Unchained - Why MSTR Should Have Sold $2 Billion Instead of $2 Million of Bitcoin

Episode Date: June 5, 2026

Jeff Dorman on why Strategy's four stakeholder classes are all losing, and why Saylor should have sold $2B of Bitcoin at once instead of $2.5M. ======================================================== Thank you to our sponsor! Fidelity: Explore opportunities at https://crypto.fidelitycareers.com ======================================================== Strategy’s late-May Bitcoin sale has turned a long-running investor concern into a sharper question: how sustainable is the company’s capital structure if its Bitcoin accumulation strategy now comes with large cash obligations? Jeff Dorman, chief investment officer at Arca, joins Laura Shin to discuss why the sale changed his view of the risks around Strategy. After months of pushing back on fears of forced selling, Dorman says the company’s preferred-share financing has altered the analysis. He points to roughly $15 billion in preferred shares carrying 10% to 12% dividend rates, which he estimates could mean about $1.7 billion in annual cash obligations for a company without operating revenue. Dorman also breaks down the stakeholder groups shaping Strategy’s choices, the tradeoffs each path may create, and the Polymarket dispute over whether Strategy sold Bitcoin in May. Host: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Laura Shin⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, Host / Unchained Guests: ⁠⁠⁠⁠⁠⁠⁠⁠⁠Jeff Dorman - Chief Investment Officer at Arca - https://x.com/jdorman81 Learn more about your ad choices. Visit megaphone.fm/adchoices

So, you know, you're just in a weird situation now where, again, it's not like default is imminent here, but this flywheel that he's created over six years is just slowly dying. And he's put too many pieces in the puzzle that can't be serviced at the same time. Hi, everyone. Welcome to Unchained. You're a no-hype resource for all things crypto. I'm your host, Laura Shin. Thanks for joining this live stream. Fidelity has been investing in blockchain since 2014. They're not wondering if digital assets will shape the future, they're hiring the talent to help ensure they do. Explore opportunities today at crypto.fidelity careers.com. Fidelity is an equal opportunity employer. Today's topic is strategy's

dilemma and why it's begun selling some Bitcoin. Here to discuss is Jeff Dorman, chief investment officer at ARCA. Welcome, Jeff. Hi, Laura. Thanks for having me. And as always, quick compliance. The views I express are my own and are provided for informational purposes only. Nothing I say should be construed as investment advice. You wrote a tweet last week. That was somewhat prophetic. You said, quote, the MSTR story has gotten so out of hand. Excuse me.

This is the first time that MSTR, BTC, and PREF holders are really in a bind. Someone is going to lose badly here, and it will happen in the next four months. And then, of course, we heard on Monday that Indeed Strategy had sold 32 Bitcoin at the end of May for $2.5 million. And you've written on your blog about how you used to be a fan of strategy and would defend it against people's concerns that it would someday have to sell Bitcoin. But obviously, now your tune has changed and you ascribe that to their new capital structure. So what changed in this structure and why do you think it's a problem?

Sure. Yeah, I guess I should have said within the next four days, not necessarily the next four months. Yeah, I mean, to be fair, what I used to talk about, micro strategy. I never really defended the MSTR stock per se. What I always said was that the fear of micro strategy and sailor selling Bitcoin and as a result, this company being a risk to the price of Bitcoin, was always really low up until the end of last year. And what really changed was that this used to be a pretty simple capital structure, right? At first, they were selling equity and using the proceeds of any equity raises to then buy Bitcoin. Then they layered on a little bit of debt.

crazy. I think in total they had about six or seven billion dollars of debt relative to a 40 or 50 billion billion dollar equity market cap. So it was pretty nominal from a debt to cap standpoint. It wasn't really going to be a death sentence for a company like this, especially since most of them were zero or low coupon converts. So there wasn't a big cash outlay. But at the end of last year, they started introducing the preferreds. And the growth of this preferred market, they have multiple preferreds in their capital structure now. Most of you probably have heard of STRC, which is Stretch, the one that they talk about all the time and has ballooned to, I think, 11 billion in assets. But there's others as well. There's about four different prefers that they have in the balance sheet.

