Unchained - Unconfirmed: How Elon Musk Pushed DOGE Up and BTC Down, With Arca's Jeff Dorman - Ep.237

Episode Date: May 14, 2021

Jeff Dorman, the chief investment officer at Arca, comes on the show to give a macro perspective on the crypto environment. In this episode, he discusses: how economic data and real-world events have affected digital assets how Jeff classifies the different types of assets within crypto what market forces have pushed ETH to new all-time highs above $4k whether EIP 1559 will have the same effect on ether price as the Bitcoin halving has on BTC price what is happening with Dogecoin and other meme-coins why the market’s reaction to Tesla’s halt of BTC vehicle purchases was healthy whether environmental concerns surrounding Bitcoin will have long-term consequences on crypto as an asset class   Thank you to our sponsors! Crypto.com: https://crypto.onelink.me/J9Lg/unchainedcardearnfeb2021    Tezos: https://tezos.com/discover?utm_source=laura-shin&utm_medium=podcast-sponsorship-unconfirmed&utm_campaign=tezos-campaign&utm_content=hero    NEAR: https://near.org    Episode Links   Jeff Dorman Twitter  https://twitter.com/jdorman81 Arca https://www.ar.ca/ Blog post titled “How Economic Data Affects Digital Assets” https://www.ar.ca/blog/crypto-market-recap-05-10-21  Blog post titled “The Four Types of Digital Assets” https://www.ar.ca/blog/crypto-market-recap-06-29-20    Miscellaneous Links Dogecoin SNL clip https://www.youtube.com/watch?v=x5RCfQyTDFI SHIB token + dog meme-coins https://decrypt.co/70587/shiba-inu-shib-what-why-price-dogecoin https://www.theblockcrypto.com/post/104676/vitalik-buterin-donates-more-than-60m-to-charity-after-selling-meme-tokens-including-shiba-inu  https://twitter.com/lawmaster/status/1392533724814876680/photo/1  Nic Carter on Bitcoin mining https://www.coindesk.com/the-last-word-on-bitcoins-energy-consumption Tesla’s announcement on halting BTC vehicle purchases https://twitter.com/elonmusk/status/1392602041025843203   Link to the Crypto News Recap: https://unchainedpodcast.com/why-an-elon-tweet-sent-bitcoin-below-50k/   Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, everyone. Welcome to Unconfirmed, the show that reveals how the marking names in crypto are reacting to the week's top headlines and can see insights keep on what they see on the horizon. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago, and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. Heads up, everyone. If you're not already subscribed to my newsletter, you want to go sign up now. Next week, I am switching from my weekly news recap to a daily, in order to keep up with a crazy pace of crypto news. Each morning, you'll get four to five quick headlines, a crypto meme or two, and a few recommended reads. And in the newsletter, I will soon be making an announcement about my book, which you definitely won't want to miss. Head to Untunepodcast.com, and the sign-up for the email newsletter is right on the homepage.

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with code Laura. The link is in the description. Today's guest is Jeff Dorman, Chief Investment Officer at ARCA. Welcome, Jeff. Hi, thanks for having me. So it's been a wild week in the crypto markets. But before we get to some of the very specific events that drove some of the market movements, let's just talk about the broader picture. In general, as we're coming out of this pandemic, how do you see the different macro forces intersecting with the crypto markets? Sure. I mean, it depends what you say by crypto markets. And this is a big thing that we talk about a lot at ARCA is we don't really think it's one market anymore. This is a large asset class with a lot of different types of digital assets that all have very different drivers of what makes the price move and what makes interest in them move. So cryptocurrency itself, especially Bitcoin, is obviously very affected by the economic data in the macro picture. But a lot of the other assets in this asset class really aren't and really shouldn't be. In some ways, you can think of digital assets almost like the ETF, right? The ETF wrapper itself is consistent across all ETFs, but there's really no reason

why a health care ETF would react the same way as a bond ETF, which would react differently than a gold ETF, right? What you put inside the wrapper matters. I think the same thing is happening in digital assets. So specific to cryptocurrency and Bitcoin, you know, this is a huge week from a macro standpoint, right? We've had strong economic data for the past six weeks, really, across retail sales, across GDP. But now you have the inflation, whether it's transitory or not, but you are starting to have it creep up. What I think is probably most interesting, though, is everybody is concerned about the rise in rates, but rates themselves are going nowhere. So we have all this inflationary data. We have all these headlines talking about rates are

