Unchained - Bitcoin Treasury Companies Are Taking Off. Could They Eventually Crash? - Ep. 843

Starting point is 00:00:00 If you're buying Microsoft strategy today at two times an half of a two X premium, you're actually buying like half of Bitcoin as it's supposed to about one Bitcoin being a spot, right? Which seems irrational. But micro strategy has proven over time by using financial nearing, whether that's selling a stock or selling converts in an accretive way, they can actually acquire more Bitcoin. And there's this new metric that people should focus on, which is Bitcoin per share. And so you're saying, if you're buying micro strategy today at half Bitcoin per share, if they can grow that Bitcoin per share, 50% a year for two years. After two years, you have 1.1 Bitcoin for sure. So you're actually better off

Starting point is 00:00:35 if they're real Bitcoin would share quickly by owning micro strategy at 2x premium than just buying 1x Bitcoin today. Hi, everyone. Welcome to Unchained. You're a no-hite resource for all things crypto. I'm your host, Laura Schitt. Every episode, we're featuring your comments. Here's what Hugh Naler on Farcaster had to say about our recent REV debate between Tom Dunleavy and Austin Federa. Love these, spicy takes, whether agreed with or not, I get tired of podcasts where people always agree and or say the uncontroversial. Do you agree or disagree? You'll have to tune in and let us know, write a review of the podcast overall or leave a comment on our video on Farcaster, YouTube,

Starting point is 00:01:14 or X. This is the May 30th, 2025 episode of Unchained. Imagine an AI that speaks crypto and does the work of a team of analysts. Introducing Focal by Falcon X, bringing in clarity to a world of noise, visit askfocal.com. Bitkey is the Bitcoin wallet from the team behind Square and Cash app. It's the first two of three multi-sick hardware wallet with recovery tools that replace the need for a seed phrase. Get 20% off with code unchained. Today's guest is Cosmo Jiang, general partner and portfolio manager for Liquid Strategies at Patara Capital. Welcome, Cosmo. Hey, Laura. How are you? Nice to be on. Nice to have you.

Starting point is 00:01:58 The crypto treasury company's trend is in full swing. This week alone, Trump media got in the game by announcing it was raising $2.5 billion by Bitcoin. Publicly traded Sharplink gaming raised $425 million to create an ether treasury company. GameStop announced a $500 million purchase of Bitcoin and Vivo Power raised $121 million to launch an XRP treasury. Why do you think we're seeing this trend take off now? It's a great question. I think there's a little bit of a product of history and the right moment in time. As far as a product of history, I'd say in a lot of ways, we at Pantara sort of unwittingly started this trend a few months ago when we structured and ceded the first deal in the U.S.,

Starting point is 00:02:47 which was a Defi DevCorp or at the time known as Janover. And it received really strong market reception, certainly stronger than we had originally underwritten. And as people saw that, that pretty soon thereafter, there were a couple more deals, notably the Cantor deal, where there is a Cantor Despec that raised close to 700 million. And I think that really made people realize that, wow, there's a really big opportunity here. And that there are really big serious people getting in. You know, the Cantor deal was obviously backed by Tether and SoftBank. And after those two deals, I'd say over the last month, I've taken, over the last two months, I've taken 50 pitches now of

Starting point is 00:03:31 people trying to do something similar, which is pretty crazy. And we've seen a lot of these deals now come to market after seeing the success of Defi DevCorp and Cantor Equity Partners. And so that's, that's sort of the, you know, you never know when trying to get started. But they did. That did with Defi DevCorp a month ago. And now we're here with a lot of people want to recreate that success. I think that. The other reason why they're taking off now is more related to the larger capital markets, which is that it's pretty clear there's a very strong appetite for crypto-related equities. And I say that's because this year has become a coming out moment for the crypto industry,

Starting point is 00:04:11 where there's regulatory clarity coming. And so traditional equity investors now feel the need, the demand, the desire to get access to crypto-related exposure. You're seeing that show up in Crypto League stocks like Coinbase or Coinbase or Robin Hood or Galaxy, we're also seeing it show up in IPOs like E. Toro price way above the range, largely because it's crypto association circles. IPO is, you're generating pretty strong demand, also because of the crypto association.

Starting point is 00:04:39 So there's very clearly really strong appetite for crypto-linked equities. And then, by the way, one great instantiation or way to represent that is through these digital asset treasury companies. Yeah. And of course, the granddaddy of all these companies is micro strategy, or formerly micro strategy now strategy. Let's talk a little bit about how these companies are structured because it seems that they're all using sort of like different terms to raise money for these purchases of, you know, usually Bitcoin, but sometimes other cryptos. You know, what are the different types that can occur? And, you know, if you could even also lay out like which ones are riskier than others, that would be helpful.

