The Wolf Of All Streets - Why Is Crypto Crashing? | Crypto Town Hall With Mark Cohodes

Episode Date: June 11, 2023

Crypto blood bath: in the past 24 hours, the tokens of prominent blockchain networks experienced a significant decline of over 20%. This drop occurred in the midst of a potential risk-off situation, which follows closely after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against crypto exchanges Binance and Coinbase, accusing 13 tokens of being securities. In this Crypto Town Hall Twitter Spaces, we explore what has happened and what it means for crypto.  Crypto Town Hall is a new daily Twitter Spaces hosted 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 $10,000!  👉 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/   ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget    ►►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 a time to be alive, my man. What the hell is going on, man? I wake up, I didn't look at the markets, I'm chilling, and then I just see your message saying, what a bloodbath. That's my morning. I just got off a jet ski, so, you know. I'm glad this is emotionally getting to you.

It seems like it's really impacting you emotionally. No, I mean, it's, you know, I think not at all unexpected that this would hit on a weekend with thin order books and when nobody's defending the walls, so to speak. But I do think that, you know, I was trying to dig through this morning quietly through the books on some of the exchanges, and I can't substantiate this at all. I would love the researchers to look into it, but it kind of feels like maybe some of the market makers just disappeared and all of a sudden the books are just really thin. That's interesting. Why do you think that would be? Well, I mean, if they're afraid to do business on any of the larger exchanges, they might

stop providing as much liquidity and keeping the spreads tight. And then if there's some major sellers coming in, you know you get these uh very dramatic so so so you think he's pulling out of some of these changes just from from the regulatory action we saw with binance and coinbase yeah like i said it's i i can't be sure it was just sort of my first take i don't want anyone to take that as gospel but but yeah because i saw the news like that usually the market is not i know someone said that and yesterday or day before but usually the market is if anything it's a forward-looking indicator so that it's not usually a lagging indicator when it comes to news so they factor in as much as possible obviously it's inefficient but they factor in as much as they can in terms of news um and and if anything remember

when Binance when BNB dropped everyone was was speculating that this is due to imminent uh imminent imminent action by the doj yeah exactly so so the market is forward looking yet um in this case people are saying hey they're reacting to the news we saw over the last 48 hours but then for me it just doesn't make sense like we knew this for two three days now and we're actually surprised that a lot of these outcoins did not respond so did not react so for you to say it's probably market makers pulling out makes it really interesting. Let me get Gore Avenue as well. You know, I literally haven't checked the market in three hours, guys.

Sorry. But, you know, I obviously noticed. It's pretty much the same place it was. Monomatic ABA were sort of the 20-plus percent movers, and those are the ones that were immediately listed on Robinhood, that they were going to be delisted, excuse me, from Robinhood, which, by the way, I can't imagine there's that much liquidity on Robinhood for these coins anyways. So it's more of a news event. But, you know, these are the coins that are being that are relatively large gap that are being named in every single one of these sort of suits. And you see Robinhood pulling out. Then, you know, I'm just trying to dig through some of the breaking news our channel

now but there's some metrics indicating that some of the larger funds or have moved their those coins onto exchanges and you know but then why is it all one of the worst performing ones i don't think it's really mentioned anywhere either right i mean i've been looking through it and it makes sense for all the fear to be surrounding like solana matic and ada but then eos is like one of the worst performers and i haven't seen it in any lawsuit at all or anything. Yeah, was EOS mentioned? I think it was mentioned it was being pulled out of Binance US, wasn't it? I mean, everything was pulled off of Binance US on the tether pairs when you look.

Like we said, we're joking the other day, it would have been almost easier to identify something that was still there than something that was removed. Yeah, so back to EOS, Dusty, back to EOS. EOS was mentioned, I don't know if it was mentioned by the SEC, I can't remember if that was the case. Not in Binance or Coinbase, as far as I've seen. I'm looking right now at the overlap again,

and I don't see EOS in either of those cases, so not sure. No, it's not in either case. If you want a good laugh, then you'll see. Go back and watch the Gary Gensler video praising EOS before he was SEC commissioner. Got a good one on Algo too. And, of course, lots of it on Ethereum. But, Mario, I'm going to let you get launched and start talking. Yeah, we'll do.

I'm just organizing all the advice. But just get initial thoughts from the audience. Anyone else looked into the markets any explanations from anyone on why we're seeing the seller the sell-off today with all these different outcoins like linking it to to the to to the to the sec action makes sense but why is it so lagging and what sense could you make out of it i mean i've got some thoughts here but go go ahead, Fred. Let's go, Fred. I'd rather, Fred, because I know, Brad, you're going to make everyone depressed when you give us your thoughts. I know what's going to happen.

So hopefully, Fred, you'll be a bit more positive. Well, there's some rumors that Scimitar Capital dumped $2 billion. Don't you think that was just made up, like a made-up capital? That's just a fake company. Yeah, that's not a real company i don't think that's so again the market moves the market moves on rumors and you know the market continues to move conflux is down 40 polygons down 37 you know this is accelerating it's not slowing down um you know these coins were down 20 an hour ago they're now down 40 dash is down 31 eos is down 26 aptos 35 chills 33 i'm just looking at corn so what do you think so has anyone looked at the order books fred have

you looked at the order books and what scott said potentially market makers pulling market makers haven't pulled out is that yeah i think it's just it's uh fear of delisting people don't want to be in something you look at okay and then how if these start getting delisted how does that i was talking to gorav uh scott you know a bunch of you bruce you know gorav so we're just chatting before this space and trying to trying to understand from it like what's what will happen to the market i expected a more aggressive response from the markets when the delisting initially kicked off um and the reason is i thought all this liquidity pulling out, all US investors, you know, getting spooked for a good reason.

But then Goa was like, no, they'll always find a different way. They'll use different subsidiaries to get in. And, you know, there's the rest of the world. The world doesn't revolve around the US. Could it be liquidity pulling out because of all these different tokens now being labeled securities in the aggressive action by the SEC? And if that's the explanation, though, why is it, again, markets are not a lagging indicator. Now, because of all these different tokens now being labeled securities in the aggressive action by the SEC. And if that's the explanation, though, why is it, again, markets are not a lagging indicator.

Why are we seeing the reaction now? You know, it's interesting. 20% of Polygon's market cap has traded in the last 24 hours. Think of that. That's over a billion dollars has traded in 24 hours. This is a massive sale. This isn't just US retail. This is people who are concerned that this is going to go global. You see Australia starting to do their choke point too. You see Europe with Mika still hasn't dealt with stable coins and altcoins. That's yet to come.

And, you know, the SEC has this habit of if one U.S. citizen touches something on an exchange, even a foreign exchange, then they'll go after that exchange. And so I think right now it's institutional investors are dumping because of risk, causes retail to react. Retail takes a little while longer to react. And this is all just reactive selling. But, you know, you can see BTC and ETH are relatively stable considering what's happening in the other markets. So it's not an overall abandonment of crypto, but it's definitely altcoins and anything that people view could be viewed as a security. Okay. And is it plausible? Can we expect, because again, that was another question I was asking Gaurav in our discussion, is like, can we expect other countries to take a similar stance to the US? And what you just mentioned now, Fred, is that we're seeing a similar action by the Australian regulators and their choke point 1.0, I guess. What are we seeing in Australia?

Essentially, banks are limiting the amount of fiat that can be sent to exchanges. They're putting in instant delays, meaning mandatory delays of 24 hours for transfers. And they're including the right to decline transfers, which is essentially saying they can subjectively not send money to an exchange, even if you want them to send it. Okay. And Julian, I want to go to you before going to Brian. What happens to all these different,

the whole concept of utility tokens? Should we just forget about that concept? I know all this should be litigated over the next few years. And a question I asked in the meeting, in the space we had, I think it was yesterday, the day before, it was like, what happens to all these utility tokens?

And Ryan, he'll be jumping on in a bit. He said, Mari, like these things take time. This is going to be litigated over many years. And during that time, those projects can continue building, but the uncertainty is what concerns me. So for vc like myself and i see wizard requesting wizard i'll bring you up in a bit as well we'd love to get your thoughts is what happens to all these different outcoins you know the utility tokens on web3 games and define all these different sectors of the uh the ecosystem

yeah yeah look i think uh we have to face the uneasy truth that a lot of people, and I would say 99% of the capital flowing into this space is people speculating, wanting numbers to go up. And I mean, this is just how it is. For example, I mean, if you compare this with AI, chat GPT, every month, if you want to call it, people dollar cost average, if you use the plus version, $20 or $30, I don't know exactly what it is. Let's say $30 a month, your dollar cost average, and you check your BD. But no one does that thinking, hey, maybe I can flip that for profit. Maybe I could sell this thing for more. I'm going to buy it for 30 and I can sell it for 60. No, people actually use it.

But in crypto, I mean, how few people, and this is really a kind of actually pointing the finger at everyone. I mean, I also want to point the finger at our platform, everyone, right? We need to really drive the use cases, not so much only the speculation. If you look at the Bitcoiners, the Bitcoiners are stack sacks. Yeah, I get it. Stack your $50 a month. I get it, but

why are you doing this? You're not doing this because you want to use Bitcoin because you actually have very little places to use Bitcoin. You're not doing this with Ethereum. You're not doing this with these coins. So I really think we need to, I think as an ecosystem, really show the US, the regulator, that we actually plan on using crypto. And I think the US has this low risk right now in really kind of going against crypto because they are saying, in the worst case, we are kind of, I don't know, shutting down an online casino. There's very little actual use

case. And in, I don't know, if over the next year or two, suddenly there is use case, then I don't know, shutting down an online casino, there's very little actual use case. And in, I don't know, if over the next year or two, suddenly there is use case, then I don't know, they're going to reverse all this. And I just think that's the uneasy truth and we just have to face it. And I think we as an ecosystem, we just have to kind of be better and step up. And I'm not pointing the finger at anyone.

I'm really pointing the finger at myself as well. And I'm seeing, just giving an update for the audience, Bitcoin is down 3.1 3.2 percent ethereum 5.6 bnb is down 10 percent and i think it's hitting this the lows that we saw when the action when the uh the sec action the the report first came out that as the sec swing binance so i think we're hitting those same levels again i'm going to check out the chart in a bit xrp is doing okay seven percent but then we see the rest of the altcoins are just bleeding. Cardano's down 18%,

Doge is down 12%. You've got Solana's down 20%, I think it's 25% earlier. Polygon's still at 25% down. Avalanche at 20%, Avalanche at 20%. So we're seeing, Wizard, I want to go to you and again, I'm kind of leaving Brad to last because I know what Brad will say.

So I'm just trying to get some sort of positivity first. I'll go to Wizard, then we'll come back. You got to bring Joe Carlissari up. I brought him up. He's here in every show, man. I've just sent him an invite. Joe, if you've got time, jump in. So I'll just send him an invite again.

But in the meantime, Wizard, you're obviously more active in the altcoin world. How do you look at the price action we're seeing today and yes we haven't spoken since the the uh the announcements regarding coinbase and binance so maybe getting your thoughts on everything we saw this week hey how's it going man thanks for having me up here um you know it's the the sec binance and sorry sec suing everyone and all that you know obviously it puts a lot of pressure on those specific coins uh you know in the short term i don't see any reason that we'll see outperformance on any of those coins regardless if you agree with the sec or not uh from a market

standpoint you know and you're kind of seeing that uh you know those are the ones under the most pressure um the you know like what is there What is your upside to buying? If you're an investor, so people out there who are deploying capital, what's the upside for them to buy the coins that are specifically being targeted by the SEC relative to the ones that they haven't mentioned at all? Something like Ethereum wasn't mentioned at all. That just makes it from an outperformance standpoint, those altcoins definitely, you know, don't have a reason to, you know, see that kind of capital inflow anytime soon. Will it be down the line?

Yeah, sure. You know, I mean, XRP is a good proxy with how, you know, the government and SEC is like, you know, litigating. I mean, these things take for years, right? So what's the reason for any investor to buy into some of these altcoins that are going to be under pressure? government and sec is like you know litigating i mean these things take for years right so what what's the what's the reason for any investor to buy into some of these altcoins that are going to be under pressure and if these are under pressure you know all the other altcoins that are related to it that act as a proxy by algorithms will also be under the pressure by default right so that's kind of uh you know the the base case scenario at the moment.

Recently, you're seeing Ethereum and Bitcoin still kind of holding pretty significantly relative to FTX levels. A lot of these altcoins are basically approach, if not below FTX level. And that's primarily because a lot of people keep their assets on hard wallets and you know not on centralized exchanges so they'll usually swap to BTC or Ethereum when they're getting out of positions rather than straight to stables so what this ends up doing is gives Ethereum and Bitcoin a little bit of a bid and then usually you'll see like the second wave come down that's usually the case this is kind of what you saw last night happened you saw Ethereum and Bitcoin kind of have a bid as all coins were crashing and then you just saw like those kind of come down as well so that's that's kind of what I'm looking at right now do I see any or any bottom over here unfortunately I think you know

there's more pain ahead because not only are there headwinds from this SEC issue there's also a lot of headwinds on the macro side. You know, stocks have put on a phenomenal rally and you kind of saw crypto kind of just kind of range bound. You could say that it kind of built up a little bit more correlation to gold, which is a narrative that's been kind of been pushed, you know, for a while.

And if you look at the rolling correlation over the last, say, three, four months, the correlation to gold relative to, you know, NASDAQ, which usually has been high, has been going up significantly. So you could say that, you know, it's it's kind of building on that. But I think the capitulation that that could possibly come from stocks at some point, maybe in July on the back of further rate hikes could see, you know, seep into crypto a little bit more. So we could see further pressure. You know, obviously there'll always be relief on altcoins, on everything out there.

