Unchained - Why Travis Kling Thinks Not Looking at AI Agents Would Be 'a Big Mistake' - Ep. 763

Episode Date: January 10, 2025

It’s been a tough week for the markets, with bitcoin gyrating from $102,400 to $92,000.  Travis Kling, CIO of Ikigai Asset Management, shares his thoughts on the selloff, whether this market dip is a cause for alarm, and how macro factors like the Fed’s rate policy and ETF dynamics are shaping the landscape.  Plus, he dives into the explosive growth of AI agents and why crypto investors should start paying attention to this new frontier. Could AI agents revolutionize crypto, or are we witnessing another bubble? Show highlights: 01:49 Why Travis believes this market selloff was “abnormal” 04:31 Whether he thinks the DOJ will sell Silk Road’s $6 billion worth of BTC from Silk Road 07:36 Why Travis is supportive of a US bitcoin strategic reserve 17:15 Why inflation and policy shifts might keep Fed rates steady 22:30 What explains the significant outflows from bitcoin spot ETFs on Wednesday 24:37 Whether Travis thinks the AI agent rise is a bubble  Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Stellar Build Better Polkadot Guest Travis Kling, Chief Investment Officer of Ikigai Asset Management Previous appearances on Unchained:  With Rate Cuts and Upcoming Elections, What’s the Best Play in Crypto? With the Merge, Will Ethereum Take Over Bitcoin’s Title as Digital Gold Links Previous coverage of Unchained on AI agents: 2025 Will Be a Year of Crypto Competition. Can Ethereum Make a Comeback? With AI Agents Now Trading Crypto, What Does Their Future Look Like? Learn more about your ad choices. Visit megaphone.fm/adchoices

I think if people are listening to this, they probably spend some number of hours per day or per week looking at crypto. If you're not dedicating any time to looking at AI agents, I think that's a big mistake right now. I think you need to be taking some significant amount of your weekly allocated hours to crypto, and you should be looking at this sector because it's just very interesting. And there could be some great investment opportunities out of it, although 99.99.99% of it is going to collapse and never produce anything. Hi, everyone. Welcome to Unchained. Your no hype resource for all things crypto. I'm your host, Laura Shin. We are now featuring quotes from listeners on the show. Today we have one from Joseph DeLong, who commented on guest Mark Zeller's comments that liquid staking tokens should not exist in Ethereum. DeLong wrote on X, quote, the design was intentional to prevent what Lido is, stake concentration.

Unfortunately, the result is exactly the same with worse. mechanisms. O' the joys of experimentation. To have your comment featured on the show, write a review of the podcast overall, or leave a comment on our video on YouTube or on X. This is the January 10th, 2025 episode of Unchained. Did you know the Stellar blockchain already powers over 550 million tokenized assets in 180 countries? Join the build better movement at betteron.com.org. Pocod is the original and leading layer zero blockchain with over 2,000 plus developers, and the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Join the community at Pogo dot network slash ecosystem slash community.

Today's guest is Travis Kling, chief investment officer of Ikigai Asset Management. Welcome, Travis. Thanks for having me. Good to see you. As we speak, the crypto markets are down about 8% over the last few days. And I think at the fall after the election, people thought it might be a sort of up-only situation until inauguration. Do you think that narrative has changed? And if so, would you still consider the inauguration to sell the news event or how are you looking at things now? So I think there's kind of a few

different things going on. I mean, we did have a headline out last night about the Department of Justice selling $6.5 billion worth of Bitcoin and maybe we can get more into that later if you want to. And there's kind of TBD on whether or not that's confirmed or what exactly that means. means, I think that if that ends up being the case, I think that that could explain some of the just swift reversal and price action that we've had over the last two days, which just seemed kind of, I don't know how to describe it, abnormal. There are macro-minded folks that are pointing to some macro fears, which are really focused around the Fed rate path for 2025. in the face of stronger growth, inflation, and labor data that would call into question the

ability for the Fed to continue cutting interest rates and potentially start to even talk about raising interest rates. And you're seeing some stuff in the long end 10 to 30 year treasuries with yields getting up to levels that are starting to spook some macro-minded folks. And the Dixie is also at levels that are kind of starting to spook macro-minded folks, and people are thinking that maybe that's bleeding into BTC and crypto broadly. And then I think also, you know, there's a lot of reasons to be bullish about crypto and Bitcoin right now with the new administration. We could list off a bunch of different sort of political Trump administration reasons to be excited about crypto and Bitcoin. Absent those, just in a vacuum, it would be.

