The Wolf Of All Streets - Tether FUD | Crypto Town Hall

Episode Date: November 7, 2023

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I actually made co-host today. I'm flattered. Congratulations. I'm proud of you. You did a good job. You lobbied hard. You worked your way up. I don't know how I lost my position as co-host, but I mean, okay, we'll take it. It's the first two people here. I was here two minutes later than you today, and therefore you are the co-host. Okay. With more, I get more responsibility now, right? I get more power, but I also get more responsibility now. Yeah, now you have to add people, remove people you don't like.

I mean, you're going to be just have that power flowing through you. You have to be careful. Is Mario here today, or is he biohacking or warmongering both but both okay all three all three john how does it john how does it feel to be the reason we changed the title of the space to be known more negative i am completely honored you know uh i appreciate I appreciate everything you do and happy to be a part of it all. Well, thanks for ruining it. What is it, Ran?

What about this show? Is there Tetherfud again? Yes, Ran. Yes. Scott messaged me before the show. He's like, Mario, there's Tetherfud. I'm like, again? He's like, it's John Reed Stark. I'm like, great. I said, we've got John. He just wrote this tweet. There we go.

We're done. It was a good tweet, though, and I've got a lot of respect for John. I think it's genuinely worth discussing. Let's get it out of the way. Every type of cycle, even mini cycle, is always marked by Taylor Fudge. So let's declare an end to this cycle just before you read the thing. It happens every top of every mini cycle. So Mario, with that, you can go ahead.

Read us the tweet. I'll read the tweet. Let me open it up again. Hold on. Scott sent it to me. But actually, I'll let John explain instead me open it up again hold on Scott sent it to me but actually I'll let John explain instead of me reading what he wrote um but I think it's a it genuinely a point worth discussing and he points out you know outside of crypto those things would be very concerning but

for some reason in crypto we think it's not even worth discussing we just dismiss it as FUD I'm not worried about Tether but I also don't think we should just dismiss the concerns that John will mention now. John? Well, I just look at it, you know, I was on CNBC last week and there was a lot of talk about my appearance there. And I just look at things at this Sam Bankman free trial very differently. And Jacob Silverman wrote this incredible article for The Nation, which I linked to there. And I don't know if anybody knows Jacob. He's a reporter, completely objective, from Bloomberg. And he actually went to El Salvador with Ben McKenzie, and he wrote a book with Ben McKenzie about crypto called Easy Money. And they spent three or four weeks in El Salvador

just traveling around trying to figure out what the truth was about Bitcoin and El Salvador. And his article, I think, really hits a nail on the head. And it's what I said on CNBC, is that the Sam Banker and Freed verdict is not the end of the story. And I saw a lot of people, you know, including my good friend Anthony Scaramucci saying, look, this is just an aberration and we're good. We're glad that this is all behind us. And now we can go and do wonderful things with Coinbase and with Binance and all the great companies that are still out there. And I found it amazing that the journalist at CNBC never said anything like, well, you know, Binance has been sued for fraud by the SEC and by the CFTC. And Coinbase has essentially been sued for

operating without a license. And Tether, there's $36 billion worth of Tether that flowed out of Alameda and back and forth that no one has any idea about. And the prosecutors did a nice job of keeping all that out of the trial because it would have made it a lot more complex. So they kept it simple, which is what I would have done. And I've done a lot of securities fraud trials in my career, my 35 years. And I would have done the same thing. It's just simple thievery and just a simple grift. But there's a lot more to it.

And I don't look at it as tether-fud. You know, Mario, I'm completely objective. I don't have any stake in this game. But these are very serious things that are going on with tether. And there's absolutely no transparency. And the idea that there's no other reliable information. Let's not mix two things here. So the fact you're mixing the fact that tether may or may not be backed.

And I think by now, I think the market's pretty comfortable that not only is tether backed, two things here. So the fact you're mixing the fact that Tether may or may not be backed. And I think by now, I think the market's pretty comfortable that not only is Tether backed, but actually Tether is now over, over backed with treasuries. And audited. And audited. And they just audited. Yeah. So I think let's not mix the fact that, you know, I think admittedly Tether had in the past been unbacked for certain periods of time. We know that. Everyone knows that. There was actually a case around that, I think, where the New York Attorney General actually told them that they had to make right on certain things.

But let's not mix that with the inflows and outflows of USDT stablecoins out of ftx and now i'm going to argue that the inflows and outflows of usdt based stable coins is not really anything to do with tether as much as as it has to do with the people that are moving it in and out just like if scott and i trade us dollars in return for drugs or weapons or whatever else it's not the dollar that's at fault it's the two it's the two people that are trading it now that said i do know that there is some something in u.s law which says that if you're using the dollar then they can basically implicate you for the crime because you use the dollar to do it but i mean that that for me is a big stretch i just don't see it that way i look at look at well tell me how you see it tell me how you see it tell me how you see it of course of course i will i don't see any transparency into what

tether is doing i don't see anybody but but that's audited audited wait tell me tell me about the audit go ahead explain the audit to me scott maybe you want to jump in here since you interviewed after the audit okay what. The audit by whom? I need to look up the name of it. BDO. So they had an MHA came in. Correct me if I'm wrong, guys. But MHA came in as the initial auditor.

And then a year or two ago, I'm just reading here off of a website. Hold on. Tiger might know more details on this. I'm going to bring him up. Then BDO Italia was the next auditor, which is a more credible auditor. I'm just Googling it now trying to research. I mean, BDO just did their audit. They just had their Q3 attestation, which just came out,

and it was BDO that did the full audit of their backing. No, that's not a full audit. I don't agree at all. I don't think these snapshots are an attestation. Yeah, an attestation. Okay, look, can I finish my statement here? So here's the thing. Thank you. Thank you. So here's the thing about audits. You know, think of it like, and again, I've studied audits. I've taught law and finance for 20 years at Georgetown Law School and Duke Law School. I was at the SEC for 20 years in the enforcement division, looking closely at audited financials. So I know exactly what to look for. John, John, who do you say? I'm going to give you some information as you say this. I don't think there is an audit for, there's an attestation, but no audit for Tether. Thank you. So let me explain the difference between those two. First of all, the Public Company Accounting Oversight Board, the PCAOB, has put out some specific guidance about saying

how these attestations are complete nonsense and garbage and should never be relied upon. Okay. Here's why. Think of it this way. If you own a house, right, like I do, okay, you own a house and you decide, okay, I'd like to get a mortgage on this house. I like to pull out $100,000, maybe pay for my kids' schooling or something like that. So you call the bank and you say, okay, bank, you know, I'd like to borrow $100,000 on this house. The bank's going to give you a financial colonoscopy like you've never experienced before. And they're going to look at your house. They're going to ask you for all your financial statements for the last five years, all your bank statements, anything you owe. They're going to ask you about every single financial asset that you

have, every single liability you have. And they're going to give you about every single financial asset that you have, every single liability you have. And they're going to give you an exhaustive questionnaire about all that. Then they're going to send an appraiser to your house. And you're going to have to let that appraiser in. You're going to pay for that appraiser. You're going to let that appraiser in. And they're going to look at every nook and cranny of your house. They're going to look at everything about the soil, everything about the neighborhood.

