The Wolf Of All Streets - USDT in Trouble? | FOMC Aftermath | CryptoTownHall

Episode Date: June 16, 2023

Join David Duong (Coinbase), Simon Dixon (BankToTheFuture), Travis Kling (Ikigai), Dan Gunsberg (Hxro), Dave Weisberger (Coinroutes), James Butterfill (Coinshares), and others in the latest episode of Crypto Town Hall. Crypto Town Hall is a new daily Twitter Spaces hosted by Scott Melker, Ran Neuner & Mario Nawfal. Every day we discuss the latest news in crypto and bring the biggest names in the crypto space to share their opinions. ►►OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $60,000!  👉 https://www.okx.com/join/SCOTTMELKER  ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

What do you think of the market response in today's crypto markets? And they're not doing too well. Yeah, I think there's a lot going on in the crypto market. It's hard to attribute it just to the FOMC meeting. I think we've got much bigger problems than whether Jerome Powell says skip, pause or pivot. You know, but I did say yesterday often, you know, you see things go up right after the meeting and then it sets in and the market's usually wrong on the first reaction and goes the other way i think to some degree that's what's happening here i just think there's a lot of bad news for crypto right now it's sort of drifting down on low volume but it's really not bothering me that much what what big did

soon here did did but did above are you actually what's your portfolio like your web3 portfolio uh do you want me to describe it in song or did i drop out as a space crashing hello anyone there can anyone on me yeah you're no you're good all right all right you cool because usually what happens when it goes quiet it means the space is about to crash unless the other person got a call which which Scott got a call. Scott, are you there? Yeah, I think Scott got a call or something like that.

Scott. All right. So, Ryan, I want to ask you that question. And I've sent you a call to invite. So, if you can accept it in the next 30 minutes, it would be good, Ben. Can you hear me? Yeah, man. Yeah, man.

So, what's your – I'm not sure if you're doing the dishes, but it seems pretty quiet. So, while waiting for Scott to come back, what's your portfolio like? And then we'll kick off the show. As I mentioned yesterday, I'm with 30% in Bitcoin, probably 10%, 15% in ETH and the rest altcoins. I should probably have a lot more Bitcoin now, but where I am right now is I don't but i don't have enough i don't have a bitcoin you never do but what what percent and what what what percent do you say is altcoins probably i mean we say altcoins do you call ethan altcoin no no no i'm talking about startups uh i'll i'll probably probably 50 probably 50 percent wow respect all right you've got balls man yeah

um and what says maybe give us a quick overview scott is coming up just lost internet so he's coming up again he's up now but give us an update what was your show about how was um what's the response like what are thoughts on the market yeah so i mean the main thing we looked at today we looked at the we looked at the response to the fmc which i don't think we really need to speak about here because we spoke about it at nauseam yesterday um but the main thing we spoke about today was the USDT DPIG. Now, it's a slap DPIG. But, you know, what the tweets came out and said, which is something we all need to pay attention to, is maybe someone knows something. Now, I don't

believe there's anything, but, you know, you don't believe there's anything until it comes through and then there isn't and we looked at ways to protect your portfolio or to protect yourself if usdt doesn't de-peg now i'll give you some obvious ways that you can do it if you think usdt is going to de-peg you can go to curve now and you can sell your usdt or usdc and that way you're out of usT and you're holding USDC and it will cost you, right now it will cost you probably 0.2% on your portfolio, which is quite a good trade. If you think that

USDT is going to deep peg or that the DOJ is going to take action against USDT, well, then just go and get your money into USDC. That's the easiest way. If you think, the next thing that you can do just go and get your money into USDC. That's the easiest way. If you think, you know,

either way, the next thing that you can do is you can just go buy Bitcoin because what we know is that when stable coins de-peg, people often run into Bitcoin. It's happened the last few times stable coins have de-pegged and it's also happened

when USDC de-pegged, people went into Bitcoin. So that's a natural thing where people migrate into Bitcoin when they have these de-pegged, people went into Bitcoin. So that's a natural thing where people migrate into Bitcoin when they have these de-pegs. The other one is a little bit more technical and I'm not sure that it's something I want to talk about in spaces but you can go and listen to my show.

I'll say it. I'll say what you don't want to say. There's a way to short USDC as well. Is that what you're saying? So, yeah. So there's a way to do it. way to do it what you can do is you can short usdt against usdc and you can do it on leverage now your downside is very limited because your worst case is that usdt goes up by 0.2 percent in d pegs and and re-pegs but your upside is if usdt um completely d peg eggs you've got all the upside so it means

that you've got a very very very very very small risk 0.2 at the moment and your return could be your leverage times that now i don't want to talk about on the spaces i did cover it on my show the reason is it's quite technical and if people do it wrong, there's the cost of leverage and the cost of borrowing and stuff like that. I think that for people who don't know exactly what they're doing, I don't want to actually open that can of worms. Let's say to me that is the best

risk return trade on the market if USDT depicts because your risk is 0.2%. Your upside is all the way up. Scott, see what happens? Scott, see what happens? Scott, Scott, see what happens? You leave for a few minutes

and we start talking about shorting Tether. But no terminology, man. Please. No, no. I want to argue terminology again. We argued positive it yesterday. I refuse to call this and we'll never call a stable

coin that changes price on an exchange a DPEG if it can still be redeemed one-for-one directly from Tether. There's no DPEG. Agreed. Scott, there's like a dozen entities on planet Earth that can redeem from

Dell Tech for what it's worth. No, I understand that, but I'm saying debt business traders doing things though. It's traders that are causing this on individual exchanges. Okay, but question, can you educate me in the audience?