make intuitive sense to me. If you were just like, Bitcoin's going to chop around 100K for months, like it's just going to take months to work through this 100K level because it's this really big, round number that people have been talking about for literally over a decade. That in a vacuum makes a lot of sense to me. And I think that so far what we've been doing over the last, I guess it's been about a month now, is really just chopping around 100K. We go a little bit lower, we go a little bit higher. So I don't know. I'm not super worried about any of it right now. Yeah, let's talk about that news about Silk Road. This is, to my mind, not quite confirmed. Basically, DB News reported that a federal official had confirmed to that publication that a federal judge had granted

the U.S. government approval to sell 69,000 Bitcoins that had been seized from the Silk Road dark market. And I'm sure the crypto community remembers that Trump had promised to, you, use that Bitcoin to form the basis of a Bitcoin strategic reserve for the U.S. So I just wondered, first of all, I understand that this is not confirmed. But let's say that it is. Like, what do you think is the likelihood that they could actually get that sold before inauguration? Or do you think that they would try to do something like that right before the inauguration?

I wish I had insight into it. You definitely can sell $6.5 billion of Bitcoin. You can sell in a day if you want to. It would have a price impact. It would not be my base case that the DOJ would be super aggressively selling Bitcoin and just trying to like, I don't know, like undermine an executive order that's presumably coming from Trump in his initial days of office to stop selling Bitcoin. And like the DOJ is like, oh, we're going to like stick it to Trump and all the Bitcoin's. It just, I don't know, it feels like too, I don't know, tinfoil hatty or whatever. I don't know, it just doesn't make sense to me.

And so I really don't know what to make of that, of that DB headline out yesterday. That was a follow-up from a headline or article that was out in December, right? There was something about this that came out in December. Yeah, that was, I think, the judge ruling. I think that happened on December 30th. So, yeah, I don't, I remember the exact details. I could try to look it up, but basically it sounds to me like there was some kind of court ruling, and then there's probably like additional administrative things that have to get decided after that,

basically. Right. Yeah. So I don't know how to handicap the likelihood that these actually get sold between now and inauguration. I don't know. And I mean, Trump has obviously been making plenty of projective edicts prior to his inauguration, right? He just had the press conference a couple days ago, and he's done a bunch of stuff where he's been talking about what he's going to do. So it does seem like there's an opportunity here for him to do

something like that on this as well, too. I mean, I think if he just flicked a tweet on truth social, like, I don't know, it could be enough to make a difference. But I really don't know what's going to happen with it. Okay. By the way, I am noticing that DeCrypt found the court document and say that this is what the officials had cited that confirm the ruling. But they say that the ruling doesn't actually guarantee that there would be immediate liquidation because there are these different administrative steps. And there's also appeal windows. So I guess the community will be watching this step by step between now an inauguration. So let's fast forward to inauguration. Obviously, as we just mentioned, Trump had promise to create this Bitcoin

Strategic Reserve. I was crazy for your opinions on that. Do you think the U.S. should create a Bitcoin Strategic Reserve? I'm sure you've seen that there's been a conversation about this on Twitter where some people are opposed and some for. What are your thoughts? So it's kind of you need to talk about two different things. One is not selling any more seized Bitcoin, the current seized Bitcoin that the government has and then sort of committing to never selling any seize Bitcoin that comes in the door in the future. I think that's highly likely to get done. I think it gets done quickly via executive order in the initial days or weeks after the administration starts. That feels like basically a done deal. I don't know, I'd put it at a

85% likelihood or something like that that it gets done in the first month. So one question for you. So obviously in this case, it's Silk Road where that was generally not legal activity. But let's say, for a case like the BitFinex hack where there were users who could make claims, like would you still support that? Or like, what's your opinion on how to handle those situations? So I am aware of the, there is a legal minutia issue in the Bitfinex hack where my understanding is that it looks like, and I'm not familiar enough with the minutia to regurgitate it here, but I guess it's my understanding that the minutia makes it look like those coins are going to go back

to Bitfinex. Is that your understanding as well, too? Yeah. Yeah, that's what I've heard. I don't know if that's fully confirmed, but that's what I had been hearing. Okay, so that's sort of my understanding of it as well, too, not fully confirmed. Yeah, so maybe I should clarify. I didn't mean literally that particular case, but let's say there's another exchange hack,

and then there could be like users that are identified. Because obviously BitFinex, they meet this deal with the users. They had this token, blah, blah, blah. And so they handled it a completely different way back in, you know, whatever that was, 2016, I guess. So, but let's say it was something, yeah, where there had been none of that. So, and there were identifiable users that were owners. Yeah. So I think in that case, I would want it to go back to the users and not be auctioned off by the U.S.