And they're going to go through with a fine-tooth comb everything that's going on with respect to your house. And those two things, the bank is not going to loan you any money if you do that. Now, the attestation or proof of reserves audits or whatever you want to call them are just a snapshot. So the analogy in that context that I just explained would be saying to the bank, I'm not going to let you see all my financials. I'm not going to let you into my house. You can take a look at the satellite photo of my house and make your decision based on that. And if the PCAOB, an independent body, okay, the Public Company Accounting Oversight Board, tells you that these audits are not reliable

and are not to be relied upon and are nonsense and garbage, then you have to listen to that. And what's so hard about these audits? Okay, I've been, again, in this business for 35 years. What is so hard about opening up all of your doors, opening up all of your books and saying, you know, and going to any big accounting firm that would love the business. Remember, I also ran the DC office of a very large data breach response firm. Turning it away in engagement that would be worth millions and millions of dollars is not anything I would ever want to do.

Why isn't any big accounting firm saying, hey, we'll do it for you? The answer is that they're told that it's because it's too complex. It's not complex. Looking at financial statements is easy. Go ahead, Ron. Sorry. Let me interrupt you just for a second.

What you're talking about is something that's been spoken about around Tether since I got into crypto, which is 2016 or 2015 or whenever it was, everyone's had the same issue regarding the audit, the attestations, whether they're fully backed or not. The question is, what's different now? I mean, has anything changed now? Is there any reason to be worried about this now? Or is this the same? But isn't that the concerning part, that nothing has changed, that after all these years and the space maturing to where it is today, they still don't have an audit? I mean, yes.

But on the other hand, they don't owe you any obligation to be audited. They're not a public company. There's no reason. I mean, I'm playing devil's advocate here. There has been an attestation. But it makes business sense to order. If there's so much fud around them all the time, then it makes sense. Of course it does.

If you don't like their attestation, use another stablecoin. If you do like their attestation, don't use another stablecoin. I agree with you. I think we're analyzing how... True, true. But I'm just saying it's... What I'm trying to understand is why now are we talking about this? Has something happened?

Has anything changed since the last 852 times that we've had exactly the same conversation? That's all I'm asking. Absolutely, things have changed. Every day, it gets harder and harder, and it gets clearer and clearer. The SEC now has a specialized crypto unit that's bigger than any other crypto unit they've ever had. But this has got nothing to do with the SEC. DOJ. This has got nothing to do with the SEC. Zero to do with the SEC. SEC now has a specialized crypto unit that's bigger than any other crypto unit they've ever had. This has got nothing to do with the SEC. DOJ.

This has got nothing to do with the SEC. Zero to do with the SEC. Wait a minute, wait a minute. It's not security. It's not domiciled in the United States. Okay, let me finish. Everybody works together. Ron, everybody works together gathering their facts.

And if the SEC discovers something about Tether, whether they do something about it or whether they refer it to the FBI agents who are embedded in the crypto unit, like they were embedded in my unit when I was chief of the Office of Internet Enforcement. The SEC is in the fraud detection business, just like FINRA is. So saying that it's not their jurisdiction doesn't mean they might not investigate and find facts along these lines. Now, you look at DOJ, and the reality is that until criminal cases are brought, then most of these people look at the SEC like a glorified parking ticket. In fact, Cameron Winklevoss said as much. And look at Paul Graywall. I was speaking at a Federal Reserve conference on fintech, and he was on the panel before me talking about, as a representative

of everything that's right in crypto, and he's one of the primary architects of a business that's being charged by the SEC for operating unlawfully as an exchange, as a clearing firm, and as a broker-dealer. So we're in an upside-down world here. Now, DOJ now has this, where it just doesn't matter. These SEC cases just don't matter to anybody. And that's, you know, again, that's how they treat it it's regulatory arbitrage let's

keep it going for as long as we can but the criminal prosecutors that stuff matters and the ftx case shows never in the history of financial reporting fraud of financial white collar securities crime cases has there been a case like ftX where, first of all, you have incredible access to senior executives who all made deals. So you get a roadmap drawn by them. You had incredible access to all the documents. You had a legion of forensic investigators at the prosecutor's disposal. They could call any time they wanted over at FTX and say, bring over all those documents and explain what you found. And they're billing, you know, one and a half million dollars a day to FTX and say, bring over all those documents and explain what you found. And they're billing, you know, one and a half million dollars a day to FTX. So they're incentivized to provide

that information to the government. So you had this case that really brought all of this to light. The evidence was overwhelming. And then you had, of course, SBF's diarrhea of the mouth, where he just talked and talked and talked and made all sorts of impeachable statements and gave off all kinds of inculpatory information that made cross-examination a cakewalk when he actually decided to testify. So you have an overwhelming evidence. How is this related to TIPA? I'll tell you exactly how it's related, because all of these people are cooperating. And when DOJ, and I've been in the room for lots of these discussions, I was a federal criminal prosecutor as well.

When you're in the room and you're talking to these witnesses and you start telling them what the potential consequences are for not cooperating and how they might be named as a defendant any day, they start cooperating. So this is one of the first cases that has brought to light DOJ techniques, which is to get all these people to cooperate and then bring the case when they've got their ducks in a row to such an extent that their victory is overwhelming. So I look at it like, Heather, just because this con has gone on for years does not mean that it's become not a con anymore. But why is it a con? Hold on.

Why is it a con? Why is it a con? Why is it a con? Because these attestations are not audits. You're all talking like they're audits. The con, the con, John. The con, the con. Yeah, exactly.

It's not a con, objectively speaking, but it's a con because it gives us that false sense of security. All of us thought they had an audit. Let's be real, guys. Hold on a second. Hold on a second. First of all, do your own research.

It was an attestation, not an audit. Number two, if you don't like them, there are many other stable coins in the market. You're welcome to use a stable coin. What you're saying is that the market is bashing USDC market cap and is exploding USDT market cap. And the reason why they're doing it is because most players in crypto don't want to have anything to do with the United States. And unfortunately for Circle, USDC is domiciled in the United States. And so people are saying, listen, we don't really want to be involved in anything to do with the United States. The two arguments you made, but sorry, just the two arguments you make, there's another stable coin you could use.

