Unchained - The Chopping Block: EigenLayer Airdrop Fallout, Shkreli vs. Io.net, and CZ's Sentencing - Ep. 639

Episode Date: May 2, 2024

In this episode, we dive deep into the controversy surrounding the EigenLayer airdrop, discussing the community’s backlash and its broader implications for token distributions in crypto. We also explore the ongoing debate over the efficacy and future of cryptocurrency points programs. The episode also delves into Martin Shkreli’s impactful campaign against Io.Net, highlighting how his public criticisms shed light on project valuations and investor trust. Additionally, we discuss CZ’s recent four-month sentencing, reflecting on the crypto community’s supportive response and considering the Department of Justice's approach to crypto leadership. Tune in to gain expert perspectives on the complex interplay between market movements, regulatory actions, and community reactions in the evolving world of crypto! Show Highlights 🔹 EigenLayer Airdrop Controversy: Delve into the community's disappointment over the EigenLayer airdrop and explore its implications for future token distributions. 🔹 Debate on Crypto Points Programs: Analyze the effectiveness and future prospects of cryptocurrency points programs. 🔹 Impact of VCs on Market Dynamics: Consider the role of venture capitalists and how investor sentiment is shaped by their actions in the market. 🔹 Martin Shkreli's Campaign Against Io.Net: Discuss how Martin Shkreli significantly impacted Io.Net by publicly criticizing the project's overvaluation. 🔹 CZ's Four-Month Sentencing: Reflect on the crypto community's support for CZ following his four-month sentencing. 🔹 DOJ Sentencing and Prospects for Crypto Leaders: Examine the Department of Justice's approach to sentencing and what it means for future leadership in the cryptocurrency sector. Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly  ⭐️Tom Schmidt, General Partner at Dragonfly  ⭐️Robert Leshner, Founder of Compound ⭐️Tarun Chitra, Giga-Brain & Grand Poobah at Gauntlet Disclosures Links AI x Web3: Pioneering Decentralized Intelligence - TOKEN2049 Dubai 2024 https://youtu.be/zt_uEHcFiA4  EigenLayer Whitepapter https://github.com/Layr-Labs/whitepaper/blob/master/EIGEN_Token_Whitepaper.pdf  Learn more about your ad choices. Visit megaphone.fm/adchoices

The implicit in that claim, which I saw many, many times on Twitter of, like, farmers who are very upset that the VCs have what they perceive as being better liquidity terms than they do, which I'm pretty sure is definitely not true. That, like, oh, you know, the VCs are going to dump on retail and that's terrible and, like, how could they do this to us? When, like, they're sort of assuming that, well, I'm, as a farmer, I should get to dump on retail first before the VCs dump on retail, right? But, like, both people, like, it's sort of implicit in there as like, no, I want to dump on retail, not. you and we're sort of assuming like retail is some other person who we're both racing to fuck faster. And I'm like, I just think like that's kind of a warped mental model of what we're doing here. Like if you think that, then like why are you farming, like, why are you doing any of the, why are you pointing fingers anyone else? It's sort of like no honor among thieves kind of

mindset. Not a dividend. It's a tale of two Kwan. Now your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways. I'm not just trading for who are very involved. I like that eight of the ultimate top. Defy protocols are the antidote to this problem. Hello everybody. Welcome to the chopping block.

Every couple weeks, the four of us get together and give the industry insider perspective on the crypto topics of the day. So quick intros. First you got Tom, the DFI Maven and Master of Memes. Hello, everyone. Next, we've got Robert, the Crypto connoisseur and Tsar of Superstate. Good morning. Next, we've got Tarun, the Gigabrain,

and Grand Puba at Gauntlet. Yo. And finally, I'm perceive the head hype man at Dragonfly. We are early stage investors in crypto, but I want to caveat that nothing we say here is investment advice, legal advice, or even life advice. Please see chopping block that XYZ for more disclosures. So as they say, there are some years where nothing happens and there are weeks where years happens. And this feels like one of those weeks where just so much shit has happened over the last couple of weeks. So we're going to go ahead and jump straight

into it because there's been so much content and we were just, you know, before the show started, we were already getting into it. So I want to make sure that we have enough time and bandwidth to talk about everything that's on the docket this week. So the first thing on the week, not even necessarily the biggest story, but probably the one on which we're going to have the most disagreement, let's say, is eigenlare. So eigen layer, as you caveat that,

so we are very small investors in eigenlayer. I think robot ventures, bigger investors in eigenlare, since you guys invest in. Also, really, okay, maybe smallish. Relatively, on a relative basis, size is not size. Yeah, exactly. Anyway, okay, so,

everyone here on stage as an eigen-Lear investor, but to varying degrees. So, eigen-layer, they're a restaking protocol on Ethereum, whatever, you don't need to explain what it is. They had $15 billion that were staked through Eugenlayer, or restaked through Eugenlair

from people all around the world. And it was very highly anticipated that there was going to be a massive air drop from Eugenlayer that was teased through their points program. So we got the airdrop, and the internet was not happy. So now, why was the internet not happy with the airdrop?

So the airdrop in absolute terms was about 5% of the total token supply. Now, this internet of itself was not that far out of market. The declaration was that 15% total is going to be airdropped over multiple seasons. But the reason why people got really upset was a few things. One, a very large combination of both team and investors. So north of 50% of the total supply is owned by team and investors collectively. Second, the tokens are non-transferable. So initially what they said was that we're going to give you theirdrop,

but the tokens will become transferable once there's sufficient decentralization. This is perceived as being a kind of regulatory hedging, because of course if the tokens are tradable before there is sufficient decentralization, at risk being an unregistered security. The third thing, and this seems to be the thing that has most animated people, is that the airdrop is not claimable from many jurisdictions. So these jurisdictions from which theirdrop is not claimable include, you know, sanction countries, obviously, the United States, Pakistan, I don't know, where,

were you the places where it's not allowed? Half the world. To claim? Yeah. Half the world, really? It's a crazy. I mean, there's the usual suspects, you know, you're North Korea, your Iran's, your cubas.

But yeah, they got Pakistan, Myanmar, Laos, Mali, Albania. I don't know what Albania did. They're very nice people in Albania, but they're not, you can't get the air drop. I'm sorry. Nicaragua. Also not on there. Oh, wow. Okay.

So I have this list here. USA, Canada, Russia, UK, China, and India were all excluded, as well as those who were caught using a VPN. So who's even left in? Who's not on that list? That's like all the most popular countries. Dubai. Dubai is.

