Unchained - The Chopping Block: Quantum FUD, Circle vs. Tether & WLFI Drama

Episode Date: April 19, 2026

Quantum computing risk, USDC vs. Tether drama after the Drift hack, and World Liberty Financial’s governance circus take center stage as Haseeb, Tom, Tarun, and special guest Joshua Lim dissect market signals, institutional FUD, Trumpcoin shenanigans, and ask: is crypto VC dead or just getting started? Welcome to The Chopping Block — where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest in crypto. This week, the crew is joined by special guest Joshua Lim, Head of Derivatives at FalconX (and self-described Quantum FUD Whisperer). Ever wondered what happens when a quantum computer finally threatens public key cryptography? We break down the real and imagined risks of “Q Day,” what markets are actually pricing in, and why watching for Satoshi’s coins moving is still the ultimate market panic trigger. Next up, the hosts tackle the messiest storyline in stablecoins: the massive Drift hack, North Korea’s role, and the blame game between USDC and Tether. Is Circle’s “wait for the court order” approach defensible, or are PR wins up for grabs for whoever moves fastest? We would never forget the crypto car crash that is World Liberty Financial: from drama-filled governance votes that magically extend lockups, to Justin Sun’s redemption arc versus Trumpcoin, to whale-scale DeFi leverage that could nuke a protocol. It’s a masterclass in governance theater and permissioned shenanigans. Finally, we level with all the “crypto venture is dead” crowd — who’s still building, where the real capital is now, and why bear markets always demand an extra shot of conviction. From quantum nightmares to meme coin melodrama, let’s get into it. Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform. Show highlights 🔹“Q Day” decoded: What quantum risk really means for Bitcoin and the markets   🔹 How institutional allocators cite quantum FUD — but are they just making excuses?   🔹 Why “watching for Satoshi’s coins moving” would nuke market confidence   🔹 Drift hack dissected: USDC vs. Tether, North Korea fingerprints, and Circle’s PR headache   🔹 Is Circle’s don’t-freeze-without-court-order policy defensible or just bad optics?   🔹 World Liberty Financial’s (Trumpcoin) greatest hits: forced lockups, governance theater, and Justin Sun’s crusade   🔹 Tether’s “PR coup” and the stablecoin migration on Solana   🔹 Are most crypto VCs washed? Debating the right-sizing of venture capital in the bear   🔹 Hot takes on “revenue meta,” mature infrastructure, and why there’s less room for dreamers   🔹 Who’s actually still building in crypto — and why cycles always come back Hosts ⭐️Haseeb Qureshi, Managing Partner at Dragonfly ⭐️Tarun Chitra, Managing Partner at Robot Ventures ⭐️Tom Schmidt, General Partner at Dragonfly  Guest ⭐️ Joshua Lim, Head of Markets at FalconX Links: Joshua Lim’s Q-Day Thread: ⁠https://x.com/joshua_j_lim/status/2044602429002367330?s=20⁠ Disclosures Learn more about your ad choices. Visit megaphone.fm/adchoices

I think the reality is that crypto is extremely momentum driven. When momentum turns negative, nobody wants to say, I'm selling because it's going down. That's a stupid, it sounds stupid to say that. So instead, you come up with the smartest possible thing you can say of why you're selling, which is quantum. Not a dividend. It's a tale of two quons. Now, your losses are on someone else's balance. Generally speaking, air drops are kind of pointless anyways.

Unimmed trading firms who are very involved. I like that eat is the ultimate pump. D5 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 insight of perspective on the crux of the day. So quick intro, this is just you got Tom, the Defy Maven and Master of Memes. Hello, everyone.

Next, you got Tarun, the Gigabrain, and Grand Puba at Gauntlet. Yo. Joining us today, we've got special guest, Josh Lim, mastermind of markets at FalconX. How to be here? And I have received 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 Josh, we brought you on because we often talk about markets on the show, but we have no idea what we're talking about. And you do know what you're talking about. You work at Falcon X. You see everything happening, especially on the institutional flows that are coming back and forth across your guys' desks. And you recently published a thread. So Crypto is starting to get a little bit of breath of fresh air after a long and kind of dark quarter that we've had over Q1. But you recently published a thread

about Q day. Now Q day, I don't think we've used the term on the show before, but QDay stands for basically quantum day. Sounds celebratory, but it's really a very sad day because it's the day that a quantum computer can break public key cryptography. So people are very afraid of QDA. We're repairing for QDay.

It's a bit like Y2K. It's like, that's the day when shit goes bad. So you wrote a thread about what to look for in markets that are going to be signals that QDA is coming. So obviously there's a lot of technologists who are looking at, okay, you know, how many cubits does it take to crack an egg or fry an omelet? But the question that you're asking is,

when is the market going to tell us this, not the scientists, about when QDA is coming, because, of course, markets often give you signals that are not necessarily obvious from just looking at the object level questions. So I was hoping that maybe you could, one, give us a sense of where the markets are today, And two, is quantum a part of the story? And what are you seeing in the market tea leaves with respect to when quantum is coming and how afraid we should be? Yeah.

Yeah. Thanks for having me, guys, a long time fan of the show. I would say this. Like, I think we live in a time where there's a lot of geopolitical risk. There's a lot of basically risk premium built into the market, right? And the risk of quantum computation sort of affecting crypto and potentially resulting in like unlocking Bitcoin that had been dormant for a very long time, that's just one of many risks in the market today.

And I think that's like one of the things that I wanted to talk about is just I wrote this thread, the idea being how do you explore this idea of quantum and how does it manifest in the markets? We live also in a world where there's a lot of focus on prediction markets, right? Like how do you extract signals from the markets and from people who have this sort of specialized information? And there is, you know, one way to do it, which is to create and spin up a polymarket. And I'm sure you guys have seen there's markets out there that specify, you know, some

events related to quantum computing, breaking Bitcoin encryption. But thinking about it from the perspective of much more liquid markets that exist in crypto today, things like the Derivit Options Market, things like the Ibit Options Market, the forward curve using exchange listed futures, that might be a more reliable indicator to a sense of where things are. And I think I kind of wrote this thread because a lot of people have talked about the effective quantum on Bitcoin and specifically how it can be mitigated and how these, you know, the signature schemes can be migrated to a post-quantum world.

And I believe in all that. Like I believe we will all as a community, the, you know, millions of us who are involved in Bitcoin today can do that and migrate successfully. but there's always going to be this open question, which is going to have a huge amount of market impact of what happens with the Satoshi coins or really any coins that are dormant and sitting in paid to public key addresses

that are basically not movable unless someone steps up to claim them. So yeah, that's kind of the motivation. Okay, so let me challenge. So the core of your argument, for those of you didn't see the Twitter thread, basically you look at three different indicators in the market based on, you know,

out of the money options and a lot of these signals of like open interest that will tell you, hey, this is indicative that somebody is either trying to hedge because they're going to blow something up using quantum or they're worried themselves about quantum and as a result, they're trying to alleviate some of their own risk of QDA blowing things up. The problem with these indicators is a little bit like, I think we talked about this previously on the show, of using oil futures as a way of prognosticating like the length of the war. And the problem with this is that it's actually just like an overloaded metric. Like there's a lot of other reasons why you might be worried about Bitcoin in the future

or a lot of other reasons why you think Bitcoin might go down that are not quantum, right? There's like all the constellation of risks of what might go wrong with Bitcoin in the future. Like Bitcoin gets banned or I don't know. Bitcoin has a bug because of AI. Like, you know, mythos goes and cracks Bitcoin or something, not because of quantum. And so it does seem like this is why we like prediction markets is that they can actually isolate individual questions with more granularity than just looking at an aggregate, like the oil future price? What's your response to that? Yeah, that's a great point. And I think a lot of people

misinterpreted my thread to me. And I think Qaida is imminent. I mean, it's not, right? Like, very smart people at Google say it's at least a couple of years away. What the point in throw was like, there is, there are things you can use to get information. And like you said, a lot of risk premium is expressed sort of uniformly across all the tradable instruments in crypto. But if there is to be something that you can extract that's specific related to crypto, to quantum risk, I think it's this differential between Tradfai and crypto-native markets. And I think this is only something that's only recently come about that you can actually observe and reason about because everything's become much more liquid. And there are actually two kind of bifurcated worlds around people like us who are

deep in crypto every day and touching kind of on chain. And then people who are on the kind of trad-fi side of the world touching markets that are much more established and much deeper and actually probably much more credit worthy because crypto is just one part of that entire ecosystem. So that would be like the CME and the iBit side of the world. So this is a very sophisticated point. And I really appreciated you bringing this up. Like your claim is that basically if you're buying insurance through a through an option, right, buying that insurance, through Deribit is cheaper than buying it through the CME or Ibit in the situation where you're worried about some kind of systemic risk, right?