You could say this, make that same argument to FTX. Hey, if you don't like FTX, just use another exchange. No, I think it's important to dig into those concerns and they are valid concerns. And then the second point is the market is wrong. The market was wrong about FTT. I just don't know if we need to deal with those concerns now because we dealt with them 800,000 times in the past. And every time we get to the same point, unless something fundamentally changes

or someone has a new bill of information that maybe shows that Tether is lying about its attestation, we're just going to get to the same point that we've been in for the last five years. Ron, the New York Attorney General found that Tether lied about its asset reserves and the company has admitted in legal filings that it lends out

tokens without receiving money in return. Writing and distributing digital dollars. If they're doing the right thing, why are they not allowed to do business in New York? Exactly. Exactly. Because that's how the u.s legal system works look i made my business i made my bones in this business this is how you look at investing you look for red flags okay and there are so many red flags

about tether so many red flags about binance and they just become more and more glaring. Can I ask you a question? I just don't see it. Go ahead. John, let me ask you a question. You're talking about red flags. So Binance did have red flags and we all agree they might have done things not above board. But we also agree that they've changed their ways and they've kind of made up for those mistakes. Do you think Tether is more likely to be in that camp than the camp where they're still doing the wrong thing, where red flags were there, they addressed them as they matured and they're no longer there? And I'm not saying it's not worth the question, but do you think this is more likely scenario than the red flags persist and you should still be concerned? Well, first off, I don't think finance has changed their ways. They have Noah Perlman as their chief compliance person,

and he's a responsible guy. He's a former Eastern District of New York assistant U.S. attorney. He's still there. Everybody else has left. They're in the midst of a massive, the largest asset freeze by the SEC of a financial firm in the history of the SEC. Finance U.S. specifically or Binance? Binance. Well, Binance U.S, but it's all tied together. You're parsing things that really

don't deserve that kind of parsing. It's a hornet's nest. It's a cesspool. You read the CFTC complaint, you see a massive market manipulation orchestration. It's in the complaint, not in the pleadings, not in the later pleadings. You're seeing a vivid depiction of a market manipulation scheme firsthand. You're reading emails, you're reading texts, you're reading signal chats. The SEC case is the same, 100 pages, where they get the extraordinary relief of an asset freeze. That means you're more likely to succeed on the merits than you are not to succeed. So that's what Biden is. So I don't think any of these companies have changed their ways. They just continue to bark. They continue to turn victims into victimizers. You have people

on this call saying they've already been audited. They haven't been audited. OK, an attestation is not an audit. It's a ruse used to deceive people into an audit. Look at Voyager. Look at all the ways that Voyager pretended to have FDIC insurance without really saying it exactly. So, you know, when you look at the way these companies operate and how flipped they are, and they're obviously they're never inspected. There's no regulation. You say, well, they are regulated. No, they aren't.

They're not audited, not inspected, not examined by the SEC or FINRA. There's no licensure. There's no FDIC insurance. There's no licensure. There's no FDIC insurance. There's no cybersecurity requirements. All of that means something because you become, when you lose your money in crypto, you aren't, it's not like me losing my money. Suppose I had a thousand shares of Microsoft at Robinhood and Robinhood went under. I'd still own my thousand shares of Microsoft. Well, not so in crypto. You're instead just an unsecured creditor waiting in line,

desperate, desperate for help. And there's no one there to help you. I want to get other thoughts. Lawyer and Carlo, I'm not going to go to Tiger yet, because I know what Tiger is going to say. We need to balance it out. Carlo, what are your thoughts on this? We'll go to Lawyer and then Tiger. Yeah, good morning, Mario. And good morning, John. You know, look, I can't disagree with a lot of what you're saying, having been on the other side of this and defended criminal cases for over 25 years. But my question for you is this. Isn't this just the natural in the stock market in its infancy, and that caused the securities laws to come into effect in 1933 and 1934. We saw after the Great Recession that Dodd-Frank alleviated a lot of the red flags that were seen with respect to the way the financial sector handled things. So I don't think there's any denying that this technology

is going to continue to evolve. And I agree with you, we're going to see more criminal prosecutions, because I talk with the agents who are on the ground doing these cases, and I see the volume of work they're doing. They're overwhelmed. But I don't think that that means that all of this is essentially a bad risk. I think this is collateral damage in the evolution of this technology. And I've often wanted to pose this question to you because, as I stated yesterday, there is no denying that every aspect of our life is going digital. Why would money be the exception, John? I would love to get your thoughts on this genuinely. Oh, absolutely. And those are all excellent points. I think that's a good recitation of history. And if anybody on this call needs a defense lawyer in this circumstance, they should obviously hire you, given your experience and given your perspective. I respect that a lot. I guess I would respond with two things. Number one, I would say we already have digital money with Zelle, with Cash App, with Venmo, with PayPal,

with credit cards. Those are the solutions that the problems of crypto present. So that's number one. And number two, I would say, where is the utility? And this is what I was talking about on CNBC. Where is the utility here? It's all for either speculation and it's become this notion of this predatory inclusion that it's going to make things better for the unbanked and it's going to solve issues of financial inclusion. Those ideas, there's not a shred of evidence to support any of those ideas. It's just a typical affinity fraud. done by Carmona Tenantse at the Brookings Institution. She goes into detail about how that's absolutely wrong, that people of color are suffering because of crypto, not being helped. And then you look at Michelle Singletary, who's a legendary financial journalist here

in Washington, D.C. Maybe 30 years she's been writing, and she looked at all the studies and wrote a scathing article about crypto, how it doesn't, she's an writing. And she looked at all the studies and wrote a scathing article about crypto, how it doesn't, she's an African-American writer, how it doesn't help African-Americans. So this idea that it's wonderful for some, has some utility, it's anathema to me. I look at the criminals who use the pseudonymity of crypto to orchestrate devastating crimes, especially ransomware. I'm a ransomware expert, drug dealing, human sex trafficking. When you read Zeke Faw's book about how Tether is used to enslave people, sanctions evasion, and of course, terrorist financing.

And don't tell me crypto is traceable. I'm meeting with the FBI tomorrow. And I've written a lengthy treatise on the idea of crypto traceability. It is not traceable. In 2022, there were reported to FinCEN, I think, 1,256 ransomware attacks, collecting $1.3 billion in ransomware payments. Not a penny of that has been recovered, and no one who's orchestrated those schemes have ever been caught. So I look at things like just the real facts of what this crypto has done, and then I weigh it against, you could say, oh, but fiat's the same, or oh, the internet's the

same. People use the internet for fraud. People use the cloud for fraud. People use fiat for fraud. Well, that's sort of whataboutism. It just doesn't work with me because when I look at those particular technologies like the internet, you know, I was chief of the office of internet enforcement for 11 years. I was an internet evangelist. I talked about how incredible the technology was on the same days that we were prosecuting people left and right, all with joint parallel criminal prosecutions. So I get it, but I just don't see the utility. I see the utility of fiat. I see the utility of the cloud, of the internet, but I don't see it with crypto other than speculation and use for crime. Mikko, jump in.

This is a perfect time for you to speak. Yeah, I mean, John seems to be warped in his own thoughts. But if you just look at what's happening in the market, I mean, take a look at what Ripple has customers directly using XRP to move over $10 to $15 billion through XRP, the digital asset, for cross-border payments every single year. This is real-world utility of cryptocurrencies that John doesn't seem to think exists. It's important to point that out because these customers are using these products because they are helpful. This is real world adoption and real world utility. And if you just ignore that, it's easy to make John's argument. But when you actually look what's happening with the customers, right, these are customers who are adopting the technology because it's more efficient than the normal rails they're

using. You can look at the savings these customers are getting. There are plenty of reports from Ripple's customers on how Ripple's rails are more efficient because of the use of XRP. And this is the early days of this adoption. And to ignore this and say there's no utility, I think is just ignoring the facts. So, John, this is just one example. Ryan, any other good examples for John, for utility? And John, I'd love to get your thoughts. Look, even without these examples, because I don't want to debate each one of them. John, if there isn't utility, why is crypto even here? It's gone through time and time again.