Okay, I guess Dubai is good. Places in Latam, I guess, are good if you're not sanctioned. Okay. So that's like kind of insane. And so basically the entire internet descended on Eigenlayer to, basically collectively shame them as well as collectively shame the VCs for being, I get more or less implicitly complicit in this big gigantic cluster fuck that has become the eigenler token. So it's gone from being probably the most anticipated token launch of this cycle to now being the kind of public

enemy number one of crypto. I don't know how they came up with this. Like Lebanon is also on here. And so some of these are obviously sanctioned countries and obviously some of them are US. I think there's kind of this current meta after the, you know, CFTC settlements with Open and ZeroX to IP block US block VPNs of usage of the actual protocol, which makes sense if you don't want to be serving US users, you block those, and obviously sanctioned entities as well or sanctioned countries as well. But this just feels kind of this like hodgepodge of countries that are maybe in some sort of gray area around the world. And it kind of goes back to this point that's been making the rounds on crypto

Twitter, which is there's no IP block or VPN block to deposit into eigenlayer. So it, even through the front end, you can't really do it on chain, but I think most people are going through some sort of UI. But now it feels like the door is closing behind you. And actually, you can't come back and get your points or get your tokens if you're from one of these countries, even though you could use the product and deposit. So in some ways, it feels like the opposite of kind of what all these on-chain derivatives and per-proticles are kind of doing. So, okay, let me maybe represent the pro and con, because there's been a lot of talking heads on Twitter, so the common argument against what EigenLare did is basically what you just described,

Tom, is that you are happy enough to take all of our deposits, right? The protocol itself doesn't really have a demand side yet. You know, there aren't AVS as paying fees to the depositors. So the reason why all this capital was there was you were offering points. Everybody could get points and, you know, all this capital was there because you were enticing them with your points program. And now, all of a sudden, you kind of flip the script and you say, hey, guess what? Most of are not getting points. Also, ha-ha, you're now, you know, exit liquidity, quote-unquote, or whatever, we've taken advantage of all of the retail investors or, you know, investors, whatever, retail restakers, farmers who are putting their capital into eigen-layer. Okay. So now what's the, what's the opposite

side? What are the people who are defending eigen-layer saying? The people who are defending eigen-layer, or maybe just not defending eigen-lar, but defending, like, calming down, are people who are saying, like, hey, this was all free money to begin with. Like, you know, nobody lost any money. everybody who is putting their capital into eigenlayer was getting staking yield and the people who maybe said I didn't get enough I mean to be clear

a lot of people were complained they didn't get enough of an air drop because it was also a linear reward meaning that the more stake you had the more reward you had and a one to one ratio and so if you had a billion dollars in deposits you got you know

some billion dollars multiplied by the points factor it was time weighted so it was ether times time either over time plus amount right exactly right And so the, and so some people are like, well, hey, this benefits the big people.

I didn't get much of a yield. And the people who are saying, calm down are like, well, you know, why does this protocol owe you anything? You put your money in this protocol. You didn't lose any money. You were getting the ether's staking yield. So, you know, calm down. That seems to be the pro side. I should also say, despite the fact that we are investors, none of us were consulted on any of this.

Like, you know, we are all tiny investors in eigenlayer. And these sorts of things, generally speaking, you don't talk to anybody about this, including because there are a lot of investors on the eigenler cap table who probably had no idea that any of this was happening either. So, Robert, what's your take on the whole eigenlayer debacle? Yeah, well, I wouldn't say it's a long-term debacle. It seems like a short-term debacle to me. You know, I think the biggest reason why people feel unhappy on the crypto Twitter is that

this was, if there's ever been a points program, this has been the most marquee flagship points program of all time. It's attracted the most capital of any points program in the history of crypto points. And it is probably the barometer that like others are going to follow. And there has been some relatively bad behavior in the past with points. You know, Some examples were people feeling misled by how blurs seasons kept on extending and extending indefinitely, and they felt like they were getting farmed by the protocol. Igonlayer, in a lot of ways, is the lead horse, not only for points in general, but also for AVS and restaking systems in general. and I feel like they had an opportunity to lead by example.

And instead, I think a lot of the community feels, you know, as you've touched on, somewhat misled in that, you know, not only are, you know, the terms of theirdrop different from what people expected. People expected that if they were able to participate and get points, then points would equal tokens, not points subject to half the world being blacklisted. would become tokens. And secondly, the calculations, yes, to your point, seemed a little weird. You know, even when it was linear, you know, the amount of points that they were dispersing, I believe was not equal to this, although I could be mistaken. But I believe there was also changes in the actual ratio of points to tokens based on participant, based on when they participated.

So points were nonlinear in a. algebraic way. And I think people just feel like their expectations were let down. And I wouldn't say that, you know, no one has lost anything. There's always an opportunity cost to capital. There's always an opportunity cost to staking. There's always an opportunity cost for all those point farmers out there. And so many people were participating in eigenlayer on the expectation that points would become

tokens. And there was other places for them that put their ether. There was other protocols that they could have been engaging with. You know, Eigenlayer was considered to be, you know, the most ambitious project in a lot of ways with the most real project, right? Not like some BS, fly-by-night, you know, copy-paste crypto protocol with points. This is probably one of the most unique and ambitious projects in the last couple of years. And so there was just so much positive goodwill going into the points program and through the points program. I think this just let a lot of people down.

It doesn't mean it's not fixable. I think there's a lot of things they can do. No one knows what season two looks like. No one knows how it's going to go. And I just think there's a lingering fear in the air. There's going to be similar to a blur like scenario where season two goes on in perpetuity and people feel like they're getting farmed in perpetuity. and they get let down, but I don't necessarily think

that's going to be the case. I think, you know, there's a lot that can happen between now and when, you know, season two ends and the token becomes transferable to, you know,

excite people all over. Again, I just think that, like, this was a stumble when it comes to good well. Actually, I want to point out one thing. Robert, you had a tweet today yesterday. Yesterday? Yesterday. That was,

that basically said, you know, era is over what comes next. So I feel like, I think we're obligated to ask you what comes next in your opinion. Well, I don't know what comes back. Do you think that's because of eigenlayer? Do you think eigenler ended the points era? Well, I think I'm saying this because for a few reasons, there's actually a lot baked into that tweet. And I'm like sort of making a couple statements all at once. So one is the actual eigenlayer points ending. Second is the system's built on top of eigenlayer, including your

Renzo's, which Disclosure Robot Ventures is a small investor and other protocols points converting to tokens. You know, eigenlayer was this like base point system

which so much of defy with built around. There was all of the pendles. There was all of the derivative protocols. Everything was built on eigenlayer points. And with the culmination of eigenlayer points, it's not just the culmination

of eigenlayers points, but it's also, I think, in a lot of ways, the end of so many other economic systems that are adjacent to it and their points. And I don't think that Eigenlayer's points program is ending in a way that's going to inspire a lot of excitement for other projects.