The ability to swap your tether to a dollar, a US dollar, what could happen where you're not able to swap your Tether to a dollar, a US dollar. How could that... What could happen where you're not able to redeem it anymore? Assuming Tether doesn't do anything in this different way. Nobody can create or redeem Tether

without having an account at Dell Tech. And getting an account at Dell Tech is really hard. And it's my understanding that there's something like a dozen entities that can do it. Which is like, it's a pretty impressive racket that they've created. Where you got 80 yards in this thing. And there's, you know, a dozen doors in and out of uh and travis travis what's this yeah i'll give you yeah so simon i'll give you the mic just one question and then i'll give you guys the mic and i'll meet myself but what's the fear around so so ryan told us about the

d-pack and how to protect yourself and how to short it but why is there some fear around tether and we're not creating fud here and you know i hold tether but why is there some fear now and i know it's about regulation i don't know what this latest like within the last 24 hours i actually do not know what like the latest round of flood is i don't know if it's like somehow connected to you know binance fears and that kind of thing. I do not know. Ran, Simon, Scott, do you guys know the latest? Well, I think Ran could probably give the summary if he didn't while I got kicked off there for a moment.

But it has to do with the curve pool and basically an indication that there might be someone who knows something who's heavily trying to short uh because the pool between dye tether usdc has gone out of whack it's supposed to be 33 33 33 and i think uh usdt went up massively as a percentage of that pool this is when you're getting really deep in the defy weeds but there's nothing there uh specifically like for a regulatory standpoint besides the normal foot so. So that's like a causality thing where people look at that and they go, like, whoever did that, do they know something that other people don't know, basically? Yeah, exactly.

And it has something related to regulation, a regulatory crackdown. Yeah, I mean, let's just go through what actually happened. It's technical, but it's probably worth talking about for just a few seconds for those who are a little bit more technical here in the audience. And I apologize if there's background noise. I'm just getting into the car. There is a stablecoin exchange called Curve. Now, Curve is primarily a place where traders go to trade in and out of one stablecoin into another stablecoin.

So if you have USDC and you want USDT, or if you have DAI and you want USDT, what you do is you go to Curve and you trade this at Curve. Okay, so Curve is an exchange. It's a decentralized exchange, which is specifically made for trading stable coins. That's where its strong point is. Now, how Curve works is there are pools. So there is a pool which has DAI, USDC, and UFDT.

So imagine like a bucket, and inside this bucket, there is DAI, USDC, and USDT, and they're all stable coins. And there is a ratio of those stable coins so like let's just say for argument's sake there is a third die there's a third usdc and there's a third usdt now if traders want to dump their usdt they go to curve and they go to this bucket this this pool and and they dump their USDT and they take, instead of USDT, they take DAI and USDC because those are the other two tokens in the bucket. Now, what it does is it causes an imbalance. All of a sudden, yesterday, there was 70%,

or right now, actually, 70% USDT in this bucket and only 15% DAI and 15% USDC. Now, what that means is if you look at the curve pool, that's the first indication that traders en masse are actually trying to exit a stable coin. So just imagine if there was 33% DAI, 33% USDC and 33% USDT in the pool. And all of a sudden, traders said, we don't want our USDT. And they dumped their USDT and they took DAI and USDC. All of a sudden, the pool has 70% USDT and only 15% of the others. Now, what that does is it causes traders to start panicking

that why do people not want their usdt and that's what caused the defect because then people said hold on a second maybe someone knows something and that's why they are dumping on curve which is the primary stable coin exchange that's why they are dumping their usdt and they're taking by and usdc in place of it And that is what caused the deeping. Now, the last two times that we saw this deeping, the first one was when UST was on an imbalance, sorry, UST, the Terra Luna stablecoin. There was an attack and it had the same thing happen.

And the last time we saw this was when USDC deepened because of the Silicon Valley collapse. And I came onto your show, you remember, and I said, I'm noticing this. This is a big problem. Get into Bitcoin. And that was the beginning of a Bitcoin run. And so when it starts happening, the people that are watching these pools these buckets on curve they they pick up very quickly when there's a change in demand of stable coins and then they start asking themselves questions they start saying well what do people know that we don't know is there a potential doj attack coming

on together is there maybe missing assets and they're not backed so that's what people start asking i don't believe any of those are true but that is what that's the the mechanics of what happened out there if those right right if you don't think those things are true i know that other speakers want to jump in alex i saw you on you as well if you don't think those are true then why do you think we're seeing that the the trade is fleeing from um from tethered well look they're not fleeing on mass number one so you know the peg is still, number one. So, you know, the peg is still, just to give you an idea of the peg, the peg is still 99 point, I'm driving

now, but when I left the office, it was 99.75 or 99.8. So the deep peg is ever, ever, ever so small, and only real high-frequency arbitrages and people that really know how to play arbitrages can trade such small uh increments

number one um but then the other thing is you know maybe i think there's nothing but maybe i don't know something maybe example and i'm not saying that i don't want there to be any fun around it but what if a very select few people have have had a leak from a doj action which which i think is bullshit but I'm just saying, what if that is the case? They would start going at it first. So the idea is to say, you've got to watch that pool