Starting point is 00:05:23 Yeah, let's start with there are two large types of transaction structures. And then there's a few different tools they can use within those transaction structures. So the two most common types of transaction structures we've seen are one, you can either go through a SPAC route. And so, you know, there are very large SPACs are basically large Winktack companies that have a lot of capital. Canter equity partners is the largest D SPAC in the last couple of years. And they, you know, they'd raised a bunch of capital and they added on, they did a reverse merger with a Bitcoin holdings. entity called 21 and add it on an additional pipe and pipe, which is a public investment, private investment in public equity and convertible debt raise. So there's the D SPAC route,

Starting point is 00:06:04 which is take a large Wankchat company and then, and then effectively take this treasury company public. And then the other route, which has become much more common because it's faster to market, is finding a, you know, what I'd love link, what I would lovingly call a NASDAQ listed, you know, public company that is perhaps very small microcap and in a lot of cases, either clearly a shell company or something that just hasn't succeeded in what they'd like to do. And so trading out a very low market cap. The idea of using a NASDAQ listed company is because that way you get access to the US capital markets day one. It's already listed on NASDAQ. And it's much quicker to raise capital and use all the tools that are available to you in the

Starting point is 00:06:46 financial markets if you're already a seasoned issuer or in other words, a public company for more than a year. And so we see most of the new forays be going to find these NASDAQ public companies, these NASDAX shell corporations where they then raise a large raise a large amount of capital to begin acquiring crypto. So those are the two routes of either SPAC or a or a public shell co. I'd say, you know, the tools that you have available are really twofold. It's you can either raise debt or you can raise equity. When you're raising equity, it's through a pipe or a private investment in public equity. And when you're raising debt, it's likely going to be through a convertible debt offering.

Starting point is 00:07:28 Because people who want to participate in this one, equity like the upside, which you get in convertible debt as opposed to normal debt. And, you know, but you also get downside protection if you participate in curatable debt that a public equity investor wouldn't get. So there are the two major types. It seems like most of the capital has been raised in the pipe format rather than the convertible debt format. And that's because, you know, what we've seen is that at least in the first few deals, most of the participants in these deals are people who already own the underlying asset, whether that's Bitcoin or something else. And so for them, they're already have that delta one exposure to the underlying asset.

Starting point is 00:08:06 They don't care or they're indifferent. If Bitcoin goes down in price or goes up in price, they're already long Bitcoin. And so for them, investing in a common equity type structure makes a lot of sense. And they don't need the downside protection. As we see these deals get bigger and more mature and certainly with the larger deals like the DJT deal, you're going to attract much more traditional finance investors and they want the downside protection. So you'll see more convertible debt structures and larger, more mature deals and a lot more pipes in these smaller deals that are mostly crypto natives. And if like from an investor standpoint are certain, you know, either structures or, you know, ways of financing the purchases, are they considered riskier?

Starting point is 00:08:47 or better or just different? Yeah, they're definitely different, but there are some that are more riskier than others. So from a really comparing the pipe versus the convertible debt, a pipe is effectively you own common stock. And so with common stock, you have, obviously, you know, a downside to zero or unlimited upside, but you get it at the price at which your entry is. And so you have, you know, the full spectrum of return outcome.

Starting point is 00:09:13 So it's higher risk reward. With a convertible debt note, you have downside production. because it is debt. Oftentimes it's collateralized by tokens in the treasury. And so, you know, if you're investing in convertible debt offering, you get the downside protection of not losing your principle except in a merely bad scenario. And then you get the up, but your upside is limited. You generally convertible notes have a conversion option. That's 30 or 35 percent above the existing price. So let's say something trades at $10. If you're a pipe investor, you buy it at $10. If you're a convertible debt investor, you are your downside protected below $10. And at $13, you can then convert into

Starting point is 00:09:52 common equity. And so you sort of lose the first 30% of upside, but you get the downside protection. Okay. So some of these companies are also solely devoted to the crypto acquisition or the crypto treasury strategy. And others tack that strategy onto another business. And I wondered if you thought there were any types of companies that, you know, like this strategy. This strategy, of trying to acquire crypto is better or worse for? Like, do you think it makes more sense for a company to do it if they already have a core business? Or is it for one that is just purely an acquisition vehicle?