If it's systemic risk, then you really are not as worried about the CME paying you out. You're very worried about Deribet paying you out if systemic risk does come to pass because Deribet might just be a crater in a real kind of quantum, like a quantum, it's sort of suddenly, oh my God, everything is broken and nobody was expecting this kind of moment. it's an interesting point but of course like you know like we were talking about earlier

and I've seen some people commenting on this like the same thing would be true of you know a mythos style somebody just breaks Bitcoin on the networking layer or on the you know someone breaks the protocol or someone does a 51% attack all of these things are also these kind of systemic risks

that might result in I mean the other thing naturally is like I don't really know what one would do in the case of like these really crazy kind of breaks like what does what does CME even decide the Bitcoin prices of Bitcoin forks. And like it's unclear which one's a canonical fork. Like I don't, I don't know that you, I don't know that it's clear in any universe

what your payout supposed to be. Yeah. Well, to your last point, I think I did go and take a look at the Ibit perspective. And it's, it's very open ended, right? Like basically the sponsor can decide what is best for their investors. And it could result. And basically there doesn't have to be any, even like the forked asset, there doesn't have to be any protection around them trying to monetize it. It could just be entirely abandoned and that

would be acceptable in the perspectives. So there's a lot of open questions for sure. I guess to your point about mythos and those types of risks, I agree, right? That could also be reflected in some of these like long-term measures of risk, like the basis spreads and downside put skew and all these things, I also think that there's other spreads you could look at. For instance, those risk metrics in ETH versus in Bitcoin, right? Because like, you know, the impact of me, those is going to be much more significant in an ecosystem that has smart contracts and defy living on it rather than on Bitcoin. So I think I agree with you. That may be another threat that we should write and explore that type of risk. But in specifically on Bitcoin, I think you can you can infer it's like quantum

I would say that was one one interesting sort of anecdotal evidence that I've heard are the last six to nine months, which is like sort of related but not exactly the same, which is the number of a number of the large ETF issuers. I've talked to them being like, what is the number one thing that like you go to an institution that was like, doesn't own any Bitcoin and you try to sell them your ETF or asset manager or whatever? And like, what is the number one thing they ask? And like, it is, is the quantum thing still, even in the last three months. And a lot of those people decide not to buy because that's the thing they're afraid of,

versus like, so there's this lack of demand aspect, not just the like people who are betting on the crash, but also these people who are like, I'm not participating. And a lot of those asset managers in the past would have invested in liquid funds or VC funds or things like that to get that exposure like seven, eight years ago. And a lot of those people now are like, I'm just not going to buy Ibit. And so I think there is also this There's another confounding variable which is like how many people didn't buy because they're they hear the fear FUD whatever I think that's a non-trivial effect also to you have to account for that like I don't think the

the the derivative spreads even get is there's like this complete non-demand thing which actually like shrinks implicitly shrinks spaces again it sounds minor but like from all the ETF people I talk to it it sounds like it sounds like that's like billions of dollars of demand that like was about to make purchases that didn't. I think you can just see it in yet another spread, which is the spread between gold and Bitcoin prices, right? Like all of that money that was seeking a safe haven went into gold instead of Bitcoin, I think. Yeah, yeah. Maybe that's that's true. Sorry, if I, if I allow other assets, that money went somewhere. Yeah, I think the problem with the story is that we just haven't seen like, okay, this was a story that some people were using partially to explain the downturn of Bitcoin

instance 1010, is that maybe people suddenly woke up to quantum. I think this is like clearly not the explanation because there was nothing that happened around 1010 about quantum. And when something did happen, there was enormous around quantum, which was the story from Google a few weeks ago, prices didn't move at all. There was no market activity whatsoever, which I thought was very surprising that, okay, quantum timelines moved up. This is probably the most serious jump in quantum timelines that I've seen literally in the entire time that I've been in crypto, and markets didn't respond at all. So I think this is kind of a jesto story. I don't think there's any clear evidence that this explains any of the market activity. Yeah, I was going to say that I've

also heard this from institutional investors in terms of Bitcoin allocation, and it strikes me as just something smart to say versus like, oh, they actually have a deep understanding of the quantum problem and like how it's going to get resolved in Bitcoin. I don't think they have an care about the understanding. They just need some reason to buy gold, kind of like Josh said. Yeah, exactly. It's like, they actually want to do something else. And they're like, oh, well, that's, you know, my wife's making dinner tonight. And that's why I can't come over. And, you know, I think, I mean, I'm curious.

Like, it does get, like, literally quoted, though, as an explanation. Like, there was some whale who sold, like, you know, $6 billion in Bitcoin ago. And it was attributed to quantum. And I mean, Josh, I mean, you talk to a lot of clients. Right, right. Like, has this ever come up or, like, like, what are you sort of seeing maybe just from a more, more, a qualitative perspective? It does.

It does. I mean, we are more active with liquid funds that are crypto-native. So these people are doing the same thing that we're doing on this call, which is like reading the tea leaves of what the TradFi managers are trying to do. And it's true, like what Turin is saying, it comes up in every conversation that this is a blocker for a lot of people to allocate into crypto. I mean, I do think it is conflated. Like, Haseep saying, like, there's a lot of other confounding factors,

Iran being probably the dominant factor, and then Mithos maybe being another one, where it is causing Bitcoin to lag other risk assets meaningfully. Everything else is basically at all-time highs and crypto's not. But I think that what I guess the point of my thread was more, these are things we need to watch out for. I mean, I don't think it's being actually priced in as much as we think today, but it is going to be priced in more and more in the future. And what would that look like if it got priced in?

it would definitely show up in some of these spreads. Yeah, I agree if it's imminent. It's going to get priced in. No question, right? But we're talking about, is it three years away, five years away, seven years away? I think it's performative right now when people say that, oh, you know, I can't allocate the space because of quantum. I think the reality is that quantum was not the reason why Bitcoin sold off from, you know,

120 down to 60. Absolutely had no, quantum was not the explanatory variable there. I think it is the smartest thing that you can say about why you're selling. And that's why I think it's like sort of dominating as the excuse for really just the assets going down. And I don't want to hold an asset that goes down. So I think the reality is that crypto is extremely momentum driven. When momentum turns negative, nobody wants to say I'm selling because it's going down. That's a stupid, it sounds stupid to say that.

So instead you come up with the smartest possible thing you can say of why you're selling, which is quantum. think that's fair. I mean, I also think there's, yeah, yeah, I, I have frequently used this other reason, which I think is more resonant, which is like that we kind of cut the addressable market for Bitcoin and half when we kind of like made it a U.S. centric asset. And it made it very hard for Asian investors in China in particular to hold it long term, right? And kind of encourage their own citizens to invest and build on top of it. But yeah, I mean, it's really probably, that's probably the main reason, but it's easier to say quantum.

Hey, hey, hey, except Iran because, hey, you like to take tolls. I also don't buy this story. Like, we just saw this Iran accepting tolls in, in R&B and in Bitcoin that feels like it is precisely the opposite point. I mean, actually, can ask a tiny weird related speculation on this is like, how do you think if like what you're saying is true, like, do you think like there will be some impact in like stable coin flows from a Q day scenario? Forget about raw Bitcoin. Just like people actually suddenly being like, oh, the platforms are vulnerable. Everyone pulls stable coins or redeems.

Like where do you see that second order effect? Because I've been kind of thinking more, imagine the one of Satoshi's coins moves, nothing else. Only one Bitcoin, right? But it's enough to like scare the world. What's the second thing that people are worried? He's just like trolling us? Or just like the attacker doesn't, you know, like they might... It's a test transatlact. Test.

That would be pretty funny. That'd be pretty funny. But like I'm kind of, I'm kind of curious since you guys have thought about the market side about the effect of this more than me. Like what do you think the second asset, like second effect is? Like to me, it seems like stable coins people will suddenly be afraid of, but maybe I'm wrong. Maybe it's ETH.

I don't know. I mean, I think that's right. And I think probably the same reaction as like the mythos kind of bud, right? It'll be around just moving assets off DFI platforms into as much as sort of like off chain and centralized places for money as possible. It probably won't even be in stables, right? It'll be back at bank accounts. Like people, you might actually see stable coin balances on chain decline. I think that that's all part of a trend of like getting closer to these like critical events.

I guess one thing I'll say in response to to your point. to see it's like there are two kind of constituents here constituencies one is the the hedging cohort of people and those people have the least amount of information about when QDA will be and so that's kind of where you affect you you you think all the impact to markets will be in the back end of the curve so it's six months or one year type options because they don't know right they think it might happen sooner rather than later but they have to express it with as much time so they're not wasting the premium and then you you have maybe the attacker who knows he's about to hit the button,

I'm about to move Satirche's coins, and that attacker is probably only going to concentrate their activity in the very front of the curve. So maybe that's like another good indicator. If you see a lot of activity and short-dated I bit, and maybe it's like a bank that got hit on some, got lifted on some put options, and now they're trying to hedge it in listed markets or whatever.

