Unchained - Unconfirmed: Coinbase's S-1: The Number That May Make the Exchange Nervous - Ep.215

Starting point is 00:00:04 Hi, everyone. Welcome to Unconfirmed. The show that reveals how the marquee names in crypto are reacting to the week's top headlines and gets the insights scoop on what they see on the horizon. I'm your host, Laura Shun, a journalist with over two decades of experience. I started covering crypto five years ago, and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. Unchained and Unconfirmed are now published his videos. If you're not yet subscribed to the Unchained YouTube channel, head to YouTube.com slash C-unchained podcast and subscribe today. Crypto.com is giving away four Teslas. To enter the lucky draw, download the Crypto.com app and buy at least $100 worth of Bitcoin. Download the crypto.com app now. Today's guest is Jeff Roberts, executive editor at Decrypt, and author of Kings of Crypto. Welcome, Jeff. Hey, Laura. How is it pleasure? The most recent big crypto news this week was the Coinbase S1 becoming public.

Starting point is 00:01:01 Having written a book on Coinbase, you were extremely familiar with the company's history. What were your big takeaways from reading this one? Yeah, this was a big day. I mean, I think for Coinbase and for crypto, getting to look under the hood and discover things, yeah, even I didn't know. I guess a couple big takeaways where, I mean, they're killing it financially. I mean, $322 million profit, that's very good. But also compared to the other big name unicorns going public. I mean, Uber, Air, Airbnb, are all still losing money.

Starting point is 00:01:33 So I think the fact Coinbase is profitable is impressive. And also, they've been on an M&A spree, so the amount of money they raised. Also, it's a bit of a wonky detail, but they did a direct listing, which normally means you can only sell shares you already have, but a new rule by the SEC lets you issue new shares, meaning they could have raised more capital, but they chose not to. So I think just the, that's one big takeaway, is surprised how well they're doing. Other thing that surprised me is I think who owns the shares. I can't believe Mark Andreessen owns more common shares than the family. under Brian Armstrong and also the firm, Andresne Horowitz, owns a ton of it too. So that was

Starting point is 00:02:10 sort of a surprise. What else was in there? Another big one was there's lots of good nuggets in there, including the shift between institutional customers and retail customers. I think two or three years ago, it was 20% institutional. Now it's closer to 65. So, I mean, I think this thing's built to last. I mean, it's really coin basis to lose at this point. You know, I'm not sounding bullish because I wrote the bulk on that much. It's just, you know, I've covered a lot of startups. And this is some of the nicest, you know, S-1 results of seeing. Oh, yeah, for sure. Yeah, no, I wouldn't say that you're looking at this with rose-colored glasses because this was definitely impressive. One thing that I was looking at is that currently Coinbase stores more than $90 billion worth of crypto assets

Starting point is 00:02:49 and against the, you know, total market cap of all crypto assets, that's 12%. And I was just like, wow, one company. And I really feel like that kind of speaks to probably one of its core values, which is security. You know, they've. kind of famously been one of the few exchanges to not ever suffer a hack. So, and let's talk a little bit more about this institutional shift because I feel like this has been a major storyline in crypto over the last few months. Like, what does that say to you when you saw that that transition has been happening within Coinbase?

Starting point is 00:03:23 Well, I mean, I think it's no surprise. We all knew what's happening with, you know, the likes of, you know, I think micro strategy was a bit of, you know, an exception or when they bought certain buying, but when you saw a square come in and Tesla come in and, you know, probably some names who don't know about are doing it, too. So, and I don't think that's a surprise you're going with Coinbase because these are, you know, big companies and, you know, financial advisors are conservative and they want a name they can trust, you know, and for better or worse, it's Coinbase. But the other takeaway from this is for Coinbase, it's a double win.

Starting point is 00:03:52 They think probably take a nice cut for, you know, arranging the transaction like they did for Tesla, you know, arrange the subtle purchases of it, nice service fee for that, but also their custody business too. you know, I bet you most of these companies are also parking their Bitcoin with Coinbase, you know, for the low, low fee of 25 basis points or whatever it is. So, I mean, I think that's interesting because my one reservation financially about Coinbase is it's very, you know, prone to booms and busts. You know, and the good times they're making a killing. Prices are up, volumes up, and then it all drops 80%. So I think they're probably better poised to ride out the next crypto winter because of custody business. So, you know, those are some of my original thoughts. And obviously,

Starting point is 00:04:31 we're still peeling through that filing, but there's a lot of goodies in there, including the setting Satoshi on the on the front page. I like that. I know. I tweeted that sending the S-1 to Satoshi's address made me tear up literally because I do. And I really think that speaks to the momentousness of this occasion. You know, just to imagine when Satoshi first sent the white paper out on that cypherpunk email list, you know, just I don't know how many people are on that email list, but it wasn't a huge number.