Starting point is 00:10:27 Yeah. My preference has been to, has been for those that are more simply pure play acquisition vehicles. And the reason for that is, is because generally in the public markets, people want simple digestible stories, not just because it's easier to understand and underwrite, but also because it shows you that management is focused on executing a specific thing. Equity investors like being able to choose between different strategies. That's why conglomerates, you know, there's a big wave in conglomerates and the equities in the 50s

Starting point is 00:10:56 and they all got broken up and tore down over time because equity investors became more discerning about wanting specific exposures. And management teams also understood the benefit of being focused. So generally, I like things that are going to be very pure play. And so I find the pure play digital asset treasury companies where, All companies have to have an operating company in order to be listed on NASDAQ. But if it's a small operating company that's sort of de minimis value or a operating company that's very clearly synergistic or linked to the acquisition of underlying tokens,

Starting point is 00:11:28 I think that makes sense. But if you have a very large side business that's associated with it, as in, you know, one might argue in the Donald in the DJT acquisition, they had a $5 billion dollar truth social vehicle. You know, it's not super clear whether true social is driving the $5 billion. are value or not, but regardless, it's sort of this $5 billion thing that existed and they added $2.5 billion on top, it's like the digital, the digital asset piece is just too small of the whole piece of the pie. And so I thought that would, I think that as a result is not getting a great reception, whereas those that are much more pure play don't really have a large underlying

Starting point is 00:12:01 business, like the DFDV or like counter equity partners, those are performing well because people like that it's so simple and easy to understand and the man in this focused. All right. Well, a month ago, there were also a number of Salah Acquisition Vehicles that launched. UPEC, SAL Strategies, and as you mentioned earlier, Defi Development Corp. It was surprising to some that there were Solana ones, even before there was an Ethereum one. And, you know, as I mentioned earlier, there also this week was this XRP one that was announced. Which types of crypto assets do you feel like make more sense for the, like, to serve as the underlying for these publicly traded acquisition vehicles? I think it's important to take a little bit step back and understand the context of why these vehicles even work to begin with. And it really comes down to a few things, right? In order for the final model premise is that these, if they trade at a premium, they can continue to acquire more tokens in an decreative way over time. And so why should something trade it at a premium? Well, it really needs a lot of, it really needs a lot of retail attention and a really strong marketing and awareness.

Starting point is 00:13:07 Otherwise, it's just not interesting. Like if we're going to choose crypto asset number 100, there's probably very few people in the equity markets that know it or are interested in it. And so you're not attracting new incremental capital. You're not really getting a lot of buzz. So it has to be, next to start with, it has to be a very widely recognized asset. And also not just a widely recognized asset, but an asset that a lot of people want, and preferably an asset that is hard to access.

Starting point is 00:13:30 And so Bitcoin has done really well. I might try to do it really well because at the time when it launched, it was very hard for Google to access Bitcoin. This continue to do well because there is just such strong appetite for Bitcoin in the public markets. Naturally, the list of assets that are widely known and also are attractive that are easy to market or attractive to market to a larger set of investors is pretty limited. I'd say I'd be surprised if you go beyond called the top 20, but maybe even top 10, that these really have enough widespread retail awareness for it to be interesting as an asset.

Starting point is 00:14:04 But within the top 10 or maybe the top 20, I think there's a lot of reason to believe many of these could work. They just need to come out with a really clear message and a really clear marketing plan to attract this broad set of investors. So when you look at Bitcoin, it's very obvious. When you look at the next, you know, next runner-rap asset, you know, at least in our conversations, I spend a lot of time talking to institutional investors and large, you know, private wealth clients. And it's pretty clear in all other conversations that, you know, that Bitcoin is probably 95% of the conversations that people are having when it's talking about entering crypto for the first time. But the next most commonly talked about asset is Solana. And so for me, as I was looking at these deals, Defi DevCorp really stood out to me because it's pretty clear there's demand for Bitcoin. But it felt like the second most likely asset that could generate excitement was Solana because it is the second most talked about asset by the LPs that I, like,

Starting point is 00:15:00 top to or the color that I get from them. It is truly a fast-growing asset that has a lot of upside. Certainly relative to a $2 trillion market cap token like Bitcoin, Solana probably has more upside over time. And that there's like a slightly different story in that there's a real fundamental story behind Solana versus Bitcoin is digital gold. So it's unique enough to really stand out. And that's why I think we've seen DefiDorp and the other Solana, the other

Starting point is 00:15:24 Solana digital asset acquisition vehicles do well. Clearly, we've seen Ethan XRP come out next. I think both of those also are great assets that a lot of people understand and are aware of. And so they also stand a really good shot of making it work. All right. So in a moment, we'll talk a little bit more about the different crypto assets that could serve as the underlying for these different acquisition vehicles. But first, a quick word from the sponsors who make this show possible. Markets are ripping, but not every pump is created equal.