Like that's kind of where all this stuff would come from. That would be a good sign that like some actor, maybe it is Google, maybe it is the U.S. government, but like somebody who has that information is expressing a view to kind of protect the value of their position. Yeah. So I, okay, so taking a step back, I do think it's a little bit absurd to take seriously the possibility

that like crypto like Bitcoin gets hacked in a QDA scenario. Like so many things have to compound in going wrong in that like one, literally Bitcoin just keeps his head in the sand for like multiple years at a time, which doesn't really sound like a plausible outcome. come. Like, there's so much money writing on them getting this right that, like, they'll probably just get it right, the same way that everybody else is going to get it right. Like, banks are going going to get it right. Like, we're literally the biggest target in the world. Everyone's yelling at the top of their lungs. Do we really think that, like, that's not going to happen? And Bitcoin's

the easiest to transition. It's pretty straightforward. Like you mentioned in your post, the political problem is hard, but the technological problem is actually not that complicated. And especially with AI and, you know, how much more powerful these models are becoming, just building the post-quantum version as long as we have the post-quantam algorithms is not really the bottleneck. I mean, I mean, I think you are, you are waving away the distribution aspect of like getting every exchange. Just think about like Bitcoin has had very few upgrades. Bitcoin has very, very few upgrades. And I'll tell you, Taproot took forever for a bunch of exchanges. Sure. But this is, like, first of all, this is way more important than Taproot. No, no, I agree. I agree.

Yeah, I don't think that's, that's my point. There's going to be this quiescent time. Yeah. Sure, sure. But like if you haven't migrated, you're vulnerable, but nobody else is, right? And like, your customers, if you're in exchange, are vulnerable, but nobody else is. So you're not socializing that risk. It's internalized to whoever doesn't migrate. You know what I mean? So the way that I would imagine it gets done is that there's some agreement eventually about

what the cutoff date is going to be. And the cutoff date is like, let's say, 2031, okay? And by 2031, you got to migrate to a post-quantum address. And if you don't, on this block date, all coins in non-post quantum addresses cannot move. So that means not just Satoshi, it means also your rinky-dinky exchange or your weird little custodian. If you don't migrate, your assets are stuck forever. And we give you a lot of time, we give you three fucking years. And if you did not move in three years, like, that's on you.

And that's just you didn't do a software upgrade. And like sometimes that's what happens. You don't upgrade your software for three years. You should not expect it to work when you wake up. to me, that is probably what a post-quant transition looks like. It's going to be very orderly. Everyone's going to know that it's happening. It's going to take a lot of time.

It's going to be very boring. Bitcoin dev politics. Bitcoin dev politics are very much not like this. In fact, I bet you this is going to turn into it. This is going to be like the U.S. government. It's going to be a pork barrel bill. We're like everyone's like this quantum thing. It's the only thing anyone's going to actually bother upgrading to.

So we need to shove our bips in there as fast as possible to get them. You know how like in Congress and like bills I always shove. Yeah. It's like there's going to be this race, I bet. That's going to happen. I'm willing to bet on that. Interesting. But like, okay, assume that this is what it looks like, right?

Let's say that, I mean, it's not going to happen now, but let's say by, by, let's say late next year. Okay. There's some convergence on what this proposal is and what the upgrade is going to look like. And then there's a three year migration window. And anybody who doesn't move within those three years, like, look, you can move early.

You can move late. if you move late, you're taking the risk that you might get hacked by a quantum computer, but nobody else is, right? Like, anybody who moves early, they're fine. Does that change the way that you think about, if that's the way it looks? Does that change the way you think about the market analysis? Because I think the way a lot of people cognize Q-Day is that it's like this big race to an all-or-nothing thing.

And like, if they don't do something by such and such date, the whole thing explodes. And I don't think that's what it's going to look like. Yeah. So I think if that got disseminated into the market, right, if that was the kind of the state of the world, I would still expect all of these things I described in that thread to happen, which is basically people just start pricing in the fact that there's now a race. And China or the U.S. or whoever, like these state level actors are now on the clock to try to get it done before that end date. So all of these things, these phenomena of like the put wing, Rishening and, you know, like the Tradfi versus Crypto Native basis widening. Like those things will happen up to that defined expiration. I see. So, I mean, the other thing that I also find to be wildly implausible is that the United States or China are going to hack Satoshi's Bitcoin. Like, or Google.

Yeah, Google is obviously much more likely to get there first that Google is going to hack Satoshi's Bitcoin. Like, I just don't think they're going to do that. I don't think that they care about that. I don't think it would be legal for them to do that. It would be very obvious that they did it. how like who's going to buy these coins once you've hacked it like these are the most marked coins in the universe i totally agree it's like yeah and it's also like kind of a zero day like once you use it and reveal to the world that you can run shores and like break public key cryptography

then everybody knows and so if you're china and you have a quantum computer that can do this of course you want to conceal the information for as long as possible and probably you know try to break, I don't know, U.S. military communications and whatever, not like steal Bitcoin. And yes, no one is going to buy Satoshi's coins. That's obviously also, I think, true. I think interestingly, like, the defy actually feels more exposed here because your counterparty is automatic and on chain. And so, yeah, if you can just go steal a bunch of Eath, you can borrow stables against

it and kind of ex-fill it and obfuscated the same way, like, a normal hack would happen and sort of the same way, like, North Korea does it. And it's not going to be as obvious, but, like, you have a natural counterparty available or natural landing facility available. And so the Bitcoin story feels like actually like the hardest one to kind of kind of pull off. But that's the point, right? You're not making money on the spot transaction. You're putting on derivatives ahead of time so that you can like actually profit.

Yeah. It's like putting $30 billion shorts in Bitcoin. Like no, that's not going to happen. Yeah. It's ridiculous. Yes. Not themselves, but through proxies, right? It could happen.

Or like I guess the point is more that the information is, not, if it's not tightly contained, is going to get into the market somehow. Sure. I guess the effort's underway. I guess the claim is just like, yeah, fine. I do, I don't disagree with you. There's going to be anxiety. There's going to be questions.

There's going to be some people hedging that, look, maybe a quantum computer arrives early and we just don't know. Obviously, those things are real risks and they should be priced. But I suspect that the, there's very little, very little weight in the probability distribution in my mind that we actually end up in a somebody hack Satoshi's coins and is market selling them. I think the likelihood of that, even in a case where somebody comes up

with a quantum computer by 2030, is like less than 10%. I mean, I thought... I remember someone telling me who worked in like centralized exchange security that a lot of exchanges don't accept deposits from Satoshi addresses anyway. Because they kind of like assume it to hack.

Interesting. Yeah. Because there is some signal from them moving, right? And so, like, you'd rather just block it first before, right? Totally, totally. I mean, these things are like energy. It's like the easiest. It's the easiest, it's also the easiest thing to block because you know what it is.

It hasn't moved in so long. Right, right. I feel like it's just like there's actually already. Yeah, I don't think anyone is going to be moving these through like an Iranian exchange and like cashing out tens of billions of dollars of Bitcoin. Like, that's just not, it doesn't exist. That's like a fantasy. if you're not moving it through the big venues,

like if you're Binance and you say, oh, look, Satoshi just deposited $30 billion a Bitcoin, let a rip, you know? No, I think they'd be like, okay, pause. Let's go talk to the community and decide as an industry, what do we do now?

I don't think anybody's just going to auto cash out Satoshi's hacked post-quantam coins. So that's why I think like this is just, this is kind of like a sci-fi novel version of like what would actually happen. like, I mean, look, people, people get their accounts frozen for way less than depositing Satoshi's coins, you know what I mean? Like on any of these exchanges.