I think, you know, the next team that launches a points program is going to be met with a lot of skepticism. And so in a lot of ways, I think like the golden era of points is 100% over. I don't think the sort of meta of points would be the same. And I do think that teams are going to have to iterate on this significantly to get the same. I will take the other side of this. I will take the other side of this. It sounds like you are building in a very high learning rate into crypto retail,

which I think is like just a terrible mental model. I think like right now, the market is a little exhausted. You know, like I think people are looking for reasons to be a little upset as well. Like it's sort of a testy moment for them to also have launched their token. Like somebody mentioned that if ETH was at 6K, I don't think that people would be nearly this mad about the Eigenlair air drop. But I agree with you. I think we're going to take a sec.

People are going to reload. but I think if we see market momentum picking back up again, I think it's like right back on. Like you could have thought that it would Starkware, right? Starkware was also a kind of disaster of a launch. And then, you know, no one's even talking about it anymore. I mean, except to compare it to Egonler of like, oh, which was worse? Well, I think people keep making all the Starkware has eight users memes.

And Starkware has themselves leaned into it and made marketing about how they have only eight users. So I think I would say it probably was still a net negative because people still, if you look at the eigenlayer stuff, a lot of the critiques on Twitter just reference Starkware critiques, i.e., you know, like Starkware staff calling all the AirDrop Farmers, e-beggers, you see that represented and that the reference to that represented. So they're kind of used as this thing that everyone compares to for the worst case points. I mean, just from looking at my view of crypto Twitter is like the Starkware thing kept getting referenced non-stop.

Yeah, yeah. So I think, like, I don't think it's actually as not, they disappeared as you were saying. Yeah. I think, in some ways, it's like the eigenlayer expectations, kind of mirror actually what's happening with East staking, where it's kind of like you said, people view it as free money. And the problem is that, like, there's diminishing marginal utility at a certain point of adding more capital or adding more stakers. And so it reduces the yield for everybody. Like, I don't think you need $15. billion dollars to secure something that is going to have a number of ABSs when they get started. But people view it as free money. So they keep piling more in and that dilutes the returns for everyone else. And so similar with East staking right now, everyone's just like, yeah, why wouldn't I be staking?

Let's go stake. And, you know, it's risk free and I'm earning 3%. And then it's, you know, 2% and a percent and then it's going to be 2%. And, like, you know, the ETH Foundation, I think, has been also pretty clear about the fact that they, they don't want this meta of everyone staking, all the ETH being stake because it should be something that you actively choose to participate in. and there should be maybe some risk or work involved. And I think that's been maybe the other part of sort of the points

meta that's that I think is kind of coming to an end of, this is all free money. I don't do anything, I don't have to risk anything. I go and I show up and I do a little thing and I get an air drop versus, you know, what it's supposed to be, which is compensating you for the value that you're providing to a network or a protocol or a system to get off the ground for the opportunity cost of your capital

and your time and your work to go and do it. And so, you know, I think hopefully there's just more, normalization and kind of more, it's calculus that goes into where should people's capital be placed? How much should teams actually be compensating people for? It just feels like right now it's just way too on one end of the spectrum. Okay, maybe I'll capitulate a little bit, and I'll say this might be the peak of the points era, but I don't think it's the end of the point era, right? In the same way that sort of EOS was like the peak of the ICO bubble, but it was not the end of the ICO bubble, right? Actually, there were a ton more ICOs

after EOS. I mean, so. Not a ton of successful large ICOs. I mean, it was the death now, right?

Yeah. There were still like $100 billion iceos after that. Everything moved private after that. Yeah, there will still be

points programs in the next couple weeks and the next couple months, maybe in the next couple years, but those points programs are going to be nowhere close to as successful

as what we've seen so far. That's my prediction. Right, but also successful in, in a narrow sense, right? Like, I mean,

they had $15 billion dollars of state teeth in there. But that $15 billion, I mean, we're talking about the opportunity cost of capital, right? The reality is that the opportunity cost on that staked ETH is extremely low. It's staked, it's already staked, right? What else can you do with it? Like, the reality is that there aren't a lot of other places where you can get yield. You know, there was blast.

There was basically blast, and then there was a eigenlayer. And there weren't a lot of other places that were giving you yield on. That's part of the reason why they were able to attract so much capital. So maybe if we call this the peak of the point. or how do you think blast will do upon conversion? Because now they're kind of, they're kind of the sitting chicken, right? They're kind of the last one out.

There was a very good meme that showed, I think it was ZK Sync and Layer Zero, just like hiding behind, hiding in a hallway, like watching Eiger and Lair getting beaten up by people. So, yeah, I do think any project that's looking at this

is just kind of sweating bullets right now of, oh shit, I'm next. And if I make one wrong move, like I'm just going to get crucified in the town square for not being community oriented enough or not being decentralized enough. It is a very, let me actually take it a slightly different direction because a lot of the animus that I saw, obviously people were mad, Eigen layer blocking, you know, you took my money,

quote, unquote, whatever, you know, everyone got all their money back, but nobody lost money. But, you know, you were willing to take my capital, which, of course, the other thing that's weird about is that the capital wasn't doing anything, right? like there's no slashing in Eigenlayer. There's no like AVF that were taking the security. It wasn't real economic. Right. It was like put your money in this box and then like I'll give you points.

The SBF box. Yeah. Yeah. Yeah. Yeah. I mean, look, there's smart contract risk. There's, you know, whatever put money in a box risk. I think in Pendle and gearbox you are taking real risk.

Yeah, but I was not telling people go put your money into. Yeah. Yeah. But I'm the thing like if you looked at the distribution of where people are, are putting capital, the sheer amount that went into the like, that's on them, right? That's not on, that's not on, I think that also impacts these, these expectations that users have, right?

Because they're like, totally, totally. They're sort of re-hypothicating, making the total amount used look bigger. And in the process, they expect their size to be, you know, like they expect some proportion relative to the amount of risk and leverage those things. I understand. I understand that, right?

I'm not, I'm not thinking about all this. But that's not, I can have responsibility to your point. I'm just saying that this is why I think there's this communal, like, anger and why people were initially freaking out and being like, oh, Pendle didn't get as much as everything else. And then, of course, like the Pendle market is this beautiful. Like the interest rate went down 50%.

It came back up to almost completely reverse in two hours once people, like, you know, read the docs and the foundation put out a tweet. It was actually, it was beautiful if you watch that, the Pendle. Right. Right. So, okay, I want to take this in a slightly different direction because, you know, look, clearly, Eigenlater team fucked up. They did not read the room very effectively. And we should also maybe talk about the intersubjective staking stuff, but I don't know if we're going to have time today, honestly, because like there's just, there's just so much there that I don't think we're going to have capacity to get to it. But the thing that I want to talk about that was also, it felt like a big part of the story was not just the mechanics of theirdrop and who got blocked and blah, blah, blah, but a lot of the story was fuck VCs.

and this kind of feels like I was telling to ruin this that like this feels like the worst cycle to be a VC where it's just like I you know even though like yes these are all VC projects

and you know I'm sure I'm sure there's going to be markups for a bunch of this stuff as it's coming out and the other thing like I don't really even know that well how is Igen going to do right I think it's listed on AVO

I believe what is it trading on AVO for the future Yeah it's like $11 and 10 to $12 per 10 to $12 yeah so 10 to $10 to $1 billion fully diluted valuation that's implied there. I think it's higher.

