The Wolf Of All Streets - TUSD & Prime Trust Bombshell | Bitcoin ETF In August?! | Crypto Town Hall With Alex Tapscott, Joshua Frank, Bruce Fenton, James Butterfill, Joey Krug, Travis Kling, Eric Balchunas, Udi Wertheimer

Episode Date: June 28, 2023

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Hey, Alex, since you're the first person up here, we can talk about your book. Sure, why not? I know, it's a perfect start, but since we don't have a panel up and we're getting everybody up, it's a good time to do it. So go ahead, have at it. Well, thanks, Ben, I appreciate it. It wasn't intentional, but I'm sort of glad that I released the news today when I was joining the show. Yeah, so I just announced that my new book, Web 3, Charting the Internet's Next Economic and Cultural Frontier, has officially kind of been announced. It's available for pre-order now, and it is available to buy on September 19th of 2023.

The book's been a long time in the making. I've been working on it for a little over a year now. I've conducted over, I think, 50 or 60 interviews with plenty of builders, entrepreneurs, creators, regular people, venture capitalists, policymakers, and so forth. And the book basically makes the case that the web and with it, the internet are entering a new era and that this new version of the web, Web3, is going to be a transformational technology for business, but also for culture and could even potentially allow us to solve some global problems too. I think despite the progress that we've made as an industry, there's a lot of misconceptions that continue to skew public opinion on the topic. And that really kind of increased my sense of urgency

to write a book on this subject, intended for a really broad audience. So, you know, of course, it's going to be a technology that changes business. And I think, you know, leaders, the enterprise, entrepreneurs, policy makers, journalists, and others should pay heed. But my hope is that, you know,

this book will be read by, frankly, anybody who cares about the future and wants to play a role in shaping it. So I owe a huge debt of gratitude to so many people for helping to teach me and to help shape my views on the subject. And I'm just really excited to get the book out into the market and for it to have an impact, hopefully. Guys, by the way, this was not intended, real i just i'm excited about the book i'm gonna read it and so i happen to have alex up here but it comes out in september right yeah that's right september 19th and uh yeah you can check check out more information on my on my website um alexsapsify.com or you know go to amazon like barnes and noble like basically anywhere you where you can buy a book it's um

it's gonna be available pre-order. What's a book? Is that the thing you hold? Do you mean a PDF? Well, you know, of course, there's an audiobook, and actually, I got to choose who my speaker was. I said, hey, do you want me to do it? They're like, no. Should I have your dad? I'm going to have your dad do it, for sure.

Yeah, no, he would have... He's sort of an... Yeah, he's not impartial. Oh, that's fair. Does that come across in tone when you're reading a book? Oh, I don't know. That's actually why, you know, unless you're a famous politician or actor or something,

they generally don't want people narrating their own books because they aren't impartial, and so they put emphasis on things that they think are important, but maybe the reader doesn't. So you want like a neutral voice to be the voice of reason, so to speak, when someone's reading a book for an audio book. So at least that's my opinion. You know, audiobooks, it's a real job to read a book,

you know, for an audio book. And so you are a professional taking care of it too. Awesome. Awesome, man. I can't wait to read it. And now everybody here, you have to read taking care of it too. Awesome. Awesome, man. I can't wait to read it. And now everybody here, you have to read it or you're not allowed back. I'm sorry. God, I got it. This was not intentional at all, but I really appreciate that.

Yeah, I know for sure. I see. I see. We got Josh, James, Joey. God, it's the Jays. You guys are like a boy band. And Travis, James, which part of the boy band are you? I guess. I don't know bass all right something like that i'm a terrible singer so here's the house yeah

we have the british voice that's the requisite of any like uh we have to have one one guy you know with that accent in any boy band anyways guys everyone obviously uh welcome it is wednesday uh ways, guys, everyone, obviously. Welcome. It is Wednesday, June 28th. We're very quick market update here. Welcome to the Crypto Town Hall. Things down slightly. Bitcoin trading about 30,200, down about 1.8% over the last 24 hours. Ethereum down 1.37% at 1855. But I don't think anyone's particularly surprised that the price action is going a bit sideways after seeing such a monster move from $25,000 up to about $31,000 just last week, that candle of last week, basically bullishly engulfing 10 weeks of consolidation and price action to the downside. But it's definitely what we're going to get into at some point here today,

some theories for why that might have happened, why we might have seen that massive move to the upside. I think the ETF hype, a huge part of that, obviously. BlackRock announcing their ETF. And then news today that ARK, if you guys haven't seen, sort of the breaking news that they have refiled and will be basically having a surveillance sharing agreement with, I believe, CBOE, which is the differentiator that BlackRock has the surveillance sharing agreement with NASDAQ.

Cathie Wood came out and basically said, hey, we can do that too. And so now ARK is definitely in line first ahead of BlackRock, BlackRock being second, and arguably no discernible difference between those two ETF applications. So that's going to be very interesting to see. The other narratives, obviously, for this Bitcoin move to the upside, MicroStrategy just announced once again that Saylor is a massive chad and is buying the hell out of Bitcoin. They bought 12,333 Bitcoin for $ 347 million, cost basis of 28,136. They now own 152,333 Bitcoin, which they acquired for $4.5 billion, an average price of 29,668. So maybe, maybe slightly up depending on fees and interest on their Bitcoin position. But that was a very,

very heavy bid, obviously, on Bitcoin over the past probably months, not necessarily weeks. And then there's the FUD, which I guess we will get into about TrueUSD. I was talking about it on my YouTube show today, but basically they minted a billion coins right at the dead bottom of this move before heading up, which is a third of the circulating supply of TrueUSD. And if you go back in history, the last few mints of TrueUSD of any significant size have actually immediately preceded roughly 20% moves to the upside for Bitcoin over a period of a week. So we have a

hell of a lot to talk about here today. First, I want to dig into the ETF here and ARK getting ahead, but what this BlackRock ETF means, if anybody has an opinion, who's up immediately, if that really is the reason that we are seeing this move or if it's something else. Go ahead, James.

Yeah, please. I'll make a few comments. Yeah, I mean, there seems to be this new model, this surveillance model coming along. BlackRock have their surveillance theoretically with NASDAQ surveilling Coinbase. And then we've probably got ARK with the CBE.

I think it is CBOE. I don't want to pour too much cold water on all this, but this has actually been tried before with various other applications um so it's not new this whole surveillance model um and it is a lot it's around to prevent market manipulation and if we look at some of the key exchanges out there i mean but finance in the past allegedly has been known to wash trade so this doesn't you know sit that well fca the other thing on highlight is we've got to wait another what three months for the fca to respond to all of this i mean i know it's black and they have a certain amount of fire up here

um but it's still i think it's a big step for them to approve an ETF at this juncture. Sorry, why is it the FCA rather than... Because he's in England and his brain is on a certain track. Okay. You actually make sure I didn't miss something there. Reflects everything I said about the FCA and the SEC. Sorry. I mean, Travis, what do you think? I mean, Bloomberg putting it basically at a 50-50 chance of an approval and thinking those odds actually increasing now with the new ARC filing. So what do you think?