government to the highest bidder, which is what they've done in other sort of like criminal seized cases where you can't return them to the user. Yeah, that would certainly be what I don't. would, you know, like to see happen. And it really just gets down into, you know, the minutia of law, which I don't know enough about to be like, oh, I think this is like bad law the way this works. But I mean, I'm generally in favor of customers getting their Bitcoin back if they were holding it on in exchange where it gets hacked. Obviously, you know, I've experienced a version of that myself in spades. because I don't think that the future selling of seized Bitcoin is weighing price down now. I don't think that's how price action and Bitcoin works.

I think the price of Bitcoin sort of like doesn't care about the stack of Bitcoin that the government has until they see it move on chain. And then price drags ass for a few days or a few weeks. And then it doesn't care again until you see it move on chain again. And that's just generally sort of how it works. And so when you remove the future selling that the market wasn't really discounting in the first place, I don't think you get that much of a price pop out of that. Maybe you get some 5% or something like that. Now, buying Bitcoin, totally different ball of wax is a completely different kind of thing. And then there's two paths

for that. There's the Lummis bill. And then there's the executive order, Bitcoinpolicy. wrote this executive order. Apparently, it's my understanding that with a stroke of the pin, Trump could sign this thing. And then this could be enacted via the Treasury if you sell $21 billion worth of gold, if you purchase $21 billion worth of Bitcoin, via the exchange stabilization fund. And you think that's a good idea for the U.S. to have a Bitcoin strategic reserve? This is like a slightly long-winded answer, but there's been a lot of conjecture on this. So this is kind of my view on it. So it's like, how much gold does the U.S. government own?

I think it's like about a trillion dollars. The U.S. dollar has not been backed by gold since 1971. We all know that. Bitcoiners all know that famously. And M2 money supply of the U.S. dollar is about 20 trillion. So you have like about a trillion of gold against about 20 trillion of dollars. So it's like you got some gold against the dollars, but it's nowhere remotely close to back on a percentage basis or anything like that. And there's obviously no mechanism for redemption via the government.

Okay. Then you would ask the question, well, why would the U.S. government continue to hold any gold at all? Why hold any gold at all? And then you look at our economic and just general global competitors. And you say, well, everybody else owns a lot of gold and our true. largest competitors, China and Russia, they have a lot of gold. Oh, and also, they have actually been buying a lot more recently. So there's this kind of pretty straightforward game theory type of situation where you would say, if we sold all of our gold, and then the price went up a lot,

and we didn't have any anymore, and our biggest competitors had a lot of it, that would put U.S. dollar hegemony and just U.S. control in general in a tough spot. And I'm an American and generally patriotic, and we have a lot of problems here. But I think we do a better job than anybody else on planet or some sort of generally raw, raw, the United States. And so it just seems like we need to keep some gold around for these reasons. And now I think if you just take that explanation and then remove the word gold and put in the word Bitcoin, some version of this generally holds.

it's not as straightforward about how much Bitcoin our competitors have, but China has a lot of Bitcoin and Russia has a lot of Bitcoin. They didn't get it through your, you know, legislation that was passed and there's not some public wallet address about how much they have, but they have a lot and they're probably acquiring more and the Middle East has a lot and they're probably acquiring more. And so this idea, and so then when you think about Bitcoin versus gold from a first principles perspective, Bitcoin is an attractive store of value relative to gold from a first principles perspective. We've been using gold to store value for 5,000 years. Before we were storing value with gold, we were storing value with salt and really big heavy rocks and seashells.