Starting point is 00:05:00 and just to go from that white paper to then just a few people running the network. And then now this massive industry has been built on this. I mean, it's really against all odds, you know, this currency that just came out of nowhere and was, you know, not the kind of currency that most people are used to,

Starting point is 00:05:18 like a brand new revolutionary thing. I mean, I think it's, I just think it's amazing. Like when I tweeted that I teared up, somebody tweeted back at me like, I don't see why this would make you tear up, blah, blah, blah. And I was like, okay, clearly then you don't understand the single thing about Bitcoin because like the odds to go from where we started to this like it's insane. But anyway, um, oh, did you want to add something on that?

Starting point is 00:05:40 No, I got to hold you on that too. I mean, I didn't, I saw your tweet. I thought I was kind of touched too because I get it. I mean, I've covered Bitcoin since 2013, not all in like you, but you know, the amount of times people have asked me, this is stupid why Bitcoin blah, blah, blah, and, you know, it takes a bit of faith to really do it. You know, it's not my job as a journalist to have faith, but, you know, I've met so many entrepreneurs, including you who basically bet your careers on moving into crypto despite the risk. And I think, you know, Coinbase going public, you know, almost at the size of Facebook is a really validating moment for, you know, whatever you think of crypto and Bitcoin and all the rest of it, you know, I just think a lot of people really put themselves

Starting point is 00:06:17 on the line and work their asses off to build this up. So I think for them, you know, it's a good day, you know, that's, let's not, you know, diminish that. Yeah. Well, so to go back to Coinbase your point about how the companies revenues really are dependent on how the crypto markets are doing. That was one thing I noticed was that 96% of the company's net revenue comes from transaction fees, which, you know, that to me sounds like, oh, boy, definitely going to see a lot of swings in that regard. But I did wonder, you know, for the, so for the subscriptions, I was looking at what makes up the subscription part of the revenue and it's custody, as you mentioned, but also staking, the earn service within Coinbase where you can earn some crypto for learning about certain

Starting point is 00:07:03 crypto assets and then also licensing for analytics. But I just don't see any of those being like huge, huge businesses the way that the exchange would be. So how much do you think that shift towards subscriptions can help? Yeah, I confess I missed that part. Are you saying only 4% is from non-transaction revenue? Yeah. So right now it's like tiny, tiny. And I just, I don't know how, you know, I was kind of like, hmm, all right, so maybe if custody gets big enough and maybe staking, but like, I can't imagine they make a ton of money from earn or the licensing for analytics, I mean. Yeah, that's interesting because, you know, the other thing, you know, they're trouble they're facing is I think basically brokerage services can become a commodity quickly. I mean, look at Robin Hood, what they've done to traditional brokerages. People are used to not paying fees. And as PayPal gets into it, as Robin Hood gets into it. And, you know, maybe the big brokerages will too. You know, it's, yeah, that's a pretty, pretty big risk for them.

Starting point is 00:08:03 You know, the flip side is they've got some time to figure it out because they've got such, you know, war chest of cash. And the numbers we saw today don't even include Q1. You know, that's all from, you know, late December when, oh, my God, Bitcoin broke $20,000. Right. They've had like a full quarter of Bitcoin at like near 50K. So, you know, even if, yeah, you know, even if the competitors come and cut down their profit margins, they've still got this big war chest to figure something else out.

Starting point is 00:08:28 But I do think it's a red flag if only 4% is coming from other stuff because I know they've been talking up custody and staking the rest of it for years. But the flip side is, I mean, if they're right, the stuff will grow and if they can get their teeth into part of the defy market. The amount of acquisitions they've had through the venture arm and directly, you know, it means even if someone else springs up to, you know, be the new big dog in crypto is a good chance Coinbase is going to own part of it. Yeah, yeah.