It's 16 because it's 1.67 billion tokens. So it's like, oh, I see. It's closer to 16 to 20. Okay. So right now, it is still trending. Even with all of this, the market's still pricing that this thing is at 16 to 20 billion. So two things that I want to ask here. To be fair, though, these pre-launch markets are very illiquid.

Of course, of course. But they are relatively indicative. Yes, they are relatively accurate. They're not off by an order of magnitude. They're off by like 30%. Yeah, I've been very impressed at how accurate they've been thus far. Yeah, I agree. Right now at 987.

Like the day one. 9807. Give you a, give you a. Okay. Tom, so you historically have been on the side of air drops don't matter. Yeah. This is all like a new story that will go away in like 48 hours. These people are not your users.

They're fucking farmers. They're, you know, when you're actually building your product, these people will go away anyway and they won't be there for you. So what is your take on this whole situation with Eigler? Do you stand by that? Do you say like whatever, who cares? Doesn't matter? Or do you say, look, they fucked up. Yeah.

I think the whole like points, airdrop farming, sort of blob has really, people are conflating all these things. I think when we talk about points and retroactive airdrops, it's really just liquidity mining. It's liquidity mining with some editorial tweaks

to make it work. It's very different than kind of, again, like a uni-styleirdrop where it's literally just, hey, here's a thank you to the community. It's not directly proportional to how much you provide it. We're not trying to explicitly bootstrap this thing. It's a very different kind of thing. And I think ultimately, I was making this point for a presentation recently

is like if you look at some of the most reviled airdrops in history, pariswap always sort of comes to mind as like the one everyone hated. They were really aggressive filtering. They're still doing pretty fine. I think they're like 5% of dex volume is going through pariswap. It's not great, but I don't think theirdrop necessarily hurt. I don't think your token has ever, ever recovered that. No, definitely.

Tons of usage. For sure. But I don't think like a great air drop would have saved the product. Similarly, a terrible air drop. I don't think, you know, stop them from being successful. It's ultimately about the product itself. And so I don't think this is going to stop. I think obviously using tokens as a way to bootstrap a network, bootstrap a market is,

it's one of the key kind of killer apps of crypto and the thing that like makes a lot of these products work. There's going to be iterations and tweets on that the same way points were, you know, a tweak on sort of the original model of liquidity mining, but like that sort of concept isn't going to go away. And so I kind of agree that I don't, air drops still remain kind of pointless and sort of tangential to the actual success of the product. But that doesn't mean that like, hey, you, you know, can't do liquidity mining or you shouldn't have a token or something like that. It just feels kind of orthogonal. It's like a moment in time. And ultimately, you have a marathon to run

in building a successful product. So you feel like this was a brand marketing moment. They fucked it up, but whatever, you can recover from that. Yeah, I think the only thing that they would have fucked up is I think if they did not, and maybe going back to my point,

is like maybe they overly incentivized, you know, too much security sort of start. I think it was also kind of the issue with blur in season one is they, it was basically too much of a maker rebate. You had crossed spreads, which then caused, wash trading caused market inefficiencies. It's like an over a subsidy of the market.

That's kind of what we're seeing with Eiger layer right now. But, you know, ultimately, like the product still has to be successful. They bootstrapped this sort of, you know, security budget to help these ABSs get online. It's just, hey, we're slightly miscalibrated on, you know, how much we should actually be compensating these people for. Yeah, that is one of the things that I take away from all these is that in the moment, like, we talked about this with Starware. Like, when the internet is mad, it's like fucking crazy, right? Like your brain is just designed

to just be an abject fear when something like this is happening. It's hard not to feel that this is like basically a near-death experience for a project. And in reality, like it actually seldom is. I mean, Paraswap is one example, but Paraswap was actually never really

that successful in absolute terms anyway. And you look at StarCware, like, yeah, people now joke around about, oh, StarCware was a terribleirdrop. But like, you know, the primary thing with StarCware is not theirdrop. The primary thing is like, okay, are there a user?

are their applications, are there things to do? And whether or not your AirDrop is good, like these farmers are not users. They don't use the product. They're not people who are hanging out on chain. One thing that you do need to be careful of, and I think a lot of the teams that have been in this position are now cognizant of,

but maybe in 2021 was less true, is by having an unsuccessful in some metrics AirDrop, you're very likely to encourage vampire attacks and sort of competitive pressure where people say, hey, we're going to do a more fair one, we're going to do a better one. It's just like you do...

On what basis do you say that that attracts people to do vampire attacks? I mean, vampire attacks are incredibly rare. I mean, but Eganlear is, because of so big, is the recipient of at least one, possibly two right now, right? where there are people explicitly trying to court people pissed off about the points decision. And so I think you have to be a little bit careful, right?

Like this was sort of the uniswop, sushi swap thing. Right, but do you, okay, but do you really think that, okay, there's going to be season two, there's 10% of the token supply set aside for the season two. Eigen layer points translate into tokens. FDV is going to be about every $15 billion. I think the transferability is the thing you have to be a bit careful of, right? That's where you're opening yourself up for the. that was for for the other.

Yeah, fine. So somebody might go be faster, looser, somebody might just straight liquidity mine and not even have points, right? They might just say, look, here's token, get token, fuck the points, you know, intermediary. But like, at the end of the day, I don't think these people are competing on TVL.

Like, it seems to me like the wrong theory of the case that Eigenlayer versus, like, the Eigenlayer competitor is a TVL battle, right? That feels like it's sort of a fireworks show to show people, wow, we have 15 billion in Staked Heath when like there's no slashing, there's very few AVSs, like a lot of stuff

is like not fully online yet. Like right now it's just like a big headline number that everyone is excited about and some people are mad about. I don't know. I mean, okay, so I want to go back to the VC thing because I feel like this is where I'm seeing a lot of sub-tweeting and like,

many people seem to believe that VCs are kind of complicit in whatever happened here with Eigenlayer. And obviously, you know, we're not lead investors and Iganlare, so none of us particularly did this, but we also have our own portfolio companies that we are more involved with that have done points programs and do this kind of thing. What is your guys take on like the, you know, the pitchfork, you know, torches coming out for the VCs in the cycle?

All I have to say is, is my impression of this is the Sib is very sensitive to the alignment anons like zero X balloon lover and trying to play. than what would truck and who by the way highest influence in people's minds relative to the audience size but honestly you know very scathingly true and oftentimes insightful point but i see it everywhere right you see the traders are saying it you see like you know the but the traders are usually very you know the crypto traders i don't feel are very honest right they'll like change their mind in two seconds and send you a ref link for something that they were shindle of a week ago Right?