Starting point is 00:15:52 You need to make sense of the action and what's coming next. But where do you start? Meet Focal by Falcon X, your AI powered. crypto analyst. It's like having a legion of experts at your fingertips, ready to break down market-making events, chart protocol TVL, and track ETF flows. Get clarity in a world of noise with Focal. Learn more at askfocal.com. Here's another listener comment responding to Tom Dunleavy and Austin Federa's RIV debate on a recent episode. On YouTube, Sean M. Cryptodadad said, No one wants to pay ETH fees, period.

Starting point is 00:16:29 We all moved to Solana because the U.S. was a million times better. The cost to transact is a million times cheaper. Trying to move your money around from ETH to the L2 is not straightforward and simple for a non-crypto person. People don't have to deal with those issues on Solana. If you have a hot take, let us know. We're listening. Leave our review of the podcast overall or leave a comment on our video on Farcaster, YouTube, or X. Back to my conversation with Cosmo.

Starting point is 00:16:54 So it sounds like the reason, because, you know, when we saw the trend with the Sall acquisition vehicles, people were wondering like, why is this not for Ether? But it sounds more like the LPs that you were talking to were more interested in more upside. And because Saul is kind of like at an earlier stage, that was sort of why they were focused there. Is that the reason? Because obviously with Ether being the second largest crypto asset and having been around for what will be 10 years in two months, it, you know, seemed like, I don't know how to phrase this, but I think it was surprising to people that we didn't see the trend with Ether earlier. So can you just dive into a little bit more, you know, explanation there of why we saw with Saul before Heath?

Starting point is 00:17:40 Yeah, I want to be pretty clear that we are, like, I think ETH is clearly a very established asset that a lot of people recognize. And I think, you know, we recently made an investment in Sharp Link Gaming, which is the new ETH Treasury vehicle. that's backed by consensus. And I'm a strong supporter of that team and I think they're going to do very well. I think the reason for Solana vehicles coming out before Eve is just as much about the asset, but also about just the opportunity that's out there or the opportunities that get presented. For these things to happen, you need a confluence a couple of things.

Starting point is 00:18:13 You need there to be management teams that are dedicated to try to do this. And you also need a set of investors that are interested, that are available and capital available. So on the capital available front, clear there's capital available for both Salana and each treasury vehicles. I do think it's, you know, the momentum in Solana has been strong over the last couple years. And so the relative appetite, at least amongst, you know, my vantage point of everyone outside of crypto is higher for Solana than it is for Heath and it has been for some time. But that could change. And, you know, clearly there's still strong appetite for Heath. From a, from a management team perspective, DFI DevCorp wasn't the first pitch I've taken.

Starting point is 00:18:51 I've started to take a number of pitches prior to that. And it's, but they were the first team that launched in the U.S. with a really strong, with what I thought was a really strong view and a really strong probability for success. And so they happened to be the first one to get started. The first one that started in the U.S. happened to be a Salon one because that was what the team chose. So there was a little confidence of both those reasons. Yeah, although there was that failed either one in January or February. So yeah, it's not.

Starting point is 00:19:21 It's not just timing. Yeah. There is a, I guess there's like a minimum. So for these to work, there's a minimum viable scale as well. Right. And I think the earlier ones didn't get enough scale off the bat. Like meaning they didn't have enough backers or buyers like from the get-go? Right.

Starting point is 00:19:42 Right. Exactly. Okay. And then just out of curiosity, you said that you felt like it could also work for the XRP one. You know, that one's a little bit different in that. that XRP, you know, doesn't have kind of like the same level of usage as these other chains or hasn't quite proven itself.

Starting point is 00:19:59 And obviously, Ripple is trying to do things to give it more utility, like the Circle Acquisition or, you know, offer or discussions of acquisition. So I just wondered, like, you know, for that particular asset, because such a huge portion of the supply is owned by one entity, like how does that affect, you know, that treasury company? Yeah, I think that is a, it's a great question. And obviously one of the risk factors that anyone has to, has to keep in mind when they're buying XRP the asset or XRP the treasury company.

