The Wolf Of All Streets - North Korea’s Lazarus Behind $1.4bn Bybit Hack | Crypto Town Hall

Episode Date: February 24, 2025

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Morning, everybody. Happy Monday. Welcome to Crypto Town Hall. Every day on X at 10 15 a.m. Eastern Standard Time hosted by myself. For those of you who may have missed it, we did an impromptu spaces on Saturday interviewing him and digging very deeply into what happened there. Quite a wild story. I'm sure we will get into it at least to some degree today. Although if you're really looking for information on what happened at least fully updated for about 48 hours ago, I would recommend going back and listening to that. I believe it's probably yes, it's the pin tweets on the crypto town hall accounts.

But as the market has somewhat absorbed everything that happened over the past few days. We're now looking at Bitcoin down trading at 94,500. Down day here, Ethereum obviously also down, but surprisingly relatively sideways for having $1.4 billion worth stolen by the North Koreans. Or if you ask other people, that's all a grand conspiracy theory with no evidence because that's how stupid X is. But Solana absolutely getting smoked right now. Down, open the day at 167 trading at 152. Not sure exactly what's happening with the market. I would imagine we can get into it. Solana likely as a result of just dramatic reduction since Libra in interest in meme coins in the meme coin casino. But not sure if there's something else going on there.

Before we dig into all of that first, since we have Matt Hogan here. Good morning, Matt. How are you? Doing well. Glad to be here. So we had a couple crazy weeks here. I saw a story with about 500 million, I think, in net outflows across crypto products last week. So obviously, not a surprise when we see sort of choppy or boring

price action. But there's actually an article I just brought up that I wanted to ask you about. There's one point telegraphed says only 44% of US Bitcoin ETF buying has been for hodling. This is from Marcus Thielen at Tenets Research. He says that the demand for Bitcoin as a long-term asset could be significantly smaller than the media portrays and basically says that that means 56% of US Bitcoin ETF buying is effectively for arbitrage or the carry trade. Does that align with anything you're seeing a bit wise?

Well, I think a significant amount is for arbitrage or the carry trade? Does that align with anything you're seeing a bitwise? Well, I think a significant amount is for arbitrage and the carry trade, but I don't know how the data gets to anywhere near 56%. I think it may be 20%, 25%. So it's definitely a real amount. You know that when you see the list of hedge fund names at the top of 13 F filings, right? They're not there going long only Bitcoin. That's not what they do. That is carry trade money. But I think 56% sounds totally extreme. I think it's more like 20, 25%, something like that. And that's part and parcel of any ETF that's not unique to crypto really.

They're held by short term traders, they'll hire for various purposes, and by long-term investors. So that number is directionally right, but I think probably two or three X bigger than what what I think is real when I look at the data. And so are the outflows from last week, or assuming that that tape is even accurate, because I know everybody calculates these things

in different ways. Do you think that that's just a result of this choppy market? Do you think it's related to Libra, the hack? I mean, can you ever point to specific things or just sort of the ebb and flow of a choppy market? Yeah, I think you can point to actually a narrowing of that basis trade is the primary reason for that, those outflows. I don't think any of the long-term investors, you know, honestly, even knew about Libra. I was speaking at a number of institutional and actually one retail conference, and there were exactly zero questions about Libra. I asked one audience how many people had heard

of it. No hands went up. That's just existing in the crypto echo chamber. I actually think Bybit is as well. I think for the you know, for the most part, that was just a narrowing of the basis trade. You know, maybe there's some, you know, short term traders who got out as well, but I don't think it's a fundamental change. I think it's mostly hedge funds narrowing up. And your mind is there then a catalyst to resume massive inflows? Look, yeah, I think I think there's going to be a steady drip of massive inflows? Look, yeah, I think there's gonna be a steady drip of massive inflows.

I think the three horsemen of insatiable demand, ETFs, corporations and governments are all still moving into this asset long-term. I think we'll probably have inflows. We'll see what the basis trade does this week. That definitely can provide a short-term overhang. But the long-term story is still good. I still think we're on track for north of 50 billion of inflows this year.

Nothing that we're seeing it bitwise with our clients tells us things are slowing down. So yeah, I think this is just a short-term pause. The long-term part of the market, whether you think that's 50% of the ETFs are like I do, more like 70 plus percent, isn't even actually paying attention to the negative news. So I think we'll see the inflows come back, Scott. Yeah, that makes perfect sense. Dave, we haven't spoken in so long. I just want to point out something that's important and Matt knows this, but it was

kind enough not to talk about it. The basis trade is not a monolith. The reason it exists is because there are brokerage firms out there, very large ones, one of which I used to work with. I started my career at Morgan Stanley a long, long time ago in a galaxy far, far away, cannot touch physical Bitcoin. I know the word physical Bitcoin is meaningless, but they can't touch spot.

And so when they do derivative trades for their clients, they have to use futures. When they are an authorized participant that have to make prices in big ETF blocks, they have to use the futures. So as a result, the futures are traded at a premium ever since we started with cash settlement. Now, eventually this year, they will be allowed to,

once Paul Atkins is confirmed and they manage to get some safe harbor set up, they will be allowed to trade in the spot markets and that basis will disappear. That is not a bearish thing because fundamentally, the reason the basis exists in the first place is because there's demand from their customers to buy Bitcoin through less conventional means, things like principal protected notes or things like

non-deliverable forwards, et cetera, because the clients don't want to worry about the aspects of Bitcoin in terms of they read about hacks, etc. So understand that even the basis trade is being driven by fundamental demand. It's just not demand that is from the ETF side. So this article is basically, to use your favorite words, got a nothing burger. Whether the demand will decrease or not, that's a different story. And I think Matt well understands, and is probably closest than anyone on the panel, to what the demand drivers look like. But they seem pretty healthy to me.