They're pure mercenary. But these Anons not only do that inside information in the sense of like they clearly know things that are really non-public. But they're also very curt and direct in the way that I don't think the traders are maybe either too focused on chasing yield or like looking for the next token to even bother having that level of honesty in their discussion. Tom, what's your take on the anti-VC sentiment? Well, as someone who's slightly biased, I mean, I think this is kind of Kobe's whole thing with Echo, which is his sort of, you know, angelist on-chain crowdfunding platform, which I kind of agree with, which is most VCs are not super helpful. They supply capital, and in some ways they're very, you know, vampiric to their, the products they invest in. They want to have a super short lockup and then just kind of down. They're almost kind of like, you know, a caricature of kind of the evil VC that people on

Twitter sort of imagine. And I think in practice, you know, the sort of name brand VCs that people think of that are investing in the IGLAIR actually are very helpful when it comes to everything that goes, is involved in running these kinds of companies. And the other thing is, you know, they also have very long investing cycles, right? For most of these tokens, you're looking at three to four years of until you're fully invested. you know, to put that in context, if you, you know, did an investment back in January, January 2021 when, you know, OpenC was just kind of becoming a thing and NFTs were just kind of booming again,

you still would not be fully vested. And so I think there's this sort of like image in people's mind that they like to get mad at, this sort of fake image of there's TGE, all the VCs dump on retail, and they walk away with big bags of cash. And like, that is very not accurate. I do think there is a real concern around VC concentration and ownership of some of these protocols and, you know, some of these tokens. But I think it's very different than, you know, the dynamics around price action and sort of short-term, short-term air drop dynamics. I think in the eigenlayer case specifically, some of the arguments about the terms appeared more heated than I think the reality suggests should be the case. For example, because

of the non-transferability of the token combined with the facts that people on crypto Twitter read the terms as being, oh, VCs are fully vested in three years, nobody was sure if that started when the token was first created or when it first unlocked. And a lot of the chatter online was, I believe, incorrectly of the opinion that that three-year counter started when the token was released at the token generation event, not the transferability of the. the token. And so a lot of people on crypto Twitter thought the VCs were evil in this case because they said, oh, well, the VCs are going to be fully vested in three years. They're just going to stall transferability for as long as they possibly can, if not for a year until the VCs hit their

cliff so that when the token is transferable, they're going to be liquid and they're going to be dumping on retail and blah, blah, blah, blah. And I think that was where a lot of the animosity came from, was this like trying to interpret the different like timelines combined with the non-transferability of token. I don't think the reality is going to be like that, but I think that's where some of this heat came from. What's ironic to me is that like the implicit in the claim, and I agree with you. Actually, I don't even know what the vesting terms are. I can later when the vesting timeline starts. I actually don't know either, by the way. I feel like there's been like strong arguments on both that I don't actually know.

Yeah, we actually don't know. But the implicit in that claim, which I saw many, many times on Twitter, of, like, farmers who are very upset that the VCs have, what they perceive as being better liquidity terms than they do, which I'm pretty sure is definitely not true, that, like, oh, you know,

the VCs are going to dump on retail, and that's terrible, and, like, how could they do this to us? When, like, they're sort of assuming that, well, as a farmer, I should get to dump on retail first, before the VCs dump on retail. on retail, right? But like, both people, like, it's sort of implicit in there. It's like, no, I want to dump on retail, not you. And we're sort of assuming, like, retail is some other person who

were both racing to fuck faster. And I'm like, I just think, like, that's kind of a warped mental model of what we're doing here. Like, if you think that, then, like, why are you farming, like, why are you doing any of the, why are you pointing fingers anyone else? It's sort of, like, no honor among thieves kind of mindset about what you're doing, like what Igenlair even is. Like, the VCs who invests into Eigenlayer do so because they believe that EigenLair will be worth something at the end of their vesting period, which is years in the future, right? Like, people who invest in EginLayer, like, the Cedron of EigenLair was years ago before anybody was farming it. I believe, I believe, like, December. Because we invested in that night.

Yeah, yeah. No, it was before people even really knew, us included, like, what Egan Lair would become, you know? It was. Right, the re-staking term was not even coined at that time. Yeah. Like, Eigler was doing something totally different at the time that you guys had. invested. So like the idea that, okay, well, the VCs are locked in this tug of war to dump on retail faster than you. Like, that's just not how VCs think about it. Like maybe some Chinese

Pump and Dump Fund is thinking that way. But like the funds that have long-term lockups and are backing real, you know, computer scientist types like Sri Ram, you know, like things like, you know, avalanche or, you know, optimism or Solana, these are long-term games and people are trying to, like, pick the thing that they think will long-term matter? Because if it doesn't, you don't get to dump on anyone. I will say one interesting thing. And I think there's like this cultural divide here, which every time I go to like Dubai or Singapore,

I just am constantly reminded of, which everyone in Asia and the Middle East definitely thinks of it as the, the, like, who's the last one to sell type of game? 100%. They have no clue what the technology is even for. They're just kind of like, It's just a slot machine, the meme coin.

Whereas people in the U.S., almost to a fault, assume that there's not that many people like that, right? Like, they must all actually read the white paper. And it's like, that's not true. That's true. Reality is somewhere in the middle. Yeah. Going back to Kobe's point, there are a lot of shitty VCs out there. I at, you know, so I just paid attention to what's happening on secondary desks.

So those sort of tell you, hey, here's what people are buying. buying and selling. And I saw something yesterday that kind of brought this image to mind. Renzo, the liquid restaking protocol on top of Egon layer launched their token on Monday. Or there was it today. Okay, it was today. So not even 24 hours later. I saw an offer come through someone selling Renzo at a 50% discount to spot. And it kind of around any of like praying mantises, you know, after they're done mating, the females bites the males head off and throws the body away. I'm going to get an getting that kind of vibe from the, you know, early BC just, you know, three hours after launch and dumping this token, getting the fuck out. I just, yeah, I'm hopefully you see less of this.

Well, here's the thing. I don't think we're going to see less of this. I think if you look at TradFi, okay, this is how IPOs work as well. It's entirely a structured game of who's allowed to dump when, okay? Like, the entire structure, how every company goes public on the New York Stock Exchange and on the New York Stock Exchange and on the New York. NASDAQ is like, oh, the IPO buyers have a six-month exclusivity window to sell. And then the day after that, everyone can dump, right? And they literally go into like very specific legal structures to come up with, you know,

almost a prioritization of trading to favor the most final round of investors, which is the public investors first, right? And I actually think there's going to be like probably more experimentation with this. Like it's amazing how few structures we've seen in crypto around like liquidity and lockups and how does it work and what's fair and what's unfair and like what are the incentives and how are they aligned. Like the one thing I'll say is that like. But we we do effectively have that though, right?