But the fact that since January, we haven't seen any even local highs on any altcoins is definitely problematic. It's possible that, you know, large whales were kind of in the know, which is definitely possible, and they were TWAPing out of positions, which just kind of kept a resistance across the board. But yeah, overall, I think if you're looking to buy,

I think there's definitely going to be better levels to see. I'm kind of looking at the $1,420 to $1,600, that range on Ethereum to maybe dabble a little bit and same whatever correlates to Bitcoin. But when it comes to altcoins, honestly, as an institutional investor side or even my personal stuff, I don't see a reason

to fight the SEC until there's more clarity on a lot of these altcoins. On that specific point, let me go to Dusty and Brad guys. I'll go to Brad first. Brad, with that lack of clarity, and I know what your position is, but with that lack of clarity, what do you make with all these different startups that are trying to create a utility token,

trying to abide by the regulation, the aggressive approach that the SEC has taken, and we're seeing other countries potentially follow suit? Well, I don't think that utility is a real valuation metric that people should try to judge their investments on when it comes to cryptocurrencies. I've been saying this for years. I used to be in that camp when I was drinking the Kool-Aid back in the last bubble. Which one? The latest one or the 2017 one?

2017. I mean, I worked for a crypto fund back then and I was on the investment committee and I did due diligence on like 80 ICOs and we were drinking the Kool-Aid on MV equals PQ and utility tokens and all this stuff. And once the SEC came out with their guidance that the DAO was originally done, it was a security and that EtherDelta, the decentralized exchange was dealing in under

securities and Floyd Mayweather and all the celebrities that were promoting ICOs were unregistered broker dealers. I mean, that put a damper on the whole market combined with Twitter, Twitter, Instagram, and everybody banning Ethereum ICO advertising, and just ICO advertising in general. And the whole market, you know, the bottom fell to the market, and we realized, oh, this is just VC money pumping this stuff up. It wasn't a new type of way to do venture capital, really. It was just do venture capital the traditional way, just raise money, issue equity,

and then you weren't going to have to deal with regulatory risks of being fined by the sec or the doj coming after you or breaking banking laws because finsen and all the money regulators all over the world started commenting on this stuff saying you do an airdrop you're breaking anti-terrorism rules you do an airdrop you don't do kyc on the people you're dropping stuff to this was in 2018 like they were saying this literally so it's no surprise that this is happening they've been signaling this since 2018 and really you got to fundamentally take a step back and look at all the prices of a cardano and matic and all these coins before the fed dropped the interest rates to zero percent and they did eight to ten trillion dollars in stimulus and just inflated every single risk asset bubble in the world because prices are going to fall back to where they were before covid stimulus and and all that broke everybody's brains and we thought oh i guess

you know the regulators are disrupted now like they don't matter that's kind of what everybody did they're just like they didn't give us clear regulation. Well, yes, they did. They consistently gave clear regulation and took actions. But it was kind of the government's fault because they reinflated the whole bubble. And then you had all these super influential thought leaders and finance like Ralph Paul and Mike Novogratz and all those people that were like shilling these narratives again. When if anybody was taking a look at the regulatory landscape, like this was not in compliance and what do regulators do? They regulate.

Like they're not just going to give up their hundred year monopoly on the money printer to token developers in Silicon Valley and all over the world just to disrupt the monetary regime. Like of course they're going to use every power they can to destroy it. So it's no surprise.

So Brad, and maybe move to Dusty right after, but get your thoughts, Brad, is that why is everyone acting surprised? There's a lot of smart people in the ecosystem. If Gary Gensler said in, I can't remember when, a few years ago, I think in 2021, the vast majority of crypto tokens that are being sold today are securities and should be subject to the same basic protections afforded to traditional investors under the federal securities law. Another quote here, I believe that many tokens qualify as investment contracts and are therefore securities. Jay Clayton, even prior to Gary, said, we have seen, no, this one's better. The SEC will continue to scrutinize the crypto market and take action against those who violate the securities laws. And the quotes continue. So they've been clear about this, and I've been saying this for a while. They've been clear about this since 2016, 2017.

So then why is the market responding as it is now after the action we saw in the last few days? That's question number one. And then question number two, if anyone could take it after Brian, is I want to go back to what Scott said. Market makers pulling out, and we're seeing very thin order books. If anyone's looked into this, if anyone got some more clarity on this, I'd be really interested to hear it because the question is why is the market reacting today? It wasn't yesterday or the day before or the day before.

Brad, do you want to start? Yeah, I mean I put some receipts in the nest. If you go back just to the second last tweet and that's the tweet there like i've just i've been talking about this for a year and a half now uh that like it was clear when the bubble was was really just frothy and out of control that the regulators were not going to come in and just pop the bubble the sec was didn't protect investors they let ftx happen they let you know, to Bruce's, you know, points that he always makes, like the SEC is not our friend. It's not like we need the SEC to like control what you invest in. But the point is that everybody's going through this like this cycle of, you know, the Ross Kubler emotional cycle of trauma. They're kind of in denial. They're angry. Maybe some people are in depression or whatever.

And they're not looking at the facts and the fundamentals. And it is true that the SEC let this get out of control. They didn't regulate properly. They didn't provide clear guidance for how to do it. How did that happen? Okay, fair. But just the main thing there is that they did not come in and pop this thing. All the crazy Ponzi schemes like Three Heroes Capital and Terra Luna and FTX and Celsius,

they like A16Z, all the American, the large crypto VCs, they're the ones that caused this thing in the first place and they're the ones that popped it. So all the bad behavior and fraudulent markets and pump and dumping and ponzi's and everything that's what blew this thing up and i was saying back in 2021 that the regulators are not going to come in and pop this thing because then they'll be held responsible for destroying like a trillion dollars of value of people's investments they're going to wait until the whole thing blows itself up and then they're going to come in aggressively and sweep this whole thing up and that's what they up. So you're saying that things are going to continue getting worse and worse for the market? Yeah, I've been saying that capitulation has not happened.

Can you still say that now? This is not capitulation. In my opinion, this is a perfect repeat. Look at the tweet there in the first tweet i have a second tweet i have in the nest in 2019 we started the year where bitcoin had a 200 300 run by the end of the year it entered into accumulation mode that's 2023 crypto in 2019 how did when bitcoin went up all the shit going started going up everybody started pumping again they're getting excited all the market makers in wales are starting to put liquidity

back in well what happens at the end of the year complete capitulation a lot of shit went to literally zero a lot of like icos that people bought their safes were just their safes were just like illiquid they didn't they weren't worth anything so that's what i'm expecting to happen by the end of this year like Real capitulation in crypto. Not Bitcoin so much. I think Bitcoin's going to range around here for a while. Okay, Jeremy, I want to go to you and Dusty.

As a strategy, obviously you can add whatever you like to the discussion so far, but also as a strategy, accumulating these utility, quote-unquote utility tokens and investing in those startups, it seemed like a good strategy when we saw the capitulation during FTX's collapse. It's like everything is on discount, the market is collapsing, and we're weeding out all the scams and frauds. But now what we're seeing, where we're seeing regulators take action, does it still make sense for VCs to be investing in the ecosystem?

Because the lack of clarity makes it very difficult it's different what we're seeing now is different to what we saw in 2018 2019 and it's different to what we saw during ftx because now it's it we're talking about regulation being the reason for the um for the market crashing jeremy do you want to go first on this one then we'll go to dusty yeah i'd love to so thanks i'm so this is jeremy kaufman uh i'm the ceo of a library uh which made odyssey and so first i have two points I want to make. First, I think anyone who has it in their head that there's anything at all that is going to be allowed by the SEC has to get that out of the way. We were found guilty of securities offering after a five-year fight of even small dollar sales, fully KYC'd, that were directly consumed

by the user after purchase. And that user signed, and more than one, user signed affidavits also claiming that, in addition to blockchain evidence, you could clearly say these tokens were consumed to publish content, still securities offerings. So that's just the legal reality. As much as we might not like it, that appears to be the legal reality. And so that's going to, I hate saying this because I don't like it, but I think that includes basically everything. If the standard applied to us was applied more broadly. The second point that I wanted to make, I'm not a soothsayer,

so I can't say why specifically, you know, these have gone down just today, although I find the money-making, you know, explanation superficially plausible, I would encourage people to think about the market making. The withdrawal. Yeah, yeah. But let's go from first principles as investments. I mean, go through the top coins on coin market cap or whatever and go through and look, is there anything here? What can any person use in the real world today in all of this stuff after hundreds of millions of dollars, billions of dollars? Look at how much money EOS world, it's still Odyssey. It's still Odyssey at 10 million or so users a month. And there are three people working on it right now it's happening, there's very little there, unfortunately.

And I wish there was more because I feel like we could have done more, and I feel like more is still possible. But I think the reality is there's just very little there. And someone kind of has to say that. So the question I have for you, Joe, is – go ahead, Joe. Isn't this just similar to a bank run in all reality like people are moving their selling their funds moving their money out of finance and coinbase in the u.s maybe in some other countries as well and it's a bank run and it'll readjust money will move overseas and

kind of be where we are yeah it's a little bit this isn't a bank run there's a bubble this is not a bank run a bank run would mean that the coins are not backed and i mean it sounds it looks more like this is uh selling not so much withdrawing so i don't see the bank well they they need to sell into fiat so in order to get their money as a buyer right i mean you cannot sell without a buyer. Otherwise, the price would go to zero. So the reason why there's a buyer is to make a few buyers. But you also have to look at when exchanges start changing terms, like Binance recently just changed their terms that they can at a given moment's notice, unlist a coin and

automatically convert whatever your holdings are into some other coin of their choosing. That's essentially like saying a bank is going to, your deposits, by the way, happen to be our property. And in the event of whatever we decide, we can do whatever we kind of want with it and put you into some other asset. That causes a lot of people to be afraid and withdraw their money. How do they withdraw? They have to sell it. Sure, but that's still…

They can sell to Bitcoin and withdraw to Bitcoin. This isn't a bank run. This is like the fundamentals coming to bear in the market. Let me give you some numbers. So CZ tweeted. Let me see where I've got the numbers here. In November last year, we saw $7 billion in net outflows out of Binance. Yesterday, we saw in the last 24 hours, we saw $400 million.

So the outflows out of Binance, and I know you're not referring to the exchange in this case, Joe, but the outflows out of Binance are significantly smaller than FTX. But it just seems that for me, what's odd, and Dusty, I'll let you jump in. Haseeb, good to see you. What seems odd, Dusty, is that why we're seeing that response now like i would have expected that that meltdown when when the sec when we first saw the case by the sec um and and the filing by the sec and what all the different tokens they listed as securities and just for the audience to remind you what they've listed as securities like how how wide that is

solana was was considered a security ada cardano Cardano, Matic, Filecoin, Adam Sand, all of these were considered securities. So why didn't we see the market respond in such an aggressive way when that was first announced, Dusty? And maybe you can comment on Scott's speculating that it's market makers putting out. Yeah, so thanks for having me.

Honestly, with regards to the market making, I can't say I just don't know. The volume looks to be up, but we can't really. I'd say it's pretty hard to see exactly who would have pulled out of what exchange to what degree. What I found peculiar as well is, like you said, the Robinhood news has been out for a couple of days. And I'd say that nobody really thought that Robinhood was going to be defending crypto in a similar sense as Coinbase, you know, at the start, at least not standing by XRP when the allegations of it being a security came. So I didn't expect Robinhood to stay solid then and keep it on there. So I would have expected everybody to sell at that point. What I have come to notice, though, speaking to a lot of people,

doing a couple of live shows today to just kind of see what the market is thinking what the people are thinking and i noticed is just fear of what's going to happen next propelled by for example the news today i have one headline in front of me nigeria regulator says local binance operations are illegal so together with the fact that we have another meeting i think tuesday hold on that's in nigeria hold on niger said that? Yeah, this is on Reuters.com. Nigeria regulator says local Binance operations illegal. I didn't expect this from Nigeria. Okay, go ahead. Yeah, that's like I think five hours ago, maybe more ago,

like I think this morning or somewhere yesterday potentially. But yeah, so it's just that everybody's now starting to notice, okay, they're starting to draft bills all around the world. And one thing that's very important to notice is the U.S. is not the entire world. So whenever people talk to me about, oh, but they're doing this in the U.S. with regulations to say, well, I mean, it doesn't really matter for crypto. Look at China. Even though it did bleed crypto down for a significant bit, people were scared. At the end of the day, crypto's reaching an all-time high with or without China. And the same thing would apply to the United States. Even if they were to ban every single crypto and try to hunt down every single company, okay, that move, eventually

crypto will be bigger than never before anyway. So I would have expected, but now I'm thinking, perhaps this fear is continuing on with the idea of, okay, if Europe now with their bills could potentially get something negative going, if Nigeria now is also starting to turn against it, if all these countries are now starting to turn against it, and Australia, UK, Canada, all these jurisdictions trying to block exchanges as much as possible, and the banks making it as hard as possible, that it's starting to kind of affect the users like, okay, what if I make a million dollars? How do I cash it out?

Will I ever be able to cash it out to my bank? Will my country, country basically or my bank that i have it on now actually accept this money that i've made from this crypto and will it ever be able to be because we got to be honest here a lot of the people in crypto are not here for the actual utility like we talked about a little bit earlier a lot of people are just there to make a quick buck so a lot of them care so much about having these fiat pairs and and being able to get it back to their bank so when we're seeing that there's some pressure on that they get feared and i think the nigeria news even though it's not headlines is a very big it is it is like i didn't yeah i didn't expect that to happen in nigeria it's not

hitting i don't think it has much impact what we're seeing today but it's still it's still like my concern is like whenever someone says yeah and bruce you say this all the time the world doesn't revolve around the US. But, you know, Hong Kong is becoming more flexible when it comes to crypto. China's testing it through Hong Kong. Still, that's barely, they're starting to dip their toes in the water and we haven't seen how, you know, what happens next. And we could see other countries, you know, Dusty just mentioned Nigeria and Bruce, I'll go to you and Gareth. We saw what was happening in Nigeria. So then my question is, when you say the world doesn't revolve around the US,

we had another speaker, I think it was Fred who mentioned Australia. The rest of the world doesn't seem that friendly towards crypto either, Bruce and Gareth. And Gareth, I have a question about human psychology for you. So Bruce, maybe you can touch on that one, the rest of the world. Because we talk about Dubai,

but Dubai is a drop in the ocean. Yeah, I mean, the US, no, the rest of the world because we talk about dubai but dubai is a drop in the ocean yeah i mean the u.s that no the rest of the world doesn't revolve around the u.s but the u.s has vast vast influence it used to have more influence you know in uh in the 1950s detroit believe this is the craziest stat you've ever heard detroit had 50 of global manufacturing one city in america had more manufacturing than all of the rest of the world combined so we used to completely dominate and same with securities and everything else look at the united states securities market the new york stock exchange you know when i started in the 90s was the thing i mean it was it was so much more market share and it's just lost market

share consistently for 30 years every year that's fair, but Bruce, my question is the rest of the world doesn't seem that friendly towards crypto either, unless I'm mistaken. Well, so this is the point. You know, the U.S. does influence the rest of the world quite heavily. Most other regulators look very carefully at what the SEC does. If the SEC cracks down on something, they're more likely to crack down something. If the SEC says something is OK, they're more likely to. So it does have vast influence. And also our direct laws, you know, OFAC and things like that,

those directly affect banks. And every country in the world is deathly terrified of America because they're afraid that, you know, you cross America, you're going to get bombed or arrested or declared a terrorist. You know, they're terrified of America. So, I mean, you look at, I mean, UAE, where you and I are, it's just full of, you know, every bank, the banks aren't concerned about their own regulators. They want to, you know, they're actually pro-business and pro-economy and pro-trading family and pro-entrepreneur and they want people to do well. The only pain in the necks that you run into in the UAE is concerns about the U.S. They say, oh, boy, wait a minute. You're Russian?