And honestly, when I see this stuff, people always forget markets are interrelated. It's just like the idiots who constantly chirp that, oh, the demand is from the, the supply is from the OTC markets and worry about that. The OTC markets merely reflect the the the supply from the totality of the spot and derivative markets throughout crypto. Because the OTC decks are not taking these huge risks. And they don't have like inventory. It's not like they're they're buying computers, holding them in

warehouses and waiting for people to come and buy them from them. No, they're accessing liquidity in the market. So all this stuff's interrelated. And this stuff is just nonsense. I mean, it's just literal nonsense. Who cares what the percentage of ETF buying is for hedge funds? Because the hedge funds are merely reacting to a basis that exists because there's demand

from another source. What do you really feel about it, Dave? I'm just kidding. Matt, you were giving him the thumbs up. I assume you agree. No, that's exactly right. Yeah, I think the point that resonated so strongly there is that the basis exists because there's excess demand.

So it's absolutely true that this is just all part and parcel of demand. If there was no demand, there'd be no basis there. So I think that's a really strong point. Okay, so we're not particularly concerned with the ebb and flow of inflows now flows as usual that we've now been talking to death for 13 months. No, the inflows will continue the inflows are going to continue for five years. They'll come and go. They'll be up and down periods.

They'll probably even be negative months at some point. But this is a multi-year trade. Yeah, I think the real institutional money is still just queuing up to come into the market. It's going to take months and quarters and years. Makes sense. Anybody else specific thoughts on this topic before we move on?

Last chance for hands. All right, yeah. So I think worth talking about now, obviously the market itself. We didn't see, I think much reaction to the Bybit hack, which was, I think, surprised many. We've seen reports that they've already replenished the Ethereum. Of course, some of that coming from Bridge Loan, some of it coming from buying on the open market. But obviously, right now, we're once

again in one of these situations where Bitcoin is still arguably sideways, even though it's now well below 95,000. But Altcoin is just getting annihilated. So I don't know if anyone has a thought on why that would specifically be happening here. Like I said, Solana is pretty far down. If you take a look at the Ethereum versus Bitcoin chart, it hit a resistance and heading on the way back down. Very hard to find much excitement in the altcoin market. Almost nothing is green and a lot of these are still are down seven eight percent today. So meaningful move. Anyone thoughts on what's happening right now with altcoins? Sina. Yeah, I think altcoins just haven't shown that much of a potential to Altcoins just haven't shown that much of a potential to fly this cycle.

A lot of calls for the alt season has not really panned out except in the meme coin space. And I think meme coins absorbed a lot of the capital. Traditionally, you would see Bitcoin rise and then there would be this massive amount of demand that follows the smaller coins just to replicate what just happened to Bitcoin. People would realize that there wouldn't be that 100X in Bitcoin anymore. Essentially, the gambling or the get rich quick money would switch to altcoins to outperform Bitcoin. This cycle meme coins came in and they are offering a much better deal to people.

You can 100X your money in a couple hours. Who would wanna invest in a more, if that's the right word, a legacy altcoin where it just grows much slower. And the bigger they get, the slower they grow. So meme coins captured a lot of the capital, but the game in meme coins is also who can dump faster. So at the end of the day, all the capital is also coming out of all those.

Some of that may be stored in US dollars, some of that rotated into Bitcoin. So I just think a lot of the appeal of the middle ground altcoins have been taken away by meme coins, which themselves are kind of self-harming because they're super easy to create. Once there is some money to be made, then would be like 100X more coins created and they quickly drain all the capital and there would be a race to the bottom to destroy all the capital that entered. So in that backdrop, I just don't see altcoins outperforming or performing like they did in the last cycles. And Bitcoin is also in this sideways action. I just see this as similar to what we had last year. We had a, last year we had a couple of weeks of couple,

or maybe at most one month of explosive price growth because of the ETFs. And then we had seven months of sideways. Essentially what happened there was the market is trying to absorb all that, all that price appreciation. And the same thing is happening right now. It can go back to November.

We had three weeks of pump from 64 to 100 and plus 100, more than 100. And we are simply absorbing all that, giving ourselves time to absorb that. And actually, yesterday I was looking at the real absorbed capital, which is the realized cap, and that has increased from $700 billion to $860 billion just in the last three months where the price was acting as if Bitcoin doesn't really do anything. But new capital is constantly coming in. And that, by the way, that figure is about $2 billion a day. So I just see it as a temporary pause because the price really went too far ahead of the

Bitcoin fundamentals. Yeah. Hey, Kade and Matt. Yeah, thanks then Matt. Yeah, thanks guys. I think you know the the market sentiment this week and for the for the for the greater part of this month Really really since Trump dropped that token has been quite divided. I know a lot of Investors did exit, you know a lot of the AI driven tokens that were kind of a little overhyped But you know, in my opinion, kind of as Matt here has mentioned, and then as he has mentioned, the inflows will continue coming in.