going to have to rise, and that causes Bitcoin to go down. It causes, you know, the NASDAQ and small cap stocks like the rustle would go down. But rates themselves are going nowhere. So I think inflation is on people's mind. I think Bank of America recently said that I think it was four or five times the amount of mentions of inflation on earnings falls than last year and more so than any time since 2004. But the reality is without rates really going anywhere and without the dollar going anywhere, it's still very supportive of risk assets. And I think most of these fears will probably subside pretty quickly. And so when you were talking about how you view crypto as encompassing sort of different

categories, how would you break those out? Yeah, so I think there's four types of digital assets right now. And there might be more, you know, a year from now and two years from now. But right now there's four. There's your cryptocurrencies, which for all intents and purposes, honestly, is just Bitcoin, but now you have Dogecoin and ripple and some other ones that have high market caps, but aren't necessarily being used for anything. then you have your protocols and platforms led by Ethereum, which is certainly the biggest and the most highly used.

But you do have some competitors, finance smart chain on the more centralized side. And then you have things like Solana and eventually Cardana, you know, avalanche, Algarand, you name it. But, you know, these protocols and platforms are base layers where it's really the total economic activity that happens on the chain is kind of how you value this as an investment. And then you have asset back tokens. You know, there's not as many asset-backed tokens, but these are, you know, these are regular securities, you know, maybe not in the eyes of the issuers or in the, by the SEC yet, but these are securities. These are tokens that are backed fully by either equity or debt or some sort of an income stream like an NBA salary in the case of Spencer Dinwiddie last year. But, you know,

asset-backed tokens can be modeled and valued based on what the underlying asset is. It has nothing to do with crypto or money or macro. And then the fourth one is probably the largest group of digital assets. the most interesting. And that's what we call pass-through tokens. And these pass-through tokens are hybrid instruments. They're quasi-loyalty or rewards program on one side and they're quasi-equity on the other side. These are instruments that generally, if you own them, you can participate in some way, shape, or form within the network because you own it. That's the quasi-loyalty or rewards part. But then you have some sort of an economic interest, either it's revenues or profits that are being passed through to you or some sort of inflation schedule of new tokens that are being

passed you, but you actually generate some sort of economic benefit or yield from owning it. It's these pass-through tokens that have driven defy. It's what's driving NFTs and gaming. It's what's driving Web 3.0. And these are generally, you know, have nothing to do with the economic factors that drive Bitcoin and, you know, the stock market and rates. So it's not surprising to me at all that Defi has completely uncorrelated to Bitcoin, especially in a week like today because those factors that drive defy are not relevant to what's driving big one. That's fascinating. Yeah. I love what you said there about, I guess, what I would call governance tokens, which of course, obviously they're kind of, I don't know if like self-contained

is the word, but yeah, they're sort of like, you know, if you're interested in whatever protocol, you know, those represent like whatever that's doing, what, it's like a lending protocol or, you know, something around a stable coin, then that is, you know, really kind of what will, I guess, affect the price movements in those. Well, I would also say that I also say that part of the reason, you know, they used to be called governance and now we call it pass-through tokens. And there's a reason for that is that governance without any cash flows to govern is kind of pointless. Nobody cares about governing something that's a shell that has no actual revenues and cash flows. Now in the last

18 months, you're starting to see real revenues and real cash flows at these centralized exchange companies like B&B and FTX, like the C-Fi, or sorry, like the D-Fi ones like Uniswop, sushi swap, et cetera. Once you actually start having real cash flows and have the ability to pass through something real back to your token holders, the governance really gets replaced with this pass-through element. It's the same thing, but you're actually governing something that has value for the first time. So what's also talk about one of the more recent notable market moves in crypto, which is, of course, Ethereum trading at all-time highs. Earlier this week, it reached a little over $4,300, although as of press time, I think it's around

$3,700. Why do you think we've seen Ethereum go from $740 this year to about 4K? Sure. I mean, the short answer is there's been a lot of money flowing into Ethereum. That has been evidence, no matter where you look, whether you talk to. to some of the OTC brokers who are starting to see institutional money coming in, or you see some of these new products like the Canadian ETF and some of the other products that are specific to Ethereum coming in. But there's real money pouring into Ethereum. And I think that is for real reasons.