I mean, it's definitely multifaceted. I mean, I get why people are fired up about it. Like BlackRock's approval record, what are they, 575 and 1 on ETF approvals or something like that? Yeah, 575 out of 576. Yeah. So, I mean, you couple that with the fact that they are such a behemoth that they essentially are the U.S. government, right? I mean, they're in incredibly close contact with the highest levels of U.S. government and U.S. regulators. And it's like, okay, they probably wouldn't file this if they didn't think there was quite a good chance of getting it approved. And then it seems like this grayscale, and James, I think you would probably have something to talk about this as well too,

but just this grayscale GBTC-SEC case with the potential for it to, for the judge to side in favor of the SEC, which would then put them in a position to either, I guess, approve GBTC's conversion or deny it for some additional reason that they would then have to make up or they could potentially revoke the approvals of the CME Bitcoin futures ETFs like Biddo. I think those would be the three options if the judge rules in favor of the SEC versus Grayscale, which that seems to be like a pretty big component of this. Yeah, I don't know how to weigh the likelihood. Bloomberg, by the way, James, really quick.

Bloomberg now saying on that Grayscale case saying they believe 70% chance that Grayscale beats the SEC in that case. James, go ahead. Yeah, I mean, that's very interesting. I think, you know, Grayscale has to make all the noises that they want to convert to an ETF. But that would mean a dramatic decline in their management fee. You know, to come in line with most other competitors, it's got to be at least sub-100 basis points annual management fee.

Currently, they're charging 200 basis points. It's not massively in their interest, therefore, for the SIPs to become an ETF. In fact, it's a very captive. There's been virtually no inflows or outflows recently. It's just very captive. They've got $25 billion of AUM. Why suddenly halve your income stream?

I mean, that's the kind of way I'm looking at it from a business perspective. But, you know, I can see at that point, let's say it is approved, that will open up the floodgates to a ton of other ETFs. So whatever way Grayscale look at it, they will have to call that management fee, I suppose, if it's approved.

Scott, can I jump in here? Yeah, so I think that James makes a good point. Right now, Grayscale is earning a 2% fee, not on the market value, but rather on the NAV. And so it doesn't matter to them that they traded a huge discount because they're going to continue earning fees on the actual dollar value of the Bitcoin that they hold. And it's a closed end fund. So there are zero outflows possible. Most open ended funds like ETFs allow for redemptions at NAB as do traditional mutual funds, but the closed end trusts do not.

So it is capital money. It's permanent capital, and they can continue to earn those fees in perpetuity. So why convert, right, like to James's point? And I think it's an interesting one. The counterpoint to that, though, is that they will begin in the lead with tens of billions of dollars more than the next largest competitor. And currently, the limitations on who can actually hold closed end funds that trade OTC is limited. But the second that you convert to an ETF, you open yourselves up to RIAs, advisors, and other more traditional kinds of investors who have been looking for, presumably,

an easy way to own this asset class. So I think that the calculus, if they do want to convert, is just simply a smaller piece, maybe, of a much larger pie, and maybe that offsets any kind of fee compression that would happen as a result. So if they've got, I'm making this up, a $20 billion earning 2%, well, if they're at $100 billion and they're earning 70 basis points,

then they're still a lot from where they were. So I'm not totally sure that this is all kind of a pantomime that they're pretending to, or going through the motions because... Playing both sides, right? I mean, playing both sides. I think I'd be saying like there's a good guy and apply for the etf if the etf comes then they know that gbtc is screwed so i think they're hedging exactly well it's kind of like a you know heads i wouldn't kind of thing like they're they're you know they're one of the rare groups that's in a good position these vbscc where no SEC where no matter how it goes, I think they're going to

be okay, is my point. Josh, we discussed this this morning. What do you think? Yeah, I mean, I agree with what Alex is saying. I think they kind of have to do this, right? And ETFs are generally

winner-take-all or close to it. They have massive AUM right now. And if the ETF gets approved, they're going to get sued like crazy to enable redemptions if they don't have an ETF. And I don't know if they necessarily want to deal with that. basis points rather than 250 basis points on the amount of assets that are managed. What they have now is a lot better than earning nothing if they have to allow redemptions and everyone redeems. So I think they kind of have to do it at this point. I don't think they have another option. I'm still unclear then on why the GBTC trade is so unpopular right now. I mean, I get it in theory, so popular, excuse me, right now. I get it in theory, the discount

closing, the chance that they could win but none nothing that's happening here guarantees that all of a sudden that discount goes to zero especially if they don't get approved so it seems like a very risky trade if you've already gone you know taking the advantage of 44 to where is it 31 or something today travis you and joey or travis actually do you guys know anyone who's like really taking that trade right now? Oh, yeah, I definitely know some guys that bought Grayscale kind of immediately on the BlackRock filing. Agree, you got to you do have to jump already, you know, I think legal experts that had been paying attention to that case were already, you know, feeling like Grayscale had quite a good chance just based on the response from the judge in the case or the questions that were being asked well i think a lot of this is done i mean it's inevitable at some point an etf will

be approved whether it's grayscale black rock or whoever it's just timing so if you take that trade right now you might be sitting on it for a lot longer than you expect. That's what I'm thinking. That's the biggest trouble. Yeah, that's the biggest trouble. I will add, from what I've heard, there is a chance that Grayscale wins the case, but the ETF, that doesn't mean that they have an ETF approved as well, right? That just means that the argument that the SEC is arguing on is kind of rolled over, right? And what that means is that they're still going to have to

refile, is my understanding. And the SEC gets so rejected for another reason, but somebody can correct me if I'm wrong. There's also a capital gains risk here as well, because it will be a different legal entity. So I don't think you can just convert it to an etf so whoever is in the mutual fund the close end fund will have to crystallize gain so you're a for sale you're a for seller and then you rebuy at a different cost basis yeah i think that's how it will work i'm not sure you can just make that conversion without crystallizing a tax point event so uh sorry i just want to jump in again um i don't know how it worked in the US, but I actually, we had a Bitcoin trust,

which was a closed-end product that traded on the TSX. It's called a nine-point Bitcoin trust. And we converted it to an ETF 18 months ago, and it was a tax-free rollover. And that's Ontario security, so I don't know if it's the same as SEC and in the US, but the markets are regulated in a very similar manner and the tax regimes are also quite similar. So I think it's, I don't know for sure, get a tax expert, but in Canada, at least it was a tax free

event. Another thing just to talk about on this is because because so much of this does boil down to basically the the surveillance sharing agreement and whether or not the sec feels like there's proper yeah like like all the denials of prior spot Bitcoin ETFs have boiled down to the potential for manipulation in Bitcoin markets. And there was this weird thing when they approved the Bitcoin futures ETF back in the fall of 2021, where they said, yeah, the CME Bitcoin futures are sufficiently surveyed uh such as not to be manipulated but then people were saying yeah but the price of the cme futures is based on this reference rate that's based on spot bitcoin prices and you know spot bitcoin is a manipulated market that is not you know sufficiently it's such bullshit because i mean the the futures ETF is futures from CME that are tracking the spot

market in theory anyways, but yeah, go ahead. Yeah, that's what I'm saying. And so even though I guess the crypto community was kind of happy, I guess, when we got the CME futures ETF, one, it was an inferior product to a spot ETF because of the contract role, which just makes it worse. And two, the reasoning behind it really didn't hold water to your point, Scott, because the futures are based on an index of spot prices, spot price still has manipulation to it it so then when you look at this blackrock deal that's going to use the this cf benchmarks bitcoin reference rate new york variant which is volume weighted coinbase cracking bit stamp it bit gemini and l max in Bitstamp, ItBit, Gemini, and LMAX.