And there's a reason why gold's a better store of value than seashells. And it's the six characteristics of money. It's durable, divisible, portable, uniform, accepted, and scarce. And when you line gold up next to salt within that framework, it's attractive. And when you line Bitcoin up next to gold within that same framework, it's actually quite attractive. And you could make this argument that it's so attractive that there is this inevitability to Bitcoin. It is just that good at doing its job. And so the game theory would be you're going to have to get some one of these days

anyways, and we might as well be the leader in it rather than some follower. I don't think in any way it risks the U.S. dollar as the World Reserve currency and the interest rate of treasuries as the barometer for the price of every asset on planet Earth and the Fed chairman as the most powerful economic figure on planet Earth. I don't think a Bitcoin Strategic Reserve puts any of that at risk. I just don't see it. And so I think all this being equal, I think, yeah, I mean, I think it would be a good idea because I'm a believer in Bitcoin in its value proposition. All right. So in a moment, we're going to talk a little bit more about what lies ahead this year, given all the political changes.

But first, a quick word from the sponsors who make their show possible. The Stellar Development Foundation has launched Build Better, an initiative inviting bold ideas from the Web3 community. No coding or technical experience is needed. Share your vision for better finance, creativity, or access, and see it brought to life in Stellar's next hackathon. Developers will build real-world solutions on Stellar's fast, scalable, and sustainable blockchain. Submit your idea for a chance to win from a $30,000 prize pool. Get involved at betteron.steller.org. The future of Web3 starts with you. For an additional listener comment, we have when responding to Mark Zeller's suggestion that the Ethereum Foundation fire 80% of the headcount amongst people with soft

skills. Chain Yoda couldn't help a comment on this suggestion along with the fact that Mark is French. He quipped, quote, was the guillotine discussed? Again, if you want to hear your comment featured on the show, please write a review or leave a comment on the episode on YouTube or an X. Back to my conversation with Travis. So you hinted at this earlier, but it looks like inflation might prompt the Fed to hold rate steady at the next FOMC meeting on January 20. And I wondered if you could talk generally just where you think rates will go this year and how that impacts your outlook for the crypto markets. So just since the last Fed meeting, the Fed Fund's futures curve has now priced rate cuts out of

all of the first half of this year. So according to financial instruments, we are no longer expecting rate cuts. So the market is not expecting a rate cut in January or in March. I think there's like maybe half a cut in June when I looked yesterday and there's like a full cut by the July meeting or something like that. So I think there are going to be a bunch of edicts that are going to be executive orders that are going to be issued by Trump. some of them are going to be, I think you can broadly bucket them into social and economic and maybe foreign policy. And mostly the economic ones from an asset price perspective, from a Fed, this is what's going to impact these things. And, you know, it's stuff like immigration, deregulation, stuff around crude oil that's going to affect crude production in the United States and also foreign policy.

because Gaza and Ukraine matters for crude prices. Navy tariffs. Tariffs, another huge one, right? So there's probably a half dozen of these kind of big buckets like that. And then you would look at these things and then you would go, well, what is that going to mean for inflation, for GDP growth, for wage growth, how is it going to impact these things? And it seems like there are a lot of cross currents.

And then there's different time frames on some of these. I'll give you, this is a great example of this, is like Doge, Department of Government Efficiency. So it seems like if they went really hard on Doge, this would be significantly deflationary. The U.S. government spending accounts for approximately 25% of GDP. And so if you cut 10% of government spending, that is approximately 2.5% of, of GDP, aka a very significant recession. And so, and there's a lot of assumptions baked into that. But it's simplistically, that's a good way to think about it.

But it's like, are they really going to do that in over what time frame? I think very little of that would come out in calendar year 2025, where I think on the other hand, there's like some other things that could happen much more quickly. There's a lot of cross currents, I think, going back and forth. I'll give you an example of something that would be very quickly inflationary or have an inflationary pulse to it. He's talking about not taxing tips and not taxing overtime. I mean, that's one of the most tip of the spear inflationary pulse things that you could

imagine short of like mailbox money that we did during COVID. Like that's a very inflationary pulse type of deal. And that could happen very quickly, right? and the impacts of that. The net net of all of it, in my view, seems like it's going to be inflationary on the margin and growthy on the margin. That would be my guess.

And there's sort of a question around whether or not wage growth will be able to grow fast enough such that people are generally happy with the state of things. If we have three to four percent inflation, we're at three right now, we're three to four percent inflation, but then you get, call it four or five percent real GDP growth, and then you have wage growth that's kind of splitting the difference or something like that, is that whole pie sort of like the Goldilocks scenario that Trump is trying to deliver. And that seems like that's kind of about what it looks like, but I'm not married to it.