Starting point is 00:08:54 And my thing about Coinbase, too, is, I just feel like they're sort of the leaders when it comes to security. And I feel like they, you know, no matter how well Square and Robin Hood do and catching up, like they definitely probably have to catch up when it comes to, for instance, detecting fraud on the platform or, you know, other, probably around security, like, you know, a number of these other things. And that's why, for instance, Robin Hood at the moment doesn't allow people to withdraw crypto from the platform because they don't have, you know, all that infrastructure built up and the algorithms really down. And just to also go back to your point earlier about the institutions, I did want to also note just in the sheer number of institutions. So it's not even just like the share of the revenue, but the number of institutions

Starting point is 00:09:36 has gone seven times from what it was at the end of December 2017. And so that's over three years. And you know, that to me, I think really says something about this next phase of how the crypto industry will go. And Coinbase looks definitely poised to capitalize on that. Yeah. And the other thing with institutions, too, I mean, I'm no authority on the banking industry, but you watch like the Goldman's, J.P. Morgans, you know,

Starting point is 00:10:04 we're seeing Bank of America's and all dipping their feet in it. One thing I've learned about banks, too, they don't build their own tech. You know, they just, they would much rather license it. Banks are not built to do tech, whereas Coinbase is. So, I mean, I can also give in the existing relationships between J.P. Morgan and Goldman and Coinbase. I can see sort of like, you know, white labeling services or consulting or something like that, which could help their revenue, you know, so. But, you know, again, that number you said,

Starting point is 00:10:32 4%. That surprises me because, you know, it's been three years. Coinbase has been talking about all these other avenues of revenue and, you know, 4% ain't very much. Yeah, yeah. And as far as the white labeling is going, I think Paxos right now is kind of trying to corner that market. So, all right. So in a moment, we're going to discuss a little bit more about this S1, but first a quick word from the sponsors who make this show possible. Crypto.com is giving away four Teslas. To enter the lucky draw, download the crypto.com app and buy at least $100 of Bitcoin before March 8th. New crypto.com app users also enjoy 0% credit and debit card fees in their first month. Increase your chances of winning by applying for the crypto.com visa card, which gives you up to 8% back, along with rebates for your Spotify, Netflix, and Amazon Prime subscriptions. More details can be found in the show notes.

Starting point is 00:11:26 Back to my conversation with Jeff Roberts. And so earlier you were talking about some of the Coinbase executives and investors who are said to become quite wealthy off of this public offering. One name that, you know, isn't super familiar, I think, to those who follow Coinbase is Syrojet Chatterjee. Can you talk a little bit about who he is and where he shows up in that ranking in terms of his shares? Oh, yeah, that surprised me because obviously to bring on talent, you give them equity, but I think the ranks were, you know, Mark Andreessen, Brian Armstrong, of course, co-founder Fred Ersom. I think fourth was a surge of chattery.

Starting point is 00:12:03 And that took me in there. I was like, who? I was like, oh, wait a man, that's a Google guy. They poached a couple years back. He's your head of products. But I wonder if they're having second thoughts about that. I mean, you know, obviously he's probably doing good job. Coinbase has got nice products.

Starting point is 00:12:13 But I was a little surprised to see how much he was able to pocket. through this. Yeah, it probably has pretty good negotiating skills it looks like. And so another thing, obviously, that we've alluded to, but I want to talk about this specifically in regards to Coinbase. So corporate treasuries have been quite the talk the last few months in crypto. And, you know, obviously we've seen all these different corporations that have allocated to Bitcoin. And what did Coinbase reveal about its treasury and its S-1? It's interesting because, you know, there's a lot of accounting works with companies owning crypto. One of which is I thought it would be accounted as a UIC on a balance sheet, cash and cash equivalents. Equivalents are usually bonds and, you know, T bills,

Starting point is 00:12:58 stuff like that. But that's not part of it. But there was a little line in there that said they own $130 million worth of Bitcoin as of December, which today would be worth probably, you know, double that. But I think it's like 2,500 Bitcoins, which is not very many. Of course, they have massive amounts on behalf of other people. But in their own treasury, They've got that little bit of Ethereum, not much, and a little bit of like alt coins. And they're talking up with their stable coins. They've got a reserve of like 40 million of their like USDC proprietary stable coins. And I know some people on Twitter were like, you know, come on, put your money where your mouth is.

Starting point is 00:13:33 This is disappointing. But I think, you know, I don't want to offer them a cop-out. But the reality with accounting is, we saw this when Tesla made it smooth, just a quirk and gap accounting. Sorry from boring all your listeners with this. But you haven't asked it on your balance sheet. You have to mark how much it's worth. But for some reason, crypto, if it goes down, you have to take an impairment and say, hey, our company values diminished by X much. If it goes up, you get to do nothing.