Starting point is 00:20:33 But I do agree that is a risk factor that people should be aware of. We weren't investors in the XRP deal recently, but a lot of that was because of the complexity of the structure of this XRP treasury after the same vehicle. I think the reason why it might succeed is because, you know, sort of beyond the, beyond the comprehension of a lot of crypto-native people, including myself, is XRP clearly has a really, really strong following. There's a lot of social media influencers that are really into XRP. There's a lot of what I call a lot of, it has a lot of really broad awareness amongst institutions and traditional finance. If these vehicles succeed based on their awareness and marketing

Starting point is 00:21:12 capability, Ripple has proven out over time by its market cap that they clearly have a very strong marketing engine and brand building awareness engine. And again, hard to comprehend from her crypto-native perspective, like where that comes from. But you can't deny that that exists. And that's why I think it might work. Okay. So one other thing, you know, Matt Levine of Bloomberg wrote about these companies, quote, US public equity markets will pay about $2 for $1 worth of Bitcoin. So why is it that our investors willing to do that and which types of investors are willing to do that. You know, what could they do with a share of one of these Bitcoin treasury companies that they can't do with, like, for instance, a share of a Bitcoin ETF?

Starting point is 00:21:55 Yeah. I think there was a little bit of the nuance that was lost in Matt Living's blog post, actually. And it is that there are actually a lot of fundamental value investors who own micro strategy. So just a little for a little context, like I come from traditional equities. I've done long, short equity most of my career. And I'm like a blue-blooded, deeply fundamental value guy. And so for me, micro strategy felt like this weird thing that never made sense, because why should something trade at two times it's underlying that? But sort of in the light of, as an investor, you need to constantly test your preexisting biases. And in light of the just continued persistence of the micro strategy premium for a long time. And by the way, even after the

Starting point is 00:22:37 ETS launched and the buy-in from really fundamentally oriented funds, whether that's capital group, which is the largest mutual fund company in the world, or Norhez, the Swedish sovereign wealth fund who owned micro strategy in size, there clearly is something going on. So as I dug in to understand that and sort of test my fundamental value case, I started to realize that there is actually a rational reason why these should trade at a premium, and it's not just that there is a rational reason that you can believe these should trade at premium. And that fundamental bill case is really premised on a couple things.

Starting point is 00:23:07 Like, if you're buying my strategy today at two times nav or a two X premium, you're fetching like half of Bitcoin as it's supposed to have one Bitcoin via spot, right? Which seems irrational. But micro strategy has proven over time by using financial nearing, whether that's selling a stock or selling converts in an accretive way, they can actually acquire more Bitcoin. And there's this new metric that people should focus on, which is Bitcoin per share. And so you're saying if you're buying micro strategy today at half Bitcoin per share, if you grow that Bitcoin per share 50% a year for two years, after two years, you have 1.1 Bitcoin per share.

Starting point is 00:23:42 you're actually better off if they can grow Bitcoin per share quickly by owning Micro Strategy at 2x premium than just buying 1x Bitcoin today. And, you know, last year, Microstratia grew its Bitcoin per share by 74%. So there is evidence to suggest that they can grow Bitcoin per share very quickly. And so if you believe Delta that to be true, it's actually rational for some people, including very large traditional finance, fundamental value allocators to go buy microstrategy or companies like that, because you can grow your coin per share faster than owning the coin itself. Well, now let's talk about the downsides because there is concern or potential downsides. There's concern that this could create leverage in the system and perhaps create some kind of systemic risk that would be equivalent to the role that GBTC played during the series of cryptoclosses that we had in 2022.

Starting point is 00:24:31 Mike Epilito, a blockworks tweeted, quote, it seems like we found the 2025 equivalent of GBTC. I have no idea if these vehicles will achieve that level of scale and destructive potential. but make no mistake. This is leverage getting injected into the system. To spell out the risk, it's that these acquisition vehicles accumulate a lot of crypto at much worse terms than sailor and eventually become forced sellers. It's an extremely reflexive feedback loop that if it gets large enough, ends in a 2022-like sell-off.

Starting point is 00:25:01 So what do you think of what you sit there? Yeah. I think there's, I think the broader point that this is a, this certainly a pocket of reflexivity in the market is certainly true and it's a risk. I would say that some of the detail is perhaps lost in what you said, which is that these companies are only for sellers if they have a capital problem, right? And the capital problems are either caused by cash flow, negative cash flow and the need to fund expenses or by having debt.

Starting point is 00:25:31 And by far and large, these new companies are largely financed by equity, not by debt. So if you don't have leverage, you just, it's highly unlikely you come into a forced seller situation. Most of these don't have leverage. There are some that do have leverage and some that are taking on debt. And so that creates a little bit of risk. But my view is that for many of these, they're not going to be for sellers. Some of them will, but most of them are not.