You know, I think there's also a potential, you know, slowdown just with the with regards to the federal exchanges, or the feds interest rate cut, they're only kind of pricing in about two cuts this year. Additionally, there's probably a lot of the uncertainty around tariffs. And you know, I know Trump has kind of put like a pause on it for 30 days, but I know there's going to be a ton of drama. You know, we're leading into the summer months as well. A lot of the portfolio managers or some of the bigger traders used to say back in the

day, sell in May and go away. So there may be some weakness there. Historically, I think Bitcoin doesn't perform quite well in the months of May. That's just from my memory, not from my statistic. I do also think that the DeFi markets have been increasing in actual volume as well as TTVLs. And, you know, the market is still floating in the, you know, just sub under $4 trillion. So guys, we're not going anywhere. It's just a lot of rotations. And most of the time, you want to be in the top five or top 10 to protect any of the volatility or risk off

from the altcoins that are beyond there. So I don't think we're going anywhere. I love where Bitcoin is positioned. And I think 2025 is gonna also be another big year for it. It's just a lot of profit taking from last year maybe. Yeah, I think just Matt, to let you jump in a second, just looking at the coin market cap at the moment, just looking at the larger caps, sort of as you mentioned, I mean, still on seven days,

Bitcoin's down 2%, Ethereum 5%, XRP 10%, BNB 6%, Solana's down 16% in seven days and basically 10% today, Doge down 15%, Cardano 13%. So I mean, these coins are definitely kind of getting smoked the last week. A lot of that is obviously today. But not much safe haven outside of Bitcoin, which is down 2%. Go ahead, Matt. Yeah, I was just going to say, I think Solana is pretty obvious, to me, at least, there are rumors that Lazarus is laundering the money or trying to launder the money through

Pump.Fund. I think there's a lot of concerns about regulatory action against Pump and North Korea is trying to use it as a money laundering technique would heighten that effort. I think people are worried about that regulatory headline and what that will mean for the Solana ecosystem. That's probably today's move and it's probably an overhang that may persist until we get some sort of investigation, which I think is very possible, into the meme coin space. I think is very possible into the meme coin space. It's, we've definitely seen the SEC peel back on lots of lawsuits and such, but that doesn't mean that anything goes.

And I think there's a reasonable probability, particularly after these headlines, that you're gonna see some people poking around at that. So I think that's the Solana pullback. The only thing I was gonna add is, I think there's a, and you know, there's some mention of this. I think, I think there's a quiet Renaissance taking place in DeFi.

You're starting to see it in the TVL. You guys lose Matt or just me. Nope. I think it's just you. Oh, so you're Matt. Yeah. Can, can, can you hear me now? Yeah, I hear him fine. I heard him fine, so you can keep going. Okay, great. I'll just wrap up.

I was going to say, I think the place to look for, you know, maybe the turning bull market is in DeFi. I think TVL is rising, use is rising, and we've seen early signs that DeFi is going to be the first place to respond to this switch in regulatory environment, whether that's Jupiter doing the fee switch or Unichain. I think you're going to start to see DeFi monetize in a major way and change the tokenomics of many of those tokens. So I'm actually, if I'm looking for green shoots in the altcoin space,

I'm sort of looking past the alt layer ones straight to the apps. And I think that may be where you see the bull market resume. Yeah, I mean, I'm pretty excited about like, I have this feeling that VC projects are coming back and utility and like, we're ready to get back to vesting schedules. You know, we tried, we went from vesting schedules and VC backed projects to fair launch, air quotes, and then

to scam launch, basically like bundled. You have no real chance of making money launch. And now I think we might be ready to go back to like real people making real projects that people might use. Can you guys hear me? I had a glitch. Yeah, I hear you. I thought it was on the X end, but I think it was online. So I missed the end of what Matt was saying. And, Lloyd, I did just catch the end of what you're saying. It's sort of a move back to utility.

Doesn't say it. Rationally, I think that's what we're all looking for. It's just not happening yet clearly. Tom, what do you think? Yeah, it's funny. I was thinking about this a lot the last few weeks. And when we say return to fundamentals, I get it. I get what we're going for.

But back in the dot-com bubble, we had the metrics that were eyeballs and mine share and et cetera. We had the metrics that were eyeballs and mindshare and etc. And I kind of think in a weird way for marginal low cost technology in the industry we're in, effectively, it's basically free to launch new tokens and the tech costs are zero or almost zero and getting approaching that from technologically new advances. The switching cost and moats for these projects is effectively their network effects.

So how do you value these things? It's probably something like network effects, mind share, some level of usage, like active addresses and things like that. So when we think about the fundamentals, I think it's going to be continue to be harder and harder to define, you know, what is a fundamental in this space. And it's going to apply broadly more to traditional finance as well.

And I think people are going to look at that and sort of say like, wow, that's, you're sort of making up metrics to try to fit your narrative. But you know, in a world where costs are trending towards zero for fixed costs across the board, I think this is the network effects are what we really have to bet on. And how we quantify that, I think, is like a new and interesting area.

But I don't think fundamentals are the same across the board like they used to be. We can't just say like, oh, this is cashflow, or this is revenue, whatever, because they mean very different things in very different contexts, particularly for crypto. whatever, because they mean very different things in very different contexts, particularly for crypto. Yeah, I mean, maybe more accurately, people building things that have purported utility versus completely launching meme coins and hoping they exist in two hours. Maybe that's kind of what

lawyers are hinting to. I didn't hear his entire comment, but I think utility is very hard to define in crypto to your point. You can imagine that we're in this weird spot after the dot com bubble, or if it didn't crash when it did and people started to realize that, hey, Pets.com is worth a lot, no one's actually using it. Maybe I can make a meme of it and then they sell that. We're there right now. We're sort of between, no one's using the tech yet to a good extent, but we know they will. So memes are doing well because they can, but I do think we're heading towards something where adoption brings us to that Valhalla. I mean, we're obviously seeing a sort of dramatic reduction in meme coins being launched since

Libra and certainly in volume on meme coins. I think they're going nowhere generally. Obviously the casino will remain very, very popular, but does anybody here have a strong feeling on whether Trump and then obviously Libra, that is two presidents launching, I guess we can't call Libra a meme token to be fair, just a rumple perhaps, because it was literally launched with utility promise. So I don't think you can call it a meme coin,

but I think most people kind of view it that way, mental model just because of what happened with Trump. Now we have Kanye West maybe launching a Sposta coin, which I have trouble even mentioning, but this feels like the ceiling is long in for this stupidity. Maybe I'm wrong. Maybe I'm wrong, but it feels like it. Alex.