Starting point is 00:13:55 So I think when you're a fast-growing startup, you know, that's, you know, basically fueled on borrowing growing fast. You probably can't tie up capital or make your balance sheet look ugly that way in case of a dip. So that's my best theory. But I'd be curious to know yours. I mean, you know, you watch this stuff as closely as me. Were you surprised? Oh, I was really surprised by how low that those figures were. I think your theory is a good one. I have actually, frankly, been interested in this gap accounting thing because I don't know much about it. And I, from the start, I kept wondering, is there any, like, kind of corner case where actually it works out well? Because, you know, obviously on the face of it, it just seems like a bad thing. But another idea that I had was simply that, you know, kind of like maybe they just want to sort of diversify in the sense that, like, since their whole business really does swing with a

Starting point is 00:14:45 crypto markets then to have like these additional assets that are literally going in the same direction as their whole businesses. I just wondered if that's like another reason. But I don't, even then I just feel like if you're in it for the long term, then it's sort of, you know, that isn't really probably something that would sway them. So yeah, I don't have a super good theory of probably the accounting one is the best one. But it was surprising. Yeah. And, you know, well, also too, I think they're probably downplayed because I've found it's sort of two-thirds the way down the filing and a like weird line. And you think, you know, know, if they'd own more, they would have put it up, like, you know, sort of like, you know,

Starting point is 00:15:19 proud and bold at the top and say, we're doing this before other people. But you look at the list of companies with most Bitcoin in their corporate treasuries. I mean, this puts Coinbase at like number 10 or something, you know, yeah, and the way behind, like, you know, even square and micro strategy and stuff. So, yeah, it's, it's curious. And the point I'm making is, I think they were kind of aware of it, which is why they buried it. Yeah. Yeah. So one other thing I'm very fascinated. And so I really liked reading their risk section. It was very long and detailed and it really fascinating to me to see how they're, I mean, it's like, I guess if you followed the space, it's nothing super surprising. But what interested me was that they did call out the risk from

Starting point is 00:15:59 decentralized exchanges. And this is something I've been watching. So the seven day moving average of volume on Uniswap is roughly one and a half billion, which is about 27% of what Coinbase does. And Uniswap is way younger and it's much harder to use than Coinbase. And so, you know, the S-1 does cite competition from Dex's as a real factor. And then I was just thinking about it, you know, because Coinbase also lists the competition from unregulated, centralized exchanges like Binance at the other end. And I just kind of felt like, ooh, they could sort of be squeezed there. What do you think of that theory? Yeah, I think this is one area, Laura, where we're going to disagree a bit. We were DMing with this earlier. You know, I think Dexes are cool. I think.

Starting point is 00:16:42 they're the future and stuff, but I think they're for hardcore cryptoheads. And, you know, for it's the mainstream is this stuff is still like years away, you know, at least five years away. And then, you know, there's always been, you know, before Binance, there's other cowboy exchanges. There was, you know, Bitfinx, there's Poloniacs, there was Mount Gox. There's always been the kind of fastenlist exchanges and they rise and they fall. But Coinbase has, you know, kind of made its bet, being the respectable one for better or worse. So I just don't think as a strategic threat, the dexes are going to be posed a threat to them long term. Also, I think Coinbase is invested in quite a few of those dexes. So, you know, I think they're going to win no matter what happens. Yeah. So I just, I don't think it being a, and finally, as people like say, like, it's a rising tide or like the pie is big enough for everyone. Or I'm mixing my metaphors here. But this crypto is growing and growing. And as long as the whole pie grows, you know, there's enough for everyone to eat. So I, you know, I don't see this being a threat for at least five years. Some of your listeners might agree, but that's my two sense.

Starting point is 00:17:43 Right, right. Yeah, no, I don't see it being a threat for at least five years as well. I just do wonder long-term how that will work out because I do feel that what's different about the Dex's from something like Binance is that it's sort of like, well, I mean, I would say the regulatory clarity around things like Dex's is somewhat unclear. But if you're, you know, if you've been reading the FinCEN guidance, which tends to say, oh, you know, regulations, you know, if you're not custodying customers' assets, then, you know, you don't have to follow KYC and et cetera, et cetera. So in that regard, like, at least I think some of

Starting point is 00:18:24 these dexes can breathe a little bit easy in a way that like a finance couldn't. So if it is a kind of like a more legit non-KYC version of interacting with crypto, then in that regard, I do feel like in the long term, maybe it will really take off. But you're right. Coinbase is invested too, so. Bet mode activated. The scorebed app here with trusted stats and real-time sports news. Yeah, hey, who should I take in the Boston game?