You know, the first and foremost is even though we've talked about Ethereum killers forever and who might, you know, usurp Ethereum's throne as the top smart contract platform, the reality is there's an enormous amount of economic activity that is happening on on the Ethereum network and in the protocol from, again, all the things we just mentioned, from defy to to NFTs in gaming to everything that may or may not have as much traction as those do. And probably more importantly, though, for the first time, you can value Ethereum. As a protocol, a lot of the protocols and platforms, especially when they're up and coming, they're really more like call options, right? This is why venture capital firms love to invest in

the protocols. They're call options on future economic activity, but there's no way to really support what that value might be. But, with this new proposal that's coming through Ethereum with EIP 1559 and this switch to ETH2.0, what that's saying is all of these transactions that are happening on Ethereum that are producing real value right now only two miners, that cash flow is going to start being distributed back to token holders. So now, instead of just looking at this as a what if and look at all this economic activity, now you can run a real DCF analysis or a real dividend yield model and say, well, if Ethereum has produced $50 million in fees in the last seven days, I can

manualize that, and I can figure out what percentage of that is going to token holders, and now I can come up with an actual price for what Ethereum is worth. And I think that's probably the biggest takeaway for me is that not only are the venture capital firms loving Ethereum now, but now you have real traditional value investors who are starting to look at this as a technology with real cash flows. Yeah, so I do agree that everybody is talking about this, and I'm very interested to see what happens when it does get adopted. So in a moment, we'll continue that discussion.

and plus also turn to Elon Musk's effect on the markets. But first a quick word from the sponsors who make this show possible. TASOS lets you easily exchange smart money throughout our digital world. As self-upgradable blockchain with a proven track record, TASOS seamlessly adopts tomorrow's innovations without network disruptions today. Because of this adaptability, engineers, conservationists, entrepreneurs, collectors, game developers, and artists from around the world are building, creating, and using Tezos every day.

Discover how people are reimagining the world around you on Tezos. With over 10 million users, Crypto.com is the easiest place to buy and sell over 90 cryptocurrencies. Grow your crypto with Crypto.com earn, which pays up to 8.5% interest on your Bitcoin and 14% interest on your staple coins. When it's time to spend your crypto, nothing beats the Crypto.com Visa card, which pays you up to 8% back instantly and gives you 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 by using the code Laura. The link is in the description. Back to my conversation with Jeff Dorman. So as you were talking about with Ethereum,

there's this big shift coming. Do you feel that right now, like it's sort of like a Bitcoin having where once it happens, we won't really see the price rising because everybody is expecting it? Or do you feel that afterward we will see it rise even more? Well, there's a big difference between catalyst and event-driven investing and long-term fundamental investing. Generally, we do both at ARCA. And when we think of something long-term and fundamental, it's usually something that already has KPIs and metrics and cash flows and building that we can really model. When we look at events and catalyst, we're looking at a hard date or some sort of hard catalyst that we are basing an investment off. I think with Ethereum right now, you have to still put this more in the event and catalysts

driven bucket because even though we're talking about this transition to ETH 2.0 and the EIP 1559 proposal and these cash flows coming, it hasn't actually happened yet. And for anyone who's actually worked at a technology company and has ever pushed code or seen a GitHub commit, things can go wrong, right? There could be bugs. And that's when you have three or four developers in a small company. You know, imagine thousands of developers across the world all working on this project. So, You know, there's a good chance that this could be buggy. There's a good chance there could be, you know, some effects of this transition and migration that, you know, we haven't really thought through. And I think until you see it, it's too early to say that, yes, this is a fundamentally sound token that has these real cash flows.