Yeah, I'm just saying the markets, the market's reaction is not a function of actual market impact from the sale of the coins. It's a reaction of the coins. Like, as soon as the first coin moves, the market's going to reprise lower entirely, right? It'll happen immediately. But that also opens the possibility that if quantum happens, if the quantum position happens and it's orderly, and there's no.

no test transaction from Satoshi, then maybe things price up, right? I mean, that we should be open to that possibility that actually the quantum transition is bullish because it's just happening. You heard you hear financial advice from Haseeb first. Obviously, it must be that the opposite is also true that in an orderly transition that these hedges come off and the bearishness goes away and that actually is like, oh, nothing happened. And if nothing happens, it's like Y2K, right?

like everybody's fear mongering up until the moment it happens. And then the day after Y2K, it's like, oh, wait, nothing actually. Yeah, this was like a foreseeable issue and the issue was resolved. Yeah. So I guess the reason why I say that is because maybe it's an obvious point, but it's one worth making because I think a lot of people imagine that like going into the quantum transition is inherently bearish. And I don't think, I don't think what you're assuming that going into quantum is inherently

bearish. Okay. So let's, let's transition away from the quantum discussion and let's talk about the other big story about the hack that took place recently on Drift. So Drift, just to remind everybody, there was a massive hack, something on the order of 280 million that was hacked from Drift. It was confirmed to be North Korea that was ultimately responsible for this hack through some kind of very complex, long-term social engineering type attack that was escalated into some

software that ended up taking over the machines of developers, presumably. So they announced a recovery package of $147.5 million. 127 and a half of that came from Tether and $20 million from other partners. Now, this recovery package, quote, unquote, is a little bit complicated. It involves $100 million of revenue linked credit plus ecosystem grants and market maker loans. Drift is transitioning from USDC denominated to USDT denominated as a result, and they're migrating all of their users. There was a lot of fanfare about this, a lot of also handswere.

hand-wringing as a result of this hack, because of course, the original assets in the bridge, about 232 million of it was USC, and Circle did not freeze any of the USC that was coming out of this hack at the time that it took place. There was about a six-hour window during which a circle could have frozen at least some of the hack. And this has led to a lot of criticism of USC and a lot of claims that, oh, Tether is stepping up to the plate when USC is kind of fumbled the ball. Jeremy Aller, friend of the show, did go on, I think he was on, it was an interview that he gave, where he basically said, look, how can we, like, this is a moral quandary that we're facing as a company, is that if we go start freezing things just based on our own judgment, that's kind of,

that's basically a kind of lawlessness or a kind of, you know, we ourselves are the law. And instead, we follow this very orderly legal protocol, which is that if we are ordered to buy a court or by law enforcement to enforce a freeze, then we will. Otherwise, like, you know, it's permissionless. and that's kind of the way that we've operated up until now. They face a lot of criticism for certain people. Other people have defended the stance that Circle has taken on this. But it does seem like this has been something of a PR win for Tether.

And also, you know, the recovery story, this is obviously not a full recovery, even in the nominal value or the face value of what they're saying. They're saying 147 million total hack was about 285 million. So it's roughly half of the assets in this quote-unquote so-called recovery. But to be clear, the recovery is contingent on. revenue being made by the exchange that goes into this recovery pool or something, something like this. I didn't understand the total mechanics behind it.

Josh, what is your perception here? Big market participant is Falcon X. And you obviously are close to many market participants. What's the vibe seeing what happened here? How do you read this? Yeah. I think drift, obviously, an important part of the, of the Solana ecosystem. I think it's tough, right?

I think Sala's just had a very tough run from everything from kind of the collapse of like the speculative impulse of meme coins and then all the way to market chair being sniped off by a really mind share, right, by like Canton on the institutional side, all the way to like hyper liquid on the more hyper degenerate kind of speculative side. And then you have this, right, which is kind of like the last bastion of like actual, you know, financial, you know, activities. on chain. Of course, you still have things like Jupiter and Camino active, but this was a core part of the ecosystem. So, yeah, I mean, I think we've seen, and this is not surprising, but you've kind of seen a lot of rotation happening in liquid markets, liquid hedge funds. A lot of that mind share has gone to, like I mentioned, Canton, Hyperliquid, but also to ETH. Heath has become like a primary beneficiary here of people of capital migrating back to other DFI ecosystem. And I also think that, you know, Circle, like you said, took a real kind of reputational hit here.

I kind of almost wish they would take the view of some of the exchanges that you mentioned blocking the Satoshi coins, right? Like, you just have to take action sometimes, especially when something is so noticeable and so drastic. And it's almost like, because it is actually a reversible decision by them, right? You can free something without burning it forever and you can give it back once you've very. that it's a legitimate transaction. It seems to me like the risk reward on freezing something is actually much more in favor of trying to do something to stop it because you can always reverse that decision in an hour and two hours. And to your point about the law enforcement, I mean, you know, I've been involved in situations like this before where USC is one of the hacked assets

and it's impossible to get any kind of response in the one or two hours that you might have as response time from law enforcement, you know, even if you're enlisting the help of like C-L-911 and all these folks, it just takes a while to get law enforcement to actually come back to you with something like a report or something that you can hand to circle. So I just don't think that's a viable solution either. There needs to be like some newly defined workflow and direct pipeline to some office at the FBI or something that can respond instantaneously. True, and what's your response here?

Yeah, I mean, it's, it's, it's definitely. definitely a tough situation. I think the, you know, I think an interesting aspect of this is like USCT hasn't been popular in the most of what Josh says, you know, it's hard to do the cigarettes. The only thing I'd point is it's interesting. USDT has not taken off in Solana very much. Like, I would argue a lot of the USDA growth in supply in 2021, 2021, 2022 was on Solana actually. Like, quite, I'd say, similar growth levels to Eath in terms of relative growth. And so it was actually a very big USDC stronghold. There wasn't much USDT at all. So I think from a, that angle, this is kind of interesting of like, will, will this work as a way of getting an ecosystem to use

USDT? And I'm kind of on, I kind of think there is a lot of argument that a lot of, people have made that like it might actually flip i don't know i don't know how to think about this prediction but like it is interesting to see how the salana community demographic like different protocols parties that's where everyone has like hopped on the bandwagon of like move to usc t i don't think this affects us dc long term but it does kind of it was an ecosystem they grew a lot on so i think it's like that's going to be that kind of part of this war is going to be i don't know how to evaluate that you know when you think about there's like a a lot of different directions I could go.

But if USDC grows on Solano a lot, you probably can, if we look back on this in a year, you probably will be like this was a big coup from Tether because it's probably the cheapest way to get a ton of an ecosystem in this kind of distressed situation. And an ecosystem that still has quite a non-trivial amount

of stable coins, right? So I guess from a competitive lens, it seems like it was like, a, from tether's perspective, a good strategy? Like, it's hard to say anything other than that. Yeah, I mean, similarly, like, in terms of tether, I guess it overall defy-define penetration. I mean, I, like, am empathetic to Circle's point of view, which is, like, hey, it's, you know, the kind of this slippery slope argument around, well, if we do it for this, then we would do it for the next thing and the next thing and the next thing and then eventually, you know, hey, there's

political dissidents and they want us to freeze the USC, and we take a kind of more principled kind of approach. I mean, in some ways, kind of like the U.S. legal system in that sometimes guilty people will go free because of technicalities or issues, but like ultimately, you know, you try to stick to that to sort of uphold some sort of, you know, larger principle. And I'm empathetic to that. There do seem to be some very clean, like high, high precision, high recall rules you could implement that would help a little bit more with some of these versus like, oh, we just full stop, do not do anything other than having a court order or law enforcement. I think I think I wonder part of, I mean, to Josh's point, though, like, freezing is, yeah, reversible.

So it does seem like, hey, maybe there's a better way to kind of, I don't know, have some sort of in between. Or I was also having joking. I'm like, what if they just, people love this meme? But like, you know, what if when you transfer USDC, you have to type, you know, fuck Kim Jong-un or that's part of the transaction data. And then, great, you know, you have problem solved. I mean, one thing I will say, yeah, I do think that's like not a easy place, especially as a public company to, like, come up with a policy like this. But if you look at history and the history of like AML rules and like how they got broken and then governments added some things, there is a sense in which a government imposed

version of this will be worse. Like historically, they've just like slowed these things down versus made them faster. So I do think there's sort of an impetus on it not being purely regulatory driven because it might actually just become an even worse and slower process. Well, so Circle has explicitly said that they're waiting for this like Fair Harbor provision which I think is part of the, I think it's part of clarity, or maybe it's part of like the implementation of genius. And that like that safe harbor rule basically would give them the flexibility to say,

we're trying our best, we made a good effort attempt in order to be good stewards of USC. And therefore, you know, we're not liable for this. It is a, so I do agree with Tom. I am sympathetic to the idea of like, look, be careful what you wish for. If we're freezing this, we're freezing a lot of other stuff too. and like there is no perfect rule. Now you could say like, well, but there is a perfect rule, which is like there's only three times a year

that CL 911 is like on, you know, kind of sirens are going off like crazy, but that's just not where they're going to draw the line, right? They're going to draw the line at like all this other stuff too. And they're going to invite a lot of liability. Now, they have the liability. There's a class action lawsuit that was filed, I think just a couple days ago,

against Circle specifically for this, from people who were victims of the drift hack for not having, you know, moved quicker to freeze some of that, 200 million plus USC that moved around. So it is, it is hard. And there are tradeoffs everywhere. And it's worth acknowledging that there are tradeoffs. But I tend to agree that like you're supposed to just embrace the tradeoffs and say,