I think these executive orders are likely going to dominate headlines for the weeks that come out. Both the social ones, you know, the left's going to get all up in arms about all the social stuff. And then the economic stuff, people like us are going to be, you know, parsing through, oh, what does this mean for inflation? What does this mean for growth? Blah, blah. You know, so people are going to be really, really focused on this stuff. And then you're just going to start seeing over the weeks and months that follow what the implementation of

this looks like in the likelihood and the pace. Okay. Yeah. I mean, it does seem, yeah, some of the expectations people had coming into the yard are changing a little bit. But, yeah, you gave some color because I actually don't follow politics that closely. So you gave a little bit more color on things that I wasn't aware of. But for this current type frame, I did also notice that Bitcoin ETF saw their biggest

outflows or their second biggest outflows ever. And I wondered, like, if you had a theory as to why that was. There's a lot of ARB in the ETFs a lot. And it's really hard to glean much from. So basically the annualized basis on CME is quite indicative of the inflows. So when that basis gets higher, people will do a carry trade to capture that. and at this point because you don't have to take any exchange risk, you're doing legs on CME and the ETFs, there's infinite amount of capital that comes in from Tradfai that can borrow

money extremely cheaply. These are the biggest hedge funds in the world, right? You go look at the holders list of the ETFs. These are the biggest hedge funds in the world doing this stuff. And so it's kind of a lot of the big inflows and big outflows are guys just part. hundreds of millions of dollars to capture that basis, which by Tradfai terms is like, this is like the most attractive thing you've ever seen in track. Like it's like, you know, this is just money falling from the heavens by Tradfai terms.

There's also an ARB that exists between the price of the ETFs and the nav of the ETFs, which that, that ARB is also by Tradfai terms big enough to drive a truck through. And by trad-fi terms, the most attractive thing these guys have ever seen ever. And so they will just do as much of this as they possibly can. So it just makes it you can try and we've spent some time doing this. You can try and parse through like you could try and adjust the ETFs by CMEOI, movements and CMEOI to try and maybe guess at some of this stuff, but it's still in exact. So I think that would be my answer though in terms of just.

basis comes in and you're going to see a lot of that come out. All right. I definitely have to ask you about a tweet that you recently published. It was a long tweet and it began. The current AI agent sector is a speculative bubble on a proof of concept. The current size of that bubble is about $12 billion, but that bubble can grow bigger in the near term while the entire sector remains only a proof of concept. Tell us more what you are thinking about this whole AI agent phenomenon. Yeah, so this is one of the most interesting things I've ever seen in crypto. It looks like an emerging new sector, the way that DeFi was a new sector, the way the NFTs was a new sector, the way the crypto gaming was a new sector.

So far, you know, history doesn't repeat, but often it rhymes. So far, it kind of looks like crypto gaming to me. I would say I think it has more potential than crypto gaming. But some of the nuances to it remind me of that. one of the reasons I think that's more exciting is that it parallels the most dominant theme on planet earth right now right I mean AI is just this this monolithic theme that is heavily impacting every aspect of our lives and dominating financial markets right I mean it's this thing and where crypto is kind of doing its its own version of that and we were trying to do that previously. There have been other crypto AI projects that, in my opinion, have just not been that interesting. And I know there's some BitTensor bowls out there. And I don't mean to shit on

BitTensor. I just couldn't get there in terms of getting super excited about BitTensor. And then Goat and Terminal of Truths came along. And I saw it kind of early October. And then that was really fascinating to me. Really, really fascinating to me. And so, spent some time looking into infinite backrooms and what Andy the dev has done with training up Terminal of Truths with the chat logs from from Infinite Backrooms and from Reddit and 4chan and created this voice with Terminal of Truths. I'd never, I don't think anybody really ever heard an LLM talk like this before. I'd never heard an LLM talk like that before, right?

And, you know, and then with the rise of the goat meme coin and then Terminal of Truth has a wallet, people start sending it coins. The value of the wallet is now, it's probably like 25 million bucks or something right now. The whole space is kind of pulled back recently. But still, it's like 25 million fucking dollars. Like an LLM has a wallet with $25 million worth of coins in it. Like, that's crazy. Right.