And so you just think about those six exchanges, volume-weighted, and just ask yourself, I don't know, as a market practitioner, is that sufficient surveillance such as to ensure that the spot market is not being manipulated. And, you know, I think, I guess it just kind of depends on what happens with price discovery and the bifurcation potentially of price discovery over, you know, the coming quarters and years and specifically what happens with Binance.

To a lesser extent okx matters bitfinex certainly matters by bit certainly matters hobi matters kucoin matters i mean they're you know these are there are certainly other exchanges that matter binance is the massive gorilla in the room although you know we're not really sure what trading volume market share really looks like because you know most of the offshore exchanges you know kind of the the not well kept secret is that most of these guys do wash trading and to what extent people don't really know but it's present just you know but it it makes it a little hard. When I read out those six exchanges, Coinbase, Kraken, Bitstamp, ItBit, Gemini, LMAX, and you go, if you have surveillance on those

exchanges, is that sufficient to ensure that the price of spot Bitcoin is not being manipulated? My answer is no. Right. But isn't that like, I don't actually disagree so I can see where they're coming from, but that's sort of like an infinite regress in logic for all the ETFs that track all markets. I mean, there's ETFs for absolutely absurd things, right? I just don't see how this is like such a bigger issue for Bitcoin than other markets that have gotten ETFs. Maybe that's just me. And the rest of the world has moved on with these it's i mean we have etf products in canada and south america in in europe etp but very similar products so i mean we're really the last to to be sort of litigating this i mean if if you end up having some some very

heavy-handed regulatory action against binance that significantly diminishes its dominance in price discovery, or if the exchange in a most bearish scenario gets shut down entirely, then on the back end of that, it's much, much easier for me to imagine this reference rate and surveillance sharing agreement actually being sufficient in that world, but TBD on the outcome. Yeah, since I've got you, Travis, the next topic I want to talk about, as you're one of, obviously, sadly, the biggest creditors, is FTX 2.0 and the news at Wall Street Journal saying today that we're getting a lot of momentum behind the idea of FTX 2.0. Would love to hear your stance on that. I obviously would rather never hear the three letters FTX put together again, but as a creditor, you might have a different opinion. Yeah, it's going to happen. In some form, they're running an auction. They will pick a

winning bid from that auction, TBD on the structure or the exact timing, the details of that deal. But it looks like what will happen is the bankruptcy estate will carve out the exchange assets, sell those to the winning bidder for some price at some structure. And then the bankruptcy estate will then continue on clawing back assets, liquidating assets down into cash, getting cash back to creditors. So you'll end up with this parallel path and this FTX 2.0 will likely have some component of creditors becoming equity holders, probably. In a token or an actual equity in the exchange? Don't know on details. All you know is you can comb through the fee statements

of the FTX bankruptcy, and you can see that there has been discussion and research and analysis on a recovery rights token. But don't know one way or the other on that. I would love everyone else's thoughts on FTX 2.0. I mean, I'll say one more thing on that. I would love everyone else's thoughts on FTX 2.0. I mean, I'll say one more thing on it. It's a good thing. I think it's a good thing for creditors. I'm just not sure it's a great thing for the space. TBD, yeah. I mean, TBD on what happened, you don't know nearly enough right now. In theory,

if the management team is good, if it's the most transparent exchange in the history of offshore crypto exchanges, if their product and strategy is good, and if the structure of the deal itself is good, that's kind of four boxes that you need to check. Management, transparency, product, and structure. If you check all four of those boxes and then you hold that in one hand and then in the other hand you examine the competitive landscape that is the offshore crypto exchange markets uh i think that there's room for something like that i mean i mean i know i know there's room for something like yeah so i mean i think look i mean look mean, look at the behemoth dominant player in the offshore crypto market and look at how bad of an actor that entity is. Could not be a worse actor. would need to happen for you to deposit money on FTX 2.0? Like, like how do you become comfortable with that? I mean, I know you laid something out, but does, are you still, I mean, would you,

would you really put money on it? Uh, yeah, yeah. In theory. Yeah. Um, yeah, yeah. I would trade on it. I mean, better transparency than anything you've had before. There may be a separation of custody and brokerage where it would look like something like a kind of internal clear loop for folks that are familiar with the copper product, where you can kind of have crypto that is held in cold storage and then on a you know maybe a daily basis is reconciled against uh you know basically ious on the brokerage side of uh the exchange itself uh you know i would love to see for the first time ever you know have these proof of reserves, quote unquote, that various different exchanges put out, but they really are kind of worthless without knowing what the liabilities are. What is the stated total amount of customer deposits that match up with the quote unquote proof of reserves? I would love to see, you know, on the front page of the exchange website, where you just got a ticker for proof of reserves that you can tie to on chain. And then you've got

a proof of liabilities that, you know, I don't know how you would be able to actually prove that because it's, it's records in a database, not on a blockchain. But at least you could, you could, you know, maybe try and give some additional layer of transparency to give folks comfort i mean it's it's it's very obvious right that that coming from where this exchange will be coming from if they're not more transparent than any exchange ever it's probably dead on arrival like it just it It has to start with next level of transparency. Kind of like people argue- It's my assumption that's what's going to happen.

That Silicon Valley Bank became the best bank on the planet to be banked with right after the FDIC stepped in. The most transparent, audited, and you know that it's backed. I can see that argument. I just hate the idea of FTX. Guys, I do want to go back to the ETF. I know we weren't intending to do that, but Eric from Bloomberg is here and he's the guy, obviously, on this. Eric, what's up, man? Glad we got you on. We kind of talked about it superficially, obviously. We've been talking about it every day because it's the hot button topic, but maybe you could give us some color on the odds of BlackRock getting approved and now what's happening with Cathie Wood and ARK's update. Yeah, hey, thanks for inviting me. Yeah, I'll keep it brief. We basically give

50% odds of one of these getting approved by the end of the year. You have to have I think you give BlackRock the edge just because they're BlackRock and they're very connected and they just don't put markers down. They don't randomly fail things.