yeah, we got to freeze sometimes because the damage of not doing so is so much more severe of like the loss of trust in situations like this. You know, so I think people already have the perception that USC is kind of the the man that they are more regulated, they are, you know, more compliant. And as a result, like, it's supposed to get frozen more. I think people have this perception actually incorrectly, as we've pointed out many times on the show, actually tether freezes more aggressively than Circle does. But I think it, in a way, it, like, it sort of behooves Circle to embrace their public perception

and to just not face situations like this. Like, there's just so much collateral damage that gets caused by the fact that everybody knows the right answer, which is that you stop. North Korea immediately. The moment you know what happens, you stop it. And Circle almost certainly has the mechanisms to do this, right? Like, there should not be, at any given moment, hundreds of millions of dollars flowing outside of any single contract

unless it's known about in advance, right? Like, that should just never happen. So this is not hard for a hack of this scale to be detected. Now, maybe a $3 million hack, a $5 million hack. Who knows, it's hard to tell that that's not supposed to be happening. But for something like this, like all of the really big hacks in crypto history it was really obvious that wasn't supposed to happen. And Circle could have just some preemptive, like, okay, moment that happens, freeze it,

and some human reviews before we unfreeze. Like, that should be doable. And the fact that it's not as a choice. It's a set of hard decisions, right? Because, like, this is the problem with being crypto on one side and not crypto on the other side. You're always, like, tethered by, no pun intended, by, like, by different constraints. You're always encircled. You're always encircled by constraints.

encircled by constraints that like sometimes don't let you move around one another. So I don't think there's like, I don't think there's like some. Obviously everyone on the P-Nat Gallery is like, oh, I would have done X, RZ here. But I do fundamentally agree. There's like, there's a ton of constraints here. I'm not trying to say anyone did the perfect thing or did the worst thing. I'm just, there's a lot, I'm sure that goes on. I do think I just worry personally that we end up with a system that's like as in a

efficient as like the AML system if we push too hard on regulatory solutions to this versus like industry solutions. So like worth thinking about that tradeoff because the regulatory solutions will be in my opinion. And again, I'm not a lawyer. I'm just taking history. Much worse. Yeah. I mean, to be clear, this is kind of, I think this is where we're going, which is that this is basically a new kind of banking system. And the law. enforcement and the rules in these banking and these like sort of stable coin systems are going to kind of be yolo for a while you know if if there is this safe harbor rule that basically like they can just do best effort to decide who's a bad actor and who's not and to be clear your bank also has a lot

of discretion in when they decide to debank you or when they decide to say hey guess what this money doesn't belong to you there's they don't have to go through a court system to do that like they can just kind of say well you know we think you're risky because we have some machine learning model that says you are, the end. Get the hell out. Yeah, I think that's very hard for crypto people to take seriously. Like, people have not been in crypto

for a long time, right? So that's why I understand the dichotomy. It's like, it is a very, and I think, I suspect in the long run, stable coins will differentiate themselves substantially on this axis. I mean, they already do.

I don't know they will. I mean, no, I don't think that they will because there's like two stable coins that matter. So it's kind of like, okay. But the third and fourth place, like the die in Athena, they do differentiate on this. No, because they're just so small. No, because they're just so small. That's the problem is that you can't really compete when these two are at such huge scale

of liquidity. I'm not saying that they're going to grow to the same size, but I'm saying they've provided an alternative to people who don't want either of those, right? Right. I do think if it's a little bit like, I mean, kind of after the 2022 invasion of Ukraine, obviously the U.S. and up-up of allies froze Russian assets or seized Russian assets all around the world. And, like, I think in the short term, it was a lot of the world.

was a good decision in the long term, you do kind of poison the well, I guess this is not a safe haven if I do something that is interpreted as going against U.S. interests, whether even part of NATO necessarily, which, okay, this is bad and he doesn't like me so I don't have my money anymore. And like, I don't, there's not an answer. I don't know where you sort of draw the line, but like it's clearly not unilaterally a good thing to be so, you know, pro freezing. Yeah. No, I think that's right. I think it's unique because like North Korea is the one common enemy of like almost everybody except China, I guess, is that we're all just like, yeah, definitely fuck North Korea. If there's nothing else we can agree on, we can agree on that.

But the moment you get beyond, you know, Lazarus, it does be, yeah, it does become complicated because like there will be, there will be calls to say like, oh, Jeffrey Epstein had Bitcoin. Let's, sorry, he had the USC. Let's take his USC. Or this other person was a bad dude and like, they have USC or like, you know, all sorts of ways in which the, the, the, the calls of public opinion for private law enforcement, or basically private law effectively, grow stronger and stronger. And if you do not take the stand,

they're like, no, that's not how we operate, we are not private law enforcers. Like, I am sympathetic to that. And you could create a rule that says, oh,

it's only North Korea. And if it's not North Korea, then we're not going to do it. Then it's like, okay, well, fog of war, it's been six hours in the drift act. We don't know if it's North Korea yet. So they're still not doing anything, right?

Nobody knew within six hours that it was North Korea. So anyway, all that is to say, I do think that like big sudden movements, that should be the rule. It shouldn't be about, okay, hack or no hack or whatever. Big sudden movements from well-known contracts, that should be, I think, a pretty unobjectionable rule. And like, look, if you are genuinely just migrating hundreds of millions of dollars of USC, guess what? It's going to take a while. You should expect you to see to get frozen.

One business day, maybe two. You should just transfer to... Hold on. Guys, this is a great idea. You could just transfer to... You could just transfer to die. No, I'm kidding. Yeah.

I'm just saying this is where the other... Guys, I think we just reinvented Tradfi just wholesale. I think we just reinvent the whole thing. Unfortunately, every day I wake up in crypto nowadays, I have the depression of realizing that we're just like square root of Tradfi. We might not be the full thing,

We're not really what we thought we were. Like, imagine this world where you have a margin call and you could send USDC, but you won't. You'll instead redeem it and send a wire because that gets there faster. Because you're afraid it'll get frozen, right? Like, how crazy is that? That would only, okay, no, that would only happen

if your assets are almost all of the assets in a single protocol, right? If your assets are just sitting there and you move it, that's not. If you're just in son, you have real size, you know. And then you circle for freezing your funds. Yeah, yeah. Actually, this perfect transition.

I'm talking about like exchanges, you know, like the CFTC is talking about having stable coins be eligible collateral, right? So like you got to meet a margin call on a on a CME future. I don't know. Right, right, right. So within exchanges, yeah, I mean, I think within exchanges, that should be pretty, that should, again, these are not in smart contracts, right? These are naked addresses that are just moving around.

So this shouldn't be. there shouldn't be an issue to the same degree. But speaking of having, I guess, having almost all the money in a contract, we should talk about the World Liberty Financial drama that has been taking place over the last week. So World Liberty Financial, you know what you love it.

It is the most innovative stable coin, as we all know, started by the, I guess, affiliates with the Trump family, as well as the Whitcoffs. President Trump is a advisor or what is the chairman emeritus or something, some crazy title that he has with respect to this thing.

And it was announced relatively recently that World Liberty Financial is relocking a bunch of the initial founders of the protocol. They're burning a ton of the initial tokens. And they're voting, there's a vote that's going into effect about this. However, if you reject the vote that is changing the lockup structure for all of the tokens of the team, the advisors, and early supporters, your time. tokens get locked forever if you reject the vote. This is a more funny Prisoner's Dilemma version of the freezing problem.

I don't know if these are prisoners dilemma. It's just like putting people in prison. Yes. But but it's not. No, this is more like this stuff like happens actually in dictatorships where it's like you're going into prison and you'll only come out if you say this. That's more what this is like. So anyway, it turns out that I think this is likely to pass as,

it turns out. But this got a lot of criticism from Justin Sun. I'm sorry, his excellency, Justin Sun. So Justin Sun, of course, way back in the day, those might remember this episode, Justin Sun, when the initial set of unlocks where World Liberty Financial happened, Justin Sun moved a bunch of his tokens

to, I believe, to HTX, his exchange, formerly known as Wobie, and the World Liberty Financial team basically deleted his tokens or froze them. And they were like, hey, this is clear, you are a bad actor, you are doing things that are not allowed. Now, Justin's son is the largest single investor in World Liberty Financial.