And that kicked off an entire, this is now kicked off an entire sector, basically. And there are. frameworks that there are these kind of launch pad framework open source software framework types of things that people are launching these agents on the two headlines there are virtuals there is built on base and then this AI 16 z this is now kind of one of the hottest projects certainly of this cycle um and just one of the most you know I've been doing this for a while it's one of the hottest projects I've ever seen come out of the gate this is like the most favoriteed GitHub repo of the last two months, right? And it's got a lot of attention, a lot of eyeballs, a lot of people doing stuff. The Discord is like this extremely vibrant community. It's real. People are doing a lot of stuff on it. The guy that runs at Shaw, real guy. And people are launching all these agents. And the reason I, the tweet was about that the agents themselves have really not done that much yet. And I think if I was going to point to sort of like, what is the

agent has done the most, there's this one called AIXBT that is supposed to trade coins, make recommendations, it tweets about the market, says various different things about the market, it makes recommendations on coins. And then I saw somebody run an analysis on like the profitability of the recommendations. And the analysis was that this thing actually, when it recommends small cap shit coins, they go up a lot after it recommends them, which this should not be shocking. This thing has a lot of followers. It has a lot of attention on it. And so when it name drops a ticker that's a small cap shit coin, the thing goes up a lot. Not shocking. But that end of itself, like, that's pretty interesting. Like, okay, there's not a whole lot that the

agents themselves have to show for themselves so far. The point about the tweet was basically like, at $12 billion, this stuff can go up, and the aggregate market cap of the space can go up a lot from here while the agents still don't have much to show for themselves. And then AI, AI 16c, I think it topped out at like two and a quarter billion. Virtuals, I think, topped out at, I don't know, three billion or something like that. They've all, they, it's all pulled back very recently. But, and it's like, okay, can the, if the aggregate market cap can go to 12, from 12 to, I don't know, 30 or something like that. And then like, can the frameworks go from, you know,

two to five or to 10 or something like that? That all makes sense. And I think the point I was trying to make was at some point the rubber meets the road if there's just enough passage of time or enough increase in market cap where you're still just looking at a bunch of nothing, a bunch of a bunch to do about nothing. But if you can get one of these agents or a few of these agents to do something that's actually somewhat noteworthy, then I think that's going to just take the whole sector to do a step change. And I likened that to Axi Infinity, which I'm sure you probably remember, which there was the crypto gaming thing going on. And then Axi Infinity had this pretty brief but very significant period of large-scale success where you

were providing a living wage to thousands of Malaysians by basically farming in this Axi Infinity game. And that's a big of the Philippines. Philippines. Sorry, Philippines. Right. Yeah. And so, you know, and that success of Axi Infinity just took the whole crypto gaming thing

to a big next step. Now, it really all collapsed. And there wasn't anything really sustainable at all out of it, which maybe that end of itself is indicative of how this all this might go. But nevertheless, it's super interesting. I think if people are listening to this, they probably spend some number of hours per day or per week looking at crypto. If you're not dedicating any time to looking at this sector, that's a big mistake right now. I think you need to be taking some significant amount of your weekly allocated hours to crypto and you should be looking at this sector because it's just very

interesting and there could be some great investment opportunities out of it, although 99.999% of it is going to collapse and never produce anything. Yeah, yeah. I'm reminded of this is definitely an anecdotal story and not financial advice, but apparently there was somebody who in the early days of the meme coin craze just put money into every single dog coin and they made money, even though obviously only certain ones went up significantly. All right, well, Travis, this has been a great tour through a lot of the different transverseeing in the crypto markets at the moment. Thank you so much for coming on unchanged.

Pleasure. Don't forget. Next up is the weekly news recap today presented by Wondercraft AI. Stick around for this week in crypto after this short break. Pocod is the original and largest layer zero blockchain with over 2,000 plus developers. The anticipated Pocodot 2.0 upgrade will be a massive, accelerator for the ecosystem. Upgrading the infrastructure with eight times higher transaction throughput and twice as fast block times, tailored court time for the needs of every protocol,

trustless bridges to multiple chains, and revise tokenomics with a token burn to reduce inflation. Perfect for GameFi and Defi to build, grow, and scale. Get your Web3 ideas to market fast. Think big, build bigger with Pocodot. Join the community at Pocodot.network slash ecosystem slash community. Welcome to this week's Crypto Roundup. In today's recap, we cover the U.S. court's decision to allow the liquidation of $6. billion in seized Silk Road Bitcoin, Terraform Labs founder Doquan's trial date, and hyperliquid's response to centralization concerns.