And the problem with this preferred stock is that these have ballooned to about 15 billion total, and they have somewhere between 10 and 12 percent dividend rates, which means that micro strategy basically owes $1.7 billion in annual dividend. per year. So that's what made me change by tune in the sense that he could have muddled along for decades, whether or not he ever was able to buy more Bitcoin was sort of irrelevant. He never was going to have to sell Bitcoin. There was no trigger to have to ever sell Bitcoin because there was no cash obligations other than when the debt came due. And you could probably refinance the debt because it was a small part of the cap structure. Once you introduced this $1.7 billion

of cash dividends. Now he has to come up with $1.7 billion a year in order to satisfy those preferreds. And it's a company that makes no money. So there's only so many avenues that you can come up with to come up with $1.7 billion. Either you have to continue to sell more stock, which is becoming less and less accretive as the price goes down, or you have to sell the Bitcoin. So really, you know, in tennis terms, this is a pretty unforced error. There was really no reason to do what he did in the last few months, where he basically used all of the cash on the balance sheet that they had saved to pay down debt

and now have five months left before they run out of cash unless they sell the Bitcoin. Yeah, let's kind of dive into that little piece a little bit more because you basically, I think it was in a blog post or a tweet, you talked about how they had raised $2 billion in cash via stock sales. and that initially, you know, that looked like a good move to you, but now you view that as problematic. So explain like, you know, what happened there and why now you feel that complicates the picture for them. Yeah. So again, and this is a little hard to talk to

quickly. So I have to kind of back up, right? So again, the parts of the capital structure, there's basically four different stakeholders with micro strategy. First is obviously Bitcoin holders because, you know, anybody who owns Bitcoin is affected by what a company of this size does since they own 4% of the outstanding Bitcoin. Second stakeholder is your micro-strategy shareholders. Your third stakeholder now is the preferred shareholders, and your fourth being the debt holders, right? So all of these different stakeholders are bullish in some way, shape, or form on micro-strategy in Bitcoin, but they can't all be satisfied at the same time because there's different levers affecting everything. So what we were saying is when these preferred, and for anybody who wants

to follow along, it's actually they have a very good website, strategy.com. You can see all the detail there. So you can see exactly how much Bitcoin they own right now. It's about 56 billion. You can see the market cap of the equity, $48 billion. You can see how much debt they have, $6.7 billion, and the total of the Preferreds, which is about, I believe, $15 or $16 billion. So all this parts in the capital structure, the preferreds don't, the dividends don't have to be paid, right? These are cumulative preferrids, meaning if he decides not to pay the dividend, it's still accrues, but he doesn't have to pay the cash. But once you do that to a preferred stock, that's the death sentence for the preferred. The preferred will go down 20 or 30 percent.

Mostly these are owned by retail investors looking for the yield. It's a last resort thing. So what happened is with these preferreds, as they started, as he started, raising more and more of these preferred in order to buy more Bitcoin, the market started to freak out a little bit about three months ago about whether or not they were going to ever have the cash to satisfy the dividends on these preferred. And if you look at a chart of STRC, which is the biggest one, for example, and you go back six months, this is an instrument that's designed to trade at 100, basically par, and you just get the dividend. But it was trading well below par because the market

it was worried that they weren't going to be able to satisfy the dividend. So what did they do? They went out there and raised about $2 billion in a combination of more preferreds and more stock and said, okay, now you'd at least don't have to worry about it for a year and a half because we have this $2 billion sitting on the balance sheet that's going to be used solely to pay dividends to the preferreds. Everyone breathed a sigh of relief.

Okay, these guys, you know, maybe there's no long-term solution, but at least the short-term solution is to have the money. And then what does he do? A month later, he turns around and takes $1.4 billion of that cash cushion. and buys back some of his convertible debt at 92 cents on the dollar, completely the opposite of what he said the cash was for. He retired 2,029 maturity debt, which doesn't come due, obviously, for three more years. It's just a complete balance sheet mismanagement.

And now that, you know, one and a half year cash cushion that he had to pay the preferreds, all of a sudden fell to four months. So what happens? Market starts freaking out again. And then he comes out on Monday and says, okay, we're actually going to sell some Bitcoin, even though it was a not. nominal amount, it's teasing the market that that's the only choice he has now is to sell Bitcoin. And that's why Bitcoin's imploding. That's why the stock is imploding. And that's why STRC is back down to 97.