It's just not what they do. They really sort of play to win. They want to bring a gun to a knife fight. That's just how they are. So BlackRock changed everything. We went from 1% odds to 50 just on BlackRock. Now ARK finally is interesting because ARK, got to give credit to Ophelia Snyder and Kathy Wood,

they saw the Grayscale arguments and they were like, wow, the SEC could lose this. So they filed right then, so they would be alive and active when the Grayscale decision would be made. And so they made a heads-up play, and then

BlackRock comes in and files. We don't know why, presumably because of the same reason the grayscale decision could be bad for the sec and this could give the sec a way to save face and approve somebody who is a grayscale who pissed them off because they sued them um but arc is sort of this wild card in the whole picture because they were first and now they've updated their 19b4 to include the exact same sort of surveillance sharing agreement language that BlackRock had, which you could argue maybe gave a differentiation for BlackRock's filing. So to make a long story short, if you're looking at this fairly, ARC should be in the poll position to be approved first because they filed first. But because it's BlackRock, you've got this giant unknown variable out there.

So again, we've got two active filings that could very well benefit from a grayscale winning that lawsuit. Am I right, Darren? Do you have a 70% chance now on grayscale winning? That's, I believe what I read and I said it earlier. I want to make sure that that was accurate. Yeah, this is our senior legal analyst who made this. He went from 40% to 70% based on the, you know, when the audio, the arguments, and the questions that were asked by the court. So that was a big jump up.

So I will say we're leaning on him for that. He's the legal guy. I heard the same thing, though, and I agree. I was shocked at how fluxed. What's the word I'm looking for? What's the word when you're a little taken aback? Flummoxed. Flummoxed. That's you.

That's like 50% of the word. The full lawyer was flummoxed.'s like 50% of the work. The full lawyer was Flummox. There you go. Thank you. The lawyer for the SEC, you could tell, was on her heels the whole time. I was like, wow. I couldn't believe it. So anyway, that's where we're at.

And it's obviously a race that's been going on for 11 years. I'm pretty exhausted. But BlackRock is such a massive massive change and you have to open up your mind to many theories um i kind of feel like you ever seen the movie jf course where jim garrison goes on this whole thing to try to figure out who the other shooter was and i feel like that like it's easier to say oh they're gonna deny it because they've always denied it. That's saying Lee Harvey Oswald acted alone.

But with all these other things that come out, and with BlackRock and all this surveillance sharing agreement information that's in BlackRock, plus the winds of change seem to be blowing towards a more traditional finance version of crypto, and Gensler has some issues, and in own. You sort of put all this together and again, you feel like Jim Garrison saying he didn't act alone. And so that's sort of where our team is on this. We're really giving a good 50% chance that it is the time. But again, we keep 50% open just because we've seen denials for 11 years. And again, they're 33 and 0 in denying

the spot Bitcoin. I know you mentioned how surprised you were at how flummoxed the SEC attorney was, but anyone who's been paying attention to these cases with crypto and the SEC, the SEC has kind of been losing. I'm not saying they're losing the cases, but there's a lot of people believing Ripple will win, the Voyager bankruptcy judge pushed back extremely hard on the SEC. And in those grayscale opening statements, to your point, I mean, that literally caused Gatley Wood and Ophelia to file, right? It was so bad for the SEC. Yeah, absolutely. And I think you're right. There's been, you can say that Gensler has become, he's got, you know, he might be more in a corner than he was a year ago, right, in this regard. that are going to be for crypto, thus approving a spot Bitcoin ETF and handing that to BlackRock, who is, I will say,

the fourth branch of the government, but let's just say they're- They're all three of the other branches, some would argue. So yeah, go ahead. So this is a way to sort of transition crypto to, again, a more traditional finance. So again, this is where you sort of read the tea leaves so the

tea leaves are real strong for approving a blackrock etf and i agree with you all of this stuff adds into adds into this and i think if you're gensler and you're somebody who wants to get another appointment you could if you if you're able to sort of get these exchanges to be more transparent and safer and you get blackrock out there with an ETF, you can sort of say to people, yeah, I sort of made crypto more legitimate. And that would be like a feather in your cap, so to speak. So the ETF actually plays into, I think, his politics or his ambitions in a way. But again, all this is tea leaves versus what has been written thus far, which is we just don't trust it. There's no just manipulation and fraud potential.

But, yeah, I certainly think what you just said factors into it. And, you know, because at the end of the day, I think, you know, a lot of this is just up to his brain because we've had two commissioners dissent from his decision to denial. So it's clearly the SEC is not all on the same page here. So really, it's, you know, Gensler's brain is really, and his, all the things he's thinking about and what's important to him, both politically and legally, I think are really interesting factors. is it typical for somebody to jump ahead of another filer for an ETF? Like if BlackRock was to jump out of ARK, that's the first question. Second is how important do you think it is actually to be the first one to get approved for an ETF? Like if ARK somehow gets approved first and then BlackRock gets approved a month later, does that put ARK in this just massive kind of leading position? And the final question is, what do you think the odds are that multiple just get approved at the same time?

Great questions. If I'm the SEC, you know, honestly, I would approve ARK and BlackRock the same day. But in all fairness, ARK should be approved first. When the ProShares futures Bitcoin ETF was approved, they filed first. And Valkyrie was approved in 24 hours, I believe, by the way. I think 72 hours. Yes, but they had filed three or four days later. It was almost like clockwork, the days. So if we're going to use the futures paradigm, the ARK should be out first, and then BlackRock a month later. And how much is important? It's crucial. I mean, for ARK, it's really crucial. If they're a month after BlackRock, it's a lot

harder. If they have a month lead, they start getting a lot of volume. They get some assets. BlackRock isn't as pressured because they're BlackRock and they have massive distribution. So BlackRock Vanguard are two companies that are so beloved by advisors that an advisor might wait a month just to use the BlackRock one over the ARK one. But ARK is, I think, with 21 shares. 21 shares, by the way, is huge in Europe with their crypto ETF. So they're maybe more going to be appealing to the more crypto native people and maybe some of the more younger people. I think BlackRock comes in, they're appealing to the boomer advisors, but the boomer advisors are where the money is, right? So advisors in America manage $26 trillion, and most of them are older. And so that is going to unlock some of that money.

That's why this is such a big deal. ARK, I think, carved out its niche as more of a sort of, we're more of a crypto company. We're into this. We know more about it. ARK, I think, you know, Carbot, its niche is more of a sort of, you know, we're more of a crypto company. We're into this. This is, you know, we know more about it. BlackRock, more mainstream. Now, the question is the third and fourth. After those two, then it gets really tough. Usually, you know, one or two have a good amount of assets and volume, and then it becomes harder and harder. But what was going to be fascinating is the ones that come in third, fourth, fifth, they're going to lower the fee to become appealing. So that's when a fee war is going to break out.