Starting point is 00:18:51 Well, statistically speaking. Nah, no more statistically speaking. I want hot takes. I want knee-jerk reactions. That's not really what I do. Is that because you don't have any knees? Or? The score bet.

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Starting point is 00:19:59 Yeah. Oh, maybe, sir, one other sort of digression on Binance. It was kind of cute. I saw on Twitter today. CZ congratulating Brian Armstrong, which is kind of a nice moment because, I mean, they're one sends bitter rivals and, you know, Binance did its best to take Coinbase out. So it's kind of neat on Coinbase's big day. CZ was very gracious about that.

Starting point is 00:20:20 So it's kind of fun to watch. Yeah, yeah. Well, I think CZ is actually a really nice person and generally kind of a cool character. All right. So one other thing. Well, no, just in general. So what would you say, do you think are the challenges that Coin Baseball? face after goes public?

Starting point is 00:20:38 I think the quarterly results are going to be very uneven because in crypto boom, they're going to kill it. And then, you know, there'll be a crypto winter. And now every three months, they're going to have to publicly show the results. I think their stock price is going to move all around. I think the company still has management challenges. I mean, Ryan Armstrong is one of the most tenacious, you know, focused CEOs I've ever met. But at the same time, I think the sort of debacle over the Black Lives Matter stuff last summer

Starting point is 00:21:03 created a massive distraction. and a lot of people say he doesn't have the emotional intelligence to run a big public company. So I think that's one to watch. They've had more turnover in the past, but they're in a very, you know, they're probably in the best phase they've ever been right now. So I think it's Coinbase is to lose at this point. All right. So based on the S1, how well do you think the direct listing will do?

Starting point is 00:21:25 What valuation would you expect for Coinbase out of the gate? I think, yeah, what's the word pop? I think that's what's going to happen, just because you're seeing with all the other IPOs, you know, these crazy first day, you know, 50%, 100% jumps for like, you know, Airbnb and a firm, a kind of boring fintech company. So I know they're trying to price on the private market, last, you know, the latest things reportedly is 300 bucks. People at Coinbase tell me they're going to go higher.

Starting point is 00:21:49 So, yeah, I think the stock's going to go crazy. Yeah, yeah, I would expect the same. All right. Well, thank you so much for coming on unconferred. Oh, and by the way, for people who are watching the video and for those listening, be sure to buy Jeff's book, James of Crypto. beautiful cover. And you can learn even more about Coinbase. Thanks so much, Laura. You're too kind. Always a pleasure. Don't forget. Next up is the weekly news recap. Hi, everyone. Thanks for tuning

Starting point is 00:22:20 into the speaks news recap. First headline, Tether settles with NYAG for $18.5 million. After an almost two-year-long investigation, the handing over of 2.5 million documents, and USDT growing from a $2 billion to $35 billion market cap, BitFenex and Tether agreed to a settlement with the New York Attorney General's office on Tuesday in regards to the 22-month inquiry into a possible cover-up of $850 million in losses by Bitfinex. The NYAG will bring no charges as part of the settlement. In a tweet thread, Tether claimed to, quote, admit no wrongdoing and said that there had been no finding that, quote, Tether ever issued without backing. Tether agreed to pay $18.5 million as part of the settlement and will submit quarterly reports on the composition of Tether's reserves to the NIAG for two years. New York Attorney General Latisha James was a bit harsher in her description of the settlement. In a press release, she said, quote, that Fanex and Tether unlawfully covered up massive financial losses to keep their scheme going and protect their bottom line. Tethers claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.