because that pool is your first place to see where the traders are trading out of stablecoins and whether a stablecoin can be picked. Yeah, by the way, Scott, it's, you know, market liquidity is just like total shit right now so like sometimes these like relatively small moves can you know but how do alexander how

how does this move compare to other moves in the past i know it's still very small but but small could still be big if you compare it to previous moves sure and i think that um ran hit the nail on the head here where it's this is basic supply and demand and if you have a limited pool of assets and everyone is trading one for the other uh the reasons for trading that uh may become self-fulfilling as they see other folks doing the same uh there's going to be a relative price imbalance between USDT and USDC or DAI, which creates some of that DPEG. This is different from UST, from Terra Luna, which the DPEG was part of a larger structural issue where folks were fleeing the stable coin or selling

luna and the broader market was dragging down luna which in turn a death spiral that's symptomatic of an algorithmic uh stable coin whereas tether is presumably backed one-to-one um as is usdc so i think part of the fun is there's a lot of scar tissue left in the markets from folks seeing the death spiral of Terra and thinking something similar might happen. I've seen a couple of tweets that were talking about the Tether company using profits to buy bitcoin and likening that to the the terra luna foundation guard backing um backing ust with bitcoin which ultimately when they had to sell it to defend the peg dragged the market down and it became self-fulfilling and those are two very different things and i think folks who are drawing this the similarities uh are probably self-interested

looking to pick up a few points. Yeah, the Deepak, I'm just looking now. The Deepak is gone in Tether. And by the way, Scott, I'd love you to do a market update right after we discuss Tether with Simon Gunney. But is the Deepak gone now? Is it back to par? I'm looking at the screen right now, but I would assume so.

Yeah, so it's very temporary. Very temporary, and this is nothing, you know, I mean, to Rand's point, people do rush into Bitcoin. We saw that when there was this massive event with USDC and Silicon Valley Bank, right? But USDC was trading at $0.90, $0.89, $0.87. This is just a fractional, tiny, tiny thing. So not the same.

But in all those cases, people did rush into Bitcoin, including myself. So just to, I'm trying to get my internet functioning here at full. Yeah, so you've got a market update for us or not yet? I do, I do. So Bitcoin trading at 25,052, down 3.65% in 24 hours. ETH at 1646, down 5.48%. So still seeing a bit more impact on Ether and then some altcoins than we are on Bitcoin. I'm looking for a market update, but the stock market flat. It seems like at this time, every single day, the stock market is up or down by literally like 0.2

or 0.3%. But we're definitely seeing a significant uh move down here from bitcoin after fomc we can debate uh till we're blue in the face why that's happening but i think holding bad news hold on yesterday when we finished our stream or when we were towards the end of our stream the nasdaq pretty much was up about a one percent for the day and Bitcoin out of nowhere took a $1,000 candle. That $1,000 candle on Bitcoin coincided exactly with the curve pool becoming unbalanced or whatever else. That's why we got a $1,000 drop in Bitcoin from $26,000 to $25,000. Everyone said it's Bitcoin responding to the FOMC. That can't be Everyone said it's Bitcoin responding to the FOMC. That can't be because the markets didn't respond to the FOMC. The markets were unchanged

at 1%. It would be very strange at Bitcoin point and that is exactly the time that the curve tools started to be balanced. And what's your thoughts after that, Ryan? So you think it's the people trying to trade against Tether or trying to attack Tether?

It was some kind of fight or something came out somewhere. I haven't seen it, but it was some kind of fight probably against Tether. And that's the Tether fight caused Bitcoin to get sold out. I see that. But hold on, isn't it? Yeah, so James, but if you have FUD and Tether,

there's two things that will happen to Bitcoin. One of them is people moving to Bitcoin as a store of value rather than stables. And the other one is people moving out of crypto because of a potential stablecoin de-pegging. If we do see an attack on Tether

by regulators, how would that impact the market? Gunny, how do you expect that to impact the market? Gunny, Dave. Go ahead, Gunny. Sorry about that. I think a couple things. Number one, I'll answer the question, and then I want to get back to

the curve thing for a second. Sorry if my connection's not great. You're good, man. You're good. Yeah, I think if there's an attack on the you know what regulators like i think maybe some of that's priced in but also the market is super reflexive which i think somebody else just kind of mentioned that you know panic in the same way that when things are very euphoric like euphoria incites more eu euphoria, causing prices to get kind of crazy and to the upside. Same thing can happen very much to the downside. So you normally would think things get priced in kind of ahead of pending news.

New information comes in the market. You have somewhat weak hands in the market and these kind of liquidity vacuums because liquidity is like super fragmented in the space and you know, 20 and 21 got into the market that weren't crypto native, who are now getting out as well. And, you know, these are people that are coming from traditional finance where, you know, what may seem like a not so large amount of assets, but when you put them in crypto, they become pretty large. I'm sorry, I just don't understand what you just said. Are you saying that some of the traditional, some of the trad fight Wall Street guys are going out of crypto? I have heard that there are a couple articles of, or at least rumors, or I think they disclose it as well, of some of the big Wall Street guys coming into crypto and kind of filling the void left by Binance and others.