And you're going to find that one of them might come in a double as cheap as the next one. And people are going to respond to that. And so you're going to have, and that's probably good for the investor, right? To be able to buy into Bitcoin and to trade it for a basis point, that'll be the spread to trade it. And then your fee would be, let's say we get down to 35 or 40 basis points, which is where GLD was. That's a pretty good deal. I think that's going to appeal to a lot of people. Yeah, it can. You can do it free on your retirement account. Absolutely.

Which I think is the part that, I mean, we talked about it a bit yesterday here, actually, but to your point, the boomer unlock or even the unlock in general to 401ks and retirement accounts where people, they're not going to trade, but there will be people who do that for the lack of fees, but where people are comfortable dollar cost averaging into whatever asset and generally passively do it instead of actively, that's the major unlock here. I agree with you. Yeah. And an ETF is just that it's a trusted vehicle that most financial professionals really are comfortable working with. So the plumbing works for them. And this is all underrated, in my opinion. Sometimes I'll see people on crypto not understand,

well, they can just go to an exchange. But this is just the preferred method of distribution for them. You know, I used to use the metaphor of, if you're, if, you know, if the Beatles want to reach millennial listeners, they had to stream their music or put them on iTunes. For a while, they didn't. And so millennials probably were just going to miss out the Beatles.

So certain groups of people just like their thing in a certain way. And that exists in all kinds of industries. And for advisors, they just like the ETF, they trust it. And they particularly like BlackRock and Vanguard ETFs. Those two have two thirds of all the assets there. We call them the big two. And so that's why one of the big two filing was just such a mind blowing, game changing thing for us, because that really has a lot of potential. I see James, you're here as well. So now we got both of you guys. It's awesome. So I think the other part of that, Eric, and to James as well, is that that's the conversation for your average investor, but for an institution, and listen, I'm not making the claim that a bunch of pensions and endowments are waiting around for their opportunity to buy Bitcoin, but if they were in theory, buying spot Bitcoin on exchange would probably never get past the risk managers and the ETF would solve that as well. So if there is an institutional wall of money that decides at some point to come in, the risk managers can finally green light this. Yeah. I mean, I wrote a book called The Institutional ETF Toolbox, and I explored how institutions use ETFs in that book. I also wrote it as a primer for people wanting to learn

it. So obviously, shameless plug, if you're looking to learn about ETFs, that book will help. But what I found was like GLD in particular, which I equate this to being like, I think this will be a lot like GLD. What institutions, big boy institutions really liked about GLD is how easy it was. Even an institution doesn't really want to deal with buying gold and holding it and storing it and all that. They will pay to outsource that. So GLD was used a lot for what's called portfolio completion. So if you're an institution like a pension or an endowment, and you have a portfolio and you want 2% dedicated to gold, most of them will buy GLD. And in other cases, institutions do not use ETFs because they can get exposure even cheaper than the ETF, but there's a couple of places where they will, and they also like liquidity.

So whichever one of these ETFs gets liquid, let's presume it's the BlackRock one. If it trades a billion dollars a day and it's BlackRock and it's an ETF, that would definitely qualify for that big boy institutional level. That's a whole nother level, by the way. Institutions have 70 trillion in assets,

but the advisor is probably the sweet spot for this. But I agree. I think this could even appeal to institutions, especially once it gets. Conjecturally, BlackRock would just not even be applying unless they knew that there was going to be a massive wall of money coming in the minute that they were approved. It's not like BlackRock would apply for an ETF and then just hope for the best that a couple hundred million, right? There should be billions. And somebody said that maybe it was Joe McCann said they had some information on that. James, go ahead. I see you have your hand up. Yeah. And the other thing I would say is piggybacking on what Eric just said is the reason that if you look at ARK and what everything, all these other issuers that have invested in GBTC, ETFs aren't allowed to hold Bitcoin directly, right? For the most part. So a lot of these other companies, 1940 Act funds, whatever they are, they went out and if they

wanted Bitcoin exposure, they own GBTC. This would be a way more efficient efficient way to get exposure even if it's only a small part of your portfolio so kathy wood has led that charge but there's a lot of mutual funds and other etfs that have put slices in gbtc or bitcoin etfs or bitcoin futures etfs um so that it's just another avenue on the institutional side of things so that you can get other ETFs than holding this thing. Alex, I saw you lifted your mic. Hey. Oh, yeah. No, I was just going to ask for the Bloomberg folks. You know, in the event that the ETF does get approved

from either BlackRock or ARK, I'm not sure which one would come first, how quickly thereafter could Grayscale theoretically convert? And if they were able to like how much credence do you give to the fact that they already have um so much aum and would that act as a head start or do you think like the the the pull from the 401k advisor crowd to blackrock and vanguard would just overwhelm that like i'm just wondering like in grayscale's case could they see their growth scale significantly because they've opened up that fee. I'm going to give them the benefit of the doubt and say they're going to do what they

said they've been doing and what they've said their goal was. I can't hear anything. I can hear. So it's probably on your end. Keep going, James. Yeah. So, all right. So I think they're going to convert basically, I don't know if it's going to be as soon as

humanly possible, but I think they're going to do it in a relatively timely manner. But that could be months, maybe longer before they're able to convert. I don't see a positive map here for Grayscale. The more we talk about it, I understand that people are buying GBDC because the discount is closing. But it's almost no chance that they get approved first. And their approval is going to knock their fees down 10x. What am I missing here? I mean, the benefit here is he kind of hit on it, is right, they have all those assets.

So they're already a leader in the space. They have immense liquidity. It's like the most traded thing on the OTC market. So it's not as, it used to be number one, now it always number one, but it has a lot of things going for it. And in my opinion, if Grayscale doesn't do this, if they don't do what they're saying that we're going do this, if they don't do what they're saying that we're going to do, if they don't convert, it's just like they're taking a death note. I agree. But that's the point. Aren't they going to have to 10x the assets under management in the ETF from the trust

to make the same amount of money? Yeah. So I'll let Eric chime in here a little bit too. But basically, in the ETF world, everyone cannibalizes themselves, right? It's part of what's been happening. Fees have been coming down across the asset management industry. It's been something that's been happening

for borderline decades at this point. So if Grayscale wants to be a going concern going forward, they're going to have to get competitive on fees. And they said they would. So I'm going to take them at their word for the most part. But like you just look at anywhere else in the ETF ecosystem, ETF world, everyone's cutting fees and they're trying to grow assets. And obviously Grayscale has other products that they're still going to charge

hedge fees on because the Bitcoin ETF, if it does get approved, will be way before anything else happens. I would just add again, ETFs are very disruptive. I even think what you're talking about with Grayscale, I think, will also be an issue for the exchanges. I mean, if you can trade an ETF for one basis point, that's 0.01% commission, if you will, and they'll hold it for you for, let's say, 30 basis points, that's going to steal some business from the exchanges as well. ETFs are very good about eating market share from really unique places. They've definitely taken market share from mutual funds, which are high fee, and there's no other issues with them. They've taken business from the derivatives world, options and futures, and they've taken business from single stocks. A lot of people will be like, well, just buy the gold miners ETF instead of trying to pick one or whatever. So in this case, I think you got to really give a lot of credence to ETF. So you're right,