Starting point is 00:23:35 While it is too early to decide winners and losers of the Tether versus NYAG saga, it seems that both sides got what they wanted. The New York Attorney General's office gets to be a quasi-regulator of Tether, and Tether is allowed to continue functioning with only a minor fine. However, Tether cannot serve New York citizens or businesses. Whether or not this ends up being worse for Tether or for, for New York, which is currently considered one of the financial capitals of the world, only time will tell. The settlement and resulting transparency should help resolve unfounded

Starting point is 00:24:10 suspicions that issuance of tether somehow artificially inflated the price of Bitcoin. Dan held head of growth at Cracken may have been correct in January when he wrote, quote, Tether Fudd, fear uncertainty and doubt, is overblown. Next headline. BTC falters, square and micro strategy undeterred. Bitcoin reached a new all-time high on Sunday at $58,367 and promptly dipped, dropping to below $45,000 by early Tuesday morning, a correction of roughly 20%. But these price swings likely don't phase corporations like Microstrategie, which announced Tuesday that it had added another billion dollars in Bitcoin to its books, bringing its total investment, to 19,452 Bitcoins, the equivalent of roughly $4.5 billion. Square also purchased $170 million in Bitcoin this week,

Starting point is 00:25:09 bringing its total investment in Bitcoin to roughly 5% of its total assets. The company also reported selling $4.57 billion in Bitcoins to customers through Cash App in 2020 and revealed that 1 million customers purchased Bitcoin. for the first time in January 2021 alone. In other institutional news, asset manager Stone Ridge is adding Bitcoin to its diversified alternatives fund, effective April 26th. The fund will have exposure to Bitcoin through put options on futures contracts. And in other bullish Bitcoin news, the word Bitcoin and its weekly tweet volume hit a new

Starting point is 00:25:51 high this month. Finally, in Quillette, Alex Glassstein, the chief strategy on, officer at the Human Rights Foundation, published an op-ed on how governments may not be able to stop Bitcoin on a protocol level. He also refutes a number of theories on how Bitcoin could be stopped. He says, quote, there is an enormous amount of speculation on the internet about how Bitcoin might be attacked, but few stopped to think about why it hasn't already been destroyed. The answer is that there are political and economic incentives for more and more people to push the system forward and strengthen its security. And strong,

Starting point is 00:26:27 political, economic, and technical disincentives that discourage attacks. If you have a normy friend who thinks that Bitcoin might one day go down, this may be a great essay to show him or her. Next headline, Defy Roundup. Decentralized exchange, monthly volume hits an all-time high of $65 billion on Thursday, just 24 days into February, surpassing last month's record of $61 billion. Average EF gas fees hit a year. yearly high on Tuesday with the average ERC 20 token transaction fee hitting $38.21 according to BitInfocharts.com.

Starting point is 00:27:08 Ethereum Layer 2 solutions were popular this week. Layer 2 solutions aimed to provide reduced gas fees, lower latency, and greater throughput, rather than putting every transaction on the Ethereum blockchain. The first solution, Decentralized Derivatives Exchange, DYDX, is open for training. on Ethereum layer 2 scaling solution Starkware. Trading is currently limited, though a full public launch is expected in a few weeks. The exchange lists BTC-USD and ETH-USD perpetual contracts, lending and margin trading. Andresen Horowitz is investing $25 million into optimism, a startup focused on scaling the Ethereum network.

Starting point is 00:27:52 Optimism began a soft launch of its product in January, partnering with DFI Protocol Synthetics to begin testing its roll-ups and the throughput and transaction speed. Next headline. Ethereum Killers on the prowl. With high gas fees on Ethereum being highlighted this week, it's no surprise that would-be Heath killers have been, well, killing it. B&B, the native token to the Binance smart chain, jumped from $40 to $300 in just 20 days. And now sits as the third largest cryptocurrency by market cap.

Starting point is 00:28:26 Pancake Swap, a cloned Uniswap DAP running on the Binance smart chain, which is Binance's competitor to Ethereum, is currently the number one decks by number of unique wallets and just $3 billion behind Uniswap and weekly volume. The recent popularity of B&B, however, has raised questions around the centralized nature of the chain and whether Binance's conflict of interest in having an Ethereum competitor might have accounted for its suspension of ETH and Ethereum-based token withdrawals on Monday. Salana, another Ethereum competitor, has seen impressive growth this week, with the S-O-L token doubling from $8 to $14 as of press time Thursday. Alameda Research announced a $40 million investment in oxygen, a D-Fi Prime brokerage that will launch on decentralized exchange serum.