We can discuss that later. That's different. But Gunny, really quick. Yeah, you should jump in. I just want to say that I had Steve McClurg from Valkyrie on YouTube this morning on my panel. And I asked him straight up, I said, listen, you know, everybody in this industry in the United States, is anybody crazy enough to continue building here? And he said, and he said, it was not hyperbole. He said, every single person I know who's operating in the United States is either leaving or shutting down. And he was talking about funds. So that aligns exactly with what Gunny is saying. Like, if you're a mid-tier hedge fund, small, I mean, Travis, you are one of those. Maybe you can ring in, you know, but he said basically everyone's out or just packing it in.

Yeah, I don't think maybe it's not quite that binary. Like it's not everybody in, everybody out. And I think maybe people that weren't in are using this as an opportunity to start gaining exposure but the ones that i mean it was somewhat shocking to me in 21 how many funds got in when you know i mean maybe it's not so shocking but but you know when bitcoin's at three four thousand it's it it's uh it's total wood and then when it's at forty thousand it becomes interesting and uh so i think maybe some people you know got caught maybe some people got caught, some funds got caught,

and they're maybe moving back to more familiar waters, more familiar territory. Okay, so before you jump in, I know that James is jumping in, and before you do, James, for a project, if you are a project that's building in the ecosystem, hit us up if you want to come on the show or if you want to work with us.

So we're still incubating projects. We're still helping out projects, whether you're based in the ecosystem hit us up if you want to come on the show or if you want to work with us so we're still incubating project we're still helping out projects whether you're based in the us or in venezuela it doesn't matter to us um and you can join the show as well as an advertiser as an affiliate just hit us up and there's an email in the pinned tweets there's two pinned tweets or you could just if you don't want to email or it doesn't work for you just put it in the comments or dm um but james i'll let you jump in on this particular point like you know for for startups to be fleeing the us and i'm going to go back to my question that i asked originally is that any regulatory action on tether how would that impact the market yeah um so just on on looking at fund flows we've seen 227 million dollars of outflows from insto funds this year so on a similar kind of trajectory to last year where we saw a lot of outflows so we know that instos are pulling money out um on it from a regional perspective

it's a lot a lot of it funny enough is canada we know that various funds in canada were pulling seed capital that seems to be a bit of a theme this year, taking out seed capital. From a regulatory impact perspective, I think it would be big. We track volumes on trusted exchanges, and I see that Tether now makes up around 80% of spot Bitcoin volumes on trusted exchanges. So anything that happens to Tether would have a material impact. Okay, well so can someone give me some clarity um again just treat me like an idiot what could happen to tether what could

regulators do and what would how would that impact the way we use tether um can anyone just give me some clarity there do you want me to take it mary yeah of course simon cool um just wanted to add on a on a few points that were covered um as i was listening in um uh sorry i just a little bit excited we've been making a license application for two years and i just got um we just secured our retail securities license it's a two-year application and just got a note um notice so um but yeah sorry back to tether um so tether um the firstly i'd be very surprised if we didn't hear from the doj and full disclosure i'm i'm a shareholder i'm not sharing insider information in bitfinex and also, who does USTC. But the DOJ investigation with Tether has been an ongoing thing. So we've been expecting an announcement on what the outcome is

of certain areas that they've been looking at. They had a settlement which was due to an allegation that they denied about lying to a bank when they were trying to figure out how to secure banking for Tether. The other thing is I'm not too sure it's accurate that you have to have an account with Deltec. If you want to redeem Tether, you have to have an account. You have to go to tether.io. I believe last time I checked, a minimum redemption of $100,000. Very few actually do it. They tend to trade into something else. And as far as I'm aware, I've never heard of a requirement to have an account on Dell Tech.

It may be Dell Tech that's actually making the transfer. And maybe there's some issues if you're dealing with billions of dollars or hundreds or tens of millions from a crypto-friendly bank or a crypto company. Maybe that will cause some issues with your bank. But I'm not aware of any requirements to specifically have it. So, Simon, just back to the DOJ, actually. Can you tell me more, simplify it a bit more? What does that mean exactly?

What could happen to Tether? I know we can't know for sure, and you don't have any inside information, but what is the best case or worst case scenario? Because we've seen, like, I would say we've seen, I would say we've seen the worst case scenario, but it's more on the negative with Binance, in terms of what the SEC is alleging, and we haven't seen anything from the DOJ,

but let's see what happens on the DOJ. What is the best case and worst case scenario for tether well so you know in in terms of best so the the major issue with tether has always been their issue with banking when uh you know they they became the bank to crypto to crypto exchanges through tether and holding that amount of money is very difficult and then when they lost banking in taiwan they had to do things and and various other banks wouldn't support it um and then at different stages they've you know they've said that because certain things happened where there was government seizures

of funds using a merchant processor they were under uh the the peg and then they sorry under collateralized and then they had had to put together an agreement between an intercompany loan and stuff. But now they're doing attestations. I think the major issue you could see is kind of the attestation versus the audit. And so if they want to go into the entire history of everything that's ever happened,

and again, I don't know anything because there hasn't been an audit out there. Like, for example, they were talking about... So when people were saying, like, they've made announcements that they're doing Bitcoin mining, but, you know, that kind of rings sounds of something like Celsius or BlockFi or something in your mind. Or when you hear that they're buying