Yeah, I think we're approaching the end of the cycle on this one. I think people are getting burned out. I think the level of negative reaction that you're seeing to the discussion of the Kanye coin swastika and whatever you want to call it. Oh, man, it just everyone's realizing how many games and terrible and like, if you look back at the recent quote unquote meme coin launches, none of them have actually been meme coins, right? Libra, Kanye, Trump, these are all just effectively VC backed projects by someone who has this existing brand and is looking to monetize it. And that is very different than like what meme coin six, let alone 12 months ago were of at least relatively more organic,

just random creations, capitalizing on memes or news or whatever was going on. This just, I think, looks very different and it's being so extractive that I think it's just burning out the candle fast. I mean, you have to imagine that there's a limited pool of capital for this, right? And that that's largely being siphoned into the hands of the people that are launching these.

I mean, David and I were talking. Like, yeah, I guess. I guess once it loses the fund and you're also not making money. Yeah, I don't know about the fun part. I think it was just less malicious. It was a lot less malicious. It was, everybody was just all over, nobody knew it entirely that it was going to go

to exploiting others, exploiting celebrities, exploiting peoples of influence and really using their audiences to kind of, have their exit liquidity be put in place. So that is the malicious part that makes it so unattractive. But had there been a way for this fair launch model that isn't bundled to kind of be cemented in the industry, it could have been something a lot greater

where people could be onboarded in my opinion. But what we saw over the last year has been 90% crime. Simon, I think you had your hand up. Yeah, just wanted to say, like, if people haven't figured out the problems in this whole meme coin thing and sniping after the, you know, the Melee project, I don't know what else to say at this moment. I think the Kanye West coin is gross. I think it's anyone that participates there, they deserve what they get from it. And I hope it leads to all the legal challenges that can come from it. So, I mean, this has to be the end of this

whole extractive cycle. And it feels like we've hit that end of the ICO moment. But so Simon, shouldn't we say that this is the could be the end of this version of extraction before we move on to the next one? Oh, yeah. Well, I mean, we you know, this is the crypto capital that is now being built. But it is just so gross. I just can't imagine anyone that wants to participate in this side. And I think the Kanye one would just be if this happens, it

would just be you know, I hope that marks the end of an era and then we move on to the next thing. Yeah. I mean, it's the worst of every part of what meme coins are, right? I mean, it's a celebrity grifting, it's anti-Semitic, it's hateful, it's the worst of every possible thing and would be the perfect indication or perfect thing to finally alienate enough people to wash them out. But you have a little more faith in humanity than I do. I think that all the same people will buy and flip and pump and dump this thing just like everything else. Sadly. I mean, I was a DJ for 20 years. I DJed for Kanye actually for a while. And from day one, I've always believed he was one of

the worst human beings ever lived on the planet and despise the guy. So I can say that also watching that come to fruition at this point is not stopping to me in the least. But Dave Weisberger, Dave, we were having a conversation on Macromonday this morning on YouTube, actually, we sort of made the point about high frequency traders. And when that really started to proliferate and become popular that they were effectively sniping right in the same way and that I kind of joke there's nothing new under the sun we just have a technology that makes it easier and faster. Yeah that was really the point that I was going to add back. I mean look I ran an HFT firm you know

two Sigma securities back in the day and when Flash Boys came out, which is Michael Lewis's book that got a big 60 minutes expose and people were screaming about high frequency traders, it made it into a bunch of movies, etc., by that point, the market had already corrected. By that point, all the exchanges had already done things so that people, and we can go into the details, and anyone who is really interested in this, I can explain it at a level of microscopic detail. But effectively, most of the issues were already out of the market at that point. But understand that within a regulated environment, it's extremely clear that there will be sea changes in crypto.

And what will that mean? That will mean that DeFi platforms, which are effectively open source and the code is there, are going to have to be set up in a way that there's no inherent advantage. That yeah, you might be able to snipe, but it will be public and people will understand it. They're gonna want that disclosed.

And DeFi platforms are gonna have to, at some point, say, be able to have audits that says market makers don't have better access than individuals. Or if they do, they're paying for it, and it's a very clear level playing field. That sort of anti-manipulation, establishing a fair level playing field is a good thing and will increase the ability of the market to raise capital because more people will have faith in it. That is what's going to happen with this administration in the United States.