Starting point is 00:29:16 Sam Bankman-Fried, CEO of FTX and advisor to both serum and oxygen, pointed to the speed and lower cost of the Salana blockchain as reasons for choosing it. Next headline. Problems with traditional financial plumbing highlight potential in blockchain. On Wednesday, an outage of the Federal Reserve resulted in settlement issues for many financial institutions causing ACH and Fedwire delays at crypto exchanges. On the heels of the GameStop debacle, the DTCC, the main processor of U.S. stock trades, released a white paper outlining a plan to reduce the settlement of trades from two days to one, also known as, T-plus-1. DTCC thinks it can accomplish this within two years, which in crypto time seems like an unbelievably long time away. Hear more about how such issues could be resolved by a blockchain-based

Starting point is 00:30:12 platform such as Paxo Settlement Service, which Paxos CEO Charles Cascarilla discusses on this week's unchained. However, blockchain technology continues to intrigue the government. Federal Reserve chair Jerome Powell, announced that the Fed will be engaging the public on the topic of a digital dollar later this year. And SEC Commissioner Hester Purse gave a speech titled Rocket Emoji, Atomic Trading, Rocket Emote, which actually used real rocket emojis on the SEC website, urging federal regulators to, quote, be more proactive in embracing technology. She specifically cited DFI as an example saying, quote, defy's promises of democratization, open access, transparency, predictability, and systemic resilience are alluring. She also noted distributed ledger technology

Starting point is 00:31:05 has potential to improve the current financial infrastructure, mentioning that shortening the process for settling trades from T plus 3 to T plus 1 could decrease risk associated with open positions and reduce collateral demands. She referred to Robin Hood's CEO, Vlad Tenno's testimony from last week, when he called for real-time settlement of trades and said, quote, after all, crypto transactions settle quickly and effectively without a central counterparty. Smart contracts and distributed ledger technology could make the entire clearing and settlement process in the equity markets faster and more efficient. Next headline.

Starting point is 00:31:42 Fallout from SAC lawsuit against Ripple continues. In light of the SEC's lawsuit against an enterprise blockchain firm Ripple and two of its executives, MoneyGram, a publicly traded remittance firm has stopped using Rebel services. Ripple also made headlines this week by announcing a move to Wyoming, news that was broken by Wyoming Blockchain Whisper and Avanti Bank CEO Caitlin Long. Next headline. OKCoin D lists BCH and BSV.

Starting point is 00:32:12 Since exchanges make money on the trading of coins, no matter whether they are high quality or low quality coins, exchanges are typically incentivized to list as many assets as possible. So it was surprising when crypto exchange OkCoyne announced that trading of two forks of Bitcoin, which are known as Bitcoin Cash or BCH, and Bitcoin Satoshi's Vision or BSV, will be suspended on the platform starting March 1st. Both coins are variations on Bitcoin, each with a focus on larger block size limits and layer two solutions respectively. OkCoyne says it is a neutral platform and that it believes in allowing its customers to invest for themselves,

Starting point is 00:32:50 but that based on the fact that the market caps of both coins are around 1% of Bitcoins, quote, the markets have cast their vote. Another factor that pushed it over the edge, the recent decision by Craig Wright, a leader in the BSB community who has claimed he is Satoshi Nakamoto, to enforce copyright claims to the Bitcoin White Paper. Time for FunBits. FAP protocols strikes again. This fun bits is for all of those of you who remember the quiet days of 2016

Starting point is 00:33:20 when the Fat Protocol's thesis was all the rage. The Fat Protocols thesis was the theory that in the crypto round of the Internet, that protocols and their native twins would be worth more than applications built on top. This was in contrast to the original Internet, where protocols like HTTP and SMTP were worth very little, but the applications built on top, such as Google, Facebook, and Amazon, became hugely valuable. Well, if you were wondering how that works out

Starting point is 00:33:48 when you compare a seed investment in Coinbase to an investment in Bitcoin at that same time, a site called CaseBitcoin.com has your back. It judges the seed investment in Coinbase to be around September 12, 2012, and says that assuming a seed valuation of $10 million, Coinbase's valuation upon going public would need to exceed $47 billion. And with the way things are going right now for Coinbase, that looks like it's been locked up. All right. Thanks for tuning in. To learn more about Jeff and Coinbase's S1, be sure to check out the links in the show notes of this episode. Don't forget, we are now on YouTube. Subscribe to the Unchained Podcasts YouTube channel today. Unconfirmed is produced by me, Laura Shin, withal from Anthony Yoon, Daniel Ness, Mark Murdoch, Dan Edelbeck, and the team at CLK transcription. Thanks for listening.

Unchained - Unconfirmed: Coinbase's S-1: The Number That May Make the Exchange Nervous - Ep.215

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