Bitcoin, it brings sounds of UST. But it's important to note that it's excess profit. So when USDC's de-pegged, about 20 billion of volume went over to Tether, and that was when interest rates were at the higher rates, the hiked rate. and so they were able to buy high-yielding bonds. And then the US government was essentially subsidizing their purchase of Bitcoin because they were doing it with excess profits because they found a way of borrowing at 0%

and receiving 5%. So, Samir, if we do, again, in very simple terms, because I do want to go to the panel, if we see a very, in very simple terms, because I do want to go to the panel, if we see a very heavy-handed crackdown beyond just an attestation or request for audit or attestation from Tether,

what would that look like for Tether? What would that look like for the market? For the average builder, for the average investor, what could happen? Very briefly, because I know David's waiting as well. I mean, two main things. An accusation of some type of money laundering because the connection between people that were issuing tether like ftx um all of these things may be their next announcement or just a general massive crackdown on if you if any u.s person holds a stable coin you need to ensure

that they are not from the US and therefore you need to do on-chain KYC which breaks the whole stable coin model those to be so if that if that happens if we if we have a request that yeah they could any US person cannot hold tether then we see a lot of that money flowing into two because not many options left well bitcoin is is the option yeah but bitcoin is not a stable coin yeah yeah so well then you'd go for a u.s regulated stable coin there'd be an unwinding process and you know there'd be a a transition but the more important thing is that breaks every stable coin because if you need to do

on-chain kyoc to ensure that no one from the u.s is holding a stable coin then no stable coin is is immune to that they're banking basically you've created a bank account dave well yeah i mean considering the congress was very close to actually passing stablecoin rules, they kind of got yanked from one side that the side they yanked it isn't in control. Seems highly unlikely that they will try to ban stablecoins or, you know, as my friend Mike McGone likes to call them, crypto dollars. The more interesting thing here is we had a 30% drop across the altcoin uniters. And where does that money go? So people selling and dumping out of altcoins, what are they dumping it into? Well, the liquidity was

mostly in Tether. So now you have a lot of people holding Tether and a lot of them are just getting the hell out of the market. So it's really a question of just finding liquidity. And a lot of people in crypto, I hate to say it to some people on the panel but trading in crypto there's lots of lazy and stupid trading people who just say at 10 20 basis points i don't care when you're looking at a dpeg of 0.2 that's 20 basis points there are a lot of people who simply don't care uh for those sorts of money so so it's it's to me that's a nothing burger what is interesting is it's obvious that if in in fact, an administration in the United States wanted to take out all of crypto, the obvious attack vector is Tether. I just tend not to believe that they have the power to do so at this point or the wherewithal or that the courts or the Congress would let them do it. But clearly, that's the attack vector.

Okay, so let me give you some numbers uh dave and i've got one question for you before i give the mic to scott the statement that came out 15 minutes ago on bitcoin.com stablecoin market records 2.4 billion dollars in redemptions in 30 days as leading tokens experiencing supply decline according to statistics over the span of 30 days from may 15th to June 15th, more than 2.4 billion stablecoins were redeemed. During this period, three of the leading stablecoin experienced a decline in their supplies, ranging from 4% to 19% compared to the previous months. Do these numbers concern you at all, Dave? No, they're exactly what I was saying. It almost had to be the case because there was a massive sell-off of altcoins across the board over the last week.

And that money has to go somewhere. And most people were taking it out of crypto. Some put it back into Bitcoin, sure. But a lot just took it out. And if you take it out, what's going to happen? It's consistent with my narrative. And another thing you said, Dave, is that you don't think regulators have the power or the ability to destroy Tether. What makes you say that? Well, it's politics, right? Well, for starters, it's not just the US that's concerned here. I

mean, there's a lot of use cases for Tether outside the US that are extremely important to people, many of my relatives in the US, et cetera. But at the end of the u.s that are extremely important to people uh many of my relatives in the u.s etc but at the end of the day everything that the regulators have been doing is more or less indirect assaults or picking fights that they can at least spin politically if you try to do a frontal assault on you know millions of accounts uh at the end of the day u.s elections are basically a million votes either way is going to swing actually it's hundreds of thousands of votes in swing states that will literally swing the next election i don't believe that the democrats who are obviously the party that's anti-crypto these days for reasons that are still kind of beyond me but that's a that's

a different conversation i can't imagine that they would want to do that. Direct assault isn't the idea. The idea is to try to win the narrative war, and that's what they've been up to. Scott, do you think direct assault is possible? Anything's possible, but I don't think the SEC right now has the resources to go after Tether after they're already in battle here with Coinbase, Binance, and, of course, with Ripple. Now, if you're talking about DOJ, I guess that's another conversation. But to me, you can't worry about things that you have no evidence are happening. And that's just a complete narrative. Actually, I want to ask David Young about this from Coinbase. I mean, what are you guys seeing on the home front on Coinbase? Are

there any concerns about Tether? Obviously, you work with Circle and USDC. Is there anything that's concerning you guys or your relationship with Tether or using it on the platform? So, yeah, as you mentioned, you know, we are our strategic partnerships with Circle. But I will say that more broadly, you know, of course, there's always this debate about whether we can rely on the attestations still waiting for an audit report. You know, I've heard conspiracy theories from people suggesting that there are reasons beyond, you know, their connection to commercial paper, which, you know, they've said now that they've sold off commercial paper, for example, or their loan book and things like that, that there may be other reasons why they haven't produced a fully audited report. But if you take the attestation at face value, I mean, their capital ratio right now is at 3.1% as of end of Q1 2023, which is, first of all, an improvement from the 1.5% they had at the end of Q4 2022.