So it's really just there's just no, there's no avenue here other than letting one part of the capital structure die. And basically, you know, just because of kind of how they handle that, it sort of seems now like raising more cash is not an option. would you agree with that? No, so again, this, it's interesting story here, right? Because this is not necessarily like an imminent death spiral in the sense that he still has somewhere being four and five months of cash on the balance sheet. I think it was like six or seven hundred million of cash. That satisfies it's basically $150 million a month he has to pay in these dividends.

So it's not imminent in the sense that he has a little bit of time here to figure out how to what to navigate next. And there are options, right? It's just that none of the options are very good options. So option number one is he continues to sell Bitcoin to satisfy the dividends on the preferreds. That's fine, but obviously the entire Bitcoin world is now being inundated with headlines in the last 24 hours. It says, micro strategy turns to be a Bitcoin seller, right? And even again, even though he only sold $2.5 million just to kind of wet the whistle of the market to let him know it's possible,

just that sentiment alone and the Zero Hedge articles and the Wall Street Journal articles and the Bloomberg articles that all come out and say micro strategy is now selling Bitcoin, that will spook the market and Bitcoin will trade down as a result, which is what we're seeing. So that was one avenue is you just sell Bitcoin. The other avenue is that you continue to sell stock. The problem with that is that, you know, again, if you're selling stock to buy an asset, you have to decide whether or not it's more accretive to sell stock and buy the asset or sell asset and buy the stock. You're getting now to a level of MNAV, meaning the premium of the equity. over the underlying assets,

where it's no longer accretive to the stock to sell more stock to buy Bitcoin. So he can still do that, right? The equity still trades enough. There's certainly no reason why he can't sell more stock in order to pay the dividends on the preferred. But the problem is that's going to be a debt spiral for the stock. If you keep selling the stock,

when there's less demand for it and at a low multiple, now you're going to crush the stock to save the preferred. Okay, so if you don't want to sell the Bitcoin and you don't... The other option is you issue more debt. the problem with issuing more debt, of course, is that that hurts your credit rating, right? He's already a single B-rated issuer. It's going to hurt his chances of getting the S&P 500.

Plus, he just paid off debt for no reason. So why would you go back and issue more expensive debt? So that's probably not a good option. The fourth option is you just stop paying the dividend on the preferred, which not only is that a death sentence for the preferred because they're going to trade down 30 or 40% if he does that, but he's also going to get sued because the... have been marketing this as like this, you know, he's been marketing these preferred as like a money market instrument to retail, you know, is saying that this is the safest 12% yielding instrument

on the planet, and then he's going to turn around and cut the dividend. So I think that's a last resort. But you see where I'm getting here. It's not that he doesn't have access to money. It's that you can't support all four parts of the capital structure without hurting one of them. And that's just a decision he's going to have to make. And right now, in my opinion, he's kind of hurting everybody by teasing the market but not actually doing anything. Yeah, yeah, it's a little bit like a confidence game. One thing that I just wanted to also tease out for people is that what's a little confusing is that they also announced earlier in May that they had bought $2 billion worth of Bitcoin. So basically, they're both buying and selling kind of at the same time. So just explain

why that's happening. Yeah. So, you know, there, Again, the annual nut that he has to pay is $1.7 billion, right? That is the preferred dividends right now. That doesn't, so if he, again, as he said, it's a confidence game, right? It's a little bit of game theory. If you can basically convince the market that we will always sell $1.7 billion of something per year in order to pay our dividends, but at the same time, by doing so, you instill enough confidence in the market that your stock trades up and your preferred

to trade up, which allows you to issue more of those in order to buy more Bitcoin. There is a world where he can be a net buyer of Bitcoin even as he's a seller, right? All you have to do is be able to buy more than you sell. But that spigot runs dry really fast if you lose confidence. And that's what the market is telling you right now that you made three bad decisions in a row, right? You first loaded up on preferreds that have a hefty cash dividend. Then you paid down zero coupon debt for no reason. And then you tease the market by saying you're a seller of two and a half million Bitcoin.