Grayscale, this is going to be almost more of a curse than a blessing for them because they had a monopoly and they were able to charge 2%. No way you're going to get away with that for long in the ETF world, especially after a couple file. And the real irony is if they spend all this money suing the SEC and they win, and that's ironically what triggered SEC or BlackRock to file and then BlackRock and ARK get out first and they convert maybe like after that, there's a sort of cruelness to that,

because obviously they will have been maybe one of the losers in that, even though they instigated this whole thing and sort of were able to overcome the SEC's issue by suing them. So there's another subplot, I think, that's worth watching. And so I think your points are pretty well made. Yeah. Any final thoughts, everyone, on the ETF? I know we've kind of beaten it, but it really is

such an impactful thing. It's hard not to talk about it any day, every day. Anyone else? Final thoughts? Eric, James, thank you guys for joining and talking ETF with us. It's nice. We reference you literally every single day, and we pin your tweets up top, so it's nice to We reference you literally every single day and we pin your tweets up top. So it's nice to actually have you here.

Thank you. Thank you so much. We appreciate it. Thanks, Scott. All right. Awesome. Thank you. Thank you, Eric and James. So, guys, I'm going to reset a little bit right now. Obviously, give a quick market update. Nothing has changed since the beginning. We're going to move on to the next topic momentarily. But first, I want to tell you about the awesome sponsor that we have. It is pinned above Planet. You can also see it's pinned from the Crypto Town Hall Twitter account, brand spanking new. That was actually the Wolf of Wall Street's podcast account. I donated it to Crypto Town Hall, my passion for the Crypto Town Hall.

So eventually, guys, we're going to actually end up hosting all of these Twitter spaces from that Crypto Town Hall Twitter account up above. So I would ask you guys to please follow that account. We're going to be bringing it up as the co-host to get people familiar with it. But as you can see, we have that tweet pinned above from Planet. Tell you a bit about them. Planet's mission is to address the Earth's fragile environmental issues by offering a DeFi ecosystem aligned with development goals. They're an ecosystem with a global purpose that's seen planets start a movement to address the world's most pressing sustainability problems. Planet combines technology and innovation with the power of fandom to mobilize, implement,

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but literally one of the top, I would argue, three biggest celebrities in the world is a massive part of this. So something that's going to be really significant. So guys, please check them out in the tweet above. And also, please just follow the Crypto Town Hall account because like I said, eventually, we're going to be moving all of the hosting duties up to that account.

So guys, what I want to talk about right now, obviously, is Prime Trust. So anyone who's been following me obviously knows that, and this Crypto Town Hall, more importantly, a couple weeks ago, there were some rumors David Bailey had shared, and we kind of discussed it here, that Prime Trust was likely going into bankruptcy. They needed $25 million. And then we obviously saw the BitGo deal come through. We had some knowledge, or at least rumors of events at that time, that Prime Trust had lost private keys. And then the part that we didn't share at the time, because we didn't have it vetted, was that they had used customer assets to fill those holes. We now know that's true, has come out from the state of Nevada, basically charging them. And that's really coming out today. The details being their FID alleged Prime Trust lost access to legacy wallets in 2021. That's when they tried to move to fireblocks

and use customer assets to buy back crypto. Yikes. So this is outright fraud. Prime Trust owes customers $85,670,000 in fiat, but only has $2.9 million. And they owe $69,509,000 in crypto and only have $68,648,000. If you do a bit of digging, the bulk of that 68 million that they hold currently in cryptocurrency is apparently one single token, which is audio. They have about $61 million worth, which I believe is 30% of the circulating supply. We can get into how that may have happened because frankly, I have no idea. But the further you go down this prime trust rabbit hole, it leads you to true USD and then the sort of FUD surrounding that, which I guess I can allow you guys so we could discuss. I can summarize. I don't know the best way. Travis, you and I have been talking about this quite a bit in the background.

Josh, you and I talked about it on YouTube this morning. I mean, Travis, what are you hearing here and what does this all mean to you? I mean, it does seem like a lot of smoke for there to not be any fire um and the connection between tusd and binance and there was a contract swap for tusd for TUSD onto BNB chain. And the next day they printed a billion dollars of TUSD and then the market ripped. And then you can look at, you know, kind of the quantitative data behind the market move and you can see that the TUSD pair was being aggressively bid while other pairs were being sold into that price pump. You know, it seems like the Prime Trust thing as it relates to TUSD, I think is probably... Yeah, apparently, I'm not going to be clear, guys.

People were conjecturing that the coin wasn't fully backed because Prime Trust was the custodian. It seems that Prime Trust only had $26,000 left of TUSD's assets. So, yeah, go ahead. Yeah, but after U.S. regulators basically forced Binance to shut down BUSD by pressuring Paxos, then Binance moved fee-free trading to TUSD pairs, which prior to that, TUSD was really just like a deeply second-tier stablecoin.

I think it traded about $40, $50 million a day until March 11th when they turned on fee-free trading, printed a billion dollars of TUSD, BTC price pumped a ton immediately thereafter, and then trading volumes on TUSD have increased about 20x from where they were at the beginning of this year on some days. Robert Leonard Couldn't that be explained simply by Binance being shut down, like you said, on BUSD and if they're going to adopt TUSD being that they are the highest volume exchange on the planet? I mean, wouldn't we naturally see that massive move?

I'm just playing devil's advocate here. No, no, no, no, no. I agree with that. Yeah, I agree with that. But, you know, like Binance obviously kind of like adopted this TUSD. And then there's a connection between TUSD and Justin Sarn, which is unclear. And neither side seems to be particularly forthcoming about the nature of that relationship. And I don't know if there's anybody in this space right now that can explain what that contract swap was, moving TUSD over to BNB chain. But I don't know. The timing of that was a little suspicious to me. So it's just, there's a lot of moving pieces there. Obviously, you would just love if you could get more transparency, more forthrightness from TUSD, just have management come out, you know, come into space, do a tweet thread, go on a podcast, you look at it, I don't know if people saw, but literally, clearly probably an intern or something shared a bragging tweet about their high watermark volume today while all of this was happening.

They had a deleted tweet that said that their audit proved that they were 100% back. They literally deleted it from a thread, just that one part. And if you really dig into this, guys, I do not. You guys know I don't do tin hat. We dig in pretty deep. So we're putting this out there to actually try to find more. But the auditor who has been doing the attestations for TUSD, who's named the network firm, used to be Armanino, who famously did the FTX audits. And then obviously that went so badly that they rebranded. FTX US. Worth node.