But that is better as a capital ratio than most banks. They're in a fairly decent position, which I think, for me at least, doesn't sound as if there are confidence issues surrounding this outside of what we've seen today in terms of the three pool, which I think were very specific circumstances related to curve and related to what we're seeing in terms of that position moving over to Aave. And a fractional part of the tether transactions on a daily or weekly basis. I mean, very, very small. So I think it really is just people getting spooked and thinking somebody knows something more than they do. But David, to your point, it's interesting. I mean, these platforms, companies, Binance included,

and Tether have weathered massive bank runs, seemingly without breaking a sweat, right? And I mean, Paolo Arduino, who I was trying to get on, I'm actually speaking to him at one from Tether. I mean, he tweeted today, we're ready for any amount of withdrawals and redemptions. Come at us, right? So there doesn't seem to be any fear on their part. I think that's legit. I do think that we did this exercise a few months back where we were just trying to measure out what the size of potential Tether shorts were in terms of how much you could borrow and how much you could actually put against it and it was on the order of you know not unsubstantial but it was like on the order of like maybe five to ten billion dollars compared to what they say they have in cash which was you know somewhere around like 40 billion

like they have the ability theoretically to like redeem that like three, four times over and still be okay. If you know what they say in the at stations is true. I think there's an interesting argument here for a lot of these platforms, but focusing specifically on Tether, they've also not only survived these massive bank runs, but they've survived this fear, uncertainty and doubt for as long as I've been in crypto and can remember. And I think that there's a pretty clear argument to be made that maybe in the past, they were not necessarily fully backed or backed by the assets that people would want them to be. But with this much of a spotlight on them over this amount of time, they've obviously become compliant and now are more than ready to weather any storm.

I mean, that's how I personally view it, but I would love your thoughts. I think that's what we've seen. If you listen to, say, the case at the New York Attorney General, for example, it's not saying that they aren't backed today. It was saying that in a very specific moment in time, they may have not been backed. And I'm obviously not in a position to judge the credence of that one way or the other. But even based on the language that you see coming from that case,

it doesn't sound as if they're calling them, like calling the question, what's happening there? You know, so we were talking earlier about what's going on with the DOJ. I think that, you know, it's hard to speculate what's going on. Why did they shift departments? You know, like,

and they're trying to call them out on their specific relationship with these banks and whether they gave them misinformation in some way, shape, or form. And, you know, like, it sounds like they're still struggling to actually find the right way

to actually, you know, bring a case against them. So, you know i i'm kind of with you scott until i see the actual evidence i'm a refrain from judgment i've heard about it since the beginning of time alexander i see you have your hand up i think scott hit on this earlier uh exactly right which is uh doJ haven't seen any evidence. Could there be something in the works? Maybe. The SEC, though, is not going to go after Tether, at least in my opinion. I work in DC and crypto policy

and regulatory policy. And the reason is that they can only pick so many well-resourced fights at any given time. Right now, their Binance and Coinbase fights are those. And Ripple. And Ripple, yeah. And there's a reason that USDC and Circle didn't show up in the Coinbase suit. And to me, that's because they just don't want to open up other vectors against other well-resourced opponents.

Whereas if you look at the Binance suit, Paxos and BUSD figures pretty prominently. So if they were to go out, the SEC, if they were to go after a stablecoin issuer, it's going to be Paxos and BUSD figures pretty prominently. So if they were to go out, the SEC, if they were to go after a stablecoin issuer, it's going to be Paxos. I don't see them going after Tether anytime soon, at least until they get some some precedential case law kind of at their back. Why would they go after Paxos, do you think, necessarily? I always thought that was interesting that the government went towards Paxos to basically shut. I always thought that was interesting that the government went towards Paxos to basically shut down BUSD, but had nothing to say about Paxos's other stable coin, USDP. That's a good question. I mean, the argument has been that... So taking a step back, the SEC, specifically Chair Gensler, have been pretty methodical about trying to take crypto things and stick them into existing regulatory buckets.

So with the exchanges, it's, hey, let's put these into securities exchange frameworks and everyone needs to come into compliance. With stable coins, every time Gensler has appeared before Congress, he said, well, they look like money market funds to me and should be regulated as such. So if his view is that all stable coins, to some extent, are money market funds and should be regulated as them, then the question just becomes, who are you going to go after in order to effectuate that view? And to me, the lowest hanging fruit is Paxos and BUSD, because there's no love lost between Binance and I would say Capitol Hill and the broader public in the US. Whereas if you're going after Circle and Coinbase, who at least in D.C. are seen as honest brokers, it becomes a little bit more politically difficult. I mean, you're in D.C., obviously. We've seen a lot of legislation floated about stable coins over the past year and even before,

and most of it seems to have disappeared into the ether. Obviously, that was a fundamental part of the Loomis-Gillibrand bill, which they are saying is coming back leaner and meaner in the coming months. And obviously, some ideas from even McHenry and others, I mean, it seems like stablecoins are more likely to be legislated on than anything else in crypto, and that that might then delay any regulatory action against any of these. I mean, what do you think about that? Correct. It should. The regulators are basically supposed to take a backseat to Congress when Congress is moving on something. And the Presidential Working Group report basically said as much. They said Congress should take the lead on stablecoin legislation. And there's plenty of folks in Congress on both sides of the aisle who have been somewhat upset that the SEC hasn't seemed to have been listening.