But, you know, there's no question that Ethereum economic activity is going to continue, even if there's hiccups with this migration. So, you know, it depends on what type of an investor you are. But, you know, if you are long Ethereum, there are real reasons to be long, given, all of this activity that's happening. As an investor, you know, depends on what your mandate is and depends on, you know, how you think about how smooth this transition will be and what, you know, how long your time horizon is on sticking with something with Ethereum. I still think, and I've said this multiple times before, I still think that a lot of the

applications that are built on Ethereum are probably going to be seen by traditional investors as, as better places to put their money than Ethereum itself once they really learn about the ecosystem, not necessarily because it's better, but just because it makes more sense. A traditional equity analyst who is used to analyzing companies with cash flows is probably going to gravitate towards something like defy or something like a gaming company before they gravitate towards Ethereum simply because it just is easier for them to understand. But long term, you know, rising tide lifts all boats and they should all perform pretty well as long as the economic activity on Ethereum continues to be strong. That's interesting. I guess I think of it.

differently because Ethereum's more proven and the defy stuff is more risky, but I take your point about just how they might be able to grasp some of the defy tokens more easily. So here we're making this kind of, or you are making this pretty smart analysis just based on the fundamentals. But let's now kind of talk to some other, talk about some other things that have been going on in crypto, especially in regards to Elon Musk's effect on the markets. Let's just first talk about Dogecoin. What happened with that, would you say? And what do you think all that says about the crypto market?

I don't know if you saw the S&L skit about what is Dogecoin, but I think it represented everything pretty well. Sure. Yeah, I did see it. And, you know, I've been writing a blog every week for three plus a years talking about the digital asset market. And never, if you would ask me at any point, did I think I'd ever be talking about Dogecoin? I'm not highly emotional. I'm not, you know, I'm not a Bitcoin maximist. I'm an Ethereum maximalism. I'm an investor. I'm a profit maximalist. And, you know, we will look to wherever we see value. I never thought I'd be writing about DogePoint, but we did. We wrote about it a few weeks ago because it is taking over the market's interest. You know, Dogecoin fits in the cryptocurrency basket, which is similar to Bitcoin. Bitcoin cannot be valued, right? You can look at it in terms of relative value versus gold. You can look at it in terms of total market size based on, you know, money. supply, but there's no way to value Bitcoin, despite the fact that many analysts have tried, and I've heard many of them on your show. I don't believe it. I think Bitcoin is a belief system.

Bitcoin is, you know, how many people want to own this relative to the amount of Bitcoin exists, and that's really it. Dochecoin's the same thing. There's no valuation to dochecoin. But the way to think about it is thinking about options and think about what the Black Scholes market tells you. When you price an option, you know, the Black Scholes model tells you You need to have the strike of the underlying. You need to understand the security price, the time to expiry, the risk-free rate, and the volatility. Those last three things are the most important. There is no time to expiry when you're talking about a new cryptocurrency or a protocol, right?

This is not like a company where there's a ticking time bomb, and if they run out of cash, they ultimately default. These things can stick around forever. So right away, you have infinite expiration, which gives an option value. Then you have the risk-free rate. Well, we all know interest rates are zero and some points are negative. So right there, that makes options more attractive. And then you have the volatility. And there's no question that these instruments have a lot of volatility.

So when you think about it in that way, you know, I personally don't think Dogecoin will be successful as a real store of value or as money like it is, you know, intending to do. But if you just think about it mathematically, you know, Bitcoin has a $900 billion market cap and Dogecoin has a $50 billion market cap. So that's, you know, the market is basically telling you that there's a, you know, roughly a 5% chance that Dogecoin can one day be a form of money just like Bitcoin. And, you know, I don't know what the right percentage it is. I don't know if it's zero or one or two or 10%,

but it's probably not zero based on the fact that, you know, there's no real way to kill this. And if you believe what I think, which is that all these cryptocurrencies are belief systems, who am I to say that, you know, millions of people around the world aren't going to rally behind Dogecoin more so than Bitcoin. Now, from a security standpoint, it makes no sense. Bitcoin is a much more secure network and there's hundreds of other reasons why Bitcoin makes more sense as a store of value than Dogecoin does. But again, if it's popularity

increases and there's people who really will this to succeed, there is a small chance that it succeeds. And the market is basically pricing it based on that option value. And do you have the same take on all of these other dog coins like the Shib coin for Shibbean, you know, and Akita and Bone and a dog Elon Mars, which had the ticker symbol Elon. I just wondered what you made of that whole thing as well. Yeah, I mean, honestly, we ignore most of it. Just because we're in the digital asset market doesn't mean we have to be paying attention

to every little thing that pops up on Twitter. So, you know, we're aware of it. We understand that it was driving, you know, some interest and some value. But, you know, there's a difference between waiting for something to actually have real KPIs and real metrics where you can look at how many users are using it or how many wallets are interacting with it

or how many transactions are being sent versus something that's just taking advantage of a theme and popping up overnight. You know, we're patient investors. If any of these new dog coins that come up are still here in six months or 12 months and have the same type of success as some of the others, you know, then we'll have some real numbers to dig into. For now, it seems like a little bit of a sideshow to the main event. And quite frankly, as an active manager, we love that, right?