He invested tens of millions of dollars, and his assets were completely unilaterally frozen by the team. They've now had a very public spat about this, and basically they're going back and forth where Justin's son has now criticized openly World Liberty Financial for blocking his tokens, despite the fact that happened months ago. He said, this is now, this governance proposal is the most absurd governance scam I've ever seen. He said this proposal is not governing.

of governance power. He knows what he's talking about. He has said that this is an exercise of power by the selected few. The last point that I want to make is that they also, World Liberty Financial, has pledged $5 billion of its own governance tokens of WorldLFI, into another protocol called Dolomite, which is a lending protocol, which was co-founded by an advisor of World Library Financial to borrow $75 million in stable coins against its own governance token. So this, this is so big that it is, one, drained almost everything out of dolomite, as well as drained almost everything, like almost all the yield that's possible to get from World Liberty Financial. And so there was a lot of criticism of like, hey, how is this not you guys just cashing out

of your sample claim? Obviously, if you get margin called, there's no way you'll ever be able to pay this back. And World Warliu Financial has kind of waved this off as well. And so they are now the single largest borrower for their own governance token. And they've now pulled out $75 million against it. What could go wrong? Indeed. So World Library Financial seems to be kind of pulling all the stops. And then, of course, the last criticism that Justin said made is that there is one anonymous address that can blacklist anybody on the World of the Financial. And it's a three or five multi-sig that does all the governance decisions.

And Justin's son has been calling for an unmasking of who is this who controls the multi-sig, who's in charge of, you know, blah, blah, blah, blah. So you get the idea, World War II Financial, a darling, a gem of the industry that unfortunately now is called in a fire. Tom, what do you think of this situation? How can we come to their defense? I don't know what people expected. I mean, like, it's kind of like when, you know, we were talking about people who, you lost money on the Trump and meme coin. It's like, what did you think was going to happen? And I feel like this is, you know, very similar. The, the dolomite thing is funny how it is so analogous to FDX and that you have this very illiquid, made up token and you deposit

in this thing. In this case, though, these people were willing lenders against the this asset versus sort of unwilling, you know, lenders, just any FTCX depositor that ended up being. But it was funny also when people were calling this out because it was never announced, it was just sort of people sort of looking on chain. They're like, hey, look at all these World Liberty financial tokens and people are borrowing UC1. And, you know, the official account tweeted, it was like, oh, you know, don't worry about it. We're paying the loan right now. And I feel like you, you kind of got called out. And, you know, your answer was like, yes, it's true. I did it. But, you know, so what? It's like, there was no explanation as like, why this is happening or

who's doing it or anything like that. So it's been a long time since we've seen, you know, one of these, but they flip it. The playbook still kind of works. One of these? This is, you know, MAPS token for 2026. Cream finance. Cream finance. Same thing.

Yeah. But again, and that's why I'm more curious. I'm like, who are the lenders who are underwriting this pristine collateral and, you know, what did they think they were getting? It's just three depositors, right? Like just random people and dolomite, no? It is. And I'm saying who are these people and like, what did they think they were getting?

into. Again, it's dissimilar from an FTCX in that even if you didn't think you were lending an FTCS, you actually were and your money is gone. Whereas this, you chose to do this. You chose to do this. Okay. Josh, what's your take on the world liberty drama? Yeah. Yeah. I mean, I did, you know, honestly, like we're, we're a partner to a lot of the entities that you mentioned in your monologue. I would say, like, I think this is a natural outcome of permissionless markets, right? Like, you have, you have the ability to do things like- This is a natural outcome of permissionless markets.

Okay, that's a very diplomatic way of saying that. I like that. I do think that, yeah, I mean, there's ways for governance to prevent things like this, right? Like, to restrict the types of collateral and the amounts, I think to your point about these events happening in previous cycles, like the, the, the, the, the, the, the, the, the, the, the, most difficult part about controlling a loan book is the concentration risk because you see a juicy opportunity and you say, I want to go all in on this one because this will fatten my profit margin the most. But you have to control yourself and you have to limit the amount of exposure you have to

the one thing. So I think, you know, there are obviously protocols that do manage this quite well. And yeah, I think kind of hope that it can navigate this event, you know, And I think they are making moves in this direction for sure, right? Like they're talking about ways to pay down the loan and sort of like help the protocol to kind of like replenish its balances of good collateral. And I think that's probably the right outcome in long term. Okay. Turin, what's your reaction? I mean, are you also a partner to the people involved?

I just I just kind of feel this like world. Refincial has been like a sequence of like rug pulls, right? Like didn't they, initially they're going to be AVE fork, then they rugged AVE. They didn't give them the amount of tokens they're supposed to or something. And like the data snapshot said yes and then they sent them something different.

Then the next thing was like they kind of were going to be a wallet and all the stuff. And then they were like, no, we're not going to do that. And then kind of this USD1, if you look at the Githubbs of USB1 Dolomite, Rolivary Financial, there's some overlap in contributors. the whole thing just is like okay like

I don't know it's like it's like Luna without the stable coin like I don't I don't really understand I don't know how else to describe it like something about it just is like unsavory and it's like name itself just feels like it's like

a 1980s villain telling you like we're going to fuck you in your face and like they're like we did it we did it this is you know American psycho but on chain you were killed goodbye World Liberty Financial actually is like one of those generic evil corporation names like from a movie that wasn't trying very hard. I just don't, I don't, to me, it's like, it's just, it has obviously I grew a Justin here.

I just don't really, like, how can you not? He's the one doing all the forensics and being like, this is clearly all the issues. I just think I would love to like get back those neurons I lost paying attention to this. You know, like there's some lost brain cell that like I just really wish I could get back. Yeah, I will point out, I mean, there is a fundamental difference between this one and like a Luna or something, right, where the stable coin itself does have treasuries backing it. No, no, no, sorry. My difference with my difference with the Luna thing was like the Luna Foundation. Thank you for that, Josh.

My difference with the Luna thing was the Luna Foundation borrowing and anchor against their Luna and then sending the stable coins elsewhere. That was like very much like this USD-1 thing. Do you remember there was like there's like $200 million transfer to the curve pool right before that the Luna Foundation did barring against Luna in Anchor? I was like that that's sort of the vibe. Right, right, right. Yeah. I will say that like I think this is kind of a all-time high aura for Justin's son right now in this crusade against World Liberty Financial. Like I have never rooted as hard for Justin as I mean, TRX is back in the top 10.

from right now. Do T.RX is like the top 10? He is absolutely like, him getting his USD1, or not his user, his World Liberty Financial assets frozen, I am rooting so hard for him. Yeah, how could you not?

He's such an unsympathetic villain otherwise. But it's just like, no, he, totally, this is a violation of property rights. Just because he's an unpopular guy, you can't do this to him, and he's calling it all out and he's like going, and his poster is so well written. Yeah.

I'm like, he sounds like, he's just like, he's just like a, he's like an Ayn Rand hero. No, also, it's like, World Liberty Financials replies to him are like, feel like, how you're doing fellow kids memes? They feel like, oh, like, who listens to Justin's son anymore? And then he writes a long diatribe dunking on them. And like, you can see him getting much more engagement. And it's, yeah, you know, like, there is some 1980s evil villain movie somewhere that you can make out of this. I just don't know who's ever going to be the crypto anthropologist

because there's not enough time in the day. It is a little bit like that, you know, the Marvel movie where like the villains are all fighting each other and there's like the ultimate villain and like the villain who turns, you know, to a hero. Anyway, very strange. I hope that we say, I hope that there's more news here

because I will say it's the most entertaining corner if it's consequential of the crypto industry right now. I just really wish it wasn't because I feel like any time, I talk to people who like already dislike crypto and they're like well are you still working in that scam world with that stupid World Liberty Financial? Yes. I do have to say yes to this

because that's like the only fucking answer I have to people. You're a partner? You're a partner? You're a partner in World Financial? No, no. I'm saying people who don't know anything about crypto who only read the New York Times, right? They read the New York Times. And the World Liberty Financial is like one of the most mentioned things. They will always be like, oh, especially like people in AI. So how's the scam industry with World Liberty Financial that you work in doing? And it's like, I don't have any response to that because it's fucking true, unfortunately.

All right. Well, what else can you say? You know, like it's like, yeah, I mean, I don't know. I mean, the answer, look, we try to tell, we try to understand what's happening. I think we were going to look back on this era as a very, very interesting kind of growing period for the industry. I think in retrospect, like, I mean, look, we're going into the midterms fairly soon, right?

And very clearly, there's going to be divided government, if not a full sweep of Congress by Democrats. And when it happens, and I think I've said this before on the show, like, there are going to be hearings in Congress about everything related to World Liberty Financial.

Like very clearly, the amount of social anger that World Liberty Financial and the perception of corruption around the president's involvement in crypto, but between the meme coins, the NFTs and now World Liberty Financial. It is so animated to people.

It plays so well. And it's so brazen that I think it's clearly going to be a huge part of the story in 27 and 28. The media loves covering it. Totally. Like normal. Every journalist I ever talk to, they always talk about. Yeah, they always want to bring it up.

