is clearly saying, hey, you can't operate a leveraged DeFi protocol in the United States. So this is clearly saying, hey, you can't operate a leveraged DeFi protocol in the United States. Obviously, we already saw SushiSwap, which isn't leveraged, be attacked.

But this is sort of a statement, right? These are small, small settlements, but I think a huge statement on what these companies can and cannot do in the United States. Yeah, I mean, this is the playbook we've seen. Go after small actors, use it, hold it up as not only a win for sort of the politicking in the agency, but also as precedent that can be, you know, wrapped to other cases, because these people aren't going to fight the case, right. So you sort of have these summary judgments that, that basically, you know, the SEC argues constitutes policymaking. mean it is this is this is the definition of regulation by enforcement when people use that phrase is taking you know the agreement of parties that uh are admitting culpability or or at least paying fines even though they technically don't

have to admit culpability and saying that that applies to everyone else as well you know they're they're I think that the defFi was always going to be a battle and there are, you know, it's going to take huge, huge discussions in Congress to figure out where those lines are. But the SEC is effectively, I think, shoring up their side of the argument

with these sort of decisions as their sort of entree into that conversation. Right. Just to be clear, though, what makes this slightly different is 100% true on the SEC. These three are the CFTC, right? These are not huge. No, I'm saying these aren't huge multimillion settlements like the SEC goes for.

But this is the CFTC getting in on the party saying that, hey, maybe, you know, doing a little bit of regulation by enforcement works for us as well. Following the Gary Gensler, let's attack Kim Kardashian so no other celebrities do anything playbook. The CFTC, you can kind of read through the comments how different folks have reacted to the events that have transpired over the last, you know, 12 months or whatever. And the CFTC clearly took umbrage with being associated with Sam as sort of FTX's preferred regulator, because there was a very distinct and, you know, serious uptick in aggression following FTX that felt more from the comments sort of around it, you know,

about sort of making a point that the CFTC wasn't some sort of pushover regulator. Now, that might have also been a political calculus because there is still jockeying for which regulator is going to actually kind of own these markets or, you know, different parts of the market. And maybe they thought that, you know, they were impaired basically by that association as sort of the crypto industry's preferred regulator. So they had to sort of jump to. But again, there's just so, so much politicking involved versus, you know, just good faiths efforts to try to figure out the industry.

Maybe in this case, also, there's an element of the CFTC generally is viewed as the regulator for exchanges. So it makes sense that these three would fall under the purview of the CFTC. And I don't think honestly that anybody's going to attempt to offer leverage or derivatives trading in the United States now, even based on the three of these. So as quiet and small as they are, I think it's actually really big news. And the other thing I think that's really big news, Hal, speaking of the SEC, Library decides to fight. Blockchain firm files notice of appeal against SEC. Now, I think this is huge because Library lost and said, it's over, we're winding down, we're out of here, right? And literally said, we're not even going to be in business. And now, in my opinion, because they've seen Ripple win, and they've seen Grayscale

win, and there's now a roadmap to beating the SEC, they've decided to appeal and they can now make the case that, listen, if Ripple's a win, we should be a win. It feels like there has to, like, where is the money coming from to fight this, too? I mean, there has to be some external catalyst. I mean, look, the folks involved in that were very begrudging of it. I mean, you could see from the kind of ongoing social conversation that it was I mean, it really laid bare this strategy of of leaning on an actor that couldn't defend itself, you know, even though that they thought they had good legal things because it just would have been so expensive to fight. So, you know, I wonder if there's sort of a, you know, a ghost

of the machine who's now kind of come in as well to say, you know, here's the blank check to fight this. Yeah, I don't want to quote the numbers because they'll be wrong. But I seem to recall that library's original penalty from the SEC was something like $20 million. And in a rare move, the SEC lowered it to $130,000 or something like that because Library had no money to even pay a penalty after this entire suit. So to your point, there's literally no way they could be appealing this when the SEC has looked into their books. We all know that they have no money. Where is that money coming from?

I don't want to tinfoil hat it, but somebody really wants Library to fight back against the SEC here. Listen, I'm for it. So good for them. I think we're all for it. Actually, right after this on Spaces, I have Jeremy Kaufman from Library,

who is, I don't know if you guys have ever listened to him, but he is about as big a character as you can get in crypto. And he's going to join to talk about this. So I can't know if you guys have ever listened to him, but he is about as big a character as you can get in crypto. And he's going to join to talk about this. So I can't wait to hear him rail against the SEC once again. It's always good for a quality soundbite. But do you think that Library could actually win this?

Do you think that there's, I mean, we're not lawyers, but do you think that the precedent now that's been set could help them from these other cases? I think that, so one, there has to be a legal assessment that yes, they can. Or here's the other thing. It felt very much like they didn't even have the chance to fight it. There was no, it wasn't even a consideration at the time, even though they felt they had really strong arguments. The assessments that I've seen from other crypto legal folks were basically, it's a real bummer that this one got lost in the shuffle and that we weren't paying attention

because there could have been a really good fight here. It didn't seem like a slam dunk fight for the SEC in quite the same way that some of their others have been. So it may be that there's precedent. It may also just be that it's not so much precedent specifically in terms of what has come through rulings, but the fact that the demonstration that the courts are looking at things from first legal principles and actually understanding or trying to understand what's going on versus just sort of assuming that

the SEC probably has it right and moving on with their day. Yeah, I think they probably got more money and better lawyers, to be honest with you, because they were sort of the first sacrificial lamb of the industry against the SEC, at least on a grand scale. And anyone who knew the story, Jeremy Kaufman from Library literally was the first person who heard them say, come in and register, meet with us. He's told the story in my podcast. He went into the SEC, sat down with them, and basically gave them a full PowerPoint presentation on why he wanted to do what he was going to do. And then they just sued him outright for the unregistered security offering. So he literally presented it to them. I think Ripple spent $100 or $200 million defending themselves. Library spent,