We'll also discuss Coinbase's rare legal victory against the SEC, FTX's dispute, over backpack's acquisition of its European arm and Gemini's $5 million settlement with the CFTC. Plus, Coinbase explores tokenizing its stock, Phantom dismisses token rumors, and Marlins a chunk of its Bitcoin reserves. And for a fun twist, Justin's son is re-elected as the prime minister of a micronation you may not have heard of. Thanks for tuning in to the weekly news recap. Let's begin. U.S. court clears sale of $6.5 billion in seized Bitcoin from Silk Road, case, a U.S. federal court has approved the sale of 69,370 Bitcoin, valued at approximately $6.5 billion, seized from wallets tied to the notorious Silk Road Darknet marketplace.

The decision, handed down by Chief U.S. District Judge Richard Seaborg in the Northern District of California, marks a significant milestone in one of the largest cryptocurrency forfeitures in history. The ruling denies attempts to block the Department of Justice from liquidating the assets, following a legal battle spanning four years. According to court documents filed on December 30th, the Bitcoin was confiscated as part of efforts to dismantle the illegal operations of Silk Road. While the DOJ has yet to comment on the ruling, the sale is expected to undergo administrative processes required under federal asset forfeiture laws.

Do Kwan's trial scheduled for January, 2006. The criminal trial of Terraform Labs founder Do Kwan, accused of orchestrating a $40 billion crypto collapse, has been set for January 26, 2026 in the U.S. District Court for the Southern District of New York. Judge Paul Engelmeyer called the timeline unprecedented, but granted the defense's request for additional preparation time due to Kwan's extensive legal challenges in multiple jurisdictions. Kwan faces nine felony charges, including securities fraud and money laundering conspiracy stemming from the failure of the Terra-USTable coin in 2022.

prosecutors allege Kwan knowingly misrepresented the system's stability, likening his actions to building a Potemkin village. The U.S. government has revealed that the alleged fraud may have impacted over 1 million individuals and entities worldwide. A website will be established to inform victims of legal proceedings with opportunities for them to participate. If convicted, Kwan could face up to 130 years in prison. In related news, a federal judge postponed the sentencing of Aviis and who was convicted for exploiting decentralized exchange mango markets to April 10th. The judge cited the case's complexity and the need for additional review of sentencing issues when making the postponement decision. Hyperliquid addresses concerns over validator transparency

and centralization. Hyperliquid, a decentralized perpetual futures exchange, has responded to growing community concerns about its validator network. Critics raised issues of potential centralization, lack of transparency, and allegations that validator seats were being sold, a claim the Hyper Foundation firmly denies. In a statement shared on X, the Hyper Foundation clarified that all 16 validators currently active were selected based on their performance during the TestNet phase. There is no way to buy a seat at the table, the post emphasized, calling such accusations a disservice to the validator's contributions. Concerns over centralization persist as five validators under the foundation,

Foundation's control manage over 81% of the staked hype tokens. The Foundation acknowledged the issue, announcing a delegation program to redistribute tokens and promote decentralization. Hyperliquid also addressed complaints about its closed source node code, pledging to make it public once network security is insured. Coinbase scores victory as court pauses SIC lawsuit. In a significant legal development, Judge Catherine Polkfaila has granted Coinbase's request for an interlocutory appeal in its case with the U.S. Securities and Exchange Commission.

This ruling pauses proceedings while the Second Circuit Court of Appeals considers whether the SEC's allegations fall under existing securities laws. Judge Fila acknowledged the complexity of applying traditional securities tests, like the Howey test, to digital assets, calling it an issue of first impression, requiring higher court guidance. Conflicting authority exists regarding Howey's application to crypto assets. she wrote in her decision. The case centers on whether certain crypto assets sold on Coinbase qualify as securities. If the Second Circuit takes up the appeal, it could shape the regulatory

future of the crypto industry. Crypto lawyer Amanda Tuminelli described the ruling as a potentially pivotal moment that could bring long-awaited legal clarity to digital asset regulation. FTX challenges. Backpacks acquisition of its European arm. The FTX bankruptcy estate has disputed the legitimacy of crypto exchange Backpacks' acquisition of FTXEU, claiming it was neither authorized by the U.S. bankruptcy court nor conducted with FTX's knowledge. Backpack, which is a crypto exchange and wallet firm founded by former FTX and Alameda employees, announced the purchase on Tuesday, along with plans to repay FTXEU creditors and launch regulated crypto-derivatives services. In a statement, FTX emphasized that Backpack has not been authorized to make any distributions to FTX customers or other creditors.