Yet VCs are still flocking in and adoption is just going up. So if there's no utility, the market would dictate that. I don't agree with that. I don't think VCs are still flocking in. I think they've moved on. I think there's plenty of empirical evidence to show that. And when I read the Concern.Tech letter, and I hope everyone on this call has read it,

you can find it, Concern.Tech, from some of the most important technologists in the world talking about how blockchain is a failure, talking about how crypto is just, again, mostly used for crime and nothing else. Now, there are ways you might want to maybe do something with your back office. But to me, when I do the research on XRP and Ripple and otherwise, and I've studied those cases very, very carefully, I look at it like most people are buying it because it's an investment. That's why they're so fanatical about it. Who cares

about whether it's a security or not? It's being used. That's what the data says. One product, John. It's $15 billion move for utility. XRP is a bridge asset. And I'm not doing this to say XRP is so great. You're saying it has zero utility, but Ripple's customers are saying it does. So how do you think these customers are just using it for fun, using it to lose money? Of course not. They're using the product because it's helpful. Just like people buy NFTs, they buy crypto because they want the price to go up. And that's what bothers the SEC so much. If you want to use crypto for other things, you know, have at it. I mean, I listen to the earnings calls of Amazon, Apple, Google, Microsoft, and Oracle.

And I've studied those companies to see what they're doing with blockchain. And none of them are doing anything. It's a glorified append-only limited writer spreadsheet. But you're dodging my question. No, I'm not. I'm specifically giving you a product where XRP is not used for speculation. It's directly used as a bridge asset, but that's how the product works. And there's $15 billion moved across those rails yearly. I'm disagreeing with your analysis. I'm not dodging your question, okay? I'm disagreeing

with your analysis. If you just look, all I have to do is mention XRP or Ripple in a Twitter post, and I'll get 10,000 people screaming and yelling at me. Why would they care? Why would you care if Ripple or XRP was a security or not, if you were using it for your back office to move money? Because the point is, when the SEC looks at this, it's sort of like we were talking about before. The 29 crash happened, and we set up a bunch of regulations in the US, the 33 Act with respect to offerings, the 34 Act with respect to intermediaries relating to offerings, the 40 Act with respect to mutual funds and investment advisors, and just started regulating all those players because in this kind of situation there's too much room for Griff to too much room for chicanery John if if tether before going to Tiger and lawyer if

tether gets an audit would you would you put to bed any fear that you have around their uh their reserves uh I I don't know but you know that that's a great question it's a very fair question because again I don't think it's that challenging for a multibillion dollar company to engage a top accounting firm and get a real audit. I don't think it's that challenging. Do you think the issue, but isn't it challenging for crypto businesses? We've seen audits walk away from some company. I'm not going to name them because I can't remember who they were, but some of the top companies in the industry had auditors revoke their audit and walk away or refuse to work with them. Yes, because you see, part of an audit, Mario, is exactly that. You have to open your doors, just like when I want to borrow money from the bank based on a mortgage to my house,

I have to let the appraiser in and I have to let them see every aspect of my house. The same goes for an audit. And no crypto company wants to do that. They're just... We're going, we're going, John. Why doesn't Coinbase just register? We're going through the... I'm going through that same pain. The thing is that I know what we did.

I know we did everything above board. But I'm not in the finance team, but when I talk to them, they're like Mario. It's like they want to understand every single transaction. They want to understand custody. They want to understand every single thing we've done.

It's like I sent $10 there or you sell a token, they'll buy a token. They want to understand it, understand what that token is, and then try to figure out how to value it. So is it a tether problem or is it a crypto problem? No, it's – look, nobody wants to undergo the kind of financial colonoscopy that SEC registration requires or an audit requires. Nobody wants to do that. But that's what the law requires because it has been incredibly successful, at least in the US, that those kind of audits and that kind of regulation has made the markets very safe and have thrived and made a lot of people very wealthy. So, you know, I can appreciate why a company wouldn't want that kind of scrutiny. Look at Coinbase.

This is an incredibly wealthy company. Why don't they just register? And don't tell me, well, they came in and they tried. Look, there are a million lawyers out there, many of whom I know who would be more than happy to get them through the registration process. But you know what that would require? Licensure with FINRA, audits from the SEC, four cause audits. Remember, when I was chief of the

Office of Internet Enforcement at the SEC, and as I mentioned, it was for 11 years, I had five people from the Division of Examinations that I recruited to come work in our group. And that wasn't, you know, by accident. It was because whenever a regulated entity was involved in one of the investigations that our team was conducting, I would immediately tell those guys to liaison with the Division of Examinations and send a team over there to find out exactly what was going on. With banking regulators, it's even more so. If you look at a big bank in the U.S., they've got members of the Fed, members of the FDIC, members of the Comptroller of the Currency actually sitting in offices at their company 24-7. I like that. I like that trust.

I like this idea of disintermediation or decentralized finance, which is quite hypocritical if you look at everybody's excited about this Bitcoin spot ETF. Well, what happened to decentralization? But putting that aside, the idea of a centralized entity is a good thing for consumers. They like the fact that when their credit card is used by somebody else, you can just dispute that. When there's a problem at your bank, you can talk to someone. There's a compliance team. There's infrastructure. There's record-keeping requirements. Every single person has to be licensed, has to pass exams. So it's incredible. It's an incredible burden. In many ways, I would say it's too burdensome. But that's not the issue here. The issue is that none of these crypto companies

want to subject themselves to that. And who can blame them? Yeah, David Lloyd, is there a different way of looking at the fact that Tether doesn't have an audit? Should we be less concerned than John's making it out to be that I have an attestation rather than an audit david lawyer i mean not to me right so i think if it's an intellectually honest conversation would look at all the reasons why maybe maybe there isn't one and what and like the question that um you asked i think is very important like what would that change if we saw an audit you know because at first i was just kind of bored by this because it was really like oh let's talk about something we talked about a thousand times you know here are the things that might be wrong with tether but let's not talk about why it's not the best off why it's may or may not be the best one out there um but then when

the conversation sort of shifts to oh and you know all crypto is bad then it's like well i see why we're doing this and it's just, I find it like not that helpful. Like I'm happy to have the conversation. I just don't know that, you know, demanding an audit from Heather is actually going to change anything with respect to the conversation. You know, if we're looking at whether there's risk there, that's important. You think an audit, like David, do you agree like an audit wouldn't change things rather than an attestation no i do think an audit would change things because there are requirements

there are you know recount accounting requirements there's everything um i do think that you know and i see biff and x is in the audience you, I have loved everything he's done over the last 10 years. But, you know, at this point, dear God, if they are not fully, you know, audited and the lawsuit in New York goes differently. Like, I just can't imagine that they've had this much attention. Look, a couple of years ago, we found out it wasn't one to one backed and they changed. But this goes to my whole belief and, you know, what John was just saying about Coinbase. You know, Coinbase circa, you know, 2018 is very different than they are today. It's very important that I do believe whatever Tether was, and I say this about Binance all the time, when people ask me about is Binance going to go down.