Like the air drop farmers are the first to unlock. Like the VCs don't unlock until everybody who's bought it on finance has like a year to keep trading it. Yeah, I think I think a fact of life. that like I think a lot of the louder people on crypto don't realize is that in traditional finance and capital formation for normal business, the same stuff happens. It's just actually extremely more non-transparent. You don't get the pie chart, even if the pie chart is messed up as we saw. Oh, that pie chart was chart. Okay, we're good. All right, we're going to ignore the pie. There's too much talk about. Okay. Speaking of, you know, projects and bad things

happening, we should talk about the Ionet drama. I.O.net is a Salana-based D-PIN project that tries to create a decentralized marketplace for GPUs. They've claimed at various times that they have hundreds of thousands of GPUs, tens of thousands of GPUs. Different numbers have been thrown around at different times. Okay, so the main character, the protagonist in the story, believe it or not, is Martin Schrelli. You might remember Martin Schrelli from several years ago when he was known as PharmaBro, a very famous pharmaceutical entrepreneur who had he'd cornered the market. on some pharmaceutical called Daraprim, raised the prices by a lot,

became quote-unquote the most hated man in America, eventually was sentenced to prison for security fraud that was actually unrelated to any of the Daraprim stuff, eventually got out of prison and became a just general kind of internet influencer, man about town person. So, Martin Schrelli was actually an early user

of Ionet. Ionet is a, you know, Ionet is sort of pre-lawn, or pre-token, but it is launched so you can go on the network and use the GPUs, rent them and start using them. So Martin Shrelli started tweeting on April 24th, this is about a week ago, saying,

hey, I would avoid the Ioneet token. Seems kind of shady. There's a $2 billion plus market cap for no reason. These H-100s, which are a high-end Nvidia GPU, cost $3.30 an hour. They're far cheaper elsewhere. No one has articulated why this thing needs a token. Okay.

So then April 27th, a few days later, there was an incident on Ionet where basically there was some kind of, it was discovered that they were spoofing huge amounts of GPUs on the network. So supposedly this network had hundreds of thousands of GPUs. In reality, it turned out many of the GPUs were fake.

And so Ionet launched an upgrade to require the GPUs to implement some kind of proof of work, in addition to the normal heartbeat, to prove that these GPUs are actually GPUs. But shipping the software upgrade caused a huge amounts of GPUs to go offline, presumably because a lot of them were fake,

or because they couldn't, like, upgrade their software in order to actually implement this proof of work system. Then there was like some other breach where like they had to implement octa or something. I don't know. A lot of stuff happened that kind of made everything very convoluted and fuzzy. Then starting the day after this, Martin Schrelli goes on the offensive. He starts going on Ionet, which claims that it has 10,000 plus GPUs. And then tries to actually just go on the network and try to rent a GPU.

Just a single GPU. And turns out he cannot rent AG, he cannot rent any GPUs. He basically goes on a tirade the entire day showing that it is impossible to rent any GPU from this marketplace that claims to have 10,000 plus GPUs. And then when he does rent a GPU, he shows that the GPU is falsely labeled as being an A100 when in fact it was like some other much lower end GPU that was not the thing on the tin. There was one of my favorite interactions here was Screlli in the midst of this tweet storm, you're talking about how there's no GPU to rack. and the founder of Ironnet. It was like, oh, really? And then you're trying to sort of contradict him

and post these two photos, one of which was a rack full of like Apple M1 studios, which is like not a GPU, not that people are renting. And the other picture was a picture of like a single gaming PC. It was like a single gaming PC with like a 3090 and some like RGB lighting. This is not the founder. This is not the founder. This is not the founder.

This was a community ambassador. This is a community ambassador for ION. It was a, it was a later afterwards, but it was good. So anyway, this became just a complete debacle where the team, for the better part of the day, was like ignoring this, assuming that, okay, it's probably better if we just, like, let him talk in the void and go away. And it sort of got bigger and bigger over the course. I think it was like Saturday or Sunday that this started. And pretty soon, like, everybody was just watching this dumpster fire of this guy, eviscerating, probably one of the most hyped crypto AI projects out there. I mean, this token

has been projected to launch on finance. People tell me it's going to come out at four to five billion FTV. And basically the only person who's like on the internet actually trying to use it is Martin Schrelli, who just goes on to demolish it in public, points that he basically trawls up as well

a bunch of information saying that the founder Shadid something something was involved in a bunch of scams in the Arabic speaking community but there's not a lot of like English-translated stuff. So Martin Schreli was literally going out there, translating these Arabic articles and posting them piece by piece on Twitter. They're just absolutely insane weekend. So I will add one personally, I think, which is that

token 2049. Oh, dude, yes. I had a panel with the with Ilya from near. So author of the Transformers article. The founder of Sahara, who is a professor at USC, and the I internet founder. And I got to say the difference in ability to answer the questions that were asked was quite large. That's what I would say. If you watch that video, which is probably online somewhere, you can just see the engineering answer, you get the theory answer, and then you get the kind of like, what is that? The booster answer. Yeah. Yeah. So apparently, by the end of this tirade that Shrelli went on, he announced that a bunch of the investors

in IONET are now very unhappy in trying to undo their investments, as well as apparently the Binance listing supposedly got pulled on the basis of all the stuff that Shrelly started just posting online. And Shrelly now, it seems like he's on the warpath. He basically has declared war on Ionet

and will do everything he can to destroy them, almost seemingly on principle that a project, this agreed, is going to be trading at this high of evaluation. So he was like several times he said, look, if you guys were just going to try to trade at $50 million and paint yourself as a startup, I would be like, oh, yeah, cool.

You know, you guys have some bugs. But trying to come out and dump this on retail at $4 billion, like I just have to stop you. So I don't know. This kind of seems like a weird redemption art for Schrelli. I'm actually, I'm super here for it. Because I'm like, we need more people to just like go and use products

and like describe how broken they are. I know. I feel like a lot of stuff in crypto would get corrected overnight if that just happened a lot more. Yes, but that's why, Dante go full circle back to like, you know, some of these points programs, when all it is is stake in asset get point, there's nothing that can go wrong. When a project is trying to incorrectly or through fraud or whatever, say like, oh, we have this super high tech thing, like, you know, it's magical. that doesn't really exist. That's where people run into problems. I think that's one of the reasons

why the meta has shifted into just points and meme coins for the most part, in that not much can go wrong if all you're promising are points and meme coins. Yeah. I mean, look, I've been fairly skeptical of the decentralized GPU marketplace story for a while. Not because I think it's not possible. Obviously, it's possible

in principle, but it's just like you end up basically becoming like a tier 0.5 data center low quality GPS. There's also a verifiability problem, right? Because it's very easy to fake that my

driver looks like some particular thing. And then I'm actually using a lower power, cheaper device and giving you random numbers. Right. So that... This is like the two chipmunks in a trench code problem which like, you know, how do you actually verify this is a real GPU

without some kind of trust? And the answer is like, well, This is not a theoretical problem. Apparently, this is literally what happened to IORNet a week ago, is they realized their quote-unquote 700,000 GPUs were a bunch of, you know, Schrelli was also claiming, like, at some point, one of their UIs had more GPUs than AWS had H-100s or something. It was like something crazy. Yeah, yeah, yeah.