The more of the market and the media continues to focus on things that we don't find to be all that relevant and valuable. the more we can focus on the things that are. And the most interesting thing from my standpoint, especially having come from places like Lehman Brothers and Merrill Lynch and Citadel is, the sweet spot for active management or investing is always when the asset class is evolving and growing

and the opportunity set is growing, but the competition isn't. And truthfully, a lot of these things that pop up that grab everyone's attention, it's just providing a nice smokescreen for the real economic activity that's happening. And it means the competition is focused in the wrong place. So I love it personally as an investor, even though I honestly have no idea what these are and probably would never invest in.

Yeah, yeah. And just to note, at Chang Peng Xiao of Binance, the CEO there, tweeted that Binance ran out of ETH deposit addresses due to SHIB today. That was the day they listed it. And he said, never happened before for any other ERC 20 coins. So, you know, yeah, says something about what the demand was. And if that demand is still there in six months, it might become interesting. I think it's a little too early to tell. But like I said, a lot of these are option value, and I'm never going to tell somebody that it has a 0% probability of working.

So for those who have done the work and enjoy it, you know, it could very well be profitable and very well interesting. But for those who do real fundamental valuation, we certainly have to see more than just a few days. Yeah, and we'll have to see now after Vitolix sales of the SHIB token, And some of these other dock coins did crash the price. Or I don't know if crash is the word, but, you know, definitely took some of their hour out. So now let's talk about Elon Musk's announcement that Tesla would no longer accept Bitcoin as payment. The company did say they would continue to hold Bitcoin on its balance sheet. So tell us what effect that had on the markets and why you think that was the reaction.

Well, first of all, I think that might have been, you know, the final catalyst that took the market. is down in the last few days here, but I don't think it was the only thing that was happening, right? We've already talked about the macro lens, you know, between the inflation data, between what we saw with some of the stocks, the publicly traded stocks that are of basically digital asset companies, all being down somewhere between 30 and 40 percent in April and already being down 20 to 30 percent here in May, not to mention the NASDAQ, you know, having three or four days down. There was a lot of other signs that were leaning towards people wanting to err on the side of selling over buying. And I think the Elon Musk news or the Tesla news that came out yesterday

was kind of just, you know, the nail in the coffin for those who were trying to make a buy or sell decision. But at the same time, you know, I wrote back in February, how many times can Bitcoin rally on the same news? Because if you look at the rally from November through, you know, middle of April, it was the same news over and over again. Tesla announced that they bought Bitcoin, Square announces that they buy Bitcoin, you know, B&Y Mellon and Deutsche Bank are reviewing crypto custody, MasterCard and Visa and Venmo and PayPal and Morgan Stanley, it was all the same news over and over again. You could summarize that in one sentence, which is there are new entrants to Bitcoin. So if that is a central theme that drove Bitcoin up 5x over the course of six months,

by that same definition, if one of those players pulls out, you should have a negative reaction to it. Now, it doesn't really change anything in terms of the full scope of what Bitcoin is or how much penetration is having in the market. But again, if the market's are going to reward that type of news on the way up, they should also negatively punish it on the way down. And, you know, I think the reaction was actually, in the beginning, the reaction was great. It was a very Bitcoin-specific piece of news, right? Tesla and Elon Musk said, we don't believe that Bitcoin is environmentally sound, and I don't believe in that. I think there's been enough on your show as well. There's been enough people who have refuted that, so I don't want to get into that.