at the moment he's lost the confidence of the market. It doesn't mean he can't get it back, but it's a very slippery slope, as you know, a confidence game when something is built on a house of straws like this. All right. So now let's also dive into these various stakeholders, which you kind of already did. But I wanted you to just kind of walk through what you think,

you know, how each of them would fare in the different scenarios and how they would be, you know, negatively impact. impact in different scenarios and basically which one you think is the most likely one that strategy will pursue? Sure. So let's start with the bull case. There's really only two bull cases for any of this, right? Number one is that Bitcoin just goes way higher. If Bitcoin goes way higher, it solves all of his problems because if Bitcoin goes way higher, all of a sudden the equity starts to run higher, you're able to sell more equity. Also, it's more feasible for him to sell a little bit

of Bitcoin every year. If you think about $1.7 billion of annual, dividends on a $57 billion pile of Bitcoin, it basically means Bitcoin only has to go up like two and a half percent every year in order for you to make enough money and capital gains to pay those dividends. So logically, there is a path there that if you're bullish, you're basically saying, if Bitcoin goes higher, it bails them out and everything's fine. Obviously, that must be what micro strategy or what strategy and sailor thought. Otherwise, you wouldn't have loaded up on as much as they did in the last few months with these

preferreds. They clearly saw something in the market that made them think that Bitcoin was about to explode higher. I don't know what he saw that made him think that, but there was no other reason why you would have saddled your capital structure with so much debt and preferreds over the last nine months unless you thought Bitcoin was about to go higher. So clearly in this calculation, but that's one way. If Bitcoin goes higher, this story can at least get the can kicked down the road a little bit longer and then probably solves problems. The other thing he could do from a bullish standpoint is basically just say, we're done buying Bitcoin, right? Let's say that his magic number was, I want to own 5% of the outstanding Bitcoin,

and once I get to that number, we're never going to buy more Bitcoin again. Well, once you get to that number, then you could just stop paying the dividend on the Prefords and say, you know, sorry, you guys knew the risks when you bought these. Preferreds don't have to be, you know, paid out, and, you know, we're just going to not pay you, and, you know, good luck. If he does that, he'll never be able to raise money again because the capital markets will shut down for him, but at that point, he doesn't need to raise more money because he already owns all the Bitcoin that he's ever going to buy. So those are kind of the two avenues where things can

go mostly okay. Obviously, that wouldn't be great for the preferred holders, but it would be, you know, mostly okay for kind of Bitcoin and Microsrategy. On the other side, again, as we already kind of talked about, every other scenario is going to be bad for at least one part of the capital structure. So let's start with what happens if he just sells a ton of micro strategy stock. So when you talk about a digital asset treasury company, you use the term MNAV, right? This is the premium to the net asset value. So if the net asset value is the number of Bitcoins in the pot, which right now, according to Microsan Strategies, the website is 57 billion Bitcoin, if the enterprise value of the

company is trading above that 57 billion, then it is accretive to sell stock and buy more Bitcoin that's trading below that, then it's not accreable. The problem right now is that because they've layered on this debt and the preferreds, it's not actually as clean as just being above one or below one. It's actually about 1.26 is what the company has said. Basically, it's not accretive for them to sell any more Bitcoin when it's below 1.26. Right now, it's trading at 1.23. So he can sell more equity, even though he's admitted that this is not a level that's accretive. so he can sell more stock but it's not accretive that would be good for Bitcoin because it'll create more demand

for Bitcoin that would be good for the preferred because it'll raise him more money that he can use to pay the dividends than preferred but it's really bad for the MSTR stock that stock is going to just continue to go lower and lower and lower if you continue to loot it dilute the stock at levels that are not accretive so that's number one it would be good for Bitcoin good for preferred bad for micro strategy number two is he sells the Bitcoin you know again there's

this is more of a confidence game. You have to kind of convince the market that you're selling just enough to pay the dividends, but not enough to tank Bitcoin, which he clearly hasn't gotten right yet, you know, what that magic formula is to make everyone happy. But if he sells Bitcoin, that's good for the preferred, again, because you're raising enough money to pay the dividends. But it's bad for Bitcoin because, you know, again, when the biggest holder in the world of Bitcoin is openly selling,

it's going to scare people, and Bitcoin is largely a sentiment game anyway. And it's going to be bad for the stock because the whole point of the stock is that you're adding Bitcoin per share and you're growing the Bitcoin yield. So if you start to sell the underlying asset, that's bad for the stock. So that's, that's, you know, not a good option for anyone. Then the third option, like I said, is issue more debt. But, you know, I think that that's very difficult for them to do when you just bought back debt. And you're trying to, you know, he has basically publicly said that we don't want to have more debt because it's killing. our credit rating and it's killing our ability to get included in the S&P 500, but that is an option,

right? The convertible bond markets are open to microstred to strategy because convertible bond investors are not really credit investors. They're more like volatility investors. So as long as they can arb it out and model out what the option value of the convert is, there's demand there. You could certainly do that. If you did that, it would be good for Bitcoin because again, you're raising enough money to be able to continue buying Bitcoin. It's good for the preferreds because you'll be able to pay the dividend, it's probably bad for the stock because you're not going to get S&P 500 inclusion and you're going to continue to layer on debt that's senior to you in the capital structure. And it's fairly neutral for the other debt holders.