It was like a little thing. Right. Yeah. Oh, there was a, okay, I see. Yeah, they claimed 1.7 million GPUs, which is more than AWS, Google, Azure and meta combined. So, uh, it's a, so, it's a, But I think this is,

okay, by the way, this is, I think, inherently a problem with a lot of the deep-pin, decentralized physical infrastructure networks is like the civil resistance is very hard because you kind of need like some physical device analog analog civil resistance to prove that you're not faking like either the same physical thing 20 times in different places or you're not faking sort of identity of a thing as in like claiming it can do so much compute, but they actually can't. And instead of you just, like, fill in random numbers. Both of those problems are very hard.

I feel like there were, like, lots of, they've always been a ton of startups in every hype cycle in crypto where that, like, want to do that. You know, I think, like, the, there is, there are ways of doing it. The thing is they'll always. What are the ways of doing it? Well, one thing is, like, you can constantly keep doing challenges, right? So it's like as you're doing work thing that they're shipping. Yeah, yeah, yeah, exactly.

But the problem with that is like, then you're a problem. prove the hardware, right? It just proves that you're willing to do this amount of proof of work. Well, you can have some type of challenge, which, you know, for it, for GPU, imagine that you have, you know, the newest architecture and the previous architecture. And you know that for some benchmark, there's a gap of a certain size. Now, their proof of work is they have to run that, you know, that benchmark. But you've got network latency, you've got jitter. You've got all this stuff. I'm not saying it's perfect, but then to increase your probabilities and know that, it's true, you have to do more challenges, but the more challenges you do, the worse the work quality is

because they're spending more time doing a challenge solution. Yeah, yeah. Right. And it feels like it's also easy to game, right? The moment you get a challenge, you're like, oh, turn on the actual A100 and like go right to just in time from AWS and then feed the challenge and then go back to like using your gaming GPU. Yeah, it's definitely like a very hard thing.

I think like there, there are like I said, I think there for some small applications, closer to this helium type of thing, you can find proof of bandwidth. It's very hard to fake that you're actually sending packets in a certain direction and certain latency distributions. But it feels to me a little like, it's a just-so story that these networks are so easy to bootstrap and then suddenly have $4 billion FDVs. I mean, even helium ran into this, right? There are people

GPS spoofing helium to like move into vacant areas and sort of far more. And so it's like, yeah, maybe, you know, functionally it works and you can relay data, but like, that doesn't mean you are physically in the place that you, yeah. I mean, forget about crypto networks. This happens all the time in like Uber and DoorDash and stuff. Yeah. Drivers will boost their GPS. And so it's like, I think like that problem hasn't been solved. I think it, and people have to realize that when they are investing in these things is that they're not going to have the same guarantees that you think you're getting from a normal blockchain.

I think what you basically need is trusted hardware. And the newest generation of GPUs do have trusted execution environments in the GPUs. Yeah. But once you have that, you kind of don't need the blockchain anyway. You know, like then it's like, okay, just have a cloud provider, have GPUs with TEs, and then, you know, game over. Like, that's it. You don't need a decentralized network anymore. Because you can guarantee the privacy.

You can guarantee the like verifiability. You get all that more or less for free by making the same. assumptions about the hardware. So anyway, kind of ridiculous, but, you know, another part in the, or sort of another quiver in the arrow of people who say VCs ain't shit. So, you know, although, luckily, we were not investors on the cap table, but there were some pretty notable investors who were a part of Ionet. So, look, so I will say as a one final thing,

is like we're investors in some centralized companies that do GPU stuff, And those are actually great businesses. They're actually, they're, you know, they can, they can have like hundreds of millions of dollars of revenue. And the centralized ones don't have all these problems of like, I have to care about the spoofing. They're kind of like running, they're getting data centers to run these things and signing contracts and stuff. So it's not that the business model isn't wrong. It's just that the like shoving a token in it and like hoping that you can verify part is the part that doesn't make sense. Well, I think it's not getting the economy of scale and not doing the quality control, right?

Like, data centers, the amount of money that data centers make is directly proportional to their quality. Yeah. A low-quality data center is a low-margin business. High-quality data center, high-margin business. Yeah, it's designed to be centralized and specialized, right? And high-quality. That's like what makes the product itself good. Like, as you take away any of those legs of the stool, the product gets bad.

And everything is about performance in AI. It's not necessarily about verifiability at this point. So it's like you're not willing to spend that much of a cost for that. feature. So it's just, it doesn't quite make sense to me. Yeah. Cool. Okay. So let's move on CZ. So CZ's trial has, well, not his trial, sorry, his sentencing has just concluded. So if you recall, CZ, founder of Binance, settled four billion dollars with the DOJ and CFTC for charges about money laundering and, you know, AML, sanctions, violations, all that stuff. his sentencing just took place today.

I think there was a betting market that guessed that he was going to be roughly on the order of six months to a year. Turned out the judge gave him four months. So very far cry from SBF. SBF, you recall, was sentenced to 25 years. Looks like CZ is going to be out basically by end of year, presumably,

if he starts his sentence soon. He's going to a minimum security prison in the Seattle area. And from everything I've read, it should be pretty chill. Apparently, he had 160 letters. that were sent for his sentencing hearing that were just glowing things about how he's a great guy

he's done a lot of philanthropy, like real philanthropy, you know, like donating to, you know, build schools and not effective altruism. Well, okay, well, effective, nevertheless, but yeah, not effective altruism. And apparently he, like, you know, drives some kind of Honda minivan and, like, he lives, he doesn't live very sumptuously, he doesn't have fancy watches.

So, ironically, CZ, was actually more SBF than SBF was painted as being. But like, if you read the, if you read the stuff that they talk about it, they're like, yeah, he lives very, very simply. And if you just saw him, you just think like he's some nerd dad. So although, you know, he flies a lot. But besides that, like, he doesn't really spend a lot of money. And, yeah, it was actually, like, very heartwarming to see the reactions of people that, like,

hey, okay, he admitted that he did wrong. And obviously, the industry was in a very different place at the time that CZ, was basically operating in a pure Wild West environment. But he owned up to it, faced the music, paid the biggest fine in history, and will be the richest person ever to be imprisoned in the U.S. So thoughts? Well, you scooped the, you know, really good fact that I was going to drop, which is that he's the richest person to ever be imprisoned in the U.S.