But it was very Bitcoin-specific. Tesla said, we do not want to accept Bitcoin anymore because it is not environmentally sound. And that was it. So in theory, the only thing that should have gone down was Bitcoin. And for the most of yesterday, that's actually what happened. Bitcoin was going down and the rest of the market was holding in pretty well. Today, you had a little bit of a spillover and contagion effect, where the rest of the market started to trade off as well.

That's when you get back into these high correlations and whether or not this is all just one market. But I thought the reaction was healthy yesterday, even though I don't think it has any real long-term consequence. Oh, okay. You know, that interests me that you said that because I just feel like this year with the NFT thing, there's been a lot of talk about environmental stuff. And I feel like sort of like now that the normies are coming, that they're highlighting this way more than normal crypto people. But you don't think this will have a long-term effect on the crypto markets. Well, I mean, look, I wasn't there when Satoshi wrote the white paper, but I'm pretty sure, you know, seeing Mark Cuban and Elon Musk battle on Twitter about whether or not Bitcoin is environmentally sound. I'm pretty sure that's not

what was intended. Two eccentric billionaires fighting over the value of Bitcoin. So, no, I mean, it's one piece of a giant mosaic theory puzzle. I think the ESG concerns are valid across the entire globe. And I think there is some components of what Bitcoin is offering that you can say has a negative impact on the environment because of the electricity. But at the same time, again, we've been refuting it. People like Nick Carter have been refuting it. I mean, there's enough evidence to also support that, you know, energy is a grid and there's excess energy available and miners are efficiently looking for the lowest cost surplus

of energy. And therefore, it's not really adding any more of a carbon footprint that would be there without Bitcoin. So it really just comes down to people either believe that Bitcoin should exist and this idea of a government, state-free, monetary system should exist or not. If it does, then you would say, yes. This is worth the energy that goes into it. If you don't believe Bitcoin should exist, of course you're going to say the energy isn't real.

There's all kinds of things that utilize energy in the world that you can validate if you believe the means justify the end. So, you know, I'm not a big believer that the Bitcoin ESG concerns are going to have a huge impact on this market. But I do understand, you know, why if you're Tesla and you have this brand, of being environmentally conscious and you, you know, sell renewable batteries and you're looking for, you know, energy credits, why you would take that stance. Yeah, I do obviously see why, you know, for the position therein, it was probably something that had to happen at some point. But I do think this is a growing concern. I'd like to keep my eye on it. Well, this has been such a fascinating discussion. Thank you so much for coming

on Unconfirmed. Well, thank you for having me, Laura. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break. Did you know nearly $338 million worth of the NFTs were sent last year? And in 2021, that number is growing faster than ever. If you're looking to make your first NFT, check out NIR's fast, scalable, low-cost, open-source platform. NIR is investing 80 million NIR tokens in community-led projects over the course of five years to power. sustainable innovation through its ecosystem, with fundraising opportunities and support for Dow's and DAPs to engage fans and reach new audiences. Come learn why NIR is the infrastructure for innovation at N-EA.org. Thanks for tuning in to this week's news recap. First headline, Tesla stops accepting Bitcoin.

Price drops. On Wednesday, Tesla CEO Elon Musk said that Tesla had suspended the purchase of vehicles with Bitcoin. citing concern over, quote, the rapidly increasing use of fossil fuels for Bitcoin mining and transactions. The announcement immediately sent the price of Bitcoin plunging. Because, you know, so much of the Bitcoin transaction activity was people sending their BTCs for Tesla's. The price hit a monthly low of $46,000 before bumping back up to around 50K. It was not all bad news, however. Tesla will continue holding BTC, hinting that Bitcoin vehicle purchases could come back if mining transitions to a a more sustainable energy source. Musk ended his announcement with a tease, writing, quote,

we are also looking at other cryptocurrencies that use less than 1% of Bitcoin's energy per transit action. If that is the case, Tesla could be looking into cryptos running on blockchains that use proof-of-stake consensus algorithms rather than Bitcoin's proof-of-work, which is dependent on computing power and therefore energy to secure the network. Solana, itself a proof-of-stake blockchain, has already shot at shot on Twitter, replying to Musk with a waving emoji and the words, DMs are open. Binance reportedly under investigation by DOJ and IRS.