And then the last option, like I said, is the nuclear option, which is you just stop paying the dividend on its preferreds. And this is, like I said, this has to be a last resort because you are going to kill the preferred. You're going to lose access to all of the capital markets. You're probably going to get sued. and if he did that, it's mildly good for Bitcoin and for the equity because it means you won't have to sell any more of that, but it's so bad for the overall story that might actually

just kill everything. So, you know, you're just in a weird situation now where, again, it's not like default is imminent here, but this flywheel that he's created over six years is just slowly dying, and he's put too many pieces. in the puzzle that can't be serviced at the same time. Wow. First of all, that's an amazing explanation. But second, yeah, it's extremely complicated.

So in a moment, we're going to talk about where a strategy will go from here. But first, we'll take a quick word from the sponsors who make this show possible. Fidelity has been investing in blockchain since 2014. They're not wondering if digital assets will shape the future. They're hiring the talent to help ensure they do. Explore opportunities today at crypto.fidelity careers.com. Fidelity is an equal opportunity employer. Heads up, everyone.

We'll now be fully transitioning Bits and Bips to its new dedicated Bits and Bips channels starting next week. So if you're not yet subscribed to the Bits and Bips channels on X, YouTube, Spotify, Apple Podcasts, or wherever you get your podcasts, then go there now and subscribe. After that transition for a few weeks, we'll place segments of the full interviews on Unchained, a reminder, but head there now and subscribe so you don't miss an episode. You can get links to all of the platforms on Unchained Crypto.com slash bits and Bips. Again, that's Unchained Crypto.com slash bits and bips, spelled BIPS. Back to my conversation with Jeff. So just quickly on the stakeholders, I did want to ask if you were invested, you know, in just pretty much any of the different instruments or a Bitcoin holder, whatever, like, you know, whichever,

of the stakeholders, you know, you want to look at, which would you prefer to be and which would you not want to be? Well, again, and this is where it gets complicated is it's all probability analysis, right? Because all of those scenarios I just laid out, there is some probability that one or more of those choices are going to be made. And where you want to be in that capital structure depends on how you rank those probabilities. In a worst case, I'll just start backwards for a second. In a worst case scenario, let's say that micro strategy actually does default and goes into bankruptcy,

which, again, there's not really an imminent threat for that. But let's say they do. Well, then you'd want to own the debt first because the debt is the highest in the capital structure. And if you have 56 billion of Bitcoin backing $7 billion, you're fully covered, right? Your debt is not really at risk. I know a lot of the debt is trading at, you know, 70 or $0.80 in the dollar, largely just because the convertible is a feature is so far out of the money. and the coupon is zero, so it has to trade at a level where there's actually a yield,

but those would rise to par immediately if you thought default was imminent. So that's the safest place is the debt. The next safest place is the preferred, even though I just said that the preferreds are going to fall 30 or 40 cents on the dollar if they cut the dividend. Again, there's only 15 billion of preferreds on top of the 7 billion of debt. So you have 22 billion now backed by the 57 billion of Bitcoin. So again, like in a actual liquidation or a default, you will get. your money back. That's not why people buy preferred. People buy them because they want the

dividend and if you cut the dividend, they're going to fall 30 or 40 percent and that's not going to feel good. But at the end of the day, you will eventually get your money back if they default. If you don't think that they're going to default, which I don't think they will anytime soon, then, you know, again, the preferred are really risky because they're going to have to cut the dividend at some point. But if you think that that's four years out instead of one year out and you can get 12% per year while you wait, that might be worth it for some people, right? The Bitcoin and Microstrategie stock is probably the hardest one. I don't see any scenario where you'd really want to own the MSTR stock right now,

given how dire the options are. You know, and you could also make an argument that you don't really want to own Bitcoin right now, given that the biggest owner is going to be a net seller, not necessarily a net seller, but be a seller for the foreseeable future. So, you know, I'll caveat all of this by saying that, you know, Saylor has pulled a rabbit out of the hat multiple times in his career with multiple companies, or multiple versions of the same company, I guess. You know, it's entirely possible that he figures out a way to do it again.