Correct. FTX US. And then if you look, and this is a lot of this is coming from a thread by Adam Cochran. The attestation is through a one chain link Oracle, which has 17 different nodes, all pulling from the same source. So as he sort of summarized it here, if you want to just look at what the accusations here are, you have a stable coin that, this is from Adam Cochran, won't tell you it's banking partners. The only one we knew about was Prime Trust. So the only known partner is bankrupt, has audits from a formal FTX auditor, is attested by an article run only by that auditor, doesn't seem to be redeeming. That's another story here, by the way, that people are claiming that when they go to redeem TUSD, they're being sent to Binance to just trade out of TUSD and that they pump $2

billion into circulation after knowing they had issues. To your point, that billion dollar mint took them circulating some supply from $2 billion to $3 billion, a 50% increase. And as I said, which could be entirely coincidental, it was literally within 30 minutes of the dead bottom of this entire market move. It was when Bitcoin was 24,736 and it went to 31,000 the week after. So that's what's happening here. People are wondering why Travis is saying there's smoke, potentially not fire. I mean, does anyone else here have any color on TUSD or anything additional that's happening with Prime Trust that we haven't covered? You might not. It might be a conversation between me and Travis.

I know a lot of people don't want to jump in. David Silver, I'm calling on you because you're the lawyer here. And we talked about this last week when I was talking about Prime Trust. We did. And, you know, I don't have any insight or any, you know, substantive knowledge to contribute. And as a lawyer, I love saying that because it just means I'm giving my own personal opinions here. But think of how bad this has turned

from when we talked about this last week. Last week, I say within a minute of each other, God, I really can't believe they lost skis here because they would have just come out and said that. I was wrong. A minute later, I said, what we're really going to find out here, I think the tip of the iceberg is the TUSD because I've said this for a while now.

I do believe that the regulators are going to go after the stable coins next. And this is a great stable coin for regulators to go after. I can't remember. I think it was Travis who just said this isn't like an A-list stable coin. This is like a B or C-list stablecoin. Rand used to make fun of me back in the early days when I used to say I was a D-list celebrity in the Crypto Sir speaking tour. This to me is like a D-list stablecoin. So it's amazing because we were talking about 17 million being missing. Now that number's up exponentially. There's going to be a

lot more investigation into the smoke. And unfortunately, from what we've learned in all these investigations in crypto, where there's smoke, there's not just a little fire, there's a forest fire. And I expect we're going to uncover a forest fire here. There's going to be a lot more players that go down. And the numbers just don't add up in the prime trust. I mean, they just don't add up. They raised a hundred million after 60 million went missing. Then they do redemptions. They do, they end up doing, you know, uh, they come back, they're saying only 60 million was missing. I, none of these might, I'm a 16th century English major in college that had to go to law school

because I couldn't get a real job. At the end of the day, there's something here about the numbers, which so do not add up that some regulator who, you know, again, we're still in Nevada. There's an issue in Nevada right now that more people are talking about as right now there's a receiver. This is not a bankruptcy. Is this going to convert into a bankruptcy, which all, you know, means no one's ever going to get money back. But there's no one publicly proclaiming that they're missing money yet. And I find that so odd. Usually, I'm inundated with calls with people who their funds are locked away. They can't have access to their money. Institutions wanting to get consults with their general counsel. There's not a whisper out there right now of large players who are missing money. So where is all of this money? Who's missing the money? And where's that going next?

That's really a great question. Because I mean, clearly they were rolling it, sort of rolling it forward in a Ponzi scheme type scenario, right? If someone came to redeem, they just buy more assets, give it to that person, hope they fill the hole further down the road. But it is curious that we're not seeing. And David, and then what do we make of the fact that their client list, at least on their website, literally went down from like 24 huge name clients to five or six that were left by two or three weeks? Exactly. And, you know, we'll we'll use the self. But does that mean everybody knew? Like, does that mean everybody knew? Because I can tell you, as you know, like there was a quiet secret in the industry that some large custodian had

lost some private keys, but nobody would say who. Well, here's the problem. And this is, again, I'll use Celsius as the example. Celsius claims they're going to do customer clawbacks. I'm wildly against customer clawbacks, especially consumer customer clawbacks. But how in this instance, can they not claw back money from people who were able to get their money out a week two weeks or three weeks ago that would be the i that would be the situation where a clawback should actually apply someone had inside knowledge there was clearly leaks going on and you know people are running you know jumping off the ship and they knew something to pull all their money out but isn't the whole point of a trusted and regulated custodian that there can't be

clawbacks? I mean, I guess that's assuming that all the assets are there. But I mean, isn't that the entire point of this trust structure? I think Kathleen Long made this point. That's the difference of a trust structure in Nevada versus a trust structure in Wyoming for crypto. This couldn't have happened in Wyoming. I'm not sure I 100% agree with her, but at least they're trying to make laws here. This isn't the violation of the trust structure. This is just out and out fraud and stealing. So no matter how good your laws are to prevent fraud, you can't stop the act of a madman. Here, the act of the madman is once the keys were lost, they dipped into customer funds. Someone's going to go to jail

for this. That is out and out stealing. So that's a criminal act. So the path to hell is paid with good intentions. There's no one out there, no law can stop anyone from stealing money when they have access so here no matter what was supposed to happen it wouldn't have stopped the person from stealing it once they had access i still don't know how the hell you lose the private keys if your one job as a custodian is to maintain them i mean we know that it was when there was sort of a migration over to fire blocks these were legacy wallets. So something happened there. But I'm not far enough down the custody rabbit hole. But I mean, how does this even happen?

Well, I think that's I mean, good lawyers, you know, are going to point out that this is a complete violation. You know, the custodial arrangement in the trust obviously says this crypto is yours. And while I'll use Celsius as the example one way, I'll use Celsius as an example the other way. These assets belonged to the individuals and clients of Prime Trust. They did not belong to Prime Trust. So from that perspective, as we're going back and we're going to start examining this, when someone's going to eventually come up here and say, I'm missing money, we assume. Otherwise, because if this just turns out to be a circular wash, that could be even worse from another perspective. But someone's going to eventually stand up here and be like, I'm out $50 million and I need to get my money back.

And the regulators and the lawyers and everyone's going to come together. You know, this is going to go back to November of 2022 when all of this happened and they knew about it. Yeah, apparently it's actually 21 to be clear. So they're saying it was the end of 2021 and then somehow they raised $100 million in July, which was due diligence, not a thing. And then they fired their CEO in November-ish of 2022. Yes, you're completely right. I'm sorry, I got the dates wrong. That's what makes it so crazy is they raised $100 million. And you know, forget, forget, I, my, my belief is this,

whoever came on the $100 million raise, the due diligence was clearly predicated on the lie. So people are like, well, didn't someone do due diligence? Well, I'm sure whatever documents they did and received to do due diligence, the due diligence was like, clearly they didn't put down, oh, by the way, we lost our keys and we don't have our crypto and we're raiding our customer funds to buy crypto. And by the way, I did a tweet about this this morning. If you do the timeframe from when they're supposed to be buying more crypto, they should almost be, you know, if they bought crypto at the right time with $100 million raise,

they should be at like $150 million plus. Where the hell is all this money? That's a great, it's a great question. It is very suspect. Here's what I want to know, and I'm sure we don't have anyone on stage, and this is what I've been trying to dig into, but somebody may have some color on this. Obviously, if you're regulated federally and by the state, there's got to be regular audits and attestations. So clearly the coins are in a wallet, right? So I guess doing that diligence, you could say the coins are there. They showed, they proved it. Shouldn't they also have to prove by doing some small transactions that they have access to those wallets and actually can make transactions?