So yesterday, Jeremy Allaire, the CEO of Circle, testified before Congress on the latest stablecoin bill draft from McHenry. That bill is going to get marked up by the House Financial Services Committee in early July. It will pass out of the House because Republicans control the House, and McHenry has a tight relationship with Speaker of the House Kevin McCarthy. The question is, does it make it through the Senate? Stable coins are the one issue where the administration actually seems to see the need for comprehensive legislation. Their views on crypto market structure are a little less generous. So look, I actually think that there's a decent chance that stablecoin legislation

passes into law by the end of the year. It's not a sure thing by any means, but Congress could act on it relatively quickly. Where would you put the likelihood? Is that like a coin flip to you or more likely than not? Or how would you... I would say probably 40, 45%. Yeah. Whereas I would put market structure legislation around 20%. It really depends over the next couple of weeks whether Democrats decide to hop onto McHenry's bill or not, because the more Democrat votes there are on that thing coming out of the House,

the more likely the Senate's going to have to stand up and take notice. If there's no dumb votes, then the Senate doesn't have to do anything. Hey, Mario, I just want to share something that's a bit of breaking news or announcement today. And obviously, Bill Barheit, the CEO of Abra, has been one of the most guests here and a close friend of the show. This just came out. Abra is announcing a significant restructuring of its operations that will take place over the coming days. Effective June 15th, today, Abra is ceasing its retail business in the United States. Existing Abra Trade clients will receive notice of the timeline for the withdrawal of their digital assets from Abra Trade. Abra previously announced the wind-down of the Abra Earn program in the U.S.

Abra Borrow will cease offering new loans to U.S. consumers. Abra Boost will cease offering services to U.S. consumers. AbraBoost will cease offering services to U.S. customers, and existing users will receive separate notice of the wind-down process for their existing deposits to take place in the coming weeks. So to our narrative, Gunny, we were talking about before, and all of us, people leaving the United States, Abra was sort of the last man standing when it came to the loan and yield model that existed. I reached out to Bill. He said he's dealing with clients right now and said Abra will be fine. Just another bullet to the head of U.S. investors who get screwed by regulators.

Simon, you can go ahead if you have a take. Yeah, sure. So, yeah, as you said, Abra is pretty much the last person standing where you can do a collateralized loan and then Abra has the right to invest that collateral and try and generate yield. So obviously that has become a very problematic model, but Abra survived all the storm and full disclosure. I'm a shareholder in Abra as well. But Simon, I think it would be easier for you to make a list of us of companies you're not a shareholder in. Go ahead. I know. It was like, it's just disclosure is important when you run a regulated securities business, I have to say. And I think it's a decent thing to do anyway. But yeah, it's an interesting one because,

all right, so if you want to re-hypothecate, then that's what banking does. There's loads of stress tests. You can't go out and invest that in crazy risky things. You have all that type of stuff. But if a high net worth investor is depositing collateral and then they're borrowing against it but then abra has the right in order to invest that money there's no current disclosure requirement around

that so they're probably taking the opinion that they can do that as a as a form d accredited investor so only a high net worth investor would be able to borrow against collateral i think they were already only dealing with accredited investors at this point. Well, this was the announcement that they're taking away the retail business so you can't borrow and you can't have an earned product. So they're officially making that announcement, but they're saying that it doesn't affect. But interestingly, I still think it's really important for, if you're borrowing and that collateral is going to be used

and you're making financial decisions, I still think it's really important to know what risk profile a company is taking with those funds so you can manage accordingly. And that's where the collateral being used, I think, does need some security law disclosure. But then they're doing it based upon lending licenses, which is a completely different regime. Because that's why banks have the ability to leverage up, because they have such stress testing on what you do with those funds. And we saw two similar platforms halt withdrawals in South Korea yesterday.

Yeah, there's a big shakeup. It'll be interesting to see what the equivalent of Chapter 11 looks like in South Korea, because these are pretty big numbers. And yeah, it was the whole lending side. I think in South, I don't know, I'm not an expert on South Korean liquidation, but my guess is it goes straight

to liquidation in these models rather than the... Rather than dragging us through what you and I have been through with Voyager and Celsius for the past year. The UN model is you make it legal for lawyers to spend client money

and you basically use the Mishinsky method but allow it to do under the court and everybody just spends your money. Hopefully they don't do that in the rest of the world. Ran, what did you have to say? The South Korean one wasn't as big as everyone thought because on their website they said

they had $8 billion worth of altcoins. And that's because when you translate the website from korean to english it doesn't change the number but it changes the currency so it was chinese one or it's korean korean korean one or whatever it's a korean um whatever the currency is called korean w and the eight billion k W, which is not actually a big, it's actually not really a big amount in altcoins. Someone should just do the calculation. But when you translate the website from English,

from Korean to English, I thought it was a huge story. We thought $8 billion of altcoins were now locked up in Korea, but it actually was, it was a tiny number. Yeah, I think size is a huge part of the narrative, but I think the narrative still is the key here,

which is... They did say 41,000 Bitcoin. They do have a billion dollars worth of Bitcoin. They got 21,000 Bitcoins. They do have a billion dollars worth of Bitcoin. Yeah, but I thought people were saying that that's the total amount of Bitcoin that has passed. That's like total amount of Bitcoin that has like passed.