According to Bloomberg, the world's largest crypto exchange, Binance, is reportedly under investigation by the U.S. Department of Justice and the Internal Revenue Service. Bloomberg reports that officials from the DOJ and IRS have, quote, sought information from individuals with insight into Binance's business. U.S. investigations are not new for Binance as the exchange faced an inquiry from the CFTC earlier this year. In response to the news, CEO Changpeng Xiao tweeted, So Much Fud today. It's a pain for some and opportunity for others. Next headline. Batelik donates to charity thanks to meme coins. The Dogecoin knockoff, Shiba Ino, which is named after

the dog from the Dogecoin memes, won on quite the moonshot, making token holders incredible amounts of money. Igor Iyambordiev, a researcher at the block, reported that one person took an investment of 37.65 eith and turned it into a whopping $2.5 billion, at one point at least. Earlier this week, the self-proclaimed Dogecoin killer had a market cap of over $10 billion, which briefly made it a top 20 token. A total of one quadrillion shib have been minted, with half, over 500 trillion coins, going to a public address of Ethereum creator of Italic Buterin in a supposed burn. The other half of the coins were sent to a uniswaf liquidity pool and can be bought and sold on multiple exchanges, including Binance.

However, on Wednesday, Vitolik decided to take an active role in Shib and two other meme coins, Akita and Elon, by selling the tokens instead of acting as a passive burn account. The co-founder of Ethereum netted 15,719 Eath, worth about $63 million in his sale of $660 billion, Shib, 140 billion Akita, and 43 billion Elon. Boudarin immediately sent the proceeds from his meme sale to charities, including Givewell, the Methuselah Foundation, a COVID relief fund for India, get coin, and charter cities. Larry Sirmak, director of research at the block, speculated that Vitalik's token dump stemmed from the tokens clogging up Ethereum, which consistently caused gas fees to go over $400.

dollars. He also mused that investors would be, quote, rugged regardless later. Don't get me wrong and by much worse intended people. But still, wouldn't be surprised if this leads to lawsuits. It was a busy week for Votelic. In between his charitable activities, he posted on Uniswop's governance forum, proposing that Uniswap's unitoken should become a price oracle in the same vein as a chain link, but simpler with a strict focus on price rather than data feeds. A UniPrice Oracle would specialize in wrapping real-world numbers into smart contracts on Ethereum. Luteran also saw Ethereum reach a $500 billion market cap, overtaking JPMorgan and Visa in market capitalization, with the ether breaking

$4,300 for the first time. For context, when BTC had a $500 trillion market cap in December of 2020, it only took roughly two months to break $1 trillion in February 2021. Next headline. A crypto company ETF is live on the New York Stock Exchange. This week, the U.S. Securities and Exchange Commission released a staff statement that described BTC as, quote, a highly speculative investment, which is a tough turn of events for those waiting for the vaunted Bitcoin ETF to be approved. The timing of the SEC's note was especially inopportune for CBO and Vanek, which both made headlines to speak in the crypto ETF space. Sebo, a traditional exchange, acknowledged its support for Fidelity's Wise Origin Bitcoin ETF application.

Without an exchange like Cebo coming on board to support the ETF, the SEC would not consider the Wise Origin application. Benek, an asset management firm, filed a proposal for an Ethereum ETF with the SEC. Benek already applied for a Bitcoin ETF and is awaiting the SEC's answer, which should come as early as June 17th. In the meantime, a crypto company ETF run by Bitwise will launch on the New York Stock Exchange, ticker symbol, BITQ. The ETF will track a list of 30 public companies with significant exposure to crypto, such as Coinbase, Microstrategy, and Tesla. As of now, there are 10 crypto ETF proposals on the SEC's docket. This week in crypto adoption,

Switzerland's largest investment bank, UBS, is reportedly planning to offer wealthy clients' exposure to cryptocurrencies, though the details are unclear. UBS would follow in the footsteps of Goldman Sachs, Morgan Stanley, and Bank of New York Mellon as a high-profile banking institution granting clients access to crypto. Moneygram, a cross-border payments company announced a partnership with ATM provider CoinMe to allow U.S. customers to withdraw cryptocurrency holdings in cash, with plans to expand internationally in 2021. The company plans to offer Bitcoin at 20,000 outlets by the end of the year. After hinting at the idea last week, eBay announced that it is now permitting the sale of NFTs on its platform. Users will be able to bid on NFTs just like any physical