What Binance was several years ago, Binance isn't today't today i hope and i think it's important with tether i do think that tether can provide more information but at the moment it would be shocking to all of us if tether was a run by fly by night ponzi scheme and i don't think that they have provided significantly more information. The lawsuits that have been going on for years, there has been more discovery. I do think that the prosecutors would have come out with more vitriol if there was more bad information to come out that we haven't seen so far. Now, does that mean an audit isn't better? No, an audit is better than attestation. We should get an audit if it's stablecoin. But I think most of us are concerned only about whether or not they would survive something like a run on the bank or something. And as time goes on,

those of us participating see and are convinced more that they're the best option out there, the safest one, or maybe they aren't. And there can be maybe there are arguments about that. But just to say that when you tell people not to use Tether, you they use something else. Right. It's not like they just leave crypto and go to fiat. So if you're going to have that argument and that discussion, I think you need to have, you know, if it is the best option and that's your opinion, you should say that. And if it's not, I think it helps to sort of direct people to something better. And maybe that's Bitcoin. Maybe there is no good good stable coin but that's the kind of conversation you know i and this goes back to i don't think that anyone almost anyone that's even near let's call them let's say goldman sachs is 90 legitimate nobody can survive a hundred percent

run on the bank tether could not survive a hundred percent run on the bank there's just no reason banks of several holland tether has more chance than the banks to survive a run on the bank that i can tell you for sure if the fed wasn't there could i chime in the banks are openly insolvent could i chime in on banks but ran you agree in the history of the world. There's never – wait, Hans. Ran, you agree in the history of the FDIC, no bank has ever collapsed where the depositors lost the insurance. Of course. Isn't that American capitalism? Isn't that hard work? Ran, can I chime in on the bank run argument?

Because it's a stupid argument. There's never going to be a bank run on tether because most usdt holders have no intention of redeeming so this is even if there was this is a useless argument even if there was tether is over collateralized if they're right number two their t-bulls are all short dated according to their report that right now if you ask me i would rather be in tether than most of the american commercial banks if you remove the fdic insurance yes of course if you ask me, I would rather be in terror than most of the American commercial banks if you remove the FDIC insurance. Yes, of course, if you put in big daddy government who just prints money in the land of the free, the land of capitalism, the land of capitalism. It's a very strange kind of capitalism that you have in the United States where when the going is bad, the government just steps in and fixes everything and takes everything over.

I mean, it's a very strange kind of capitalism. It's more like a nanny state. But anyway, regardless, this is not a rant session around the United States. Right now, Tether is more solvent than any commercial bank that I know in the United States. Now over to you. Okay. So on the Alameda stuff, like I've heard arguments about arbitrage, right? But like there were fucking awful traders.

Okay. So like I don't buy that argument for one second um i would love to see the wire confirmations for alameda sending tether 36 billion us dollars to back the 36 billion usdd i'd love to see it so i don't i don't buy the arbitrage argument for one second okay i know i know traders that jump crypto and they told me exactly how this shit works that they don't send they don't send the dollars in full okay they send a percentage they get massive discounts and they send the vast majority of i guess whether you want to call it crypto or or dollars in crypto okay so they're mostly sending bitcoin as

collateral to back the tethers and a lot of it is corporate ious as well all right and i just like i just think that you need to think about this logically uh because there's no way alameda sent 36 billion us dollars i'm sorry and they did not arbitrage. I don't I don't I don't buy that argument for one second. And I think what is not discussed often, okay, and I think will become more important as these new stable coin bills evolve, is that well, I mean, number one, these stable coin bills are basically aimed at Tether, right? Like they're an attack on Tether's quote-unquote business model, right?

They require fast fiat redemptions, which you can get with Tether, by the way. It's sort of why a lot of particularly offshore crypto firms, exchanges, whatever, have used USDC as an off-ramp right and that's why their market cap has imploded this year even just the other day you know there was 166 or 156 i don't remember um a million in uh usdt issued on ethereum and 100, about like almost the exact same amount was redeemed or burned from USDC on AVAX and Ethereum. So like you're seeing this USDC as an off ramp avenue because you cannot get mass amounts of dollars out of tether because candidly they rely on three tiny tiny banks in the bahamas with tiny tiny balance sheets that cannot handle a company the size of tether right i mean they're new why tiger question on this one why do you think they're

using those three banks is it again is it a crypto problem or is it a tether problem i well okay so here's the thing too is like i know everyone thinks it's a crypto problem yeah there are problems within crypto but a lot of the problems in crypto are not like quote-unquote crypto related they are traditional finance related like this whole problem with tether is not a quote-unquote crypto problem Okay, it's a liquidity risk problem. It's a counterparty risk problem. It's a key man risk problem These are all traditional finance problems. It's aren't crypto problems Okay tether for the most part is a traditional finance company. They're a quasi Money market fund quasi alternative asset manager they're not a crypto

company they have a they have they have usdt which is a token but the the the standard operations of tether are very akin to traditional finance companies okay yeah but banks don't see it the same if you try and get a bank account it's it's virtually impossible for a company like tether that's just simply that's well why is that though well why is i mean listen you i mean listen you know this simon okay tether was created because they couldn't get a bank account okay so if they can't get tether had a bank account and it was created so that you could get it

from one exchange to another. And they lost their banking which led to a cycle of stuff that they had to deal with from there. The reason why they lost their banking partner is because the US has pretty much made it radioactive for most banks to deal with anything to do with crypto.

I mean, you don't want to be a bank banking tether related or connected to anything to do with the United States. Well, there was also, I mean, okay, so they did actually get bank accounts, but they got bank accounts fraudulently through signature bank by faking they started with the taiwanese banks they started off with the taiwanese banks then they had the issue with the puerto rican banks um they had this hot potato because they essentially became the bank account for all crypto to crypto exchanges and they grew so fast and they went from only having about five million dollars and trying to persuade every single exchange that stable coins are a good idea to companies like binance becoming huge because they were able to use tether without having to deal with their banking relationships. And then that led to a bunch of relationships that they lost.

And then as they got bigger and bigger and bigger, they lost these relationships and they had to find others. So even though you talk about small banks in Bahamas, and by the way, this is not me, Tether is just a different kind of risk. USDC has its own risk. Other stable coins have its own risk. But using a bank trust in Bahamas is a different type of risk to using a fractional reserve bank with deep leverage in the US.