Okay. But I do think, you know, very clearly, it's a tale of two founders. I mean, SBF was hated because he truly wrecked the lives of so many people. And almost everybody in the public thought that 25 years, I mean, this is all debatable, and we're just rehashing the past, but so many people were furious that 25 years wasn't enough for the harm that SBF caused. And the reaction to CZ is 180 degrees opposite of SBF. In fact, most of the internet has been hoping that he gets.

you know, zero. There was home confinement or like probation or whatever, right? Like he had so many people rooting for him versus SBF, which almost everyone was rooting against him. And so, you know, I do think it's a function just in a lot of ways, you know, harm done, influencing public sentiment, but the public sentiment around CZ, it couldn't be more different than SBF. And so, well, I mean, SBF didn't have anyone who came. He had so few people who came to sentencing to even write, say something nice about him, right? Yeah, SBF was pure evil. I mean, CZ was not.

CZ obviously moved really fast and cut a lot of corners to, in pursuit of building a big business, right? It's like, in a lot of ways, the CZ story is extremely similar to like the Uber story. In that Uber broke the law, like all over the place to build Uber. Like, Travis cut a lot of corners, right? And that was the only way to get to scale as fast as he did. Z, cut a lot of corners getting to scale as fast as he did. He was way more permissive and facilitating with like, you know, AML than he should have

been in a regulated world. And he cut a lot of corners. And if he didn't, finance would not be where it is today, like realistically. And, you know, there's a spectrum of like the startups that cut corners and achieve crazy scale. Like, I view it way more like Uber than I do SBF, which is way more like Bernie Madoff, you know? Yeah. I mean, in some ways, it is a, you know, procedural violation of a somewhat more recent, you know, regulatory regime that is very U.S. specific versus, yeah, stealing retail investors money. I think even, you know, the numbers that the DOJ, you know, trotted out in

sentencing were, like, not very impressive. They were like a million dollars, one point one million dollars from Iran was like traded on on finance it's like okay sure you know maybe that happens I'm sure you know most large banks probably have you know a larger number of that given kind of the historical and no bank executives are ever ever ever ever charged yeah um I think uh there's also obviously the other big sort of BSA violation case in my mind is is BMEX and all those founders got probation um and so it I don't quite know why maybe the answer is hey, that was 2020. You know, this was still going on through, I think, 2021, 2022.

And so maybe there should have been more awareness of kind of what the laws or what the compliance requirements are. Maybe CZ's, I don't know, less sympathetic a character. I don't know what the reasoning is as to why, you know, he's receiving, maybe the scale, you're receiving prison when the Bitmix founders got probation. But in the grand scheme of things, four months in minimum security prison is not too bad. For one of the richest people in the world. Yeah. I mean, I would argue that, you know, the scale of Binance's violations were definitely bigger than Bitmex's, right? I mean, Bitmex, it's like, oh, you know, blah, blah, blah, bribe regulators of the Crocanut and we were not KYCing. But there's nothing in there about, you know, sanctions and Hamas and, you know, Russian terrorist groups and blah, blah, blah, like the scale of the of the damage that Binance facilitated through allowing money laundering and, and, you know,

sanction entities to run through Binance over many years, like the scale of that damage is just much bigger, right, unequivocally. And the reality is that a lot of what people pointed to of why the sentencing was so lenient was that the DOJ actually couldn't get CZ in the room where it happened, right? So they got, you know, Samuel Lim, the chief compliance officer, talking about, oh, shit, you know, we've got Hamas on here. But they never have any messages where CZ knows it's happening.

And CZ basically, like, to the end, the DOJ could not prove, because this is going after CZ personally, right? they already did the settlement with Binance. Going after CZ personally, you have to prove he knew that that was happening. This is a gigantic business. He could have been insulated. He could, you know, blah, blah, blah. And that's always what happens with the banking executives is that, you know, yes, there were

AML violations, there were sanctions, there was money laundering, there was human trafficking, whatever, but we didn't know. Somebody else was responsible for that. I didn't know, right? And it's very hard to prove that for white-collar crimes. And I think the thing with this story is that they didn't have enough evidence to to really clearly link him to it

because of, I think, how careful he was. And that, I think, is a big part of the reason why the sentence is much more lenient than it would have been for Arthur Hayes, right? Arthur Hayes, probably none of that scale of stuff was really happening. People in the U.S. were gambling on Bimex, you know? But I don't

think there was a scale of money laundering and all that other stuff that was happening on Bin Laden. But it's not like this is a organized crime and this is a RICO case. And, oh, I didn't know that, you know, there was, you know, drug dealing and prostitution, and even though it's my key income stream and a core part of my business, you know, this was, in the ideal world, you know, finance could have operated without KYC and just any bad actors,

any sanctioned energy just just can't sign up because, you know, that you can be compliant. But they're not actual revenue drivers. They're not actual, you know, material business lines for finance. So I think it is very feasible that, you know, maybe CZ was careful, but also you probably didn't give a shit about any of this other than, other than looking at it. to keep them out of jail, but it's not like it was key to the business. And that, I think in my mind is sort of like the other key distinction. No, I agree with that.

I agree with that. I mean, clearly, finance was making most of their money from the biggest markets, which are the U.S., China, you know, Europe, et cetera. So no question that, like, all this stuff, they could have avoided all of it and probably made just as much money. And obviously now would have made much more if they didn't have to deal with all this bullshit on the tail end. But I think, you know, the point that you made, Robert, which is that, you know,

all these banking execs have been guilty of very comparable crimes and none of them have ever been put in prison. I think is also a good point. Reality, CZ is a foreigner. He's a, you know, Chinese guy or Canadian Chinese. And he is going to get, because of how he has also figured into the growth of the global crypto market and the story behind the collapse of FTX. I think all of that stuff has added more, you know, energy behind the DOJ pursuing him as aggressively as they did. And the reality is that, you know, I think CZ, if he didn't have as good of a legal defense, I think this would have ended up much worse for him. But he obviously hired the best lawyers that money can buy.

As you mentioned, one of the richest people in the world. Very, very powerful set of resources that he has available to him. So I think he just got the better of the DOJ. I think four months. At the end of the day, like all that being said, I do think that, you know, something is fair, something that's not zero. Four months feels to me like the right amount of time, which is that. that yeah, you know, like also he paid, you know, bill it, four billion, exactly, four months, uh, also four billion. Um, and, uh, you know, don't, don't fud. I guess it's all,

um, it all comes full circle. So, uh, but I think he will, he will retire into a very welcome embrace in the crypto community as being like this elder statesman. I'm sure at this point, he's not looking to start any more businesses and, um, you know, kind of enjoy his Honda Civic lifestyle or whatever, you know, however he chooses to spend his, uh, many, many riches. Anyway, yeah, I think we have to wrap. Unfortunately, there was a lot of other stuff that happened, but maybe we'll get around to it next time.

But until then, see, everybody.