item on the website. Palantir Technologies headed by PayPal co-founder Peter Thiel is now accepting Bitcoin as payment. Additionally, the prospect of putting BTC on his balance sheet is, quote, definitely on the table, according to CFO Dave Glazer in a Tuesday earnings call. The block reports that 0.72, a hedge fund founded by billionaire Stephen Cohen, is set to, quote, get big in crypto, which could mean a sizable investment in digital assets since 0.72 managed as much as $22 billion as of April 1st. Cohen, a 103-year-old investment bank, is partnering with digital infrastructure firm PolySign to provide crypto custody services for institutional clients. According to a tweet from CEO Michael Saylor, MicroStrategy has purchased another $15 million

in BTC and the average price of roughly 55K. Next headline. Facebook-backed DM is coming to the U.S. On Wednesday, the DM Association, formerly known as Facebook's Lieber Project, announced the withdrawal of its application for a Swiss payments license. The association, made up of 26 financial firms and nonprofits, will be relocating to the U.S. DM says it will register with FinCEN and partner with Silvergate Bank

in order to issue its long-awaited stable coin. Silver Kate will both issue and manage DMUSD, which will be a dollar-backed stablecoin. DM has had an arduous journey so far, including two significant hurdles. First, rebranding from Libra, which was supposed to be a universal currency tied to a basket of major currencies and debt. And two, losing Visa, MasterCard and PayPal as members, along with several high-level execs. In other stablecoin news, Tether, for the first time since 2014, revealed the breakdown of its reserves as part of its settlement with the New York attorney. Attorney General's office three months ago, which requires an ongoing publication of the assets backing USDT. As of March 31st, 2021, UST is backed by 76% cash and cash equivalents with a final 24%

filled by secured loans at 12.55%, corporate bonds, funds, and precious metals at 9.96% and other investments, including digital tokens, at 1.96%. When Tether initially launched, UST claimed to be backed one-to-one with U.S. dollars. In 2019, the company changed the wording on U.S.D to being backed 100% by Tether's reserves, which, it seems, is still company policy today. The current market cap of UST is over $50 billion. Next headline. 30 plus million dollars lost over two D-Fi hacks. Defi Protocol X token suffered an exploit on Wednesday to an attacker using flash loans. The hacker got away with roughly $24.5 million worth of crypto, including $8 million in SNX and $6 million in BNT. Rari Capital, a DeFi project, lost 2,600 Eth over the weekend, which is approximately $11 million.

CEO Jai Bavani announced that 2 million of the project's native token, RGET, will be used to reimburse users who lost money in the hack instead of being used to scale the Rari Capital team. Time for Fun Bits! This is the Bitcoin car. At this year's Indianapolis 500, racing fans, a national TV audience and hodlers alike, will have the chance to root on car number 21, the Bitcoin car, driven by Ed Carpenter. Carpenter, in partnership with Strike CEO Jack Mellers, is forfeiting all sponsors this year. According to Mellers, Carpenter is racing, quote, for Bitcoin awareness and Bitcoin open source development.

In a blog post, Melers made it quite clear that the sponsorship is not for, quote, the strike car, the Coinbase car, the Cracken Car, etc. Why not? Because fuck that. Nobody wants to cheer for that. This is the Bitcoin car. The car, along with the team uniforms, is bedecked with orange BTC logos atop a black paint job. You have to see it to believe it. Editor's note, this is a lost opportunity to name this the Bitcoin Mobile. All right, thanks for tuning in. To learn more about Jeff and Orga, be sure to check out the links in the show notes. heads up, everyone. If you're not already subscribed to my newsletter, you'll want to do so now.

Next week, I'm switching from a weekly news recap to a daily blog in order to keep up with the crazy pace of crypto news. Each morning, you'll get four to five quick headlines, a crypto meme or two, and a few recommended reads. And in the newsletter, I'll soon be making an announcement about my book, which you definitely don't want to miss. Head to Unchainedpodcast.com, and the sign-up for the email newsletter is right on the homepage. You can also find the link in my Twitter bio. Unconfirmed is produced by me, Laura Shin, with all from Anthony Youne, Mark Murdoch, and Daniel Ness. Thanks for listening.