There are different types of risk. One is a trust bank where they don't leverage and they don't have the same kind of fractional reserve risk and attack that a geopolitical party like China could do to try and take down their banking system. And another has, you know, the backing of the largest government. And as soon as people stop buying those treasuries, then it introduces another type of risk. But a trust bank means that you're not taking the same kind of risk and leverage of a u.s bank and i'm not saying one's better than the other i'm just saying the different risks to manage well okay so i've also heard like you can use another stable coin if you don't like this one well like not really okay like 70 of the trading pairs in the market are based on usdt

right like you can't really use another stable coin. Yeah, it's like saying, it's a very important point. I just want to point that out. This is an important point. Like when it's like when FTX collapsed, we're like, hey, it's okay. You know, you're worried about Binance. You don't have to use Binance. But then who's left?

Yeah, but also like, you know, you guys say, oh, they're out of the jurisdiction in the United States. Well, you know, 40, I think it's like 45% of their market cap is actually overseen by Kenneth Fitzgerald. They have $39 billion in U.S. Treasury supposedly being overseen by Kenneth Fitzgerald, which is not too far from the SDM downtown New York City. I actually don't live too far from Kenneth R. Sparrow's offices. Can I ask you a question? I'm just saying, you guys say it's not in

U.S. jurisdiction. Well, assets could be very easily seized if they wanted to. It is in U.S. jurisdiction. It's a registered money service business in the U.S. and has to comply with FinCEN's requirements. Well, I don US and has to comply with FinCEN's requirements. Well, I don't, okay. I don't know if they comply with FinCEN's requirements, but... They have to because they're a registered money service business. That's by state, the money transmission

and then it's just because you're registered with FinCEN doesn't mean you're subject to examinations by anybody. Yeah, it's a different type of thing, but they have to comply with all the money laundering requirements. But who's to say that they are? I don't think they comply with that. I really don't. But, all right. On the enforcement issue,

if the US want to enforce it, they can enforce it because they're registered with FinCEN. On their payers. Wait a minute. Registration with FinCEN is filling out a form and submitting it so that you can access the Suspicious Activity Report Terminal. So anybody who says, hey, they're registered with FinCEN, very, very ominous warnings to any financial institution in the U.S. that does business having anything to do with crypto, with stablecoins or otherwise, to the point where they have to first ask permission to do that. And the reason why the banking agencies are doing that is because they fear systemic risk. It's not of any political pressure.

It's not because they don't understand innovation. It's because they fear systemic risk. And thank goodness they're doing that, as far as I'm concerned. And that should be a red flag, again, to everyone. If all the banking regulators say you you you as a business you shouldn't be associated with any of this and then you look at what's coming in 2024 with you know if you walk down 47th street and use crypto to buy a rolex then that business is going to have to report that and with respect to the exchanges all the exchanges are going to have to report

any transactions having to do with crypto, just like your traditional brokerage firms do that. Why doesn't anybody cheat on their taxes with respect to capital gains of stocks? Because they know that those forms go to the IRS, and the same thing is going to happen in crypto. So there's a reason. There's a reason why all the John Doe lawsuits that the Department of Justice has filed, where they literally just go to an exchange and they say, we've looked at the data analytics of the amount of taxes paid and the amount of transactions that you say you have undertaken

on behalf of people. We see an anomaly. So we believe that people aren't paying their taxes. So we're sending a John Doe subpoena, meaning a subpoena to an entity like Coinbase or Binance US or anyone saying, give me all the accounts from everyone who traded in the last five years. So the onslaught is continuing and is fairly robust. And I think that there's meaning behind all that. No one's doing that because they're anti-innovation or they don't like crypto or they don't like anyone on this call. They're doing it because of systemic risk and the threat to investors.

Yeah, John, 100%. If I could comment on that, 100% is about systemic risk. Because you know what the biggest risk to fractional reserve banking is? Full reserve banking. So having a stable coin that's actually backed by the assets and is not leveraged over is a massive risk to those that are leveraging and taking excessive risk with client deposits, which is fractional reserve banking. It's why you have to have that massive onslaught of stress tests and all that

type of thing, because just backing a stablecoin by assets is significantly lower risk than leveraging up your bank deposits. Yeah, just a quick question for John. John, if there was a reputable institution in the United States to adopt a cryptocurrency protocol for utility purposes. Would that change your perspective that there is utility in the ecosystem and that cryptocurrency public blockchain does have use case or that not change your perspective? You know, that's a great question. And it's a completely fair question. If the technology were to evolve that it had utility and that utility could somehow be proven and people weren't investing in it, then I say, have at it, go do whatever

you want to do. If Goldman Sachs wants to use a private blockchain to run their back office, go ahead and do it. You know, if somebody wants to use their NFT as the picture for their Instagram account, go ahead and do it. You know, but when it comes to the investment side, then you're creating extraordinary systemic risk. You're creating extraordinary investor risk. And that's why the SEC acts. I don't think the SEC is concerned. And remember, the SEC is 99.9% not political. Just about every person who works there is not any kind of political appointee. It's just looking. So if you want to prove the utility to me, you know, you can find, I wrote an article, a very extensive one, I think it's like 15,000 words, okay, about blockchain and Goldman Sachs and all the different projects, blockchain projects that have failed.

And, you know, as I said, one of my friends from a very big technology company, one of the biggest in the world, just said something very simple to me, John, it's a spreadsheet. Stop acting like it's so innovative. We've had spreadsheets forever. So we can disagree on that. And you might be able to tell me, hey, there's going to be some great utility. Of course, you know, Molly White wrote this great article saying it's not still the early days. And Anthony Scaramucci, again, my close friend of 50 years, comes back and goes, John, you don't know what you're talking about. When the internet first came around, nobody knew what it was going to do. And it took forever for things to really materialize.

So I get that. And the big thing I would say is lots of crypto investors, lots of blockchain true believers, they're exactly that. They're true believers. They want to do the right thing. They think this innovation is going to make the world a better place. They're exactly that. They're true believers. They want to do the right thing. They think this innovation is going to make the world a better place. And I respect that. I just don't agree with it, with their factual assumption along those lines.

Well, John, would you agree that a piece of technology that is backed by, now granted, if you could get the audit requirement and the attestation requirement people are looking for and you could prove that this was backed by these assets it is a significantly lower risk profile than the u a traditional u.s bank that relies upon leveraging our people's assets sending it to an investment bank using collateralized debt obligations in order to slice and dice and insure it by credit default swaps, because you're over-leveraging and relying upon the credit risk assessment of the bank to determine how much real estate people should borrow, which then gets put into hedge funds and then gets sliced and diced into a million times over and leveraged up. That's risky. Stablecoins is simply full reserve banking where you have transparency,

or in theory, you have transparency, if we can get that right, over the assets that are backing it so that you can know, you can understand the risk. We understood the risks with USDC as soon as we entered into the risk that was, you know, the risk of Silicon Valley banks that was caused by this very same issue of the risks that are created in the U.S. banking system through fractional reserves. This is a movement towards full reserve banking. That's a better product. Let me take the first part of your argument on.