It is absolutely certain that that is what's going to take place. So ultimately, what's been going on is long-term bullish, and in the short run, people are seeing where the issues are. So it's not really all that surprising to see this. And I know that there are people in the cypherpunk methodology is, oh, you know, let everybody get what they want, total caveat emptor,

but that's just not the way our society works. That's just, it isn't. And, you know, we could debate it as ad nauseam, but that's not gonna be the result. The result is going to be that participants in the market are gonna demand a level playing field, demand that there's nothing that they can't see under the result. The result is going to be that participants in the market are going to demand a level playing field, demand that there's nothing that they can't see under the table. Look, the worst example of this was FTX, right, which gave a back door to Alameda. And people put up with it while they were making money. And then as soon as they stopped making money,

they started throwing shit on Sam because, oh my God, how dare you do this? Most of the people who were saying that knew he was doing it and just didn't give a shit. So understand that this is the way the market is going to evolve. And so a lot of the stuff we're seeing. As far as Kanye is concerned, I mean, look, I agree with what you said, Scott, violently so. And you know, it's the worst impulses of humanity will always show up and will you will find out if in fact, people want to invest in it in order to try to make money, you know, let them most of the time, the worst impulse

of the worst impulses resulted losses. And so let them lose money. I don't really give a crap. You know, I just don't think that's worth talking about because You know that it's the kind of thing that I think that Libra and Trump coin were enough To convince the public that okay. Wait a minute. There's an issue here and what the hell's going on And so we'll see how the regulators respond. We'll see how the public responds, but that's what I think will happen We'll see how the public responds. But that's what I think will happen.

And not to in no way defend it, I think I was one of the most critical people of the Trump coin when it launched, much to the despair of seemingly everybody in my comments. But it is still at least worth 15. At least it is still worth like 15 bucks. Well, let's be clear. If Libra is like a zero right this Kanye thing will be a zero Right, maybe they're bad. I guess my point is if we're taking a silver lining or trying to be optimistic Maybe Trump coin will have some sort of no

No, maybe it becomes the next version of you know a dogecoin kind of thing that lasts. That's fine Some number of meme coins will survive in a slightly different state over time meme coins will survive in a slightly different state over time. And that is so when I look at pump dot fun, what I see is the OTC market. Now, for those who don't know this, the OTC market memorialized in films such as the Wolf of Wall Street or boiler room is mostly crap. In that market, there's also foreign, you know, ADRs and stuff, but there's a lot of crap. There are thousands upon thousands of stocks that nobody has heard of.

Every once in a while, you get big winners out of that. I absolutely could see Pump.Fun continuing to exist forever as that sort of feeding ground where maybe one out of some very large number will succeed in the long run. Yeah, Simon. Yeah, I just want to say like that there is a subtle argument that sometimes people get really confused about around the free market versus calling somebody out for all of their what they're doing in a free market, like anyone's welcome to launch a

meme coin. But they have to be accountable for everything that they actually do. And it's our duty to call it out for all the all the all the bad things we think it is. And so there's a difference between going to a regulator and saying, Can you please make sure that it's not possible for anybody to do this, versus anybody can do it, but you deserve all the consequences. And we're going to call out scams as much as we can and try and self-regulate to a certain degree.

I think sometimes people get confused thinking the calling out scams and self-regulation and accountability is the same as asking a regulator to make sure that it's not possible and it can't actually happen, which are two very different concepts. Right, but let's be clear about this. There is a difference. I do not think regulators can make things not possible. And I do think regulators very rarely focus where they need to focus. But there is a benefit to a consequence. So, for example, we've now seen how many bankruptcies from from Kyle and Sue. And and what would have

happened if they were considered if there were that they had criminal or significant legal consequences to their actions? Are those guys are insolvent now? Well, great. But you know, that's a good thing. But you know, should they have been continued to allow to be able to do something like that? Or Dave, yeah, I was just saying how their insolvent now makes me laugh because last I checked,

Three Arrows was still in bankruptcy and those hundreds of millions of dollars to Voyager and Genesis and others. So now they would have anything left when they owe so much money in the first place is laughable structurally. It's not about going crying to regulators. It's about having regulators that have the ability to civilly sue people who have extracted money and create a financial disincentive for doing that sort of extraction.

Now I believe the SEC takes it way too far and uses that as a club to be sort of like it's like a protection racket. So I am not a big fan of the way that they have acted in the past. Not only under Gensler, by the way. I mean, they've been like a protection racket for a very long time. So we'll see what happens under this administration. I think the three commissioners, the three Republicans, I mean, Paul Atkins, along with Mark and Hester, probably agree with my statement, you know, based on past speeches and whatnot. So, you know, I'm not nearly as pro-regulator as you

might think, but what I am saying is there is a version of a world where being able to be prosecuted for fraud, not necessarily criminally, that would actually decrease your capacity to be a recidivist extractor is not a bad thing. So there's a bunch of studies that have actually been done on crime prevention stuff, and this goes all the way up and down the stack from like shoplifting to massive white collar fraud. And the thing that matters the most is not the severity of the punishment, it's the likelihood of getting caught. And I think that's one of the biggest challenges that this space has or this, you know, that when we talk about regulators, you know, being able to go after people who are bad actors after they do a thing is we can is, it's very hard to be in a world where you get

a thousand new coins created a day, but you're also saying there will be effective follow-up regulation on it. And I think even if the couple, the two or three absolute largest scam fraud situations do end up getting prosecuted, FTX, Celsius, you know, you could talk about whether the three others guys are really suffering the consequences on it. But I think actually one of the biggest issues there is people don't perceive them as suffering the consequences on it. But unless we can drastically increase the percentage of bad actors who feel like they're, who it feels like they are suffering consequences for. And that doesn't necessarily mean criminal prosecution, but just any form of consequence on it, unless you can increase that percentage so that people who are looking at doing something feel that it's much more likely

they're going to suffer consequences. This is just going to keep happening. And again, this is just, it's the exact same problem that you see in a bunch of blue cities who like where it's technically illegal to shoplift, but everyone knows that they're not really going to enforce it. Nobody cares if it's a hundred year sentence if you think it's a 0.001% chance of getting caught. But even if you're just going to have to give all the money back and it's a 90% chance of getting caught, that's going to be a lot greater of a deterrence effect. I can't see anymore for some reason hands up.

