We Study Billionaires - The Investor’s Podcast Network - BTC182: Bitcoin Mastermind 2Q 2024 (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey, everyone, welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On today's show, I have the second quarter 2024 mastermind discussion with Jeff Ross, American Hoddle, and attorney Joe Carlisari. We cover a broad range of topics and in a very candid kind of way to include Japanese FX swap lines, why the ETH ETF doesn't seem to be getting approved anytime soon, why the government continues to tighten the screws on payments and mixers, Roger Vair getting hit with a $50 million tax liability and many other current event topics.

Starting point is 00:00:35 So without further delay, here's my chat with the group. I hope you guys enjoy it. Celebrating 10 years. You are listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone, here we are. We're back for this mastermind conversation. So I think I know we got Hoddle, we got Jeff, we got Joe.

Starting point is 00:01:09 I think I know where I want to start this. And it's in a weird spot that you guys probably aren't expecting. I saw some news that the gray scale people are pulling their ETH, ETF that has been submitted. And I'm just kind of curious, Joe, if you have heard anything on like what's happening, why has this been pulled back? There was a lot of people at the beginning of the year saying this was a low probability event. And I'm just kind of curious from like the broader standpoint of Here we got Bitcoin with an ETF approved, and it doesn't seem like anything else is going to be approved anytime soon, which really kind of gives it an advantage from just a broad-based adoption standpoint. At least that's my opinion. I'm curious what the group thinks. So I'll start. It hasn't been a secret since the beginning part of the year that folks have been somewhat pessimistic on the EFTF. I still, I'll just tell you full disclosure, I think it's inevitable. It's just a question of when it comes. It's probably more looking like 2025 rather than anything. Why do you say that, though? What's driving you say that?

Starting point is 00:02:11 Well, the reason I think it's inevitable is because of the rationale that was used in the approval of the Bitcoin Spot ETF, which it all starts with the Grayscale case that was filed, Grayscale defeated the SEC, and the basis for the defeated the SEC was that you can't differentiate between the futures market and the spot market, that if you're going to allow futures ETFs to come to market, it would be arbitrary and capricious not to allow the spot ETFs. Well, as you know, as our colleague who's not here tonight, Steve talks about frequently, the SEC let ETH futures, ETF trade, right? He is spot on. They stood down and allowed ETH futures to come to market in the form of ETS, and that followed the CME's decision to list ETH futures. So in case law, which is the world I live, once you set a precedent like that,

Starting point is 00:02:57 once you say that it would be arbitrary and capricious to treat spot products different than futures products where there's over a, you know, 95% correlation between, the prices of the two assets, how can you discriminate against the spot ETH ETF? Now, the way I read the development here with respect to pulling their 19B application is effectively they're playing nice with regulators with the hope that they will approve it on the time frame rather than agitate them, rather than have to go through litigation rather than holding their feet to the fire with the court system. They're standing down now. They've effectively pulled the application voluntarily as opposed to forcing them to make it to not.

Starting point is 00:03:35 and then pursuing it in court. So I think it's a question of timing, and I think rather than escalating it with the regulator, they're just going to play nice for now. So it would sound something like this. If I'm at the SEC, I would go, if you pull this right now, it's actually going to be faster for you and it's going to be cheaper for you. We just need a little bit of time because we're working through some stuff locally here at the government level.

Starting point is 00:03:58 And who knows what that is? Well, who knows what it is, right? I mean, you got to remember, I'm sure we're going to get into this. I'm interested in Hoddle and Jeff's take on this. But the SEC won a pretty significant motion to dismiss that was fired against them in the Coinbase suit, right? And that case is pending. We'll talk about that later on. But that's active litigation, right?

Starting point is 00:04:19 That's the major custody provider for all the Bitcoin Spot ETF save, you know, one or two. There are things coming down the pipeline. And I wonder if the SEC said, look, we're going to get to this, but we just don't want to do it now. I'm not well-versed on this. So either one of you guys take it away. let's dive into it on the coin base piece. Go ahead. I just think you keep, yeah, no, keep going, Joe.

Starting point is 00:04:39 You know way more than I do. So keep going. Okay, okay. Do you, I sent you a screenshot. I don't know if you had a chance. Oh, I didn't see this. I can share my screen here. It's okay.