Hold on. I don't want to get in trouble for letting Russians in because America doesn't like Russia. Exactly. You didn't say the right woke thing, and that's not good. And then you did business with Alex Jones. He's a forbidden speaker. You know, they're terrified. So most of their concerns about like OFAC and stuff.

So we do have quite a bit of influence. So this does, unfortunately, influence the world a lot. I wish we would go back to our roots of being a free country and a freedom first country that respects the rule of law and has transparency and be a model for the whole world of a more, you know, free market, free freedom based system. Gareth, let me go to you. And I want to talk about human psychology for a reason. And I've asked it a few times, why are traders responding now? Or are they responding now to the news we saw earlier in the week? And if so, is, you know, you understand markets a lot more than I and I appreciate you joining. Am I wrong in saying that markets should be forward looking?

No, you're right that generally markets are forward looking. I think crypto markets are a little bit different because there's such a big presence of retail investors. But it's interesting if you look at the price action on Ethereum and Bitcoin, when it initially fell on the Binance SEC kind of lawsuit, and then the rebound that occurred on the Coinbase lawsuit, if you look at the rebounds that those two had, they basically negated the down move from the Binance News. But if you looked at Cardano or Polygon or some of these other ones that were labeled securities, the price did not rebound. It basically had a flat day. And again, when you look at the price action there, what that's telling you is that retail investors

were buying that dip, but price wasn't going up like Bitcoin and Ethereum because you had no other money. In fact, bigger money, what we would call smart money, was unloading those into them. And that kept price stationary on those assets, Cardano, Polygon, et cetera. And then as human psychology goes, you're just asking about that, which is a fantastic point. Humans have this way of when we're told we can't do something or something's not okay, we have this fight mentality initially, right? No, you can't tell me that. I'm going to show you. I think the SEC is lying about these allegations. I'm going to go in and buy this dip. But over time, as price starts to decrease, as those buyers that were furious initially kind of subside because they run out of money and price starts to drop, you start to hit max pain points on investors, right? So as price comes down, it starts hitting leverage stops. I

mean, if you did a 10X trade, you're getting stopped out here. If you're someone who was really adamant initially, you're starting to get scared. And that's where the cascade effect comes in, where you see this final flush out, where it just wipes out all of these longs that bought or these leveraged traders. And I think that's why you're seeing the bigger move now as reality setting in and people's stops are getting hit and the panic is setting in. And then what do you expect to see over the next few weeks? And as we see the more clarity with and potentially the DOJ taking action and more clarity with with actually the clarity will will take time so with that lack of clarity how would

the markets respond yeah so so you know with clarity i think that's going to be where the bottom is going to be put in once we actually know the rules i think it's i think gareth but that's that's years that's so that's years years years ahead i know i know and that that may be the problem for crypto and in the in a while and maybe that's why we see 95% of these coins actually go out of existence is it's going to take that long. And investors are going to leave the space until there is clarity. I mean, again, how many investors, obviously, retail wise, they're involved, but you don't have big money, at least a lot, not a lot of big money involved.

And so I'm looking at it like I'm a trader. I'm going to be trading these things. I mean, Cardano Pierce Double Bottom is getting a little bit of a bounce. You're seeing some other technical levels. But I think the bigger question is, is there another shoe to drop? I mean, Gary Gensler saying that we don't need another currency in a statement there was very telling. And I would be, as an investor in crypto, very concerned about Tether. Or do they go after one of these other bigger fish, which actually could really be the next shoe to drop.

Okay. So what you're saying, Gareth, things can, and that's what Brad was saying earlier, that things are pretty bad right now. The SEC is, you know, unsurprisingly, in my opinion, they haven't changed course, and they're cracking down, and they haven't listed Ethereum, thankfully.

XRP is not listed either, interestingly. But they've listed Cardano, Solana, Polygon their little sort of against it by now but we're saying yeah please do there's just a perspective here that again is kind of being glossed over that i i really don't think that this is a much of a story around retail as much as a story around the fundamental construct of what caused the prices of these coins to rise in the first place again you go back to the low interest rates and silicon valley bank signature bank silver gate all these a16z all these large funds basically borrowing and investing billions tens of billions of dollars into activities that in the traditional regulated markets would be seen as illegal

and would cause the market makers to lose their licenses and get fined and have discouragement against them. Literally, these crypto casino exchanges and the DEXs as well, the funds come in, and like A16Z and Multicoin and 3R's Capital, Alameda, they were all doing the same thing. And it's the same as when FTX was insolvent. And what did they do? They went out and did this confidence game, the same with Luna. When Luna was going to collapse, what did Do Kwon do?

He went out and said, I'm going to buy $4 billion of Bitcoin. I'm going to backstop the the exit hatch with with bitcoin like lunis safe it's the same thing that the federal reserve does when when the when the banks start to get runs like they come out and they do this this this uh confidence game so what what are you going to do if you are a huge market maker like say jump or just even binance's market making arm whatever and you've got Coinbase. Coinbase's venture capital arm has billions of dollars in potential profits sitting in their venture arm

for the pre-mines that they purchased. So what are you going to do if you're one of these guys? You're going to try to go out there and signal confidence that these markets are just being unfairly looked at by the regulators and everybody wants them. And you're going to try to do what you can because it's a gray market to provide liquidity and to make it look like there's activity and to make it look feel like the risk is worth taking to like burn millions of dollars on market making and propping up prices they're going to do it and that's what they've been doing this whole time but now that the shoe finally dropped and the

regulators are getting more aggressive that shoe like in my opinion that shoe dropped a long time ago and what we see now but this is the point though mary this is the point the shoe it was clear what was going to happen how long did it take ftx to collapse from when they from when we knew that they were pretty much insolvent to when they started signaling that they were fine and their market making ftt and solana coin and they were saying they're going to buy and rescue all the crypto companies why do you think they did that they did that because they had billions of dollars in profits that they could make if they kept the markets going so of course they're going to signal that everything is okay and they're going to try their best to turn the tide because they've got billions of dollars on the line but really this this market was overvalued it was

extremely overvalued and it's not the sec's fault it's the fact that they pumped this market up to Valhalla level prices. But Brad, you can see that with AI. You can see that with AI right now. There's an article by Coindesk, millions worth, I'm just reading it, I haven't read it yet, millions worth of Polygon. And Hasib, I want to go to you right after I read this because I just need some positivity

and a lot of people are pretty bleak and concerned right now. Bye Bitcoin, goodbye. Hasib, this is exactly where I need you to jump in and my pleasure to have you A lot of people are pretty bleak and concerned right now. Bye, Bitcoin. Bitcoin is goodbye. There's some positivity. I see this is exactly where I need you to jump in, and Mark, pleasure to have you as well. Let me read out the article by Coindesk. Millions worth of Polygon appeared to be sent by key market makers jump trading in Cumberland

to crypto exchanges on Friday night ahead of a nearly 30% drop, according to blockchain data. Analytics firms LookOnChain said in multiple tweets on Saturday that Cumberland had deposited $9 million worth over $6.3 million to Binance and $5 million worth $3.5 million to Coinbase. The firm added that another crypto wallet related to Cumberland,

Jump Trading and Robinhood deposited a total of $9.4 million to crypto exchanges. So, Haseeb, I want to get your thoughts on everything that's been said so far and what your strategy is over the next 12 months at Dragonfly. Yeah, look, I have zero insight into price action any more than... Honestly, I don't think anybody on stage here has any idea what happened last night. All we know is that a bunch of people sold a bunch of all coins and they didn't sell bitcoin they didn't sell these and why it happened then you know there's speculation that maybe it was connected

to robin hood there's some fake news about some fund that blew up that was a joke but that's been perpetrated um your mic your mic your mic is in and out if you can fix it while I ask you. So what's the rumor? The rumor is a big fund capitulating. Yeah, there's some rumor about a fund called Scimitar Capital. Yeah, yeah, Fred. Yeah, yeah, that's the one that Fred mentioned. Yeah, cool, cool. Okay, so there's no big fund capitulating.

And Prime Trust has already happened. And it's not as big as everyone thought. And it seems to be being – we were talking about it yesterday and BitGo's bailing it out. So that one's good. And we've got the news from Binance and Coinbase. So then what do you, I know we can't know exactly what's happening, but then what do you make out of it?

What should we expect? What should VCs do? What should projects do? Entrepreneurs do? Because you know what Jason Calacanis tweeted a few days ago, something along the lines of anyone in crypto pivot to AI. Yeah, look, I think in general, the price level that we're at now is not too far from what the price level was when FTX was blowing up and when things got really, really bleak last year. This

is a bleak moment, right? The SEC has put on its full frontal assault against altcoins. And clearly the SEC doesn't want this industry to exist. The question is, will it still exist, right? Someone was talking about Nigeria earlier. Nigeria is not exactly a bellwether because Nigeria has been pretty anti-crypto for a long time. Central Bank has banned crypto, I think in 2021, although it was very unevenly enforced

because it's Nigeria and some things are, the ability of enforcement there is kind of a mess to begin with. But the reality is that a bunch of countries around the world are positioning themselves as pro-crypto. I was just hearing a bunch of stuff about Rishi Sunak being very pro-crypto and wanting to introduce pro-crypto legislation in the UK to try to attract more talent away from the EU, which, of course, is past MICA. And, you know, people have some misgivings about MICA. I think the world is complicated. But the clear thing is that crypto is not going to disappear because the price went down by 20 percent. And the idea that smart contracts are going to go away, decentralized applications are

going to go away, that just seems so obviously incorrect. If you look at daily active addresses, daily active addresses are pretty close to an all-time high. People are using this stuff and they're using it for different things. The tokens and the use case are different. The tokens are what they're going

after. They're not trying to stop you from making decentralized applications. By the way the imf and swift look at you know swift just announced they're launching a uh a global payment system based on ethereum right i mean it's the the adoption's not going away it's to your point the tokens are the issue right yeah the question to be clear though, the question here is also, if you're asking about decentralized applications, the question is, is it possible

for this whole ecosystem to develop on Ethereum? Like that Ethereum is the only game in town if you want to do a decentralized application, you have to fit it into Ethereum block space, which Ethereum can do about 15 transactions a second. The tech is basically eight years old at this point. There's been very little change to the execution layer of Ethereum.

Like that's obviously not going to happen. So what happens to Polygon and Solana then? With what we saw from the SEC, considering them securities, what does that actually mean for all projects building on those blockchains? Honestly, I don't think it means that much other than, hey, your price is going to be marginally lower. But the reality is that these things are going to continue to exist.

The SEC is not going in and shutting down the Polygon blockchain. They are saying, you are not allowed to trade this in the US without a license. All right, well, that's going to be challenging. It's going to be several years until we actually have an answer on that, whether one, through the case resolving, or two, because of legislation that might be passed in the interim. You know, it's going to take probably three years before this case, if it is let to its own devices, to play out. But it's very possible, if not likely, that Congress decides like, hey, people are really mad because the SEC is trying to make crypto trading outlawed in the U.S. and making it

so that, you know, investors cannot buy and sell these things. And the reality is that people want to. And believe it or not, America is a democracy. And especially as we're going into an election year, the first proxy for what people are going to do is what's popular and what gets them votes. And right now, I think as you're going into the 2024 election, my guess will be that people will start seeing a different view.

That's just not true. They're not saying you can't do it. They're just trying to say this is not in compliance, and if you want to do it, you have to do it in compliance. That's just not true. They're not saying you can't do it. They're just trying to say this is not in compliance. And if you want to do it, you have to do it in compliance. That's the correct. So liquidity. So Mark, go ahead, Fred. I will go to Mark on this particular point.

Fred, I'll let you respond quickly. Yeah. So it's, again, it gets back to how was capital raised for these tokens? And they're traded as securities. They need to be registered the sec has purposely been dragging its feet on registering them and yes you can argue that gary gensler has overreached his authority and i'm sure you're going to see congress react to that but it's going to take two years we have a presidential election crypto is a very very partisan issue. What do you do that's overreaching?

I'll let a lawyer John would be great for this one. John, did he overreach his authority, John? No, not at all. Well, not with the lawsuits. They brought 150 cases. They've won every single one. They haven't had any losses. They hit initial coin offerings. Then they hit simple agreements for future tokens. Then they hit staking programs as broker dealers, as exchanges, and as clearing firms.

They sued all the people, all the famous people who were promoting them using Section 17B, and everyone settled because it's a strict liability statute. So, you know, and you talk about this Operation Chokepoint, it's not Operation Chokepoint. It's basic SEC prosecution. In the 80s, to hit the penny stocks, they went after all the boiler rooms. In the 90s, to hit the microcap stocks, they went after all the broker-dealers. Now, what they've done recently with Coinbase and with Binance is really extraordinary. You know, again, having worked there for 20 years in the enforcement division, I can tell you that and having brought quite a few temporary restraining orders, asset freezes and emergency relief.