Contradicting Backpack's assertion that it could begin repayments as early as February, Backpack countered FTX's statement by citing approval from Cyprus's financial regulator, CISC, and confirmed that the acquisition was finalized in June 2024. However, FTX maintains that it was unaware of the indirect transfer of FTXEU and insists that creditor repayments remain under court jurisdiction. Gemini settles CFTC lawsuit over false claims with $5 million fine. Crypto Exchange Gemini, led by identical twins Tyler and Cameron Winklevoss, has agreed to pay a $5 million fine to resolve allegations brought by the U.S. Commodities and Futures Trading Commission.

The lawsuit, filed in June 22, accused Gemini of making false and misleading statements in 2017, while seeking approval for a Bitcoin futures contract. The settlement outlined in a proposed consent order includes a permanent injunction against Gemini. The exchange has neither admitted nor denied the allegations, a standard practice in such agreements. This deal spares Gemini from a jury trial that had been scheduled for January 21st. The consent order awaits final approval by a federal judge, bringing closure to a case that has lingered for over two years. Gemini has not yet issued a public comment on the matter. Speaking of the CFTC, this week, Chair Rosten Bainam announced his resignation, citing years

of efforts to close regulatory gaps in crypto markets, including enforcement actions against major players such as FTX. Coinbase explores tokenizing its stock on base. Coinbase, the largest publicly traded crypto exchange in the U.S., is considering making its NASDAQ listed stock, coin, available as a tokenized asset on its layer two. blockchain network, Base. Jesse Pollock, head of base and Coinbase wallet, revealed the initiative is in an exploratory phase, emphasizing the need for regulatory compliance. We are working to understand what needs to be unlocked from a regulatory perspective to bring assets like Coin to Base

in a safe, compliant, future-looking way. Pollock stated on X, while tokenized coin shares are already accessible to non-U.S. users via decentralized platforms, expanding access domestically hinges on clearer U.S. regulations. Phantom dismisses token rumors. Phantom, a popular non-custodial crypto wallet, has denied rumors of an impending token launch following its announcement of a social discovery feature. The feature, revealed on December 19th, will allow users to create profiles, add friends, and choose privacy settings, sparking speculation about potential token rewards for gaining followers. Addressing the rumors, Phantom stated on X, we do not have any plans to launch a token, while emphasizing their enthusiasm for the new feature.

The company also highlighted ongoing efforts to enhance the social experience for its users. Mara deploys 16% of Bitcoin reserves into lending program. Bitcoin mining giant Mara has disclosed that 7,37BTC, representing 16% of its reserves, has been loaned to third parties as part of a lending program. Valued at approximately $730 million the loans aim to generate a modest single-digit yield, to offset operating expenses, according to Mara's head of investor relations, Robert Samuels. The lending program, which has been active throughout 2024, involves short-term arrangements with established partners, though borrower details remain undisclosed.

Mara's reserves now total 44th from 893 BTC, worth $4.2 billion bolstered by mining operations and strategic purchases. The company also surpassed its hash rate target of 50 XA hashes per second, achieving 53.2 exahashes per second by year end. Time for fun bits. Justin Sun re-elected Prime Minister of, wait, where? Justin Sun has secured another victory as Prime Minister of Liberland, the micronation that claims seven square kilometers of disputed land between Serbia and Croatia.

If you're wondering how Sun found time between crypto controversies and banana art-eating stunts to become Prime Minister, you're not alone. Sun's pitch to Liberland's president included forging ties with the U.S. and, oddly enough, aligning with Donald Trump's unprecedented policies. Sun even hinted at chatting with Eric Trump during the inauguration. Bold plans for a nation no one officially recognizes. Liberland's goals include luring crypto-loving digital nomads. Whether Sun will succeed or just rename Bitcoin as Suncoin in Liberland remains to be seen.

For now, Liberland is a tiny patch of land with a lot of ambition and one very ambitious prime minister. And that's all. Thanks so much for joining us today. If you enjoyed this recap, go to unchained crypto.substack.com that is unchained crypto.com and sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin, with help from Matt Pilchard, Juan Aranovich, Megan Gavis, Pam Majumdar, and Margaret Curia. The weekly recap was written by Juan Aranovich and edited by Kari McMahon. Thanks for listening. Thank you.