Starting point is 00:04:47 So there was a decision that came down. It was a significant decision in the, at the end of March. Okay, I think March 27th. And this was a decision that came out of the Southern District of New York, which you may remember Preston was the same district court, same U.S. District Court that resulted. the Ripple decision, right? And the key takeaway from this decision is that it is completely at odds

Starting point is 00:05:09 with the logic, at least with respect to secondary market transactions in the Ripple decision. So you get this bright line rule almost, even though it's not quite a bright line rule based on the footnote, where Judge Torres in the Ripple decision said, well, these are blind bid ass transactions on a secondary market. We think the institutional sales by Ripple Labs of XRP that that qualified as an investment contract. But once you transform it to this secondary exchange, that's totally different. There's no way that a purchaser on that exchange knows that they're buying from Ripple Labs or if they're buying from Pottle dumping his XRP bags, right? There's no idea. You can't figure it. You can't figure it out. So the court sort of applied this test that's saying, no, for those secondary

Starting point is 00:05:51 market sales, those aren't investment contracts. Well, obviously, that's a huge development, That would be a huge sort of categorical removal of a lot of these coins and tokens from the securities analysis. Well, in the Coinbase suit, that same argument was raised. And the judge in this case basically said, no, I disagree with that rationale entirely. I'm applying a more of an economic realities test. I think there's clear evidence put forward by the SEC, at least in the form of allegations that are plausible at the pleading stage, that even secondary market transactions can be investment consequences. That's huge, right? Because it changes the game. It almost swings the pendulum from one end to the total other end and now we're left with confusion. And this is within a single district, a single district

Starting point is 00:06:36 court judges disagreeing over this and grappling with these issues. So it was kind of one of the first I would say in a while major victories for the SEC in a case because they were able to sort of reject this test or this precedent at least from the ripple decision regarding secondary market transaction. So, you know, we can go into a little bit more. but I'll stop there and see if you guys want to have questions of whatever I'm not making clear. You know, it is interesting. They're talking about the friction even between districts, Joe, I'd love to get your take on this, is that, you know,

Starting point is 00:07:07 it seems that every regulating body has, it's like a turf war. Like, they all want access to it. And one of the things I'm hearing behind the scenes is that FinCan is actually pretty miffed by the DOJ action against samurai because they feel like their rules that they've been setting since 2013 are clear and they've been like laying out this path. and that the DOJ action actually muddies the waters. And now they're, you know, they haven't put out anything official about this, but this is just sort of a rumor that's happening behind the scenes.

Starting point is 00:07:35 And it's not just there, but it's all throughout these regulating bodies that it seems that each one of them has a different sort of a purview on how it should be regulated. And they all think it should be under their control. Which is common for bureaucrats. And we have to get into tornado cash and samurai wallet at some point on this podcast. Let's do it. I would love to go there. Yeah.

Starting point is 00:07:54 But I want to stay. focused on this Coinbase one for a second here because I think, I think Hoddle brings up a great point, right? The SEC declined to participate in that settlement with Binance Hoddle. Remember that? In months back, the criminal settlement, you had CFTC there who had filed suit against them. And this is typical of regulators. There was through for years now, there's been this back and forth over quote unquote crypto and Bitcoin between the CFTC and the SEC. They have a turf war. And all these government agencies, as is typical, they're fighting for. for funding. They're fighting to expand their jurisdiction. You have a fast-moving, growing industry,

Starting point is 00:08:31 right? And the first thing a regulator says is, I want that under my jurisdiction, because that allows me to go to Congress and lobby for more staff and more resources, etc. That's very typical, and I think it will continue. And I think it's actually going to get worse as these issues boil up. Yeah. Everybody's just fighting for their piece of the pie at the end of the day. Yeah. So let me just, if I, can I share my screen? Yeah, I think you can share now. Yeah. Go ahead. Okay. So this is what I was referring to. This is the decision that came down. And the judge cites the ripple decision in particular and sort of dismisses it. She barely touches on it. But she talks about the SEC has adequately pled this requirement. SEC is plausibly alleged that the issuers and promoters are crypto assets through websites,

Starting point is 00:09:12 social media posts, investor materials, town halls, and other fora, repeatedly encouraged investors to purchase tokens by advertising the ways in which their technical and entrepreneurial efforts would be used to improve the value of the asset. There's no way to reconcile, I think, this portion of the opinion with Judge Torres' decision in the ripple case. So now you have what is typical in the law in new industries and new issues that are coming up. You have courts coming down differently on this issue. And eventually it will move up to the appellate courts, courts of appeals, and they will have to deal with it and they'll have to resolve it. So, you know, this is the long story short is this is not going to be resolving, be resolved

Starting point is 00:09:48 anytime soon. This is going to be long, protracted litigation. I think the SEC is filed against Coinbase. And if you're wondering about market dynamics and wondering why certain assets are or not performing as they have, quote, unquote, in prior cycles, right? I think this is a headwind. I think this is a significant concern among investors. And I'm very happy every day that you don't have this same cloud, at least with respect to Bitcoin. Very interesting. Any questions on this stuff, guys?