What goes into an emergency relief case is an extraordinary amount of work. random appoints and authorities, all the declarations. Only one of the declarations from one of the enforcement staff has been filed, the one from the forensic accountant, not the one from the staff attorney. But when you read these papers, in my opinion, they allege a vast criminal enterprise. And they're going to have a hearing. People are saying, oh, this is going to take years and years and years. It's not in Binance. You have a hearing in a couple days, then you have expedited discovery, then you have another hearing for a preliminary injunction if the TRO is granted, maybe 15 days after that. And most every time I ever brought a TRO, they consented to that. And, you know, in the meantime, my view, again, this is just my opinion, is there's got to be an indictment under seal against CZ and maybe other people involving Binance. There are probably dozens of informants and turncoats and whistleblowers that DOJ has who are cooperating

because all of these allegations are just egregious. I just can't imagine having, again, taught at Quantico, at the FBI Academy, having brought maybe several dozen cases jointly with the DOJ over the course of the 20 years I was there, I just can't imagine. Now, normally, when the SEC brings a case, if there isn't a parallel DOJ component, then that means DOJ is likely not to bring the case because DOJ usually leads. Obviously, the SEC is only a civil authority, which is evidence in the case they tried to bring against Terra. They couldn't even serve Duke Juan. They tried to serve him in New York. His lawyers said that the SEC didn't have jurisdiction, which is ridiculous. I live in Maryland. The Washington Nationals have a $40 or $50 million deal with Tara, and they claimed he didn't have personal jurisdiction. The district court said,

yes, the SEC does. They appealed it to the circuit court. The circuit court said, yes, the SEC does. They appealed it to the circuit court. The circuit court said, yes, the SEC does. They've appealed to the Supreme Court. Meanwhile, the guy's been arrested and was an international fugitive from justice. So the SEC is just a civil agency. But when it comes to emergency restraining orders, there's quite a extensive evidentiary record replete with just mountains of inculpatory information, scathing emails. So in my opinion, after 150 cases and so many regulatory pronouncements, both, like Mario said, from Jay Clayton and from Gary Gensler, Gary Gensler, the head of the SEC, David Hirsch, the head of the crypto unit, Gabriel Gruel, the head of

enforcement. They all made the same speech about 50 times each. They said that all these intermediaries were running out of runway. I mean, just Google the term running out of runway. You'll see it said by 5,000 different SEC officials. It was clearly their main talking point. He told Yahoo that all of these intermediaries need to be registered. So this is an operation choke point. What this is called is access theory or gatekeeper theory. And it's something the SEC did in the 80s and the 90s. And now they're doing it with crypto.

It's the logical progression after ICOs, after SAFs, after focusing on Section 5, after focusing on Section 17B, to now look at the registration provisions for intermediaries. So before you respond, Ryan, I want to give the mic to Mark to give us his thoughts. I know he's got a lot to say. And then the reason I'm doing this, Ryan, because I probably need your help to kind of balance out the discussion. Mark, pleasure to have you. Thanks for joining.

Well, thanks. I love Stark. Stark is the best especially on a saturday morning i think the one factor that people need to understand is all these vc firms sax's firm andreessen horowitz all these guys who pumped all these alt coins they're now trying to shift as fast as they can into ai and other things. And it was probably one of this altcoin phenomenon, this pump and the dump now, is probably one of the great VC come to an end phenomenons we've seen. It's just simply supply and demand.

And there was nothing behind these coins to begin with other than hot air and being pumped by these air quotes, the smartest guys in the room, Sequoia, Andreessen, Sachs' firm, Kraft Ventures, through Cross River Bank, through FTX. And now all this shit's getting unwound. It's no more complex than that. You had bad actors looking out for themselves making billions of dollars on the backs of working-class people and the SEC is is dead right because these things are securities they trade like securities and and you know basically the world had it pulled over by these VC firms that's

the missing ingredient here. So Mark, a question. Sorry to interrupt you. Just a quick question. But didn't that already happen with the FTX collapse? Didn't we have a lot of these VCs go under back then and we saw liquidity dry up relatively quickly and money coming into the ecosystem is down 90-whatever percent? So I just don't know what we're seeing now.

I just think't know what we're seeing now. I just think it's different. Like there's not much. Do you think VC money is pulling out just because of the ambiguity? Go ahead, Mark. Hold on, Brad. We'll go to you after. Yeah, go ahead, Mark.

When you're down 80%, going down another 50% gets you down to 90%. So it's all part of the collapse. Whatever price Solana's at is still up from 50 cents. So the VC firms didn't per se go under. Silicon Valley Bank went under. VC firms now are trying to shift as fast from the crime scene as they humanly can, which is why you'll start hearing a ton about their movement into AI. And Andreessen Horowitz put out something, you know, today or yesterday, that AI is the next big thing. So they're all going to try to run from crypto as fast as they can, because the DOJ is involved and the SEC is involved. And now people are starting to figure out that there was just no there there. And when there's no there there, things can go down 99 percent.

I mean, Silvergate went from 216. It's now at 90 cents. Signature Bank was seized. The ramps have been closed. Binance is finished. And the progression just goes all the way to the top. And then on what mark is saying what other panelists are saying and any questions you have for mark or others in the comment section in the bottom right corner and and that's an interesting question like it's two point is crypto 2.0 just uh uh tradfi merged into web3 yeah merged into the government having a hand in it whether people like it or not whether the sec having a hand in it, whether people like it or not, whether the SEC having a hand in it, whether people like it or not, and these things trading and being treated like securities. And if there is manipulation and pump and dump in stocks, the SEC and other regulators get involved, you know, hopefully or maybe. But obviously, people have seen enough. And people are tired of watching

their hard earned money go up in smoke, especially on a weekend, with no explanation. And my explanation is simply, you follow the money, and you follow the money behind these pumps, and who pushed it. And you follow the government going after these guys, albeit slowly, but with force. So 2.0, in my view, is going to be an iteration of this that's safer for people who want to invest and or trade in this stuff with the government having a hand in it. And it doesn't matter who the administration is, because you can't get the lid back on the peanut butter jar i mean it's you've already heard that pop and you can't re-re-re-seal it so that's that's my view and uh i think it gets worse from here i said on our first call mario i told everyone to get out of these offshore exchanges

to get their money out of this crap that this this is going to end, that the on and off ramps will get blown up and no one knows exactly what's going on. And this is just another brick in the wall. And it's also not going to stop. And Coinbase made a huge mistake publicly going after the SEC. And you just don't cross swords with the government like that. And, you know, we'll see with the government like that. And, you know, we'll see what happens. But this is just, again, this is just a progression that should be obvious now for people to see. Ran, I've got a question for you, Ran and Mark. I want you to answer the same question. What does that mean for all the startups that have a token that is

paramount to their ecosystem? Because, you know, decentralization is here to stay, but there's a concept of having a utility token. What happens to that? So I think I just finished the show. That's why I was a bit late to our spaces, but I think I covered this pretty well in the show. And I said, look, I know this feels like the sell-off was because maybe Robinhood made the announcement

that they're stopping support for Solano, Cardano, and Matic. Or I know that maybe it's because crypto.com exited the US or closed down the institutional offering in the US. But it's actually much bigger than that. And I think it goes to what Mark is actually saying. So I think, look, I think we've all known for a long time that a lot of these utility tokens really border on whether or not they are securities.

If there is indeed such thing as a utility token. Now, there is because we know that in Ethereum, we know that ETH token is a utility token. Although some people will argue that it's changed since it's gone to proof of stake. Listen, I don't want to get into that debate. But I think the reason for the sell-off yesterday was because the market actually realized that the u.s is banning altcoins okay now what i mean the u.s is banning altcoins they're doing it in a very roundabout way they know that they can't ban altcoins if they go through congress because that's not gonna it's not gonna work you're gonna have too many people fighting against it it's gonna be too much of a

process so what they're doing is they're banning altcoins by enforcement and they're using the SEC as the pawn to ban all these altcoins. They know they can't ban Bitcoin because too late. They know they can't ban Ethereum because Hedman and because it's probably too decentralized and probably too big. The Ripple XRP is a gray area because it's in this litigation. But I think they've now driven a very strong message to everybody else, every single other altcoin in the market. And what they've said is the following. They've said, look, we're not going to tell you which altcoins are securities because

we don't do that. But what we are going to tell you is that if you are caught selling illegal securities or unregistered securities to people, you will get into the lawsuit of your life, like Coinbase, like Binance. And they've done that by going after the two biggest ones. And in both of those lawsuits, they issued two separate lists with an overlap, but two separate lists with an overlap of tokens that they just decided are going to be our securities. So what's the message that they're driving?

They're saying, look, if you are serving US customers right now and you are a centralized exchange, then you need to know that at any point we can come to you and we can just decide at our own discretion that these are securities. Therefore, the message is delist all the altcoins.

You can only trade Bitcoin and Ethereum if you're in the United States. If not, there's a huge risk that we're coming for you. And if we come for you, it's going to be penalties. It's going to be disgorgement of all the profits that you've made,

which, I mean, if you read the SEC charge against Coinbase, they're saying that Coinbase must return all the money that they made on the trade of all these altcoins, plus the staking service, plus interest, which is over $6 billion, if you do the maths. That's a very big statement. That's a very big message to the market to say, hey, exchange, hey, platform, if you are trading altcoins in the United States, there is a risk that we're going to come for you. And it doesn't matter which altcoin, because in the next summons or the next action, we're going to come for you and it doesn't matter which altcoin because in the next summons or the next action we're going to give you more altcoins i think what they're aiming for is exactly

what mark's saying they're aiming to make all of these things securities now when our securities we know we as crypto people know that that makes the networks unusable imagine that every time you paid gas on eth using eth you had, you're transferring a registered security. Just imagine what that does to the network. Imagine what that does to the state. It makes it almost impossible to use. So my theory is here that what they've done is that they know they couldn't have gone through Congress

and the Senate and the House to get crypto banned. They also know that the optics of getting crypto banned through that way would have led to public you know public dissent public would have gone and said no this is a democracy how dare you ban altcoins whatever else but if they do it this way through enforcement and then they just like look at robin hood robin hood delisted the tokens why did robin hood delisted tokens they probably looked at this and said, hold on a second. Do we really want a summons?

The SEC has now said that Solana, ADA, and Matic are securities. Do we really want to fight the SEC? No, not worth it. We're out.

I wouldn't be surprised if Kraken follows. I wouldn't be surprised if whatever other US exchanges there are follow. And that's for me how they are banning altcoins in the United States.

So what does that mean? What does that mean for people in the ecosystem like me and you? It means probably that there's a long fight ahead in the United States. As I've said before, I'm glad that we've got Brian Armstrong fighting. He's got $5 billion of cash on his balance sheet. I don't think he's going to spend that much, but at least we know he's got it if he needs it. But is, but I mean that's on the background of Coinbase actually is bleeding cash.

He's going to fight the fight and within probably five years, seven years, we'll have some kind of regulatory clarity. But in that five to seven, but what happens in that five to seven years? What should investors and VCs do? What should startups do like you just i just don't see a lot of these projects function when they're doing security they they're doing it already a lot of them are exiting the united states i mean but then if other but if other but if other countries follow the u.s in their regulation a lot of regulators watch the u.s and look at them for look at look at the u.s for guidance not really i mean if you look at if you look at japan japan's not following the u.s if you look at hong kong hong kong's not not following. I mean, if you look at Japan, Japan is not following the US. If you look at Hong Kong, Hong Kong is not following the US.

If you look at Singapore, Singapore is not following the US. Emirates is not following the US. Europe is not following the US. This is one of those times where not a lot of regulators are actually following the US. I think it's the wrong framing to say that they're not banning altcoins. This isn't banning altcoins this isn't banning altcoins and all these other countries they're not just like letting the same nonsense happen that that has happened over the last couple of bubbles they're actually taking all this stuff into compliance

so i just think it's the wrong framing to look at it and say that the sec is trying to ban altcoins but go look at hong kong and dubai and all these other countries where they're they're like opening up hunting season for whales to come in and do more pump and dumps. No, they're taming the markets. They're creating regulatory frameworks so that people that want to do altcoin stuff can still do it in a compliant way. I don't think that the U.S. is trying to completely ban altcoins. But if you say these things are securities, that's kind of the case. Unfortunately, that's I wish that you could just legally

work with these in the US, but unfortunately in the US... But aren't they doing that everywhere though, Bruce? Guys, if you'd allow me for two seconds. Brad, I wanted to ask you a few questions. Let's just make sure we're fully aligned. If

ETH and SOL become securities, can we still use them as we use them for their use case? Just a yes or no. Yeah. You can? I mean, if ETH becomes securities, can all apps just pay their gas fees in ETH and can we just stake them and earn ETH?

No, no, no. This is the thing that I was just getting at. Wait, what do you think their use case is, Ran? No, don't get it. Stick on the securities point. His point is that if F, just take F, for example. We had these conversations years ago when there was a big debate about F and there was the Hineman speech and everything. But if F was a security or any of these things, ADA, it kills it in the U.S.

You can't put it on a wallet. You can't move it around. Nobody can touch it at all other than a registered broker dealer. And even a registered broker dealer can't really touch it. That's a reach, though, Bruce. That's not what the SEC is not able to do. Literally, the SEC is saying ADA is a security in the US. The SEC can't touch individuals using altcoins.

Like, it doesn't. Right, but How are you going to use your card? Yeah, exactly. Does the SEC come after? If you take a stock certificate and give it to RAN, is the SEC going to come after you? No, hold on. You can't build a wallet

or anything that holds securities unless you cannot use it because you bruce can't transfer security to me and this is gross i'm saying it would have to be the congress or some other government agency that would be in conjunction with the sec executive order uh one three three five you know could we, could we, could we, you go ahead, Ren, and then we'll go to Mark on that particular point on Congress acting on this. Go ahead, Ren.

Again, my whole argument here, Brad, is that they've gone against, they've done it without having to go to Congress because chances are it wouldn't pass in Congress. Chances are they wouldn't do it in Congress the year before an election because it's just too dangerous, right? Why too dangerous? Why too dangerous?

Why too dangerous? Over 90% of Americans lost money in crypto. Why is it dangerous for Congress to act on this in a negative way? Because regardless of... Look, this is the wrong framing. The one thing that you can't do in the United States is take people's rights away without getting some kind of approval. Regardless of whether they've lost money or made money on it. The US

is very sensitive to rights being taken away from them. And what they're doing here is they're taking away your rights by enforcement. Because if you're going to be living in the United States, very soon you won't be able to buy altcoins. Because what's going to happen is the exchanges are just slowly, slowly, slowly going to remove the altcoins.