I just feel embarrassed even having to think about it because it's like it already makes me look, has made me look like even worse of a human being for last year. Anytime I talked to someone not to the crypto. Right. And let's be real. Like this was part of the Faustian bargain. This was part of what happened when Trump embraced crypto. Is that like, yeah, he embraced it for his own benefit. He's clearly getting a benefit from it. It's very obvious. And I think people who tried to, you know, I think there's like various levels of the ways in which people got involved. There's somebody like, like Avey, which I see is pretty earnest, is that back in the days when Avae was engaging with World of Refinancial, World of Refinancial, they were

like, we want to be a DFI super app. That was the story at that time. And there was like, great, let's partner together. And it'll be great. And, you know, it's connected to the Trump family. They'll be all this great distribution and legitimization of the space. And that, I think, is like the most earnest attempt to engage with world liberty. And then it just kind of steps further and further down from there based on what exactly

you did. But everything is going to get exposed within the next couple of years of who did what, with respect to world liberty. And we know, I mean, everybody knows, having been in the blast radius of this thing, is that there's a lot of people who are going to be very embarrassed. to what they did, what they paid, what they thought they were getting in their interactions with the World Liberty.

Now, I feel bad about it because I know there are people there who are really trying to build something. And like, the stable coin has gotten to some real scale. Once upon a time, it was like, oh, the only person that holds it is Binance.

And that's like not true anymore. It's actually grown, even from when, you know, Binance made that initial investment, not an investment, but denominated their purchase in World Liberty. But yeah, I think it's one of these things

that we are going to, the story is very, very far from over. Probably over the next two years, we're going to be seeing a lot more of World Liberty. And it may end up becoming like the FTX where there's just like this albatross that we are, that's hanging over us as like the rest of the process. I know, which is what I'm saying. Like, you usually be prepared for a lot more of World Liberty Financial in the headlines over the next couple of years. So, okay, last thing really, really quick.

is there's been this big story taking place, a big conversation taking place on X about whether crypto VC is dead. A lot of people saying that, oh, you know, all the VCs, they don't invest anymore, like all the rounds take forever. Everyone's claiming to be invested,

but they're not. There was this big thread by this guy, Tom Dunleavy, where he basically claimed that the VCs are either out of money, they've moved to late stage, or they're just not able to raise anything anymore, and the number of VCs have gone

from thousands in 2022 to less than a few hundred. And this caused a lot of people to start saying like, oh, we're deploying, we're not deploying, or all the VCs are lying. So just quick, round the room, want to get your reactions of where are we at? Obviously, you know, we're VCs and I think Falcon X does VC rounds, right? If I'm not mistaken.

So we're all investors. What's the truth? What's bullshit and what's real? I think the owner discussed phenomenon is, this is, I mean, an amplified version, but in some respects, what's happening to venture as an asset class in like a microcosm, where like venture overall is like, you know, under allocated compared to 2022. And the money is going to bigger, the bigger firms and maybe some of the smaller firms. But for the most part, it's sort of, you know, concentrating. So like crypto, I think definitely is bearing it, you know, more than the venture industry more broadly.

But like, it is kind of true that like, yes, this is a natural sort of reaction to what's happening in the market. and capital is moving around. And, you know, it's sort of bad money is being chased out. Like, this is, this is naturally what happens in any sort of asset class or any sort of market. So I think it's probably good. Like, I think overall, I was actually surprised there were thousands of VCs in crypto in 2022. I can't even imagine like a thousand VCs. So it seems probably there's probably some crusts.

I think they're right. I think I'll read as investors, not VCs, you know. Okay. I think he was conflating investors with VCs. Okay. That makes me feel a little bit better. But it feels like maybe this is more of a right sizing than, than anything else.

Yeah. Turin, how do you read it? I mean, I think there is some, there's always some truth through it. I will say, having invested slash been around for a few of these venture cycles are up and down, it's sort of interesting. You know, like the 2015 cycle, you know,

there was like this feeling that they're, hey, there's something beyond UTXOs, right? The 2018-19 cycle, there was this feeling that, hey, Ethereum was cool, but we need more capacity. and there's all these L1s. And the 2022, 2020, 23 cycle is like, okay, C-Fi really fucked us in FTX. Like, Defi is going to have a renaissance, right?

Whereas, like, right now, what is that story? tokenization? Like, I don't, I'd no offense. It's just like, am I really going to get out of bed to, like, think about that? Like, there really isn't quite the coen of that, that, like, excites people who are founders. Like, on the founder side,

I'm ignoring the VC side, right? Like the VCs kind of are the second order effect of they're being good founders. And I would say that is a thing that feels not fully there this time. And so naturally, I think the capital just has to go way earlier. There's not as much like growth round type of stuff beyond kind of the fintech tokenization, that type of boundary. Because there's just not a thesis that's like capital light, but there's an ethos around it.

And I think, you know, I hope we find that. But I do feel like that that is something that has is not there right now. Yeah. I mean, I spend most of my time thinking about liquid markets and less about privates, but I have a lot of friends in venture, right? And the tenor of the conversations that I have has just shifted a lot from like, I'm investing in this thing and I'm really excited about it. Like, it can really create a new technology or create a new type of market structure that doesn't exist.

To now, it's really like, I'm investing in something and I really think this is going to accrue a lot of equity value because it's like a real cashler generating business and it'll get to scale. There's a large addressable market for this thing. It's what you would do in normal investing. It's very different, right? And I think that has reflected also in the liquid markets, right? you can kind of see like the concentration of the universe of assets into the top five and into things that are revenue generating. This so-called revenue generating meta is now just the meta. It's just what crypto all coin investing is. And I think for venture in crypto, what that

really means is we've concentrated our bets on things that are people are using, but it's really very plain vanilla and only in a couple categories, like one category being stable. coins and payments, clipping a small take rate on every single payment. Yeah, that's a huge business. That's a huge industry. Or speculation, like the, you know, polymarkets and the colchies of the world and the hyperliquids of the world, like those are big businesses because there's a lot of easy speculative money floating around and it's all, it's easy to tax each trade. And I think that's the difference. That's the difference. I think some people really get excited about that. And I have friends who are excited to find the founders that are building those types of businesses.

Because they'll realize a markup on the next round. And other VCs will recognize those are good businesses, even the VCs that are outside of crypto. But others are stepping out and maybe even just refocusing on other industries outside of crypto or maybe even investing just in liquids or even the liquid funds in crypto now are just trading equities. right like fintech names and things like that because that's kind of more exciting these days than than trying to find a novel tech and there's yeah the the number of founders with the ambition to do that has gone gone way down in crypto and I attribute that to AI and other interesting categories biotech that are siphoning mine share away unfortunately okay so I

I disagree with a good amount of what you just said there Josh one one I think this revenue meta stuff is like extremely simplistic. I don't think it's true. Like even today, if you look at all of the equity companies that are listed on the NASDAQ, like you combine all of them. They're worth less than half of Ethereum. Crypto is not about revenue generating companies. It's just a very small part of the market. It does not explain the lion's share of what's happening in this industry at all. And if you look at the significant things that are, that have revenue, You look at Nyperliquid, you look at Phantom and a few other things that are really making money, they're not even the top 20.

They're not even the top 10. They're still a relatively small part of the market. So it might take a lot of mindshare on crypto Twitter, but crypto Twitter is not the market. It's not what actually animates what people are doing. People still believe in a very different vision of the future, which is what they're telling you when they're buying ETH and they're buying Bitcoin and they're buying Solana and all this other stuff. it's not because they're making revenue. They're not making any fucking revenue. Their revenues is, you know, the multiples on these things are still insanely large numbers.

They're doing it because they believe that the future is going to look very different than the present. That's why they're buying the stuff. And they believe that in five, 10, 15 years, it's going to look even more different than it does now from what it looked like 10 years ago. And so now all that being said, I completely agree with you. There's a lot of people exiting the market, losing confidence in their core strategies. I think there's a couple of reasons for that. One of them is because it's low-val. volatility right now and like, you know, a lot of other things are higher volatility than crypto.