Starting point is 00:10:17 When you say that this is going to be going on for a while, Joe, and up to the appellate courts, do you think it continues on from there? And we actually bring this all the way up to the Supreme Court. And this is going to be like for the rest of this decade, we're going to be hearing about these cases? Or how long do you think this all lasts? Well, very few cases ever get to the Supreme Court, right? Like they're the tip of the tip of the iceberg, and generally what they'd let happen is

Starting point is 00:10:42 they let a circuit split develop. So imagine if you've got the Fifth Circuit Court Appeals versus the Seventh Circuit where I reside, they're them coming down on different issues. Those are, this tend to be the ones where they start to resolve. They do show a lot of deference to the courts of appeals. So, you know, I think that once you get a court of appeals decision, that's solid, That's going to send a lot of warning shots across the industry. But remember, a case law can easily be read and then smart, savvy crypto lawyers can tell

Starting point is 00:11:13 clients, well, here's how you do it to avoid some of these issues. I mean, I think the mean coin phenomena that we're dealing with right now is a direct response to this, right? Just disclaim everything away. Just basically tell people you're selling air and there's nothing there. And people will still buy it because it's just gambling. And that's what they wanted with crypto all along to go on and gamble. From my standpoint, I don't think it's going to be a result.

Starting point is 00:11:34 I think it could be 10 years of litigation on this. Wow. Yeah. I mean, that's not an exaggeration. I think the Coinbase suit alone is going to take, you know, go well into 2025. And then you've got appeals. Good Lord. Let's talk the privacy side.

Starting point is 00:11:49 So, Joe, I mean, if you're one of these companies and you even have a remote concern, like you just don't even want to touch the U.S. rails at this point. Like, you just want to IP block anything coming out of the U.S., How do you walk somebody off that cliff if you're advising them from like a legal standpoint based on everything we've seen in the past month? Well, the general advice I give to anyone when they're dealing with the government or regulators in general is that you have to sort of understand what really pushes their buttons, what's going to agitate them and what is going to sort of most likely fly under the radar,

Starting point is 00:12:23 not that I would ever encourage anybody to break the law or commit a crime. I don't do that. But I do think that there are important issues that need to be fought. important cases that need to be brought. And from my standpoint, I think that there are very important pieces of litigation that are going to start to be emerging in the next, say, two years on these issues, on privacy concerns. And when you bring forward those cases, and I think I talk with Hoddle about this briefly,

Starting point is 00:12:48 or maybe it was Jeff, you really want to bring forward good test cases, right? What the government is really good at doing is they bring forward the worst possible case. Okay. They bring forward cases where they've got individuals all but admitting to criminal actions through Twitter DMs. They bring cases where the undercover agent has basically recorded the guy putting forward the technology saying he's trying to skirt the law and avoid KYC requirements. They bring great test cases. And the problem is that there's probably good, genuine, bona fide issues in those cases. And we're forced to defend in front of a judge, somebody who is really just, you know, was purposely trying to evade the law.

Starting point is 00:13:27 Now, the way I think that the industry needs to respond is they really need to think about what they say, what they do, if they're going to poke the bear unnecessarily with comments. And the samurai guys clearly did that with some of their tweets and those found up found their way into the indictment. And, you know, we just need to mature in that respect because you have to know, you have to go in with a sober mindset knowing this is going to upset a lot of people. You're challenging the rails, like you said, that they think they own and control. And when you do that, when you're rattling those cages, you have to be prepared for the full-on slot of the big gorilla, the United States government. I think that's a really interesting point. And, you know, digging into, you made a great point about the government picking the absolute worst case. And I think that's the feeling a lot of Bitcoiners have had is that we're on defense, you know, like crazy.

Starting point is 00:14:17 And maybe we weren't expecting to be on defense this much. Or maybe we did expect it, but we weren't prepared. But we need to go on offense as well and start picking our own cases that are darling cases from our perspective. Because if the government is looking to cherry pick horrible cases in the crypto industry, there's so many. I mean, it's infinite. It's like a beggars delight for them. Like they can just have everything they want, right? And one of the things in particular with like the Samurai case that I'm worried about is that the money services business charge is the lesser charge between that money laundering.

Starting point is 00:14:50 And so now listen, the samurai guys. are ideological. They seem to be hardliners. What I've heard behind the scenes is that they are intent on fighting this thing, tooth and nail to the bitter end. That said, though, who knows how things progress. And that's a good place to start from if you're going into a long protracted negotiation with the government.