And you know what I think is going to happen next? I think they're going to go for the decentralized exchanges. I think they're going to remove the altcoins. And you know what I think is going to happen next? I think they're going to go for the decentralized exchanges. I think they're going to go to Uniswap because Uniswap is a registered company in the United States. And they're going to say for the Uniswap front end, please limit it and make sure that no American users use it. And then Uniswap in the United States is going to have to make a decision

as to whether or not they want to comply with us. And I think they will. And I think they will. And I think they will. And on that day... Yeah, go ahead, Ryan. I'll let you finish off. I'll go to Mark. Yeah, go to Mark. But on that day, that's the end of altcoins in the United States. Well, Ryan, if you're

being this pessimistic, I just... Yeah, it just doesn't sound very promising to the ecosystem at all. I was expecting you to be the shining light in this discussion. Mark, maybe you could switch positions. Mark, tell us, is there any positive path forward? If we see Web 2.0 come in with the TradFi coming into the ecosystem,

how would these tokens in these projects operate? How could these projects function if the token is considered a security? Well, first of all, one of the solutions is going to be the board of directors of Coinbase getting rid of Armstrong. And coming clean and saying the path we've taken clearly is not working and clearly is not going to work. And if we spend one to seven years fighting you, one, we're going to be out of cash, two, we'll be out of business. So there has to be some admission that the way 1.0 has gone has failed and failed miserably. And how do we all get together, put up the proper guardrails for people and legitimate players in the industry, underline legitimate players in the industry, and move forward. Because a lot of these guys

are nothing but hucksters. And hucksters don't want regulation. And hucksters would love to fly under the radar. But the powers that be, however you guys want to fill in the blanks, have clearly had enough because, as you said, 90% of people have lost their money. Some people have lost it all. So the optimism I would have is the industry or the ecosystem, instead of blaming it all on someone else, needs to say, we need competent adults in the room to set up the proper guardrails so we can trade this stuff. And if we win, great.

And if we lose, great. But at least it'll be a fair game. It'll be a fair market. You won't have these pump and dumps and rug pulls and shit moving 20% on a weekend on no news with whatever story. And I feel bad for everybody, but it's all been laid out. It was all there for the taking of what was going to happen. And because the government or the SEC did nothing for a period of time,

people thought nothing was going to happen. You know, when you weigh 380 pounds, you know, you are going to have a heart incident. Just because you don't have it at age 40 doesn't mean you won't have it at age 45. And everyone has been flirting with disaster here, walking on the third rail. People in this country are admired because they're worth billions of dollars, but all they are are scum of the earth who push product that people don't understand so they can make their billions while Joe Sixpack loses.

And it's sickening in its time it stops. So the legitimate players out there should embrace this change because the government or powers that be have had enough. And the legitimate players will succeed. And the hucksters and the frauds will go out of business and or go to jail. So it's a natural evolution of what happens. And as Stark, you know, says, and I have great respect for Stark.

This is, you know, there's nothing new under the sun. This happened with penny stocks in the 80s, happened with all sorts of bullshit in the 90s, running in front of research, mutual fund scandal. This always goes on when, A, money is cheap and regulators look the other way. And this is just a result of it. So I wouldn't be so negative on the goings on. It has to happen. And the sooner it happens and the sooner everything gets cleared up, the better. So I don't agree with you, Mark. I almost agree with you.

The only part I don't agree with you is around the VCs, but I almost agree with you. I think that you're right. I think that, and I've said it to Mario earlier this week, and we had a bit of an argument about it. And I said to Mario, we'll never see another bull market like the bull market we had, because the next bull market is going to be a regulated bull market. It's going to be a bull market under regulated conditions.

And those bull markets under regulated conditions don't do 10 X's on a Saturday because there's no liquidity. It just doesn't happen. But you guys, Mark, both you and Rand did not answer the question. Everything you said, Mark, makes a lot of sense. And I've been one of the few for the last year saying we should be welcoming to regulators because we fucked up bad. The self--regulation concept we tested it and we failed miserably and I get a lot of hate for saying this but then my question is is that is that gonna stifle innovation are these startups able to

function if they're talking is considered a security that's my concern it's not innovation it's not my concern because if you have innovation with a good idea that's pressure tested you can raise money anywhere if it's a really good idea. I mean, again, the traditional model used to be VCs would invest in startup companies. Two out of 10 would become Googles and Apples and Adobe and eight out of 10 would fail. And failure is part of this economy it's part of free markets it's part of free enterprise it's okay to fail it's okay to try and fail not everything succeeds but in this market when all these pumps were going on everything was going up

thousands of percent and it's just not realistic it's just not realistic on how things work. So if you have a good idea in this country, you could always raise money. You may not like the cost of the money and you may not and come up with a better idea. It's the way things work. But now everyone has the FOMO and wants to make a billion as fast as they can. And they don't give a rat's ass of who the fuck they run over. And I'm glad to see this. And I hope the government comes after these VCs who played all this shit and who encourage people to put their life savings in this crap. That's where, to me, everyone's eyeball should go, at the people responsible and who are in early on these huge pumps.

And that's where I think it's going to go, which is why I've been so vocal on Sachs and Kraft and Andreessen and all these other guys. A hundred percent. A hundred percent. Yeah. So we'll see. But the good news is when I started with you, Mario, on these calls, I used to be hated. People thought I was out of my mind. Everyone called me a boomer. You know, all this bullshit. And now with Silvergate in the ground and Signature in the ground and FTX in the ground, now people may start paying attention and saying, hmm, maybe that guy's on to something.

You know, and Stark, he knows. He's lived it. He's done this work. And I had Bob Hanson, who used to work with Stark at the SEC on the spaces a couple weeks back, and he echoed the same thing. No one has problems with these ideas. People have problems with the way these things trade, with the light regulation and the sleazebags and the pump and dumpers screwing people. That's where the problem is. You know what I hate about this conversation? Is that... Is there something from Singapore?

Yeah, yeah. Before, Joe, I'm going to give you the mic right after Julian. Julian, I know you want to share something about Singapore, but I wanted to ask you, I'll let you do that, but can I add a question to it, if you don't mind, Julian? So if I'm a startup that raised a bunch of million, I've got a token, a utility token for my Web3 game. Now, I know I've butchered that question.

Last time I asked it. But any investor would probably want an answer to this. I've got two questions, actually. So what happens to my token? What happens to the – how are these projects going to pivot or do they need to pivot other than moving out of the US. And then the second question is, considering everything is being discussed now, I just, other than seeing some sort of action around against Tether or stable coins or decentralized exchanges, beyond that, which people are expecting or speculating that it could happen, there's not much more that could happen. So my question is, has everything been factored in or could

capitulation be pending, as Brad mentioned earlier? Okay, three things. So first, we've been in Singapore for the last seven years. We have not been open to the US market by design. And we did this on purpose because we feel actually the rest of the world is actually quite well regulated and the US is not at all when it comes to crypto. so it's this open kind of field and so anything can happen and so i don't think it's a surprise what's happening right now in the u.s but i think it's a surprise that it happens now like this week or something the story here in singapore on the street is that uh the reason why the sell-off happened in the past eight hours is because of binance selling off their altcoin treasury um i want to be very clear on this.

The story in Singapore has also always been that Binance was the one who has been pumping the crypto market because they've been selling off their BUSD the entire year. This hasn't been really picked up by the rest of the world, it seems. But yeah, so that was always Singapore kind of seeing this. So that is why now Singapore, why now the sell-off has happened in the last eight hours. To me, Ran, I see this a bit different than you do. I don't see this as an attack on altcoins. I see this, yeah, like also I think Brad said this, Mark said this.

To me, it comes down to compliance in the U.S. Other jurisdictions, we're licensed in Europe. We fall under MICA there as well. We are applying for a license in the UAE, Singapore. I don't know. For us, the only place we haven't really filed for a license, because there is none, is the US. We don't know how to do it there. And I don't know, we just didn't see the risk reward in that. That also means, I mean, there's always, and I think that's the price discovery now. That's always meant that we could never reach the kind of same scale as some of the US companies did. But okay, we don't have these issues right now. So I know there's always a bit of a

flip side to that. I think the future here is tokens really have to be used. And if they get used, then I don't think this entire discussion about price is so relevant. It's really about actually losing them. You're Mike Julian, you're Mike, man, you're Mike, but we can hear you, but you're Mike, if you can improve it a bit, in, your mic, man, your mic. We can hear you, but your mic, if you can improve it a bit. It's in and out. Okay, sorry. Yeah, so as long as these tokens get used,

then this entire security discussion goes away. We don't have this in the rest of the world. The US has this, and I understand why. And I'm not a lawyer. I'm not an expert on the US. I would assume a lot of these tokens, especially if they did an ICO, are going to have an issue.

So the interesting question now is going to be 2024, and that's really me. I'm not a lot of these tokens, especially if they did an ICO, are going to have an issue. So the interesting question now is going to be 2024. And that's really me. I'm not a US voter. I'm looking at this from the outside. We're looking at this from Singapore. What's going to happen in 2024? Are presidential candidates daring to not only probe the market? Because to me right now, it feels more that candidates are probing to see are the crypto people,

are they actually large enough to really kind of help but we're saying yeah but we're starting to see but julie what we're seeing i've had rfk on the space and one that will probably have him in the crypto space and they just don't seem to care um so i i i believe that so to me that's just probing right now and if that doesn't happen if we don't see a a super strong-crypto candidate in 2024, then it's really going to come down to one thing and one thing only, and that's true utility. That's all I want to say. A bit of a sharing of the tier from Singapore.

Can I just say that, like, you know, the reason that if you've been able to operate overseas, it's just because of regulatory arbitrage. And just like what Mark was saying, this thing was pumped up by VCs, mostly in the United States. And you've been operating in gray areas, not you specifically, I'm just saying people that have not chosen to do business in the United States, you've been taking advantage of the uncertainty. And because of the United States, liquidity is all drying up right now because anybody that's in the united states whether it's uniswap's co-founders or uh the robin hood ceos or whatever they're going to want to comply with with all these u.s regulations and as the liquidity

dries up even the people that have been overseas like crypto vc funds and market makers and defy yield hedge funds and all this they're not going to be profitable anymore. And the global regulatory regime is going to come in line with what the United States is doing. So I think this is just a short term thing that people have been able to, maybe for the last couple of years, take advantage of operating in Gibraltar or the Cayman Islands or something like that, and kind of shirk all these like owners US regulations or avoid the regulatory risk and the legal risk of operating in the u.s but over the next couple of years the fundamentals are going to come to bear on these markets they they're overvalued these coins are not worth what all

these vcs have been pumping them up to and that's the fundamental thing we should be talking about those coins have dropped so much that's what i'm trying to say but let me let me read out dude look at look at shit that's like currently priced in the billions of market cap before it was pumped up by the VCs in 2021. That's where it's going. It's going back to like 50 million market cap. But you can't compare to back in 2021 when utilities – Yeah, you can. For example, Solana wasn't where it was.

You didn't have all these projects. Mario, you're in denial. You're in denial. I don't hold any – but, Brad, I don't hold any it was. You didn't have all these projects. Mario, you're in denial. You're in denial. I don't hold any, but Brad, I don't hold any Solman. I don't hold any Polygon either. I don't hold any of these tokens. So I don't mind if they disappear, go back to 21 levels.

But I just don't, like, we cannot compare the utility of these protocols today. Yes, you can. That's the point. That's why I'm just finishing the point here that the conversation shouldn't be, we shouldn't be saying like so much focusing it on the SEC and the regulators and cheering for the regulators like the crypto people like to say that Bitcoiners are doing, which we're not. We're just identifying reality. What we should be talking about is fundamentally people have been lied to. These markets were fraudulently pumped up and the utility value is fantasy and kool-aid and if you really want to talk about what's valuable in the space and do the true free markets way in the libertarian way let's have a debate about why crypto is crashing it's because it's overvalued

nonsense and garbage for the most part all right let me read out some markets work yeah let me read out bruce i want you to respond but let me read out, Bruce. I want you to respond. But let me read out what John Deaton, who I just invited, and Ryan Selkis as well, both have been on the show multiple times. John Deaton says the following. When Senator Warren chose to run for re-election on an anti-crypto platform, it was sealed. Her and Gary Gensler have free reign over our banking and financial markets. POTUS is bringing up crypto traders in speeches and Gensler just called Brian Armstrong, Jesse Powell and Brad Garlinghouse or anyone else leading a crypto company, quote, hucksters and scam artists. This administration has gone all the way on its war against crypto.

This is why I've been saying we must fight as hard as we can in every call. Congress isn't helping until late 2025 and only if we get a new president and senate ryan said something similar there is no future for crypto in the us with this democratic congress or president if reasonable dem reps and senators want to prove me wrong by overriding their radical left colleagues i'd love to see it happen but i'm not holding my breath for the lawless and the corrupt so we're seeing both ryan and john and saying Ryan and John saying that we need to push back, we need to go into the courts. And then Ryan kind of politicizing it and rightly so, because we're seeing a lot of pushback from the left, not so if the right will be different.

I want to get the thoughts you have on that particular point as well, Bruce, as well as your response to what Brad mentioned. Yeah, I mean, the thing is, free markets work best. It may be regulatory arbitrage, but it may just be what happens throughout human history is that people march and they vote with their feet and they march towards freedom always. That's why people, when our country used to be a free country, they came to our country.

Freedom from their savings if they're buying shit coins. That they're right brad brad that's right the market disagrees let me finish this point the market disagrees with you brad there's 55 million people who want to buy these things let the market where it's not the job of an anti-state politicians to get in there and say i think this coin works and this coin works and it's super super naive to think that that's not going to hurt bitcoin that you can just sit back and say well we they can't stop us we're unstoppable yeah do you really want to have do you really want to find out that's why that's why i said let's not talk about like cheering on the sec and the regulators let's talk about the fundamentals this is but the idea that the right but you have an idea but you you uh have an idea that the regulators can you know kind of like what mark was saying earlier that regulators can solve these

things they can't they don't solve it they don't help they it's only a negative there's no positive they have all they do is cause paperwork and hassles for honest people. The scammers don't follow the regulators. Bernie Madoff was head of the largest regulator. He didn't follow the rules. The market is solving this. This shit is way overvalued. Right, right.