That naturally is going to attract more energy and time and attention. I mean, all birds, all birds pulled a Long Island blockchain. Yes, totally. There's a look, it's crazy out there right now. Like gold is more volatile than Bitcoin. You know, you've got, you know, S.K. Hynix is more volatile than, you know, anything in our industry right now. But all that being said, all that being said, I tend to continue to take the view that,

first of all, most people who are exiting the industry were bad investors. Like the reason why they're now trading fintech stocks or whatever is because they weren't good at crypto. And most of the VCs who left, they left because they weren't good. That's capitalism working. That's how it's supposed to work. It's supposed to work that if you are not good at allocating capital, eventually you are not given a checkbook. It gets taken away from you slowly. A lot of people made a lot of stupid investments into NFT issuers, into DPN stuff, into DSI, into whatever, all this like nonsense that just did.

no there there. There was no real product market fit. And for the people who did find the stuff that was really valuable, we're investing in the defy, we're investing into stable coins, we're investing into exchanges and all the stuff that we know works and still exists, investing even into infrastructure, they're still here. They're still ticking. They're still taking. They're still writing checks. They're still allocating capital. Now, it's not to say the future is going to look like the past. I think there's still a lot of stuff to do in crypto, still a lot of founders. Now, I agree with you, AI is very exciting. A lot of smart people are going into AI rather than going into crypto. And I think it's good that they are. I don't lose any sleep over that

because I think there's a lot of important problems solve an AI. And I'm a member of the human race. And I care that smart people are working on big important problems. So anyway, all that being said, I see this as more a right sizing for as long as I've been in crypto. Sorry, that's not true. For the last five years, it's been very obvious. There's too much money in crypto. There's too much, there's too much investor capital, too much VC capital, which means that a lot of things, that make no sense are getting funded, and there's very little discipline around it. And that discipline comes from a full loop of people deploy funds, they see how it goes, and then their LPs decide whether or not to give them more money. But it takes years for that to happen. And this is what it

looks like when those years pass is they stop being given money, and the people who actually can allocate capital effectively are given money. So that's my explanation of what you're seeing, is that, yeah, initially it's a it's a it's a it's a it's a gold rush and maybe anybody can do it and then a few years later you doesn't no not everybody can do it some people are just followers the invest the investor supply aspect is one thing there's the demand side like the people demanding capital and the people demanding capital right now are just not that it's it's not like the other cycles there were way more dreamers right people who actually and that is gone this market has eviscerated all the dreamers which is fine, right?

Then you get what Josh said. I think what Josh says is actually very accurate telling of the fact that the demand side of the market has complete. Supply side is always different, right? It's like it has a lot more complexity. But the demand side is like a founder having belief. I agree. The two of them affect each other. The two of them affect each other, right?

So right now in AI, if you want to dream a dream, maybe there's somebody out there who's willing to fund you. I mean, less so now. You can raise a billion dollars for a NeoLab still. I mean, but you have to be like really, really, really good in order to do that. Yeah, I mean, there's like 50 people who can do that, right? For everybody else, like, you're probably not raising seed for some random. Yes, but that's $50 billion. Sure, fine.

Okay, yes. Yes. I mean, it is, it is. But my, well, the point I want to make is that like for in crypto, like one, we actually don't need that many dreamers at this point. We kind of know what we're doing. I know, but that's saying something about the space. Is that saying something about the venture capital?

That's changed. Totally. I agree. The space is matured. And that means that, look, we kind of know where to go. We know what you're supposed to be doing, right? There aren't a lot of dreamers in drug discovery, but there's still a lot of drugs to discover. That I disagree with having been someone who worked in drug discovery.

That was a bullshit statement. As someone who, like, also invests in drug discovery. Yeah, yeah, yeah, yeah. All right, fine. Drug discovery is wrong. Whatever. Okay. No dreamers.

Fine. No Dreamers in B2B SaaS. But there's a lot of, okay, maybe not now. There's not enough to do B2B SaaS anymore. But you get the idea, right? Is that like the idea that like, okay, well, maybe everything in the universe is going to be on the block. Media is going to be on the, we're going to have movie studios and we're going to have, you know, Metaverse is going to be on chain.

And now it's like, no, no, no, but still a huge part of the financial world is going to live on blockchains. And they're still going to eat more and more of the world. That's where we are today. So I do still see some people who have crazy ideas. Most of it's around the intersection of crypto and AI or some of these things that are more future-facing. But honestly, most of these dreamers, I was passing on. I mean, I don't know about you. But the people who are telling me, like, science is going to be rebuilt on a blockchain, I was like, yeah, I'm not okay.

I'm not going up with that. But think about Defi. In 2018, 2019, everyone was like taking a waiver on a lot of these things. And the people who made it, they, they actually didn't understand it. They didn't really know the finest stuff. They were like complete technologies who'd never even really trade on a crypto exchange

of crypto by East. That is a perfect counter example of that though. I'm just saying that like that era and the era before, even the L1 era, right? If I, it was, there was like a little more of this whereas now it's just like, okay, how do we sell out to NISI using our tokenization ship tomorrow? Like that's like how 90% of the picture.

Turin, you're talking like an old man. That was 10 years ago. Of course, 10 years ago, nobody was an expert in crypto. AI investing 10 years ago was probably a similar, like, in nascency. And yet now it's like bloomed a lot more.

Cryptos kind of converge. It's like a utility company. It's like great. Okay, utility, what innovation do you need in the utility companies? There is a lot. But it's like kind of like on the edges, right? It's not that interesting for like a really smart young person to want to go into.

It's like great for a older person to go into. I think AI investment. is extremely competitive and requires specialization now more than ever. I agree. Yeah. So I think the same is true of both of them. Is that like, yeah, you can't just be a rando, walk in and be like, okay, I don't know the prior art, but I believe that someday, you know, everybody's going to make their movies

on a blockchain. It's like, no, you're 10 years too late. Go crack on my textbook and like learn what we've already tried. And it's true in AI. It's true in crypto. It's true in any mature field. I think I think the difference is in crypto. It's like we've become.

a utility company. We haven't become like... We've become a utility company. As an industry, we're not like social media. We're like a utility company. We're like utility company. Which is like it's just not a... For founders looking who want to like be inspire the employees they work with,

inspire people around them, that's not that interesting, right? It's like, great. I'm a fucking power. Do you not feel that maybe your obligation as an investor is to extend that inspiration to people? I think you obviously. you have to do that. I'm just trying to tell you the reality on the ground for founders. No, no, I'm saying the reality on the ground for founders is kind of that. There is a little,

which is like not, hasn't been true in the past bare markets. I think it's been a lot more, there's been a lot more like positive, like this weird crazy thing could work. And I just don't, yeah. I don't, I don't think that's there. I agree with you. You're not wrong that crypto was more Greenfield in the past. By definition, every technology was Greenfield when it was younger. I think there's a lot less of chance to day. Or whether the growth, you're on this part of the logistic curve or on this part of the logistic curve. And if you're at the plateau, I don't think we're on the utility company.

We're not on the plateau. We're clearly not on the plateau. If you believe we're on the plateau of adoption. I think we're on the plateau of technology. Sure. Okay. But like your job as a founder is to get adopted, not to like that. Your job as a founder is also find competitive advantages that you might be better at.

And the competitive advantages for adoption or. We're not post-quantamom. yet. So there's still a lot of work to do on the technology. That part I'll bring everything full circle. There's a lot of stuff that needs to get done even short of that. I mean, there was a report recently by Project 11 that like Solana basically completely

just breaks into pieces in a post quantum environment. By utility analogy is even better for this. Because post quantum is exactly like replacing power lines with like a new less resistant thing. Yeah, like magnetic transmission of powers. It's like a totally different.

superconductors. Yeah. Yeah. But it's like replacing a power line. Yes. We don't know how we're going to build fast blockchains post quantum. Right now we don't have great answers to this. That part to me is the one tiny, tiny place where those inspirations.

How was it? It's not tiny too. We just talking about that might be the end of the industry. Okay. I think we've come full circle. Josh, why don't you give us the last word? Are we, do you agree with Tarun that we're cooked or do you agree with me that I think there's so lot to do?

I didn't say we're cooked. I said we're just bored. No, no, no. Let him answer. All right. I think you're both right. But I also think that so much of our industry is actually just cycles and there's like so much reflexivity in our asset class. So like we're back above 100K. It's definitely not over. We're all going to be seeing a lot of like bright-eyed people coming in and pitching really cool ideas again. So it's all going to come back. It's just it feels like a cyclical low and this is just what the bear market feels like. And I'll say one more thing, which is like I think the beauty of crypto has always been capital formation, right? Like, the ease of which you could, like, throw ETH into an ICO address

and invest in something and participate. And then also the fact that you have these, like, all coins that can just go 100x. And that's what is actually inspiring both, like, really smart founders to get into the space, but also a lot of scammers, right? It's like the good and the bad, and you kind of have to take both.

And, yeah, I mean, right now we don't have that. Like, the market's not supporting anything to go up 100x. X, but if you open the door to that again and you have like even marginally more retail participation than we have today, then all the people who have really good ideas will come back to crypto, I think. Well said. Josh, where can we'll find you? On Twitter or X Joshua underscore J underscore Lim.

Cool. All right. Well, thank you for sharing your wisdom with us. And that's it for this week. Thanks for having me. Thanks, everyone. Thank you.