First of all, I completely agree that traditional finance has all kinds of problems. I was at the SEC during 2009. I was at the SEC during the dot-com crash. I was at the SEC when Madoff happened. These are bad things. I would argue that they're aberrations, that for the most part, the banks function very well. Like David said, ultimately, people get their money back. People have a lot of confidence in the system. I can't tell you all the risks associated with fractionalized banking. I can tell you that there are a lot of problems that I would find in traditional finance related

to the way hedge funds do business, related to the way that banks operate. I see all kinds of injustices and problems. I don't see private money as a solution to any of that. And so I just don't see that as solving those problems. I appreciate the libertarian notion that, hey, when I do financial transactions, I'd rather the government not know. You know, I'm a I do financial transactions, I'd rather the government not know. You know, I'm a big First Amendment guy. I'm a big Fifth Amendment guy. I'm a huge Second Amendment guy. I don't trust the government. If you read most of the articles...

They know everything. You're onboarding and offboarding through an exchange, and then you're creating an immutable record of every transaction. And you know the backing of what is behind that so that you can analyze the risk and actually know. Because here's the biggest problem with banking. People have no freaking idea of the credit risk that they're taking. They have no idea of what's actually behind it. But with stablecoins, you get to actually know that. And it's a significant improvement.

But wait, Simon, let me jump in first. Go ahead. Let's use the signature bank failure where one of the largest accounts was Circle back in USDC. That's a fractional reserve problem. The stablecoin you were able to assess and the market in real time was able to de-peg and adjust the price based upon knowing

how much was at risk with the fractional reserve bank that was just like it did with Terra, just like it did with Terra, Simon. Terra is not backed by those assets. That's algorithmic. That's a different risk. Go ahead. Go ahead, David. Go ahead, David. Yeah. I mean, just my point being like, let's not forget, like Rand said, you you know the banks weren't protecting but you know usdc and the 3.3 billion dollars back to usdc uh and circle you know my problem here is we're talking about you know if everything is believable and i forgot who said you know well no one's going to make a bank run yeah you know that's not that's not a defense. At the end of the day, what's going to happen here is true transparency.

I agree with Simon. True transparency. If this actually worked and was regulated, look, I'm probably more pro government and pro more pro pro more regulation than anyone on the panel right now. But without that, what we've seen so far in crypto is what we've been told is not true. And if we go back to Tether, back early on to 2021, when the investigations were first releasing the documents, it turned out it was like seven. We always told it was one to one back then. When the documents finally came out, it was like 70% back. Look, that's better than fractional banking. I'm not

making the argument. Why did that become 70% back, David? Because the government confiscated a bunch of money in a fraudulent bank because they were pushed out to the fringes of using crypto capital and shadow banks because they couldn't get service within a normal bank. I mean, one of the banks you dropped off was a drug cartel bank, man. Exactly. They were forced into shadow banking because they lost their traditional class A banking. Wait, let me talk about this for a minute. You know, when it comes to banking, here's the deal in the United States. You have the USA Patriot Act. You have the Bank Secrecy Act. You have about 13 different statutes that relate to anti-money laundering.

And all of those statutes essentially say that when it comes to financial transactions, you do not have a right to privacy. Meaning at the SEC, I can find out what your transactions are. At the U.S. Attorney's Office, at the DOJ, I can use search warrants. I can use grand jury requests. I can even use just simple requests. Like at the SEC, you don't even need a subpoena to get your brokerage information. You can do it by voluntary request.

The regulated entity has to provide it. So you might not like all of those things, and you might want to debate me on those. And I think that's a lively debate because I don't like all those things either. But on the other hand, I don't like terrorism. And what has happened in terms of terrorism is this idea. They talk about Operation Chokehold. Well, that's a legitimate operation. You're trying to stop the financing of terrorism. And the way that you do that is by monitoring financial transactions. So creating this idea of private money,

it just completely, it's anathema to all of that. John, it's not private money, right? You put your money at a bank. Are you required to know whether your bank is committing money laundering with the bank deposits? Or do you rely upon the bank in order to have a robust AML program? So both of the problems you just explained. So David said, look at what happened with USDC. USDC was perfect market efficiency that priced in a DPEG based upon the risk of fractional reserve banking, knowing that $3 billion was on the line in Silicon Valley Bank, which was a banking failure, a regulated financial institution failure. The second one you talked about was crypto capital. Crypto capital was the bank that was committing money laundering, and therefore the funds got

seized and it lost its one-to-one backing. So that's a failure in the traditional regulated system because they were meant to comply with all those things. I'm not saying don't comply with them. Anti-money laundering is a fact of life, and everyone that runs a financial institution has to have very robust AML programs. And one by one, we're entering into a world where you're lucky if you can withdraw your money from a bank. But at least... I just don't see it that way, Simon. I think that most people are very, very secure in their banking. Everyone gets paid back if there's a problem. And the reality is that when it comes to compliance procedures, well, yeah, that's true. That's true, Simon.

And I get it. That's a fear. And there are only so many options for what you can do with your money, whether you want to put it under your mattress or whether you want to put it with a bank or whether you want to diversify, whether you want to use it for real estate. I get it. But I just don't. I look at these compliance systems. Well, I look at these compliance systems as critical. And so do you. But entities like Tether and entities like Binance and entities like Coinbase, they don't have those compliance systems. You say they do, but I have no way of knowing that. I know, I'm not saying that's right. That's a different topic. We were just talking about... What I'm saying is without those protections, people are worse off than what they could with a bank.

And I find it so funny and, again, hypocritical that you talk about BlackRock and you talk about Grayscale and these big companies doing this Bitcoin spot ETF. When the whole theory behind crypto and Bitcoin was decentralization. And you're just trading one set of very trusted participants with another set of less trusted ones. And I don't understand how the consumer or the customer is benefiting at all. The idea is that, well, this crypto can go up. Who knows, who knows about any of this trading information, any of this trading data, who knows about any of it? When you look at something like safe moon, 95% of it was washed trades, talking like

$35 trillion of trading back and forth between yourself. So when you have that sort of fraud, that sort of chicanery, that sort of grift going on in plain view, then I just find it amazing that anyone would want to bet on this other than as a gambling proposition. Hey, I think the scam artists are really good, so I'm going to bet on them. And I get that. All of those are being, you know, we have a global virtual asset service provider regime being implemented by Financial Action Task Force. Our industry did all sorts of criminal activities, dodgy activities, all sorts of scams and frauds.

But now a lot of traditional financial institutions are looking to get involved. Regulators have decided to catch up. They said, this is not something we can ignore anymore. And so they're putting in those regulations. And if you don't follow those regulations as a financial institution, then you get fined, you go to prison, or you fix your issue. And so, yeah, we have to fix these issues of the past. There's no doubt about that.

For what? What, you're fixing them all so that you feel like this is going to create a better banking system for the world? A hundred percent. Full reserve banking. Full reserve banking where you know exactly what backs your digital dollar and you take the bank out of the middle and you can go direct from government treasuries to stable coins that moves and creates an immutable record of your transactions. Okay. There's not a single crypto related financial institution that could withstand the kind of scrutiny to give you that kind of guarantee.