People lied about what they were buying, and it was fraudulently pumped up. So the market's crashing, not because the SEC is taking action. It's crashing because right. The market has worked better than this crap that they that they realized was was not what it was because the market and people like tone have done way more to protect investors than than the people in Washington, D.C. Way more, way more. Not your keys, not your coins. NVK, you tone. Anybody who's spoken about has done way more to protect investors. The entire- So why don't we talk about that as much then? Why are we talking so much about what the SEC is going to do and how this is unfair? Because the tyrants are trying to,

the best solution is a free and open market where people can make those decisions on their own and people like Tone can educate them why it's a bad idea. Okay, but we're minimized and billions of dollars are put into maximizing and amplifying the voices of of charlatans and grifters and pump art pump and dump artists so like how do we compete with that exactly that's just the market works don't want to change the way the world those those exist in every single industry in every industry tesla was worth this is the free market i'm using my every car company combined at one point and people were saying it was overpriced and yes it came down but it's still worth a lot more than most of the car companies come back they're doing more than just cars there's people believe in it what i don't like is if you strip away all the noise

from what a lot of people on here are saying is we want only accredited investors to have the opportunity to invest in innovation and everyone else go fuck off. And I think that's horrible. And that's what I really want to bring to the to the table is you're basically saying the American person can't invest early on in innovation. Only rich people can. And that's why I love it. That's why I love innovation. Let's talk about innovation. There's a i love the innovation let's talk about the innovation there's a lot of innovation let's use here let's use helium for example let's use helium for example which has like an iot network which is incredible and it now it's doing 5g let's use render for an for an existence it's down 97 percent no yeah and 97 percent of startups fail and 90 percent of startups fail and then you'll call them a scam.

The same thing happens in the helium VC world. The helium network was pumped up by H16Z as an unethical sort of fraudulent pump and dump that would be considered insane to invest in if it was in the traditional markets. The information asymmetry is the problem here you have people propping up bad logic like helium token is a good investment like you're saying that helium token is a good investment it's a terrible investment it's it's down 97 it doesn't have any use case aside from selling it so was amazon so was amazon in 2001 when it went from 120 to five dollars but they kept adding users.

That's a good investment. And that might make sense for some people because they want to roll the dice. But the point of the SEC and the point, you make a decent argument to say, hey, you know, when it comes to accredited investors, maybe the threshold should be lower. But that's not a defense to a legal case. The thresholds are what they are right now. So if you want to make your case that, hey, we should have more of a caveat emptor type of economy in the U.S., that our rules should allow for many public offerings, that there should be some way to democratize, those are good arguments. I mean, I've heard them for 35 years. And the reality is that when they come up- But isn't that tokens, John?

No, no, not at all. Isn't that what this was? It's not an innovation at all. It's just you're talking about mathematical computational blather. At least when you're talking about an idea like the internet or the cloud or even AI, it's something that people can grab hold of. But when you're talking about tokens… John, you know 90% of these AI projects are going to go to the wayside, and people are going to call them scams as well. Maybe and maybe they are, but there'll be regulation around them so that at least you can trust the marketplace. But, you know, you're talking about market makers in the crypto space. They aren't market makers. They aren't registered as broker dealers like traditional market makers

are. So they go and do what they please. Read the Binance. You know, I can't believe there are people on this call who actually would use Binance if they just read the pleadings in this Binance TRO. It's unbelievable how much power one person has to move funds and buy whatever he wishes with the funds that he moves and move them wherever he wants and wash trades and pump up markets. So it's a complete den of thieves. And when there's no regulator to make sure to have auditing, examinations, to have inspections, to have net capital requirements, archiving requirements, cybersecurity requirements, insurance requirements, licensure requirements, those are all the things. They're difficult. They're hard. But it's the same reason why when I went in for heart surgery, I was very confident that the heart surgeon was going to do a good job because there was all this licensure in place and the same exact paradigm should apply to crypto that's all i'm saying but john isn't that self-custody doesn't self-custody resolve a lot

of the issues you just brought up which i think is a good thing atomic wallet ask the people at atomic wallet if that actually solves more ask the guy. Look, if you point out one or two cases, you've got to look at the statistics. You can argue anything by pointing one or two out. It's a different discussion. He brought up some great points, and then you shifted the conversation to self-custody, which has nothing to do with the markets

and what these things are. I said it could solve a lot of the issues that he brought up. That's not... So you can self-custody a pump-and-dump Ponzi scam token.'s not so you can self-custody a pump and dump ponzi scam token what's the who cares if you can self-custody he was saying that he was saying that you're the one pivoting because he was saying that why would you hold your money in binance a guy who can just move his money the same exact thing that happens with banks by the way if you self-custody you don't have that problem well Well, yeah. Let me put it on your mattress.

That's a real good plan. Go ahead with that plan. Joe, let me... It's not the way that people invest, okay? If you don't mind, guys, guys... Go ahead.

Yeah, sorry. Sorry to interrupt you, John. I just wanted to bring you back because I'm going through the comments. A lot of people are asking and for anyone that just joined, the comments in the bottom

right corner of that purple circle is that... And Joe, they want more clarity on the sec action against coinbase and binance and i know you've probably gone through it since the last time we've had you so if you john and joe both of you could give us a bit more clarity in what we could expect with binance and what binance is doing we had one of the speakers mentioned earlier that the price action we're seeing come over who that was and that's just finance um finance us just selling off a lot of their altcoins portfolio

um so does that have any you know does that make logical sense considering the action they're facing and what will finance us do next why are they stopping off ramps um if we are off ramp is that part of the the action that they're facing and then if you can also link it to what's happening with crypto.com and kraken john and joe guys go ahead, guys. Thank you. I can, of course. So first of all, like, for instance, Robinhood's move. That doesn't surprise me at all. Dan Gallagher, former SEC commissioner, really responsible guy, former head of trading and markets. He got wind that these things were securities and he's the general counsel there.

And he probably said either take these off or I'm quitting because it's just obvious that when the SEC proclaims these as securities and litigation like they have, it's a very important signal for the general counsel and chief compliance officer of any intermediary. Now, understanding the difference between the Coinbase action and the Binance action is critical in some ways, but not critical in other ways. So first of all, there's the same action in the sense that they both allege that these entities should have registered as exchanges, should have registered as broker-dealers, and should have registered as clearing firms. And if you go through the pleadings and look at, for instance, the Bittrex action, you'll see a lot of the language is very similar. They took what is indicia of broker-dealer behavior, what is

traditionally indicia of exchange act behavior, and they laid it out in Binance's case in 136 pages and in Coinbase's case, 101 pages. But what makes them very, very different is in the Binance case, there is massive fraud, wash trades, all sorts of chicanery engaged, targeting you when they shouldn't. Commingling as well. Right. Commingling of assets between that are supposed to be individual investors, but aren't. Now, remember, though, Coinbase could be doing all those things. We don't know it, but they are a public company and they weren't alleged to have committed

fraud. But the real difference between these these two actions is that the Binance action is an emergency action. And what two things that are true of every emergency action is the SEC believes, number one, that investors' funds are at risk, and number two, that they have a strong likelihood of success on the merits of their action. So typically those are done ex parte, meaning the other side isn't there. And I've done lots and lots of these actions. You walk into a judge's chamber, you say, here's a declaration from our

chief investigator on it, which I've done. I've done that declaration. Here are the things that we found. Here are the problems. Here's the fraud. Here's why we think investors' money is at risk. And you should freeze all assets. And you should also have expedited discovery, which is impossible.

Coinbase will have months and months and months to comply with the discovery once it gets going. Months and months to write their motion to dismiss. Months and months to write their motion for summary judgment, months and months to delay their depositions, to delay all their document requests, to fight all those things. Binance will have days, and you're right in front of a judge on everything. Expedited discovery is impossible for defendants. You're a defense counsel, and you suddenly suddenly wake up and you've got 15 requests for documents that would normally take you a year to comply with and 10 depositions that would normally

take you 100 days to prep your witnesses for. And do these witnesses even want to come into the U.S. because coming into the U.S. risks one thing above all other things, getting arrested. So with respect to the Binance case, the SEC has also asked for the repatriation of funds from outside of the U.S. into the U.S. Usually that hearing takes place before the action is made public. This was a very unique situation where the SEC actually filed their complaint first, then filed their emergency action second. I don't know what the reasons for that were. Maybe it was a mistake. Maybe it was planned, maybe it was strategic, maybe it was because, again, some informant came forward and they learned some incredible information.

But if you take a look at the declaration of the forensic accountant who was assigned to the SEC case, it's in the pleadings. I also posted it on my Twitter. I also posted the memorandum of points of authorities, which are, again, very lengthy, unusual documents. Typically, a complaint is 30 or 40 pages that just tells a story. These complaints are encyclopedias that are like a miniseries, and they provide all sorts of minutiae, extraordinary pieces of inculpatory evidence, devastating, scathing evidence that

normally doesn't come out until after discovery. And when you look at the forensic accountant, she looks at all the accounts, or he or she, I don't even remember who was, looks at all of these accounts, finds that, gee, wow, CZ is in control of all of them. Here's all the movement. Here's some movements for a yacht. Here's some movement that went off to another CZ controlled entity. And you just see, and here's some movement through Signature Bank. Here's some movement through all of these different mechanisms that traditional money laundering was taking place in. So you have if you look at the SEC case carefully, you don't see any allegations of money laundering. Now, when I brought cases that involve money laundering, I would bring them. I would bring them as internal controls cases, for example. You can there's lots of ways to to roll in those anti-money laundering charges, but the SEC didn't do that.

And my guess is they were leaving that whole area for the criminal authorities, for the DOJ. So what you have going on in Binance is an incredibly expeditious process, which is going on in D.C., D.C. District Court, as opposed to New York, which is where Coinbase is. And oftentimes with Coinbase, you know, in that case, again, you can delay it for as long as you like. I just tweeted today, Coinbase has some of the most absurd defenses. Their defense might be criminal because they're claiming that, hey, the SEC approved our IPO. So in essence, they approved our business plan. And I get it. I can see why a layperson who's not a lawyer and not a securities lawyer might say, well, gee, that makes sense. The SEC approved that registration statement.

And Coinbase seems on the up and up. They're running around the U.S., marketing their services, doing all kinds of good things. Their founders have become billionaires. This looks like any other broker dealer. Well, it's not. And that's not a defense at all. The SEC does not review filings on merit, does not review registration statements for merit. They just review them to say, are they being transparent? Have they said what they're going to say in a clear way? Is this a fair and accurate depiction of their audited financial statements? Are the audited financial statements consistent with the management's discussion and analysis? So there's all sorts of things that you do, but there's nothing where the SEC gives any sort of opinion. So this regulatory estoppel position of Coinbase is, as I said, and I make this point in

my tweet, that it could be criminal because if you look on the legend that the Coinbase put on its registration statement, which I printed on the tweet or which you can link to on the tweet, it says that essentially the SEC makes no judgment as to the merits of this investment. And making that sort of representation could be a criminal offense. Of course, that's true. John, I agree with you. I agree with you about that. And I think it was a very strategic mistake from Brian Armstrong. He made a video this week and he opened up the video by saying, he's on a video campaign. And on the video campaign, he uses that as the first line of defense.

He says, the SEC approved our business plan. I think it was a very strategic mistake to do that because, as you say, that's the weakest thing in the armor. but i want to ask you another question but guys it's not ran right it's not about the they know that's a total ridiculous argument from a legal standpoint the reason they're raising is because their whole fight is in the court of public opinion that's their whole exactly one second one second guys one second we heard crypto people with 10 with 10,000 listeners say that? Repeat that.

Guys, I want to ask. Hey, Ren, that's the first time Ren uses the mute all button. I mean, you can't ask a question yet. I want to ask a question. Joe's point is a valid point. Okay. I'll respond to that one, Brad. I'll know what to do.

Go ahead, Joe. I want to just ask you a question. You mentioned the head of... By the way, Ren, sorry to that one, Brad. I'll note it down. Go ahead, John. Can I just, I want to just ask John a question. You mentioned the head of... By the way, Ryan, sorry, before, don't hate me, just quickly. Just want to mention it's breaking. The market is recovering relatively quickly. Bitcoin is down only 2% now. Sol's down only 10%.

It was 25% earlier today. And BNB is only down 7%. So just a bit of a positive update. I don't know why the team's looking if there's any news, but sorry, Ryan, go ahead. John, you mentioned Robinhood and you mentioned the head of compliance. And I reckon that any US exchange right now has a decent head of compliance and a decent head of risk. Otherwise, I think they've realized the dangers. What do you think these head of compliances are

saying about the other altcoins? The altcoins that weren't put into the Binance or the Coinbase complaints. And the reason I ask is because it seems like no one, never before did we know that Solana, Cardano, Matic, and all the ones that were mentioned in the last two complaints were ever considered securities. As a compliance person at an exchange, are you not now going, hold on a second, can we actually list any of these altcoins? You know, that's a great question.

You should be. You know, the head of, you know, I don't know what's going on with these head of compliance. I know some of them. I know Noah Perlman, that's Itzhak Perlman's son, who's the head of compliance for Binance. And I personally cannot believe, and he's a former Eastern District of New York attorney, prosecutor with tremendous credentials and well-respected. I cannot believe he would work amid such a den of thieves after that sort of complaint is being hired, after that sort of complaint was filed. Yes, if you're the chief compliance officer anywhere, you are constantly reviewing this, all of these altcoins.

You're constantly reviewing anything that's going on in crypto because there's no transparency in any part of the ecosystem whatsoever. So I don't understand how anybody, I don't understand how any bank, if you're a bank, for example, and you want to do anything related to crypto, it doesn't matter what your compliance person says. If it's in the US, the Office of the Control of the Currency and the Federal Deposit Insurance Corporation have both said, not only do you have to give them notice, but you also have to get their permission. So the regulatory onslaught is coming from all sides. If it's the SEC jurisdiction over investments, there's a small part carved out for retirement funds. And oddly, that goes to the Department of Labor. And the Department of Labor has put out a regulatory pronouncement saying that if any fiduciary

within the ecosystem of retirement funds like 401ks or the Thrift Savings Plan for the U.S. government or any other sort of IRA is recommending crypto, it's essentially a per se violation of fiduciary duty. Why? Well, first and foremost, where are you going to custody it? And second, of course, because there's no transparency into that marketplace. So yes, you should be doing all this kind of scrutiny. Maybe you're blinded by the millions or tens of millions that these entities will pay you. I don't understand it. As I said, as a former prosecutor myself, as a lawyer of 35 years, I would not work with any of these people. I've been offered ridiculous amounts to go do that kind of work. And I'm totally all for capitalism. You know, I'd love to make more money. It's not a problem. And I think everybody

deserves a defense. So all the SEC lawyers who are defending Binance and defending BAM and defending CZ, you know, these are all friends of mine and I respect them and they should be doing that. But the ones who are giving advice, like, for instance, Sullivan and Cromwell, the lead lawyer there, four days before FTX collapsed, a Voyager lawyer wrote to him and said, gee, I'm hearing all these things about liquidity issues at FTX. And he said, hey, FTX is solid. This is just CZ nonsense. And FTX is rock solid. And any lawyer who says that, in my opinion, starts criminalizing. Who said that, John? It's in an article I wrote.