Starting point is 00:25:53 And so if anything, it's actually just a pretty price insensitive buyer who is, who's effectively locking up tokens or locking up coins for forever. And so it's like, it's a little bit scary in that this is, it's clearly gotten getting a lot of traction very quickly. And usually those things don't end well. But if you look at the actual structure, verity of them have debt. So there's very little for selling concern here. And do you see any trends happening with like real world assets and these stocks and

Starting point is 00:26:27 defy kind of combining in any interesting way? Like if the tokenized stock trend continues, then that combined with this trend, could that lead to any kind of systemic risk in crypto? I mean, the beauty of stocks, the beauty of these closed-end vehicles is that it sort of doesn't really matter where the stock trades. Like, they aren't for sellers. Even the stock goes to like a dollar. It drops 50%. And so, like, I do have questions about the volatility of these, of these, of these equities.

Starting point is 00:27:03 Like, I think that volatility's equity is going to be very severe. And especially in downturns, it's going to be very reflexive. but if you think about it from the perspective, so from the perspective, an owner of the equity, there's definitely a lot of risk involved and a lot of volatility involved with buying these equities. People buy them for that risk, right? People like that they're volatile,

Starting point is 00:27:20 and that's why people are buying them, but they have a lot of risk. If you think about it from the, like from a crypto-native perspective, from people who own the underlying token, whether that's XP or whether, sorry, whether that's Bitcoin or Ethereum or Salana, I think it's like the volatility of the equity almost has nothing to do with whether or not

Starting point is 00:27:37 they're going to sell the underlying token. So they're kind of, they're kind of separate. Sentiment-wise, they may not be separate, but like fundamentally, they're very separate. And so, you know, all that, you know, worries me a little bit out being an owner of the equity, although I think they have plenty of upside. But as an owner of the underlying, as an owner of Bitcoin Heath or Solana, doesn't worry now. Okay. And when you look at, you know, the different types of vehicles and, you know, as you said,

Starting point is 00:28:03 you're an investor in number of these, how would you value them or how should investors kind of think about it when they're looking at them. Yeah, I think the most important metric to look at is, well, there are two very important metrics to look at. One is certainly the premium to nav. The metric that maybe you're all grabbing around towards is MNAB or the amount of Bitcoin NAB that you own or treasury token nav that you own. So just understanding the valuation of it, you know, what kind of premium to NAB does it trade at? MicroStrategy trades at two. Many of the others trade four plus all the way up to, you know, 10 to 20 times. And so there's a very large range.

Starting point is 00:28:38 As an investor, you should be aware of that valuation range. That probably should these, these should all be somewhat similar. And so buying something at 20 times is probably less attractive than buying something at four times or two times. That said, the second metric that's pretty important is, you know, valuation is one part. The other part is future growth. And so it's really taking a view on whether the growth in underlying Bitcoin per share

Starting point is 00:28:59 or asset per share is growing over time and how quickly it's growing over time. because the faster you grow your Bitcoin per share, then the higher the premium that can be justified. And so it's really a combination of the both. Just like in the traditional equity parlance, you buy things at a higher price to equity earnings or price to earnings ratio when it's higher growth company. We're these guys that are quicker at growing their underlying Bitcoin share.

Starting point is 00:29:22 You can probably pay higher premium than that. All right. Well, Cosmo, this has been such a great conversation. Thank you so much for coming on Unchained. Yeah. Thanks, Laura, for the dime. There's a lot of fun. Don't forget.

Starting point is 00:29:32 Next up is the weekly news recap, today presented by Unchain Producer Pam Mjimdar. Stick around for this week in crypto after this short break. BitKee is the only Bitcoin wallet on Time Magazine's best inventions list of 2024. Built by the team behind Square and Cash app, BitKee is a two of three multi-signature wallet and the first hardware wallet with an innovative recovery suite that eliminates the need for seed phrases in self-custody. Their new inheritance feature, means BitKee's not just the easiest way to self-custody or Bitcoin. It's the easiest way to ensure it ends up in the hands of loved ones

Starting point is 00:30:10 when it's time for it to leave yours. Learn more at bitkey.world. B-I-T-K-E-Y-D-World. Use code unchained for 20% off. Welcome to this week's Crypto Roundup. In today's recap, we cover a $220 million dollar exploit on Sui, circles IPO and USDA freeze, a federal judge overturning mango markets fraud convictions, and a shocking Bitcoin-related kidnapping case in Manhattan.

Starting point is 00:30:42 We'll also look at Arkham's alleged doxing of Michael Saylor's Bitcoin holdings, Sam Bankman-Fries potential early release, strategic Bitcoin reserves in the U.S. and Pakistan, Kobe's new token sale platform, and one trader's dramatic rise and fall on hyperliquid. Thanks for tuning in to the weekly news recap. Let's begin. Suey Network weighs bold move to reclaim stolen funds.