Don't forget, it was only November of last year when I was saying micro strategy is not a risk to Bitcoin, because that was before he decided to load up the balance sheet with 16 billion of preferreds, which I never expected anyone to do because you'd be absolutely out of your mind crazy to do. that. But he did, and here we are. So, you know, there are certainly some avenues that I'm potentially not considering here that he might be able to pull a rabbit out of the hat and kick the can down the road. But it's tough. No matter what part of the capital structure you own here, there is higher risks today than there were nine months ago. Okay. So I do then want to ask also about your tweet, which you referenced earlier, where you said, quote, tiny sales today just to prep

the market for bigger sales to come. And that was, you know, in reference to the 32 Bitcoin that were sold. And you said, STRC, MSTR, and BTC cannot all win together just foreshadowing today that someone is going to lose here at the expense of the others. So what do you foresee happening in terms of the sales? So putting, you know, in a former life, I was an investment banker and a capital markets banker. So all I did was work on companies and how you issue debt and equity to service, you know, your funding needs. If I were a capital, if I were advising strategy, I would have never told them to sell the two and a half Bitcoin. I would have ripped the bandaid off and sold two billion of Bitcoin and just said, we already told you and teased you that we might

do this at some point. We have a cash need of a billion seven every year. And we want to prove for the rating agencies that we're willing to sell it if we need to to keep our balance sheet intact. And that's why we paid off the debt. I think ripping the bandaid off doing a huge sale, but then saying you're done for a while would have been better than doing a nominal amount like he did just to tease the market like if i'm not in a sailor or or strategies inner circle but if i had to guess they probably said well we know we have to sell bitcoin at some point so let's just get it over with and rip the bandit off and do a tiny amount just so those headlines get out of the way and then when we sell bigger size later the market will already be desensitized to it

but that was really stupid because you see the reaction right bitcoin just fell five percent on a $2.5 million sale, what do you think they're going to do when they sell $2 billion? So I would have just ripped a band-aid off, sold it all, gotten it out of the way, and then put a press release out there and said, you knew this was possible at some point. We did it, but by doing so, we're going to maintain the dividend on the preferred, and we're going to continue up to opportunistically buy more Bitcoin than we sell. I think that would have actually calmed the markets a lot more than what he did. Okay, wow, that's super interesting, yeah, because, yeah, the markets,

definitely reacted to such a small sale. All right, let's talk about one other thing that is related to this that is just also very sticky, which is the contested market about whether MSTR was going to sell Bitcoin in May. And that's on polymarket. So basically it has, it's resolving at the moment to know, even though MSTR actually did sell the Bitcoin in May. Explain why that's happening. Yeah, this is one of the craziest things I've ever seen.

So for those who don't know, if you're on Polly Market, there's a couple contracts that said, will strategy sell Bitcoin? And it has a date that says, will they sell Bitcoin by May 31st or by July 31st or by December 31st? And the contract pretty clearly says, it's not will they announce it. It says, will they sell it? And the problem was May 31st is a Sunday. And strategy comes out with 8Ks every Monday. So on Monday, June 1st, there was already hints that they would have already sold it. You know, myself and others, you know, shout out to a Twitter account, BTC Believer 21,

who had a really, really well researched article talking about why he already probably sold it on Monday. or sold it in May, but there was a lot of hinting already that there was a good chance that they had sold the Bitcoin. That contract was trading at about 12 cents on Sunday, meaning that if you bet $12 on whether or not he sold Bitcoin in May, you'd either lose it all if he didn't sell or you'd make $88 if he did sell in May. So on Monday morning, the 8K came out and confirmed that they did sell the $2.5 million between May 26th and May 31st.