Simon, I got one up. I don't know if people had them. Yeah, it's a really tricky conversation. So, there's a massive difference between a centralized company that should have full accountability to a regulator and audit requirements in order to ensure that client money isn't being used and there's no paper contracts against it if they're allowed, if it's full custody. Then you've got things like Celsius, which was being represented as safe as a bank when

it was actually an illegal hedge fund with no disclosure and no one knew what they were investing in. So those things are all very clear. But when you start to get down to like at the meme coin level, clearly there's an issue with Sniper and how do you start to regulate that whole ability to be sniping? Well, you kind of do it the way the you know, the Trump token, at least it was disclosed that there's 80% and it's going to be over a three-year unlock. And it's kind of like, you then go into that fraud regime of, are you lying? Did you say you're going to do what you do?

But there are going to be, you know, with meme coins, you've even got the anonymity, there's no even, you just literally can be anyone and launch these things. So it's an incredibly complex thing. And I don't think anything's really changed here. It's just the ability to do these things is getting easier and easier and easier. So more and more people are doing them. But I guess that's it feels like the meme coin thing is going to sit outside and just be, you know, fraud allegations and whether they actually lied and stuff. But we'll see. off. But we'll see. I think that it's important to pull on that thread a bit because

Pumped.Fun has gained critical mass and other firms will you know, may or may not come but the markets themselves will have critical mass and a light touch regulator, where basically you say pump to say to Pumped.Fun the actual Pumped.Fun platform like, okay, you need to know what the addresses are, if you need to be able to have how the coin works, what the unlock is, and all of these statements to people who make it, and if they make it, if you're an issuer, you are liable if in fact you lie.

Because all of this stuff is on open blockchains, and it can be found out. And it's like your probability of to use, I think it was, that was Alex, right? We talked about probability of being caught. It didn't show up on my phone. I couldn't tell who was speaking, but I think I recognized the voice. The, the, the fact is, is you can get caught. So the sole question then becomes will will platforms like Pump.Fun be allowed

in a new regime to have somebody launching a coin without some notion of who they are? Now I don't want to get down the KYC rabbit hole because frankly I think most of the KYC regulations are absolute bullshit and accomplish nothing of what they're trying to accomplish. But the reality is that there needs to be some, if a platform comes around that does meme coins where the people who do it are liable for lying, then that matters. I think people will have more confidence and I think that platform will win. By the same token, if the methodology of sniping is well understood by people, well, you know, so be it, you know, it's, it's not really a problem, is it, if people don't care, you know, at that point, I believe in caveat, I'm sure as long as it's well understood and

disclosed, the real issue here is when people don't disclose shit. That's what really matters. I really wish Dave that I believe to platform with better rules and protections and stuff was the thing that was going to win. But I think one of the challenges in this space is that liquidity is the only thing that matters to people and they will put up with a lot of other stuff or you have to at least be at a sufficient level of liquidity. And a lot of the people who provide that initial liquidity and get things going are the bad actors in the space. And so I think for people who are really trying to do things in a better way, they're really in a very difficult spot of how you get over that initial hump

without working with these people who are going to ultimately make your platform work. That's true. There's no doubt that that's true. Liquidity does matter, but a lot of liquidity comes from confidence in the platform. I mean, I'm reminded, and this sounds like a stupid analogy, but I'm reminded of the fact that the auto industry never wanted to put in safety stuff. They never cared about airbags,

they never cared about seat belts, et cetera, and only Volvo was the only car that actually cared. But when Volvo started selling better after people started worrying about that, everybody else jumped in. And so eventually, people like to say, oh, it's because the US regulation, horse shit. What actually happened was safety became something

that people prized and cars sold better if they had more safety. I think the same thing is gonna be with markets. If you trade in a market, you're less likely to get screwed. If you participate in this market, and liquidity will, of course, come to the one that people have more confidence in. But you're right, it is not trivial, not trivial. And it is definitely a chicken and egg problem. And we're not

sure how it goes. And Dave, also, that could be gargoyled in the United States in a specific manner, but still completely unregulated elsewhere. And knowing that this is a global market, people still being smoked all over the world, just maybe slightly less Americans. It's hard to know. Well, I don't know about that. I mean, there's a lot of liquidity here. And I think a lot of, if you've talked to the regulators in places like Dubai or some places in Europe who actually care, you know, I think that you'd be surprised.

Certainly Singapore. I think you'd be surprised, and Hong Kong. You'd be surprised at how regulators, if they see how you could do it with a light touch, you can make things much safer and advantage good actors. They'll want to do it The issue is most regulators go way the hell the other direction and try to be prescriptive and then at that point You know fuck it, you know, you're right. It's gonna go the Wild West is gonna continue wherever the Wild West can be All right, which is what like, you know, you obviously said FTX was the worst example before we know that FTX was the work

worth the exact worst example of a lack of regulation in the United States, which allowed it to operate offshore and do what they did. You talk about that all the time, Dave. Yeah, 100%. We all know, John Deaton and I both like to tag team Elizabeth Warren and what she did, but the one thing that is absolutely clear is her regime with Gensler and all the people that she put in throughout all the agencies effectively created many, many more problems for investors than it solved. And it was completely counterproductive policy. And we all know that I can't stand that price, but there is an element where you can do things

that will improve markets because we've seen it, right? I mean, there is a reason why liquidity, it is not an accident that the US with 4% of the world's population is 50% of the world's investable assets. It is a reason why foreign companies wanna list in the United States. There is a reason why foreign companies want to list in the United States. There is a reason.