Starting point is 00:31:07 Following a $220 million exploit on the CETIS decentralized exchange, the SWE network is voting on a proposal to forcibly retrieve $160 million still held in the attacker's wallets. If approved, validators will execute a network upgrade that overrides wallet control and transfers the funds to a multi-sague wallet managed by CETIS, the SWE Foundation, and security firm Ottersex. The May 22 attack exploited flaws in CIS's smart contract math, allowing the attacker to use fake tokens to withdraw real assets. Although $60 million was already laundered, the majority remains frozen.

Starting point is 00:31:46 Support for the vote currently stands at 80% with early passage possible by May 29. The proposal includes compensation to affected users using recovered funds, Cetus's treasury, and a loan from the Sway Foundation. This unprecedented action has sparked debate over decentralization, with critics' warning of future implications. Quote, taking a heavily opinionated stance to censor is a slippery slope, said David Rodriguez of Blockworks Advisory. Circle kicks off IPO bid and draws BlackRock interest. Circle is pushing ahead with its long-anticipated initial public offering, aiming to raise approximately $600 million through the sale of $24 million Class A shares. According to its latest SEC filing, the offering includes 9.6 million shares from Circle itself and 14.4 million from existing shareholders. If successful, the IPO could value the company

Starting point is 00:32:42 at over $5.4 billion. Quote, becoming a publicly traded corporation on the New York Stock Exchange is a continuation of our desire to operate with the greatest transparency and accountability possible, said Circle CEO Jeremy Aller. Investment giants are taking notice. Black Rock is reportedly planning to acquire up to 10% of the offered shares. The firm already manages a $53.5 billion government money market fund that backs 90% of Circle's USDC reserves. Meanwhile, Circle has frozen $57 million in USDC linked to Argentina's controversial Libra token. The freeze follows a court order tied to a lawsuit over alleged investor fraud involving

Starting point is 00:33:23 salana-based wallets. Judge overturns fraud convictions in Mango Market's case. A U.S. federal judge has vacated key fraud convictions against Abraham Eisenberg, the trader accused of exploiting mango markets for $110 million. The ruling issued by Judge Arun Schubermannian found that New York prosecutors lacked proper venue to bring the case and that the evidence did not meet the legal threshold for fraud. There is no allegation that the mango markets platform had ties to New York. Judge Schubermanian wrote, noting Eisenberg carried out the exploit for him. from Puerto Rico. Attempts by prosecutors to link the case to New York through a user and vendor were ruled insufficient. Eisenberg was acquitted of wire fraud, but the court stating that the

Starting point is 00:34:09 decentralized platform's lack of clear rules undermined the charge. Mango Markets was permissionless and automatic, Schubertian said. While the Justice Department may pursue the vacated charges in another jurisdiction, Eisenberg remains in custody, serving a four-year sentence in an unrelated case involving child sexual abuse material. investor charged in brutal Manhattan kidnapping. A cryptocurrency investor in New York has been charged with kidnapping and torturing an Italian man in a bid to access his Bitcoin wallet. John Wolls, 37, was arraigned in Manhattan on Saturday and is being held without bail on multiple felony accounts, including kidnapping for ransom. According to authorities, the victim, Michael Valentino

Starting point is 00:34:51 Tiofrosto Carterin, was lured to a Soho townhouse on May 6, where he was allegedly ambushed by Wolds and accomplices. Carterin, a former fund partner of Wolds, was reportedly beaten, electro-shocked, threatened at gunpoint, and even dangled from the top floor of the five-story home. He told police that he was forced to smoke crack cocaine and had his leg cut with a saw. Carterin escaped on May 24 and alerted police. A third suspect, William DuPlessy, surrendered days later.

Starting point is 00:35:22 Authorities say the suspects aimed to extract cryptocurrency keys potentially worth millions. The investigation remains ongoing. Saler rejects on-chain transparency as Arkham allegedly reveals Strategies Bitcoin holdings. Michael Saylor, executive chairman of strategy, formerly micro-strategy, ruled out publishing on-chain proof of reserves, citing security risks. Speaking at a sideline event during Bitcoin 2025, Saylor called the practice a, quote, bad idea, warning that disclosing wallet addresses could expose the company to hackers, nation-state actors, and other threats. Quote, you publish your wallet, that's an attack factor, he said.

Starting point is 00:36:02 Saylor argued that institutional-grade audits, not public wallet disclosures, are the appropriate standard for financial transparency. Just two days later, blockchain analytics from Arkham claimed it had identified strategy's primary Bitcoin address, reportedly holding 454,21 BTC, worth $48.8 billion. Arcombe further asserted it uncovered an additional 70,816 BTC, bringing the total to $54.5 billion, roughly 87.5% of strategies known holdings. The platform tagged addresses linked to custodians, including Fidelity and Coinbase Prime. Quote, Saylor said he would never reveal his addresses, so we did, Arkham wrote. The public disclosure sparked backlash online, with critics accusing Arkham of distrable.