Because this is, like you said, it's been a year and a half. I see we have another lawyer now, Adam, on stage as well. You requested to speak, so maybe you have some color there. Yeah, thanks. Adam Atlas here. I'm sort of a dinosaur legal in crypto. Was working on the early, early, early stuff opposite New York DFS, and Vincent, et cetera, like 2013. Just a couple quick things to your point.

What seems to have occurred in the last, let's say three, four or five years is that the more money you have, the more you want to invest in crypto, but the less you're capable of investing in crypto wisely. The bigger the firm, the worse the due diligence. I think that's what we're seeing with Sequoia and FTX. That's what we're seeing with this investment in Prime Trust, which exactly as you say, they could have easily tested for issues in their crypto custody.

So to me, I've been completely puzzled. And I wonder if the other lawyer agrees with me but it seems that the the legal expertise in basic issues in and around crypto declines with the size of the law firm involved of course this is self-serving because i come from a small firm but we well so does david okay so so so that that's one point i want make. I just want to make quickly one other point, which is when that investment occurred about, getting plugged into Prime Trust as sort of the solution for their issues. And it used to be, hey, let's sit side by side, solve your problem, get this going, make sure it's safe, and let's get you going. And then about a year ago, when the big money came in, again, to the point of these sort of, with all due respect, sort of unsophisticated large big money coming in, they became totally unfriendly. Scott Purcell, the old CEO, fantastic guy, very friendly. But dealing with the boarding teams and the underwriting teams at Prime Trust

in the past year has been hell on wheels. Very, very difficult. Now, you could say, well, Adam, they were being more stringent. They weren't just taking anybody. And okay, fair enough. But if they're being so tough on clients like clients of our firm trying to get hooked up with Prime Trust, how come they weren't being equally rigorous with the back office? So those are just a couple of thoughts I wanted to share. You're talking about Scott Purcell. A lot of actually the rumor has kind of swirled around him and not in a positive light, actually. And I'm interested to hear that you have personal experience with him.

And like I said, this goes down the rabbit hole a bit. But he obviously was with Prime Trust and then Bank, which was a subsidiary. He was accused at Bank of basically converting their entire business into an NFT business without board approval, then leaving and taking all of the trade secrets of the company to go to Fortress, which curiously is where a lot of the Prime Trust clients have gone, which is to Fortress. But people are not speaking favorably of him. I don't know the guy. I have nothing against him. I'm just telling you what's being printed and discussed. So maybe things... So I'll jump back in on the question of the audit. And I'm going to quote Jesse Powell,

who has said horrific things about me in the past. But Jesse sometimes hits things perfectly. When the FTX collapse happened, he was taking shots at Binance and he was talking about proof of reserves and how he was arguing that it's not, and he's going to exactly what you said. He said that it's not just about showing the wallets, you have to show control over wallets

and that any proof of reserve audit requires cryptographic proof of client balances and wallet control. What we're seeing nowadays is just proof of client balances, not wallet control. And without wallet control, you cannot see whether someone actually has the reserves they have. He then goes on to talk about just showing what's in a wallet is not really proof of reserve either, because reserves truly mean assets minus liabilities. And that Binance never showed their liabilities. proof of reserve audits better, more transparent, and showing not just the reserve that was the asset, but also the control of the asset. This is the custodian, right? I agree with you 100%, by the way. But there's enough problems with proof of reserves with exchanges. We know that

none of them have successfully found a way to do proof of liabilities. Travis, you left to point that out, obviously. But this is the custodian that the exchange is trusting. So even if the exchange did a proof of reserve with that custodian, those coins would be there. No, but that's the whole point. The auditor would have, even on Prime, the auditor would have to, as part of the audit, seen the control of the wallet.

Clearly here, they never would have seen the control of the wallet with the here, they never would have seen the control of the wallet with the ETH without the private key. Ah, what a shit show. I mean, I don't know how else to summarize it at this point. Let's talk about then what the implications of this are, right? Because as many have pointed out, by this time, I mean, I think a $50 to $60 million many have pointed out by this time, I mean,

I think a 50 to $16 billion hole, 80, a hundred, who knows, while significant, it's not the awe-striking eight, nine billions that we see from the FTXs of the world. So is it more of a narrative issue at this time, like that these crypto kids can't be trusted once again, and we need to move our custodians to BNY Mellon and the trusted Wall Street guys. I mean, is that where this is going? Is this more fuel for regulator fire against the industry? 100%, because now it's low-hanging fruit. There's no one that can defend this action. This is indefensible. So it gives regulators the ability to say, look, this is what everyone's doing. And it's just everyone's going to get tarred together. People have heard me say that the Binance and the Coinbase SEC Those are completely different things. Now you're going to be, regulators are going to throw in and say, this is how custodians do things. This is why we need trusted custodians. And they're going to go after low hanging fruit. Travis, I saw you lifted your mic. Yeah, I agree with that. It seems like, you know, it's just a bad look for the industry as a

whole. When you read into the details, if it looks like Prime Trust ended up doing what it looks like they did, which was like Lost Keys had a hole in their balance sheet because of that, didn't tell anybody about it, and then used customer funds to trade shit coins to try and get it all back basically like if that's what happened then that's just a really bad look the for the industry as a whole uh you know trying to get the rest of the world to take us more seriously um you know on the back of the long line of own goals that we've had over the last 18 months uh the total dollar amount size not that big of a deal so the knock-on the kind of like immediate knock-on effects don't seem like they would be that significant. And I think the one caveat is what the deal is with TUSD, which there just seems to be a lot of opacity around that right now. So TBD on whether or not there's real issues at TUSD or not. I guess that's a rabbit hole that we can continue down in the future. I think we've beaten this one to death and probably go ahead and wrap up, guys. Once again, please check out the sponsor above. But also importantly, Crypto Town Hall, the Twitter account above. I'm going to ask you guys all to follow it. It will become a breaking news Twitter

account, so there'll be a ton of content there. But also, like I said, we're going to eventually be hosting. So if you're going to want the alerts that these crypto town halls are starting, they are going to eventually be hosted on that account. Of course, we will be back again tomorrow, 1015 a.m. Eastern Standard Time. And on Friday, if you're wondering why Ran and Mario's voices are only appearing every so often, it's because they are filming a show called Killer Whales in LA right now with Scaramucci and a whole bunch of other people, basically a shark tank for crypto. So they're three hours ahead and filming like apparently 17, 18 hours a day. So that's why they only have been popping in of late. But that's great because you guys only want to hear me

anyways. See, I can say that when they're not here and listening. Thank you all for tuning in. That's it. We'll see you guys tomorrow. Peace.