Part of that reason, despite all the bullshit, and there is bullshit, is the US is probably the easiest regulatory environment for companies to get things done, and it's the most competitive regulatory, allows more competition. Now crypto is much more competitive, and frankly the US equity markets could learn a lot from crypto. So you know I'm much more on the side of less prescriptive but

I do think that confidence in markets matters and I think that what we've seen over the last few weeks is literally the most obvious example of why. Yeah totally totally. Gracina, go ahead. Yeah, I'll just add one thing that I think we all need to be a little bit, you know, giving the audience some more cautionary notes about meme coins. You know, we're talking about how to make the meme coin market fair more regulated so people can gamble better and don't fall prey to extraction. But the whole game is extraction. So if you bought, say, a melee coin, you were hoping to dump it on someone else at a later date. Well, you were lied to, so somebody else dumped on you faster than you could. Right? So I understand that there is a lie factor there that could be definitely punished. But even if it's totally honest, if you get dumped on, I just see this as you lost the game. You

entered the game, you knew the rules, anyone can dump on you at any time. It's just a matter of figuring out the timing. So I'm a lot less, honestly, I'm a lot less worried about the quote unquote victims. It was a game and they lost. Plus, there's another aspect here that the more successful meme coins are, the less liquidity will be given to projects that are actually trying to do something. So I'm just a little bit more critical of this whole trend because it siphons liquidity out of real activity. And it's really hard to say what's the benefit of gambling. I mean, there's the fun aspect. Yes. But, uh, it's probably a lot less than other activities in crypto that are

trying to build useful utilities. So I, I just think even if regulator doesn't do anything, this is an industry or a subset of the industry that will destroy itself because the end game of every one of these meme coins is zero and the end game is full extraction. Either it's the main guy who extracts all the money or a bunch of other smart traders or snipers. Somebody extracts money from the others. So, and then the cost of creating a new coin is almost zero, right? So combine these two and you see minimal value created, maximal supply. This will go away on its own, in my opinion. Maybe a

minimum kind of a, what can I say, like a low level of activity will remain over the long run, but it wouldn't be as much of a concern to even worry too much about like the... Well said. Speaking of utility, we do have a sponsor today, appreciate everybody joining. And just as a disclaimer, before we go to to Edward is that Marios company IBC does marketing incubation and investing and that sponsors on this show

are working with IBC and not necessarily Crypto Town Hall Scott or myself in particular so Eduardo just want to get you up here to test your mic do you mind just giving an elevator pitch just to kick off the AMA? Yeah, thank you very much. I hope that you can hear me very well. And I'm really glad that also in this space, she's speaking about utility and about project that really do something,

they are getting back in the market. And also I like very much the subject of security because what we are building, it's a product, an August of the Armoury chain, a wallet that is focused on the security part. Wonderful. And yeah, I can hear you loud and clear. First question is, what's the easiest way for someone new to crypto to avoid common scams, in your opinion? I think this Web3 space needs to be based on three pillars.

One will be the advanced technical defenses that you can implement in one app. The second thing will be some robust procedures to mitigate the human error and the third that is very important is the education and training. So first of all you need to educate yourself in order to enter this market and what we are doing also with our product we are trying also with our agent to educate the people that are coming in this space in order to avoid this kind of scams. I know that you guys have your pre-sale starting tomorrow, right? Yes, our pre-sale will start tomorrow. The pre-sale will take place on our website, on iluminary.ai. And we hope we'll have a good pre-sale

and the people will enjoy our product. The product is already live. You can download it from Apple Store and Google Play. And we are really focused on security and with our AI agent, maybe we can make this and we are making this space safe for the people that are onboarding on it, but also for the crypto professional people to say like this. Is this the first round of financing that you guys are doing?

Or did you raise private financing as well? We finished our seed phase. Now we are in the second phase. How did the seed phase go? The seed phase was 100% completed, and we are thinking for our community very fast. And now we are advancing to this pre-sale and after that at the end of Q1 hoping to launch our token and also to develop furthermore our product because we are launching a V2 version in the end of Q2 with a lot of AI features including talking

with our AI and also keeping you more and more safe. With the token, the presale going live tomorrow, I want to kind of dive a bit deeper into that. How exactly is the token used within the product? In the product, the token has a lot of utilities because we are using a gamification system inside our wallet using a framework called Octalysis made by Yucay Chow and also used by big brands in the industry, also in web too like Nike and so on. So in order to benefit from our ecosystem and having the Elamete token, you'll enjoy our space like having discounts or having the possibility to invest in some projects that will be in our wallet

because it's not just a wallet, it's a one-stop shop, as we like to call it, in which you can manage your crypto assets, but also you can invest, you can educate yourself, and also you can build communities. Wonderful. And what is BREG? B-R-E-G? I see that on the materials. Yes, BREG is our AI agent. So I know that now is the hype with AI and so on. We started this project two years ago and we implemented this AI agent because we thought that will be wonderful

to have your own mentor in your pocket. So we have Greg from Blockchain Resource Educational Guide that it's your mentor that will, how we like to say, illuminate your path into our ecosystem. So he will guide you, he will educate you and also he will make some tasks for you. For example in the v2 version you can talk with him and say breg send one ethereum to a contact person. He will set up all the steps for your transaction and you just need to sign.

This is it. So it will make your life very, very easy. Do you think that, I know in crypto, I've been in it since about 2016 and people have always complained about the onboarding process. It's difficult to set up a wallet. People aren't necessarily familiar with needing to remember a password forever. They're familiar with just being able to reset that whenever they can. Do you think that an AI agent is really that UI, UX layer that everybody's kind of been needing to onboard to crypto? everybody's kind of been needing to onboard the crypto?