Starting point is 00:36:51 regarding privacy and undermining the exact concerns Sailor had raised. Bankman-Fried could see early release. Sam Bankman-Fried, the former CEO of Collapsed Crypto Exchange FTCS, could be released from prison more than four years earlier than his original sentence, according to the Federal Bureau of Prisons. Initially sentenced to 25 years in March 2024 for orchestrating an $11 billion fraud, Bankman-Free is now projected to be released in December 2044. The revised date reflects possible sentence reductions through a

Starting point is 00:37:21 accumulated good conduct time, credit for time served before sentencing, and a participation in prison programs. The Bureau of Prisons allows qualifying inmates to earn up to 54 days off per year for good behavior, though such reductions remain contingent on continued compliance. Bankman Fried was convicted in 2023 on seven counts of fraud and conspiracy for funneling customer funds from FDX into his hedge fund, Alameda Research. He is currently held at a low-security prison in San Pedro, California. His former associate Carolyn Allison is also set for early release in 2026 after receiving similar reductions. U.S. and Pakistan advance strategic Bitcoin reserve initiatives. Governments in both the United States and Pakistan are formalizing plans to hold Bitcoin in official reserves.

Starting point is 00:38:06 At the Bitcoin 2025 conference in Las Vegas, Pakistan's special assistant to the Prime Minister on blockchain, Balal bin Sakib, announced the creation of a government-led strategic Bitcoin reserve. He stated that the reserve is intended for. for long-term holding and would, quote, never ever be sold. Pakistan has also allocated 2,000 megawatts of electricity for Bitcoin mining and AI data centers to support related infrastructure. In the U.S., White House CryptoAdvisor David Sachs outlined how the federal government could expand its existing strategic Bitcoin reserve, which currently consists of around

Starting point is 00:38:40 200,000 BTC obtained through forfeitures. The reserve was established by executive order in March. Sachs noted that acquiring additional Bitcoin would depend on budget-neutral strategies developed by the Treasury or Commerce Department. Speaking at the same event, Vice President J.D. Vance urged Congress to pass pro-crypto legislation and reaffirmed the administration's commitment to firing regulators seen as hostile to digital assets. Kobe launches Sonar to reinvent ICOs. Jordan Fish, known in the crypto world as Kobe, has unveiled a new public token sale platform called Sonar,

Starting point is 00:39:14 designed to modernize the initial coin offering model. Developed under his investment platform Echo, Sonar allows blockchain projects to self-host token sales using configurable tools for compliance and distribution. Unlike traditional launch pads, Sonar does not aggregate or promote token offerings. Instead, it enables projects to customize their sale terms and host directly on supported blockchains,

Starting point is 00:39:37 including Solana, Cardano, and Hyperliquid. Quote, at Echo, we don't really like launch pads. We think the incentives are a mess. the team wrote on X. Sonar's first live offering is from Plasma, a blockchain built for stablecoins. Co-founder Paul Fex said Plasma will offer 10% of its XPL token supply, aiming to raise $50 million at a $500 million valuation. The sale involves stablecoin deposits and lockup periods, with distribution set to follow Plasma's main net bay launch later this year. Time for FunBits! Trader turns $87 million win into $13 in record time.

Starting point is 00:40:14 James Wynne might want a name change. The crypto trader racked up a staggering $87 million in profits on hyperliquid in just 70 days, riding high on meme coins and 40x leverage. But then came the plot twist he lost it all in five. According to Look on Chain, Wynne's fortune vanished between May 23 and May 28, leaving him with a wallet balance better suited for a vending machine. His latest claim to fame? a $529 million Bitcoin position that's underwater by $2.1 million, and just $13 left in realized gains.

Starting point is 00:40:53 Win bet big on coins like Pepe, Trump, and Fartcoin. The market clapped back. Hard. Turns out the only thing hyper about hyperliquid was the speed of his downfall? Ouch. And that's all. Thanks so much for joining us today. If you enjoyed this recap, go to Untebrate.

Starting point is 00:41:12 Unchained Crypto.Behive.com. That is, unchangedcrypto.bhive.com. And sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shen, with help from Matt Pilchard, Juan Oranovich, Margaret Curia, and me, Pamajumdar. The weekly recap was written by Juan Aronovich and edited by Stephen Erlich. Thanks for listening.

Unchained - Bitcoin Treasury Companies Are Taking Off. Could They Eventually Crash? - Ep. 843

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