I'm forgetting the guy's name offhand. But was he one of the attorneys for FTX? Yeah. If you look at one of my articles, one of the articles about why there should be an independent examiner of FTX, if you go to my website, it's just johnreidstark.com. All the articles are free. I don't make a nickel off of any of this stuff. Obviously, Mario, you know that. But, yeah, there's an email that came out in discovery and part of the Voyager litigation. There's an email from a Sullivan and Cromwell attorney four days before the collapse who told the Voyager attorney that FTX was rock solid. Now, to me, that's an egregious violation on multiple levels of not just being a lawyer, but you're enabling the crime.

So, again, that's just my opinion having seen that one email. So I wrote an article about it and a bunch of other things. And the reality is Sullivan and Cromwell is now making, I mean, literally a million dollars a day on this absurd notion of Chapter 11 for FTX, as if it's somehow going to go back into business. All these Chapter 11s are ridiculous. They should all be Chapter 7s. You shouldn't be paying these lawyers these obscene fees.

The average fee at Sullivan and Cromwell for the work that they're doing on FTX is I think it was between $1,600 and $1,700 an hour. Now, I've taught law school. I taught at Georgetown and Duke Law School. And my students who have graduated and maybe are one or two years out and are somehow working on this are charging like $ or nine hundred or a thousand dollars an hour so the people who are getting rich off of this exactly like mark said are the private equity firms are the big shot lawyers and uh it's just a shame and that's okay hold on hold on if you're if you're going to be if you're going to be defending if you're going to be defending the sec and invading against the folks who are trying to make money off of all this, I mean what about Gary Gensler himself who apparently was running his public statements by CZ and throwing himself at him as a potential advisor? Oh, you don't know that that's true. Isn't that not the exact same behavior that you're criticizing right now? And we've had sources – we've had sources to see – well, I agree with your argument. We've had sources say that it's – CZ went to Gary Gensler, and Gary said no about acting as an advisor for Binance.

So I don't know which story is correct because I tweeted about it. But we do know that Sam spent $30 million. Wait, wait, wait. Let me tell you something. We do, yes. Sounds different. So am I tainted forever because I've talked to some of them? Am I gone from? That's just a ridiculous argument. Respectfully.

You know, you really have. But a better argument, though. But a much better argument. But he wants to say, well, let me finish. All everybody wants to say is Gary Gensler's this. He's bad. He's just bought and paid for whatever. You know, look, 90 percent of written of what I've written about the SEC over the last five years.

If it doesn't pertain to crypto, 90% of it is scathing criticism. I criticize them for the case they brought against Covington and Burroughs. I've criticized them recently because their administrative court is a kangaroo court, and I don't agree with it. I've criticized all of their cyber regulations. So, you know, try to consider the fact that people can have different points of view and that just because I say the SEC is doing something right doesn't mean I'm some kind of SEC shill. And just because Gensler, he's not doing anything that he didn't say he was going to do. Read Coinbase's filing. Read their S-1.

I put that in the tweet today. It specifically says that we may be charged for failing to register as a broker-dealer, failing to register as an exchange, and failing to register as a clearing firm because what we're selling may be alleged to be securities. It's in their papers. And now they sit back and go, I can't believe this is happening to us when they literally wrote themselves in their filing with the SEC that what they're doing could be unlawful. Let me give a word on that because this, like you said, gets repeated all the time about, hey, how could the SEC approve this, blah, blah, blah, when clearly the SEC does not approve S1s. They approve disclosures.

That being said, the point that Coinbase is making is one that almost any human being adult can understand, which is that, hey, we, among anybody else in the industry, every single other exchange, there's only one exchange in America that is public. There's only one exchange in America is public. And even that exchange cannot get a clear conversation with the SEC about what do we do and how do we register? That point is not lost on anybody. It's very easy to understand. The SEC clearly is not making it easy for anybody to understand what is the path to registration for these things, right? If Solana is going to be registered, who registers? How do they register?

What are in the disclosures? It's complex. The path to becoming a heart surgeon is complex. And all they're saying is they're not getting the answers that they want. Yeah, exactly. No, they're saying they cannot get good faith engagement. Look, the U.S. is not the only country that regulates crypto all these exchanges operate in many jurisdictions and where they do they can sit down with the regulators and have a clear conversation about how these things ought to be done i guarantee you the u.s is not corbis is not operating in a vacuum where they're the only one place where they operate they can't get a meeting they do this everywhere in the world they got 30

for their own statements guys they have 30 meetings with with with the sec okay and i can surmise what happened in those meetings they're saying you need to delist all these things and they found that answer to be unacceptable for the business model that's what occurred in those meetings it's pretty obvious you don't have to piece the gensler has made very clear statements about every exchange needs to come in and register we're not going to bless it after the fact. We're not going to give our stamp of approval. And that's unacceptable to them. So they've had this sort of, you know, shifting the goalposts saying,

well, you have to, you make it clear for us. No, that's not how it works in a security balance. How would they know what to delist though, Joe? Which ones? Everything. It should be everything. No, but that's not America. Whether Ether is a security,

did you see the congressional hearings? Please let me make one point because I think it's really, really, really important on this. No, but that's not America. Did you see the congressional hearings? Please let me make one point, because I think it's really, really, really important on this. No, not everything. This meme that everything other than Bitcoin is a security is a bad idea. And I'll give you one simple example. Litecoin. It is the identical issuance mechanism of Bitcoin. It did not raise money.

It did not do a pre-mine. It did not do an ICO. It did not do a fundraise of any kind. It is not do a pre-mine. It did not do an ICO. It did not do a fundraise of any kind. It is not a security in the United States. If it is, then our country sucks, and it's not a free country anymore. Bruce, I agree with you. That's not the point. Please, please, please, please let me make this point.

What Charlie Lee did is he took code, open source code that has an open source license, and under that license, you're allowed to copy it. He copied it. He changed a few things. He reissued the code. And to be an extra nice guy, I don't think he had to do this, but to be an extra nice guy, he let people know ahead so everybody could jump on it fairly and mine it if they want. In the United States, that cannot be considered a security. That is speech. Charlie Lee has a right to write whatever he wants on his code. And I have the right to write whatever I want on his code and i have the right to write whatever i want on my code and we can release that and issue that to the public protect that

is protected speech to write code and run code now when you get money involved you have the right to also then be the cto of coinbase and list his token that he owns a huge bag of on coinbase brad brad you bruce you disagree with you on this one. The you have to have a country that makes it so that Charlie Lee couldn't do. I wrote a tweet on it. I called it the Charlie Lee test. If you can't pass and El Salvador seems to be going down this road or at least Max wants him to go down this road where everything other than Bitcoin is a security. A couple of major problems with that. One, first, you're assuming that these tyrants are going to stop and these people who hate Bitcoin are just going to stop all this. Oh, finally, we got we closed down Ethereum and Litecoin and everybody else.

We're finally going to stop at Bitcoin. So that's assumption number one. Assumption, you know, problem number two, you're going to end up with a world where politicians say what the real Bitcoin is or isn't. And problem number three, it's speech. And something like Charlie's case must be protected. And I've been the first to say I've been SEC registered for my whole life. So I knew these were securities.

I was the first to say there were securities. There's not a single person that I think anybody can find before me who said there were securities because most people didn't even know they existed. At the very first DAO, the minute it was announced, I said that's a security violation.. I knew this was going to be, and I had many, many, many tweets predicting exactly what's going to happen. But for one thing, it doesn't make it right. But you have to have different degrees of things. First of all, you must protect whether you like them or not, or think they're a stupid idea, or you like Charlie, you don't like his trading or not. You must protect Litecoin, Bitcoin Cash, even Bitcoin SV,

because that also has a fair issuance mechanism. You must protect these things in a free society, because what those are is speech and code issued for free, given away for free. Now, some things raise money. Does that make them automatically a security? Not necessarily. There are legitimate collectibles. There are legitimate other things that just because you raise money, don't make them a security, even if you expect them to go up just like collectibles Usually if you issue a token and you accept money Then I think you're in you know You know certainly orange or maybe red area that you would want to look at and then but not at not a blanket

Enforces your change where you're going here birds, but who are these rules in your world? Well, that's what the that's what the law is and what it has been and what it should be and what it's been for about 100 years and what it needs to be. I mean, you never – But Bruce, hang on a second. Before you talk about whether the thing itself is in fact an investment contract, you have to talk about a business like Coinbase when they're going into the market, providing quote unquote crypto exchange services, what necessary registrations do they need to complete before they list any tokens? And from the standpoint of the SEC, in those meetings, they were told you need to become compliant from a registration standpoint before you even get to what assets can be listed on

your platform. That's where I disagree with you on. Because if you're saying as you know, from an existential standpoint, you don't have necessary registrations, you're not blessed by us to engage in any exchange activity, that has to occur first before you cross the chasm into what are these particular assets and whether they fall within a securities analysis. Yeah, but- And why doesn't the SEC have to tell you what is and what is not a security? That's the problem, my friend. They're in the business of saying they want to cross trades in things like ADA. That's what their business is. They want to provide a market.

And by the way, I think anybody in favor of free markets should be, even if they hate these coins, should be in favor of investors being allowed to have liquidity. And if SEC says those are securities, so then Coinbase went and tried to create a couple broker-dealers and said, could we put them on there? See, this is another thing that people should recognize. Suppose you do go and register and you are a broker-dealer. It doesn't mean you can list these coins. We're a broker-dealer. We can't carry ADA. So it's not like it's a magic solution. There is no way in the United States right now that somebody can trade. In the example of ADA, for example, where the SEC has said in a lawsuit that this is a security. And John's right on, we don't agree on everything, but as also a person who has served in compliance

roles at ACC registered firms, clearly. And I said this, I got in huge arguments with people a few years ago about the XRP thing. The second SEC said it was a security, my position, and we never carried it anyway, but my position, if I was advising somebody else, would have been absolutely out of your mind if you carry that, because you have a very, very, if the ATF comes in and they say, hey, that gallon of milk is a sawed-off shotgun, that's illegal. Do you sit there and argue with them, or do you say, go ahead, sir, please take the milk. I'll have to you. I'll have my lawyers talk to you. I mean, you know, you if the SEC says it's a security, in my opinion, I must treat it as a security in any way. By the way, that's what Coinbase did, right? At that point, when that

was filed in December of 2020, Coinbase suspended trading shortly thereafter of XRP. You remember, then they pivoted, then they pivoted, right? Then they said, well, we can't keep delisting these tokens as soon as the SEC says it. So we're going to go to war with them. And that was a choice they made consciously. Yeah, I have a question for you, Joe. You you apparently know a lot about what happened there. And there's something that ran actually shared on the show that I had tweeted out that I pinned to the top about the fall of empires. Right. And I kind of see this as a roundabout way to kind of fight Bitcoin, to get people scared about crypto, at least the Americans,

not create an alternative currency and things like that. Do you see this as a roundabout way of going after Bitcoin? I do not personally, but, you know but I'm more commenting on a legal perspective. But if we could shift back to what John said, and I think, John, you had a masterful presentation there of just the dynamics of what is involved in a TRO and a preliminary injunction. And I just want to emphasize some of those points because I think they're critical. And I think it's lost on a lot of people how quickly some of this will develop, including the issue of, you know, the nature of whether Binance US had to be in exchange, whether they are a lawful broker dealer in Clearinghouse. These issues will be, you know, there will be orders issued very quickly from

a preliminary injunction standpoint in like weeks. Right. We're going to have precedent on this. And the SEC has come loaded to bear with a lot of evidence. If you read those filings that John was alluding to, I mean, we're going to, this hearing on Tuesday is going to be great. I mean, it's going to give you a ton of information as to what I think, you know, this direction, this is going to come. And with respect to the release that's being sought, okay, because there's the allegation of co-mingling, they have effectively, Binance US and the Binance International, the dot com, they have opened the door to all of Binance's books. That's why the relief that's being sought seeks the appointment of a receiver and a

full accounting and assets to be remitted to the United States to safeguard US customers. This is huge, guys. It's funny because I was listening earlier. When you say huge, huge in what way, Joe? Huge in the way of the rapidity of how quickly this is going to happen, okay? I mean, this is imminent, right? That is what you're at when you're in a preliminary. When you say what's going to happen, you mean Binance US ceases to exist, like ceases to operate, sorry? No, no.

I'm just saying, you know, as John was alluding to, okay, in a normal litigation, it moves at a snail's pace, right? I'm involved in cases where it takes six months for the defendant to appear and answer and begin the discovery process, right? It gets kicked and kicked and kicked. And the key thing is because portions of the complaints in the Binance and Coinbase actions are literally copied and pasted, particularly their commentary about exchanges and broker-dealers and these requirements, you're going to get rulings in the Binance suit that are going to potentially affect the Coinbase suit because of the very nature of what activity is, you know, what does it mean to be a crypto exchange in the United States? And I think that was a calculated decision, right? Those rulings in the Binance case will be cited in later rulings in the Coinbase case.