I don't want to quote numbers again, but something like five, right? They didn't have the money to do it. So they didn't have the war chest and they didn't have good legal representation and they made it much harder on themselves. So maybe they can come back and circle back. I see you definitely digging for something right now. So that's the other, I mean, the, well, the other thing that I was thinking about is that, you know, outside of just sort of a, you know, an external funder, it also, it looks like Perkins Coie is representing them. It could be a law firm that wants to, that thinks there's a really strong case and wants to, you know, make it, I mean, law firms do this all the time, right? If they think thinks there's a really strong case and wants to make it. I mean, law firms do

this all the time, right? If they think that there's an opportunity for a precedential case that they can sort of associate themselves with, it's very good for business. So I wouldn't be surprised if there's a piece of that going on. But again, whatever combination of things it is, let's go. Yeah. People don't realize, I think, how common that is in the legal system that a law firm will come in and do it pro bono so that they can make the case and make a name for themselves or that they effectively just take all the money from the settlement as a part of it, or that actually there's a huge business in the United States of private equity and venture capital type funds backing lawsuits. And then the person who actually has the legal wins,

quote unquote, ends up with like 5% of the money. It's actually a crazy story. It must have been in the 1980s. My dad invented disappearing sunblock. So you would put it on for kids and it would be purple and then it would disappear. And now I can't remember, it was Johnson and Johnson, or one of the huge companies just basically came out with it. And my dad said, I have the patent on it. And he had this huge conglomerate that came in and backed the case. They won the case, and my dad got nothing. Because it was like millions of dollars that people had to pay for the case, and he won, and his patent was honored, and yay.

So principal, it was a pretty crazy story. That's it. We went through all five. We knocked it out in about 40 minutes. Pretty impressive, I would say. That's it. We went through all five. We knocked it out in about 40 minutes. Pretty impressive, I would say. We had the honorable mentions. I know that you have a show coming out today on the IMF. If you have just the quick, brief highlights of that, because I think that news has gone largely unmasked. People can just listen to the breakdown and hear it. Yeah. No. The TLDR is that the IMF came out and the Financial Stability Board, I think, came out with a paper that was requested by the G20, which is currently being

chaired by India as part of an upcoming meeting that's meant to be sort of a comprehensive set of recommendations around crypto asset rules of the road effectively. And so it's almost think of it like an updated summary document of positions. So this is something that the member states could view and see what these institutional bodies or international bodies rather think are the ways to think about these issues, where the risks are, where the opportunities are. Things that stand out are one, very much a continued nervousness around stable coins. There are a number of parts of it that basically argue that stable coins are going to be the fastest transmission mechanism for volatility within

the crypto space to move over to the traditional financial world. I think that people who pay attention to this are probably rightly skeptical of the concern around stable coins, as opposed to CBDCs, you know, from these international bodies. But that was one piece is sort of more of a more of the same, I would say, the piece that was picked up on, and I think rightly so, was that there's an acknowledgement in the report that outright bans are very unlikely to work. And that, you know, like water flowing, it's just going to move somewhere else. And so to the extent that you're there, I mean, they're talking to the G20, they're talking about international cooperation and international norms, a ban of, you know, sort of outright

ban of activities in one area is likely to just push it to some other area. And so there's a shift in tactics to very sort of targeted regulatory, you know, actions. So they point to, you know, Dubai rules against privacy coins, and a couple other things. So, you know, what it's not is the IMF saying, hey, crypto is great. Now, that's definitely not the case. It's more just an acknowledgement that if... I think NLW just froze on us. I don't know if he's going to come back, but his face looking a little unflattering. Is that just for me or did it freeze for you guys too? I'm going to go ahead and take him off. I think that was a great summary. It seems like in...

Oh, he's back. There you are. You froze there for a minute, so I didn't want to leave you doing the YouTube thumbnail face. No, it's... Anyways, that's the gist of it is IMF is saying, despite our best wishes, it's not going to die. So you know, probably get smarter about how you're going to try to target it. Yeah, absolutely. To me, it just sounds like one of those, why ban it when you can try to control it type things. Yeah, pretty much. All right, right guys that that's all we got obviously this

will be available on my audio channels and i'm assuming on yours and on your youtube channel as well uh if you guys want a better version of this you should probably go to his audio channels because he'll do a much better intro and uh we all know it'll be much more professional than whatever i come up with on the spot at the beginning man thank you very much i'm really coming to enjoy this i see that in the comments, people are really enjoying it, saying they're going to listen back twice, that they love the back and forth.

I think the format's great, and I can't wait to see how this continues to build, man. Thanks. I hope you have a wonderful rest of your Friday. Yep. Have a good weekend, everyone. All right, everybody. Bye.

Thank you. Cheers. Let's go. All right, everybody. Bye. Thank you.