That's like the cumulative aggregate volume or something like that. TVU is total volume that's passed through the system. Yes, you're right. It's an entrepreneur number. I think it's kind of anonymous. It's an entrepreneur number when you're not forced by regulators to say what's fair, clear, and not misleading. Well, Celsius actually announced, I saw it in the news today, that they were, as part of their process, were going to sell all of their altcoins into Bitcoin and Ethereum,

which seems to be a very, very important story here. Yeah, I applied the rule. I asked them to do it eight months ago when Bitcoin dominance was at its low, and they waited till bitcoin dominance was at its high to sell all the old coins for bitcoin and east so well what is the value what is the celsius balance of altcoins x bitcoin and you can and x x celsius bitcoin um well they they uh they owe about a hundred Bitcoin. They've only got about 20,000 of them or something like that last time I looked. So it's a lot more.

I'm more worried about if they're selling all the altcoins for Bitcoin, how many altcoins are going to hit the market? Yeah, it's mainly, I think it was about 70% ETH and Bitcoin. I'd need to check the numbers again. But yeah, there's a big dump coming. Of altcoins into Bitcoin and Ethereum, right? Yeah, and out of the day. Yeah, but I'm saying big dump of those altcoins,

but that should actually be, if it's going into Bitcoin and Ethereum, it's effectively buying Bitcoin and Ethereum. Gunny, go ahead. I'm curious, and maybe somebody here knows this from um from celsius or whatnot but what are the tax implications to the retail account holders in a liquidation event yeah i don't i don't want to give um tax advice but basically creditors that have over a hundred thousand claim they're able to do it in a pretty tax-efficient way. But it also, because the coins were deemed to be property of Celsius, they have their own.

They were a UK company and a US company, so it's ultra complicated. There's an HMRC claim, an IRS claim, and they're making the trade. But they also were treating it as an illegal bank. So there's a nuance there that's really complicated. And there was a loan negotiation at the moment that may lead to people getting all of their collateral, creating a taxable event, getting a triple whammy. So the tax side is an ultra disaster in these situations. And it really does require some legal interpretation because they were operating illegally

and it depends how you interpret what the actual relationship was. Yeah, and just as an update for others in dealing with Chapter 11 bankruptcies, and Gunny, then I'll let you go, the Voyager saga seems to be getting closer to being resolved, although not in the way

that any Voyager creditor would want. But yesterday there was a hearing and the judge did clear, seemingly for the 10th time, for the first tranche to go back to customers, which is about 35.76%. So that could happen in the coming week or two weeks, which would be kind of the first one of these to be

resolved where customers are starting to get some of their money back. So I guess good news in that it's starting to see some resolution potentially, but bad news in the amounts and sort of the precedent of what we'll see in the future. Go ahead, Gunny. No, I'm good. That was my

question. Back to the panel. Yeah, also, bringing it back to this, in the Voyager case, I think they're selling 36 of the coins that the SEC deems securities as well, right? Yeah, so you've got the Voyager coins, and then you've got the Celsius

coins, and in the Celsius plan they want to get everything into Bitcoin and then you've got the Celsius coins and yeah in the Celsius plan they want to get everything into Bitcoin and then stake the ETH and the the queue for firing up a validator since because basically ETH was deemed property of the estate so their Celsius applied to take all of our Ethereum they took it off the light they took it off lido and now they're putting it on the beacon chain so there's about a 48 day queue in order to fire up a validator on east because celsius took it from about a i think it was about a 25 day queue to a 44 day queue because there's just so much east that they're going to be locking up on the beacon chain yeah so scott i just i

think we should drop we can keep it short today after doing a marathon yesterday. But just for the audience, before I give Scott the last word. Guys, guys, guys, guys, guys, before you go, I'm going to put a list of Celsius coins. So, Cardano, I'm looking at the March 7th. So, I'm looking at the May coins. So, there's 100 million Cardano. There is Polkadot.

There's 1.8 million Polkadot. 3.3 million Chainlink. 197,000 Litecoin. We've got some FTT. We've got 106,000 R&D. Are you looking at what we've got or what we owe? What you've got, I think. Yeah.

Cool. Is that the coin, I think. Yeah. Cool. Is that the coin report? Yeah. That's the largest position, I think. 150,000 Solana, XLM, a little bit of EOS. I'll tweet out the thing you've taken on my account.

Cool. Yeah. I assume it's going to be ATC anyway, but I doubt that it's changed all right everyone uh it was a good uh good short space today um remember if you've got a project you're an investor for your companies or your project um in the audience go to the pin tweets i'll pin it on my profile as well around you should do the same so i can see it when they're in the space and there's an email there you can email us or you can comment in the tweet or you can DM us. But best is to email us, please.

Otherwise, Scott, final words, and I promise I won't end it this time. I promise you, you have my word. Final words. I've traumatized you. Final words before we wrap up? No. I was actually genuinely serious.

All right, guys, so final words. Markets are not good. The lack of clarity. I think a lot of our spaces over the next few months will just be trying to piece together how regulation will look like in the US over the next few months and what response we'll see from the East,

from Russia, from China, especially with what's happening in Hong Kong. And yeah, I know that Scott and Ryan are bullish. I'm pretty bullish as well. I'm not sure about the rest of the panel, but we'll see you again tomorrow, same time at 10.15 ET. Thanks a lot, everyone.