Well, no, if you're backing a stablecoin by treasuries, you have taken the bank out of the middle and you have full transparency to the limitations of an audit. The transparency isn't possible because they're never willing to give it. Okay, what about PayPal? What's the issue with PYUSD? Well, there's lots of issues with it. The first thing is that at least with PayPal, if you have a transaction with PayPal, just like with Robinhood, you can go buy your Bitcoin on Robinhood. And my good friend Dan Gallagher, who was a commissioner at the SEC, is their general

counsel. And you'll at least have a mechanism for some sort of remediation of any problem that you would have. So I see that as better, but I don't see it as any kind of... I don't understand how you can invest in something that has no balance sheet, no assets, no cash flow, no nothing. I'm a traditional investor. I like to look at something substantive, not a bunch of mathematical computation. These are a lot of different issues. So firstly, there was, is a stable coin an improvement over a bank deposit? And I would say being able to take your PayPal balance and be able to clear it on the Ethereum blockchain is a significant improvement from the clunky, shitty Swift blockchain,

where you have to prove, you know, it's a significant improvement. I don't see a problem. Simon and John, stablecoins aside, I mean, the big institutions and John, you said you would have no problem with private blockchains, and I'm certainly not cheering for them. But I mean, JP Morgan created Onyx and is moving money money market accounts between blackrock and barclays so clearly if we're just speaking technologically there are some people you probably trust who do believe that technologically this would be an improvement on speed uh cost and obviously the bill to collateralize those things also immutable

i wrote a lengthy article correct and i wrote a lengthy article refuting that. I mean, I agree that a private blockchain, again, if you want to do it, have at it. You want to drive from DC to New York with square tires, have at it. But the public, again, I just don't see it. I see most of the blockchain projects as failing. I see most, I see all these giant companies. If this was such a magnificent, transformative technology, why isn't the greatest database company in the world, Oracle, why aren't they talking about it and doing something every day? Why haven't they dedicated huge resources to it? You talk to anyone at Microsoft, for example, and they'll say nobody's doing anything with respect to blockchain. Now,

remember, with the internet, Bill Gates got on David Letterman. I was there and I watched him and he said, every single thing we do should touch upon the internet. No one is saying that with respect to blockchain. Nobody cares about blockchain anymore. There's no venture capital money going into it. It's old. It's tired. It's done. I don't even, it's not even worth the argument because honestly like i don't give a shit about jp morgan i'm not cheering for them to utilize private blockchain or any things but like making the argument like that these companies are not necessarily using it it's like making the argument that why didn't sears like use the internet why didn't uh why didn't blockbuster see streaming coming because not everybody remains

number one forever and it's just a completely they all don't get it they all just don't get it i'm not even microsoft and google they just don't get it john for me to be able to protect myself from the bank from your banks in the u.s i can own my Bitcoin, for me to be able to transact no matter how many bombs you throw across the world, for me to be able to protect myself from your excessive money printing, that is going to have systemic risk on the entire world. To me, Bitcoin is freedom, and it creates an immutable record. So if you want a great compromise, rather than hijacking all the financial institutions to do the police work for you, if you want a great compromise, rather than hijacking all the financial institutions to do the police work for you because you can't do it, at least you can go

from create that immutable record and then just build good systems so that if you want to commit crime on Bitcoin, create an immutable record. It's your choice. Seven years later, you stole it. Yeah, I think it's a good place to end it yeah i just think we're conflating a lot of uh different arguments right i mean i can see uh the argument about transparency and banking on the one side which simon's fighting very aggressively against john i agree with you a lot of things the place i lose you is where it's just sort of emotionally like this is all worth nothing. There's no utility. Listen, that may prove to be the case.

Like, you know, I can't tell the future. But I find it surprising that we would say, oh, well, Oracle's not using it. It must be bad when you have Larry Fink on TV calling crypto flight to quality and in his yearly investment letter talking about the tokenization of all the assets and you see even with jamie jamie diamond being one of the most dismissive people of crypto in the world you see what jp morgan is doing watch what they do not what they say creating onyx jp morgan corn and listen once again like i'm gonna get uh you know people are gonna cut this up and say scott's cheering for j and BlackRock and like, fuck them. I don't care. The point is, it's really hard to make the argument that this is worth nothing when you have now the largest institutions in the world actually, whether, listen, whether they don't even believe in it and they're just taking a look just in case, they're still spending resources and money to do so. Franklin Templeton nationally in this space. Fidelity has been in this space since 2015. Once again, not even cheering the institutions here, just making the point that you can't say it's completely worth nothing, point out one or two

institutions that are doing nothing when there are so many who are doing something. I mean, Franklin Templeton has already tokenized $300 million worth of treasury bills, which is now a billion dollar AUM. Tiny, nothing. I get that. But these people are making significant moves to get ahead of what could be the next trend. So to say all of this is worth nothing because it's just for criminals or whatever. I mean, I'm sorry, John, I really enjoy these conversations. But that just verges on me like angry Elizabeth Warren Boomer screaming at the kids to get off his lawn and rap music stinks these days argument. And so I think,

you know, I think that some of the most important points that people here make are lost in the aggressive emotional side of dismissing it all as worthless. Listen, tether can be a complete fucking house of cards. I have no idea. I interviewed Paolo, many people in this audience who I see here get mad.

Scott Milker has interviewed more grifters in this space than any other person. He's shilled literally everyone. If you do 3,000 shows and have 30 guests a week, you're going to interview a lot of people that end up being complete fucking frauds. And that's the reality of the situation. And yeah, it sucks that that happens. They get past the filter. But the reality is there's a lot of grifters in this space, but it's been cleaned up a hell of a lot. And it's going to only continue to be cleaned up a hell of a lot more in the future. If Tether goes down, something will replace it. And this will continue marching on as it always has. And maybe that will just be everybody coming back to Bitcoin, which could be a great resolution, to be quite frank frank if things happen that way but i just think it's just a

little bit aggressive to just dismiss everything and go back pretty soon we're going to be doing spaces mario like in a in six months we're going to be doing spaces about how ai is only for frauds and criminals and is boiling the ocean and is a useless technology the future you know why i wouldn't those older people fucking hate new shit. You can rap whenever you want now. Yeah. Okay, man. You want your mic drop moment? I'll give it to you. John, I'm one of your biggest fans, by the way. I appreciate it coming on the space. And I think we disagree on some points. I disagree on, I kind of agree a lot with Scott with what he said here. And I disagree on the fight. Look, the tether concerns are very valid. And I think you're

digging into it. I agree with that, actually. I agree with that. Yeah. And I think this is a discussion worth having. The utility discussion is if, you know, it kind of died a few years ago,

but I'm willing to still have it and if you turn out to be right, then I give up on humanity. But on that note, we can wrap the space and it's a great space

and I appreciate Simon, John, and everyone else, and Tiger, and everyone else jumping on.