So there was no dispute at all that the Bitcoin was in fact sold. The contract traded up to like 60 or 70 cents, but it didn't go immediately up to 100 because the way polymarket works is if you dispute it, then it goes to a couple of UMA protocol validators who basically vote on whether or not there's a dispute, whether or not the dispute is real. So it never actually got to 100, which is what you would have expected to do since it was pretty clear that the, you know, there's no, there's nobody disputing the fact that he sold the Bitcoin. They're disputing whether or not that means the contract actually settles that yes,

because the news came out on June 1st. And forget terms and conditions and anything else. Just logically think about how insane that is. That's like, you know, betting on a Super Bowl on Sunday, but because the box score in the newspaper doesn't come out until Monday, you can say that the game didn't end on Sunday because we didn't have confirmation from the box score. Like, it's insane. It's insanity. There's indisputable evidence that they sold Bitcoin in May, and the contract was written on Polymarket that says, will strategy sell Bitcoin in May? So anyway, this goes to a dispute, and it's a very kind of rigged insider baseball Dow process.

Basically, a bunch of insiders, it looks like, started to say, we're going to start to buy no, and then they were the ones who then went into vote on the dispute and decided that no, he did not actually sell the Bitcoin in May because the news didn't come out until June 1st. Not only is that ridiculous, but the contracts are still trading. So you basically have, if you're going to say that the contract is invalid after May 31st, even if the news ultimately comes out and validates it, if you're going to say, no, he didn't get the news out there in time, then why is the contract still trading? So forget anybody who may or may or may not have lost money prior to May 31st, there was tens, if not hundreds of millions that were traded after May 31st,

once it was already clear and provable that he sold Bitcoin in May that are now losing money on the S contract because the validators decided to say that no was the legal answer. So I'm just, I'm amazed, quite frankly. No skin in the game on this. I've never seen anything that is so ridiculous. it looks bad on Polymarket, it looks bad on Uma and the validators. I don't know how anybody can take a market like this seriously when there is such indisputable evidence that the answer is yes and yet it's resolving it no right now.

So again, there's going to be a lot of legal battles on this one. Yeah, yeah, I agree with you. I did find a contrarian take that made sense to me, though, so I want to run it by you to hear your response. Carr on Polymarket tweeted, a key problem with allowing post. deadline evidence is that it creates hindsight resolution. Traders are forced to wait indefinitely for future disclosures that may or may not emerge. A market that appears unresolved at the deadline can suddenly flip days, weeks, or even months later because new information is released. This is

inconsistent with the principle that prediction market should provide clear and timely outcomes. So let's just leave aside the fact that it was still trading on June 1st. What do you make of that point. So I think there's some validity to that in the sense that you're right. You can't leave these things out indefinitely. There has to be a drop dead. But the counterpoint of that is somebody actually pulled the code and the drop dead on this one actually was July 1st, not May 31st. So it should have been honored through July 1st. But second, if there is a drop dead, then that contract should specifically say that, right? It should say, did strategy sell Bitcoin in May and will it be revealed and provable by May 31st?

By leaving it open-ended, you're basically tricking your users on top of the fact that, again, if you do think that it should have ended on May 31, then it immediately should stop trading on May 31 and not be available to trade thereafter. So I think there's some validity to that. I don't think you can leave these things open-ended forever,

and then a year and a half later it would be like, actually, we just found truth that he did. So there has to be an end. date, but that end date has to be explicitly defined. And it's, you know, this is not the first time this has happened. So you would have thought the people behind Polymark and OMA would have already looked to fix this. You know, putting your conspiracy hat on, you would say that they're purposely leaving this ambiguous because it allows insiders and friends to make money on things that are in their own control to dictate the outcome.

Yeah, I agree with you about how it should have been. handled. And I did see that there was a counterpoint to that tweet where somebody responded that for that one Kameney, you know, the quote unquote death market, that at that time, Polly Market did say, quote, in the case of ambiguity at the time of resolution as to whether Kameney was removed from power by February 28th, this market may remain open until a consensus of credible reporting can determine whether the resolution criteria was met. So basically, you know, that goes against that same notion that it like needs to just always have a fixed date cut off time. Anyway, Jeff, thank you so much for explaining what is, you know, rather complicated

and I just love how your mind can, you know, go through kind of each of the scenarios to play it all out and explain it so beautifully for the audience. So thank you so much for coming on Unchained. Well, I appreciate you having to me anytime. And thanks to everyone for joining us live stream. we will catch you tomorrow with uneasy money. Bye now. Nothing you hear on Unchained is investment advice. This show is for informational and entertainment purposes only,

and my guest and I may hold assets discussed on the show. For word disclosures, visit Unchained Crypto.com. The next time is, and the best part of the best, that's not so much. Just one, you know, so much very long.