To be honest, we are focused very much in the EXEI part of the things because we believe that making a wallet very simple, for example, the onboarding system. Also we have guided voice onboarding system. So when you are downloading our app, you have a guided voice that is translated in nine languages so the user can understand all the steps needed. So with our AI, I think it's the next UX UI because for example, you are a newcomer, you don't know what it's a gas fee, you get an error. What do you do? You search on the internet or you engage with the customer support. In our ecosystem, we just tap on the error and our AI

system will explain what it's a gas fee, why you get this error and so on. So I think for onboarding, but also for user experience is very important to have this AI guided system. And with beginners, like I know that once they're all set up with a wallet, they've funded a wallet, it can be difficult for them to actually choose which tokens they wanna get involved in.

Is the AI agent also gonna help them choose which tokens to pick or maybe how to create a portfolio for themselves? So inside our ecosystem, we don't give financial advices, but we inform you about, for example, the market. We have news that we are organizing with AI and we can say what type of token will be affected by that news, if it's bad news or good news.

But also we have some labels in which we can say based on some metrics like volatility news and so on, if in that time it's a high risk, a medium risk of buying one token. So we try to get more information to the user in the same app so they don't get very confused. So I think building up a portfolio using our system is more easy because you have all the data needed. Also, you have the AI that you can speak with him and you get an educate yourself regarding the market, regarding the news, and regarding the volatility trending and so on. In terms of security, what's the biggest security benefit that everyday users can have using your product? First of all, our product is already audited by Cyberscope. We have a cybersecurity audited on our token, but also we have on our app itself. The main feature that we have, we

have an anti-drainer system based with AI. For the moment it's working on the EVM. What this AI system is doing, so before you are signing a transaction, we can simulate that transaction, we can analyze with AI based on multiple factors, and we can see the outcome of that transaction, and we can see exactly if it's a drainer or not.

So after that we put a notification to you in which we advise not to sign that transaction. So I think this is a game changer for the users that maybe they are connected to the app and without knowing just sign one transaction and all your funds are gone. So we're using our system, break it's securing your transaction. Wonderful. I mean, that's pretty cool. I know that I'm a developer myself and all the transactions that I do, I'm trying to simulate. But for an end user,

having the benefit of an AI agent, being able to tell them what happened on a simulation, what they're signing, things like that, that's a huge leap forward. I just want to call out to the audience as well. We just now got the Luminary AI X account up into a speaker spot. So I encourage everyone to click on their account, give them a follow. But also as we're going for the AMA, their website is right there in their bio.

So it's a luminary.ai. So if anyone wants to check it out, please do so. But Edward, one other question that I had is based on your last answer. Are there other ways that the product is very much differentiated from other AI crypto platforms? Yes, also this product is built with security in mind. So what you are doing in our ecosystem, we try to curate everything, including for example, the Dapps part that is created by us.

And we are creating what we call a Dapp store. So in order that our user, when they are connecting directly from our wallet to the app, we know that it's very, very secure. Also, what we are building more, it's because now we are a mobile app, as I told you on Android and also on iOS, we are building desktop version, standalone desktop version and not the browser extension because of the risk that has the browser extensions in which we are creating like a very secure environment

in order to sign in transactions, to connect to the apps and so on. So combining these parts, the friendly, the UX UI, the security part and also the smart part, we are creating an ecosystem and a one-stop shop that is for the user. And for the moment, we have more than 100,000 people that benefits from our ecosystem. Is that the number of users that you guys have? 100,000 users already? Yes, yes. This is in our ecosystem. This is the number of users and the traction that we have and we are hoping to onboard the next millions of people inside our app.

Well, congrats on the success thus far. That's a big number in Web3. And with your, if people are just tuning in now, Edward said at the top of the AMA that the presale is tomorrow. It's going to be on the official website. So if you click on the Illuminary AI account, their official website is in their bio there. Is there anything else, Edward, as we're wrapping up that you want to highlight about the presale? Yeah. So the presale will start tomorrow, like you said, on our website. I don't know, like you said on our website, I think now the users have the chance also to invest in one product that it's already built,

already available and with some technical, very strong technical background. So I think like you said in this space, maybe the people will start also looking at this kind of project now because of this meme thing. Yeah, I think you're right. I think that the... I know I'm exhausted from the meme coin winter that we're seeming

to be having here. I say winter just due to the seasonality. I'm ready to get back to the utility and real builders and real chains rather than the casino. I certainly share that sentiment. Yeah, also I share this and also I'm for more than 10 years in this industry. So yeah, I get this feeling. I think it's the craziest part of this time from the beginning that I started. So yeah, I hope that will calm a little bit

the things in this direction. Let's hope. Well, Eduardo, I appreciate you joining today and also the Illuminary account. If you're tuning in, make sure to give them both a follow as well as all the speakers that have been up here. Any final calls to action for the listeners who are tuning in, Edward? Any final calls to action for the listeners who are tuning in, Edward? Join our pre-sale tomorrow. Follow us on our Telegram, Instagram, Twitter account and join the financial revolution with AI and security in mind. Thank you very much for having us today.

Thanks for joining. That was awesome and a bit of a red day on Monday here, but some optimism in the market. So let's keep our fingers crossed Monday and the rest of the week that we can end February on a strong note and get into March and have a greener March. So I appreciate everybody joining. Of course, you as well, Edward. Everyone have a great Monday