So to some extent, you know, I think that's calculated because they brought the TRO because they want to fight against, you know, potentially potentially the bad actors and then they'll use those rulings to cite precedent against the coinbase so don't you worry about the same technique being used to continually stretch the definition of all you know where you say like i mean if i was them using this same technique the next thing i would do is i would attack uh bitcoin sv because then every laser eye in the world and then we'd all be cheering and then they'd have this precedent that they could go in and say yeah a proof of work coin is a security see your honor they lost in sec you think the sec is actually going to waste time on

on bitcoin sv bruce seriously brad you're not listening to my point how did you miss my point just now brad i'm saying if the goal is to attack Bitcoin, this is how you do it. But that's the point. This is not an attack on Bitcoin. It is, Brad, because it's scaring the public about crypto as a whole. How do you know that? It's scaring the public as you guys. It's the crypto bank holders and pre-mine benefactors that are scaring Bitcoin holders

and people that want to buy Bitcoin by making us all try to be on the same page when it's not SEC versus Bitcoin. It's SEC versus insider pump and dumps and market makers running scans. Forget the characterization of the word attack. I mean, just put attack aside, right? If you're suppressing liquidity to the crypto market as a whole, that will have an adverse effect on Bitcoin. That's my view. Okay. I think if you're suppressing liquidity, expressing, you know, attacking the on-ramps, how can you possibly say that's in the long-term bullish for Bitcoin? I don't think it, I think it's actually going to be a fundamentally bullish thing for Bitcoin, just like the China mining ban was fundamentally bullish for Bitcoin, because it proved once and for all that if this flood that all the

anti-Bitcoin people used to say was China controls it, if China ever bans it, it's doomed. Look what happened. The hash power distributed away from China, and it went more and more towards places that they want Bitcoin and they respect freedom or whatever, even if it's not that narrative. It's like it didn't stop. Like, look at the hash power of Bitcoin. It's continually going up.

It doesn't matter. If the regulators come against crypto exchanges, I think that's only going to be bullish for ethical Bitcoin companies that are just providing people looking for protection from their debasement of their savings that want to get Bitcoin to protect themselves long term, that's going to be bullish for them because they're not going to have to compete with all the billions of dollars that the VCs are putting into marketing all these garbage coins as if it's like Bitcoin but with smart contracts or like Bitcoin but 10 seconds faster. Have you gone through the restrict act? Brad? Is that the thing that Mnuchin tried to put in before Trump was brought in?

Yeah, so Joe, I know you were there. Can anyone give us just a bit of an overview? Joe, can someone just give us a quick overview on the Restrict Act? Because I know we've covered it, Joe. You were in those shows as well. And the narrative that – ahead joe yeah basically the way they wrote it they could stop almost all crypto and they're trying to feed it in by saying it was for tiktok and it's not it's for any uh electronic transfer and they put in a thousand different things in there which included

bitcoin that they could stop so this is why I see it as a fight against Bitcoin. It's not about altcoins. It's a different conversation. Clearly, there's some people like Elizabeth Warren that have it out against Bitcoin and crypto. Clearly. I'm not saying that there's no people in government that want to stop Bitcoin. I'm saying that the SEC going after all of these exchanges to try to bring them into compliance, it's not trying to ban altcoins or Bitcoin.

She pulls the strings with the SEC, Brad. She's the most powerful – one of the most powerful senators. Elizabeth Warren? Really? Come on. Absolutely. Come on. Absolutely. Brad, no, no.

That's not a conspiracy theory. Where's Ryan Selkis? He was just here. I think the point that Brad is trying to make is that Bitcoin is mathematics. So you can throw all the laws you want at it. It's just going to find a new home and the innovation is have taken place over the past year. I think there's a lot of collusion happening. And I think that people are going to come to the root awakening that this technology, like Brad highlighted, is a self-healing technology. And it regulates itself through mathematics, not through bullets like the U.S. government has been doing over the last 300 years.

Yeah. And Brian, we're sitting here talking about this is the end or this is close to the end. We won't find out 300 years. Yeah, and Brian, we're sitting here talking about this is the end or this is close to the end. We won't find out for years. The total crypto market cap is down 3.7%. It's hardly a blimp in the thing. And I think it's hilarious that a lot of people, especially our very famous Shorter, is on here spreading FUD like crazy

when in reality the total market cap is not down that much. Yes. So I will bring in... So far. I'm going to bring up James because the market has recovered relatively... It hasn't recovered, but Bitcoin is back up to 26K. Sol is back.

It's only down 10% over the last 24 hours. A bit more if you take it back a few more hours. So I'll get in James, give us a quick overview again, and I will wrap up the space very shortly. But I'll go to Gaurav. Scott mentioned something earlier about market makers pulling out and making the order books thinner. And then we had another person come in and say that this is Binance US

selling off their altcoins and that's impacting the market. So I wanted to get your thoughts on these two narratives, but also the thing you told me earlier before the space when we were talking and you said that despite everything that the SEC and US regulators are doing, long term, this shouldn't have much impact to the liquidity in the ecosystem because there's ways around it for US investors to get into the ecosystem. Can you elaborate on that particular point?

Yeah. Thanks, Mario. to ecosystem can you elaborate on that particular point yeah thanks mario um two things uh are separate from uh you know from uh from each other one is market makers pulling up liquidity market makers add liquidity uh in order to match existing orders and i'm obviously talking about uh the the clear the cleanest form of market making i'm not talking about the crypto being wild, wild west and people doing all sorts of things on the name of market making, right? So the real market making, spread management, taking in, eating up, buying and selling orders

from both sides, that has nothing to do with Binance shorting or longing or anyone investing or divesting from the market right the only thing it impacts is is a better tradability of the market which means if there are traders market making can facilitate it if there are none then you know nothing doing market making orders will sit idle on the order book so i'll throw this out of the window, coming back to Binance or the investors divesting from the US market. I gave you a very small example. Almost all of my US-based employees are essentially dealing with us through their family offices or their independent contractual

entities from the Caribbean or other parts of the world, the tax destinations of the world. So when they can, you know, obviously, you know, I'm not hiring the chairmen of the company. So they're like making $10,000 to $100,000 a month kind of employees. And if these simple, plain, common people have Caribbean and international tax-friendly entities simply to get their salaries from around the world, then I'm sure the large investors or anyone with more than a million dollars in capital has an international setup to route their capital.

So what essentially might be one of the reasons of this altcoin crash or the tiny crash is that people are divesting from the market they're making it uh making their crypto turn into cash in the u.s tax system and when it's already accounted in they can obviously send it out to their international um shells or call them entities and then invest from that so their positions so their position would remain the same by now and since we had this conversation, obviously we have lived a few hours and it's already started to happen.

So the market is recovering. So people have started moving their money back in and probably at better positions. So yeah, that's, that's essentially what I meant. And, and you know, the current recovery is sort of assigned to that. Was I able to make myself clear? John, that particular point. Yeah, yeah, yeah. So the last question I have here,

and then we'll just do a quick wrap up of the market and we wrap up the space. Is that on that point that Gaurav made, Joe? Actually, Gaurav, I'll ask you a question there. So what about the tokens that should be used for their utility and they need retail users for the ecosystem to operate? All the startups that you guys have in your portfolio

that I have and others have in their portfolio, how would they be impacted? That's where the lack of liquidity concerns me. I'm probably missing something here because I don't see these two things coming together. In fact, this actually facilitates the users because those who really want the token utility and they want their token to be used, I'm only talking about the use of the token, right?

The pure liquidity factor, sorry, utility factor. I'm not talking about the monetary value of it, right? Which only actually means connected to being a security. So utility becomes easier because the token becomes cheaper. Am I not thinking straight in this case? I'm just talking. I'm not talking about the market. I'm simply saying if you have cheaper tokens, people who want to use Ethereum, let's say, will get Ethereum for a cheaper price and they get to use Ethereum better.

I disagree. Historically, from what we've seen, and I've been in this space for 12 years. The utility of Bitcoin, if we're talking about Bitcoin in this instance, goes up when the price goes up because then you can do more with the token. So but on Ethereum's point, I do see what you're saying as Ethereum is gas. The more people that get access to it, the more DApps. The current market is only about it's largely about altcoins. You know, Bitcoin only dipped 8% while altcoins were below 25.

So I think let's only talk about utility tokens. Bitcoin is at 2% now. It's back up to 26K. Yeah, so let's only talk about utility coins now. Okay, so what I'll do now is I'll shift it to uh james just a quick market update james i know you came in late we're just wrapping up you and goraf came in late but i'd love you to give us a quick market update um and we've seen a quick recovery now um and any other quick thoughts you have james before we wrap up the space yeah i don't want to just repeat whatever anyone else

said but i was just presenting my Bitcoin thesis and macro thesis at Coin Bureau in London and there were like 3,000 people there and in short people were understanding why Bitcoin was so relevant compared to all the other cryptos they came up to me and was telling me yes now I understand why I have to convert my crypto into Bitcoin and So it was quite mind-blowing to see that it's taken the SEC essentially to list these unregistered securities, but to also educate people on why Bitcoin is different. And I think it really, really hit home for all these people. They were really appreciative. So I just think it's more important for people to actually...

Yeah. So james a quick question for you is uh bullish i kind of wrap up the space with one question to each audience member to each panelist sorry very very simple question bullish or bearish bitcoin and then altcoins so bitcoin bullish or bearish james uh after today bullish because people understand that fiat to basement is 100 altcoins, bullish or bearish? Always bearish, Mario, always. Okay, okay. So we'll go to Gaurav.

Gaurav, Bitcoin, bullish or bearish? Always bullish. It's always a good time to buy Bitcoins. How about altcoin? This is a good time to buy altcoins. If you know what they're doing and if you have done your research, of course. Joa, bullish or bearish bitcoin and altcoins bullish on bitcoin waiting till two waiting

another two days to have an opinion on on all coins but i i doubt it's going to be a bearish opinion brian i just uh i wanted to go back to one thing that was said and then i'll answer your question uh something was said about the Wild Wild West. We are not advocating for the Wild Wild West as an industry. We've gone in and we've asked for guidances year after year. They refuse to give us the answer to the questions that we're asking them. And then they sue us for not following the rules after we've asked them for the rules. So it's very clear right now that at least in the

US, they've been playing games. To answer your question, this is not financial advice, obviously, but I highly recommend anyone who's listening to taper their buys. That means buy five to 10% of whatever you're making in a week and spread your risk around. I think one of the biggest mistakes that people make is they come into crypto and they go all in on a single price, and then they're stuck on that position. I recommend everyone in here to spread their bets. And then when it comes to altcoins and tokens, make sure that you do your research,

make sure that the team is real and it's who they say they are, make sure that the products are consistent. Joe, bullish or bearish on Bitcoin and altcoins? Yeah, I'm bullish long term on Bitcoin. I think people are underestimating the effect of this hearing on Tuesday and what will come after it. So in the short term, I'm bearish on the entire altcoin space. Very much so.

So and on that hearing, again, it just goes back to the speed in which things will move that's what people are just just to summarize this okay one of the requests of relief is literally because there's been co-mingling right they've opened the door to a full audit of all of binance's books including all the international so it is within the realm of possibility i'm not going to say it's highly probable but it is more probable than not in my estimation that you get an order freezing all of binance international and the U.S.-based entities. So how do you think the market's going to react if that order comes down? And that's not FUD, right?

Hold on. They have the jurisdiction to freeze all assets of Binance International? If they're going to comply with it. Are they going to just willfully ignore the court's order? Are they going to be in contempt of court? Because that's what you have to do. You have to basically say, I don't think you have jurisdiction. I'm not going to comply with the status quo order that's being entered.

So roll the dice with that. Good luck, Binance. I mean, they're complying with the litigation. They filed appearances. Their attorneys are before them. They've got documents where their attorneys have contradicted what their auditors have said that have already been put forward. They've contradicted what even their clients are saying.

I mean, the attorneys themselves are in real hot water with according to the SEC's filing because they've been consistently giving false information or misleading information about the status of assets. I mean, this is all in the document. If people would take time to read it, supported by affidavits and declarations. So, you know, you guys can think this is a trivial thing and they're going to thumb their nose in the SEC and the federal judge all you want. Generally, that doesn't go very well. Brad, Bitcoin and altcoins. I'm going to ask you anyway. Bullish or bearish on Bitcoin at the moment?

And then actually, I think it could be bearish on both in the short to medium term. Bullish or bearish on Bitcoin? Forget about altcoins. I don't want to know your opinion. Well, let me just say for all the people that are kind of on the fence here, just consider that what you've been told about altcoins over the last couple of years has potentially been fluffed up or lies to manipulate you into holding the bag open while insiders dump the pre-mine on you.

People should put down the crypto Kool-Aid. I've been saying this for a long time. Learn more about Bitcoin and just be skeptical of what all the influencers are telling you. I'm bearish on crypto because capitulation hasn't happened yet until Mario removes that NFD hexagon pick. You know it, Mario. But on Bitcoin, I'm bullish on dollar cost averaging into Bitcoin. And as the wise American hodl says, corners are into Bitcoin to they're just into your Bitcoin Bruce Bitcoin and out coins. Are you bullish or bearish?

Yeah, yes, Alaska is a very simple question Are you bullish or bearish on Bitcoin at the moment after what we've seen and are you bullish or bearish on altcoins? So starting Bruce Bruce yeah, the connection is really bad boy saying don't put everything into one basket and you know like so i think bruce bruce yeah your connection is really bad but you're saying don't put everything into one basket and you know personally uh i really don't i'm just too confused now it's just too many things happening i really don't know what to make out of everything you know i think we should wait a few days but i'm bullish again i usually always say when markets are like this and there's so much fear that i'm bullish on altcoins. But I just did the whole concept of utilities is being questioned right now. And I'm trying to understand it more and more. So I'll probably bug George and Joe.

Joe, who's on stage now and other attorneys in future spaces to really understand what's going to happen to all these different projects. Because I still don't have a clear answer. Bitcoin, obviously, I'm bullish. And to wrap up the space, we're bullish. My business is'm bullish. And to wrap up the space, we're bullish, my business is very bullish, so if you do have a project that wants to come on the show, do DM me, Scott or Ran,

but Ran is not on stage, just dropped out. DM us, you can come on stage because we're going to start doing pitches and Brad Mills will not be invited, I'm joking. And if you have a startup that wants to work with us,

hit us up as well, me, Ran or Scott, and they can work with our incubator accelerator as well um otherwise see you again tomorrow that was an unexpected space today if the market spikes up 20 drops another 20 percent and you'll see me again here and if not um we do have a big crypto show tomorrow but that's not the crypto town hall Crypto Town Hall, see you all Monday. Thank you, everyone. Bye-bye.