Starting point is 00:15:10 But if there is a plea set on the table, one of the things that is worrying or concerning is that the plea could be, we're going to strip away the money laundering charge from you guys. And we're going to hit you with the MSB charge, which has wide. arranging implications for the rest of the industry. So I think that's something that's very concerning that could come out of this case. I guess to Joe, I'd ask, like, let's just dig into the Samurai case, maybe some of the specifics and everything, but like, is this a case that we, is this a hill we need to die on as, as Bitcoiners, or is this like a do your best, get out

Starting point is 00:15:43 intact and live to fight another day? You have to always reconcile the overarching public policy concerns, things that are important like privacy with the individual rights to the defendant. And I think if I were representing these gentlemen and the government will invariably dangle, HAL to your point, some sort of reduced plea deal, some sort of reduced sentencing that is, I think, far lower than what they would face if they went to trial. And it's really tough, right? Like you've got your liberty at stake and are you going to roll the dice on principle when you could end up being the next SBF and having to do 25 years, right?

Starting point is 00:16:16 We just saw that come down. And when you go to trial and you screw around, you'll find out what could happen if the sweet old lady in the jury doesn't like you messing around with this crypto stuff and thought you were aiding and abetting terrorists through laundered funds. This is the same issue. You know, you can go back years in the industry, all the way back to Charlie Shrem, right? He pled out to lesser charges because he was afraid of having to face more significant penalties if you went to trial.

Starting point is 00:16:41 And that's throughout the entire criminal justice system. That is a tactic prosecutors used. and to your point, okay, answering the question directly about, is this the sword you want to fall on right here? I'm not necessarily sure that it is because of the emails and some of the DMs. It looks like they were directly communicating with an undercover agent as alleged by the indictment, which is not good, right? If he was, you know, if they were in concert conspiring with him to try to launder funds and he was undercover for the feds, that's not going to be really good for a jury standpoint. And there will be other cases that are more important to fight on cases when,

Starting point is 00:17:16 involving lightning and other businesses. Some of my clients have talked about these cases. I mean, we need to figure out the good test cases. And to the point, you know, earlier, think about other great civil rights movements. Think about why you remember Rosa Parks, right? You remember because she's the sweet old lady that just didn't want to sit at the back of the bus. Like she didn't do anything wrong. She didn't say anything.

Starting point is 00:17:37 She didn't assault anyone. And although that was an illegal proceeding, I mean, I think there was a charge or something. It was a point. It spurred a cultural response because she was in. impeccable with her character. And I think that's the type of thing we need to say. We need to put forward cases where people are impeccable just trying to defend their liberties and rights to privacy.

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Starting point is 00:22:05 Back to the show. Yeah. And do you see the fact that maybe they're making money or like there's some type of profit associated with the business versus somebody who's just literally trying to provide privacy technology and they're not making any type of money. Is there a big difference there between like the representation and what it would represent for the space if we had some type of case that went forward that wasn't profit motivated? Yeah, absolutely. That's spot on point. The indictment alleges they profited to the tune of like $3 million. And one of the things I tweeted

Starting point is 00:22:39 out is, and again, this is, anybody want to chime in because this is more of a technical question. But I always wonder, is there a way to develop technologies like the whirlpool, which is really the basis for the samurai wallet privacy feature without extracting that profit, right? If you take it out of the for-profit enterprise of the business, it changes the whole complexion of the case. It changes the motivations. It changes the scrutiny. The government's going to have.

Starting point is 00:23:02 When you cross that chasm of having a business that is profiting from anonymizing transactions versus one that just opens up, you know, some sort of service that has no benefit from it. It's just there and it just exists independent of the business. I think it's a totally different money services business analysis. It's a totally different 1960 analysis. And the interesting thing which we'll talk about, I want to get Jeff to weigh in on this, but, you know, this, I'm sure how you're familiar with the tornado cash argument about control and how the government says that businesses don't even need to have control over funds

Starting point is 00:23:34 to be a money services business transferring funds on behalf of others. which is a, that's the FinCEN reg you're talking about and that sort of evolution of that position from the government. Because it goes to nodes, right? Is that where you're going with that? Well, the argument that they make in tornado cash is that 1960, which is the money, the penalty portion of the statute for money service businesses, it does not require control. That all that Congress wanted was that if you were a business that was facilitating or affecting

Starting point is 00:24:04 transfers of money, that that was enough to qualify as the money. services business. They use this analogy of, here I'll show it to you just so you can see the government's argument, because it's important to understand, I think, even if you disagree with it, they wrote in, this is the Tornayo Cash reply brief that was recently filed. They say, consider the example of business that accepts parcels of cash from criminals and moves the money by courier to locations overseas, perhaps the archetypical Section 1960 violation. Under the defendant's theory, such a business would escape liability only by accept. excepting cash in the locked parcels, as long as the customer did not give its keys to unlock the parcels.

Starting point is 00:24:43 Then it could claim it never had control over the fund. Surely Congress did not intend the set should be so easily evaded. The reason they're bringing this up is because the argument raised in the tornado cash case, which is equally applicable to the Whirlpool transactions in the Samurai case, is effectively that, listen, we don't control the keys. Every user on the Samurai wallet controls their own private keys. We don't control the Bitcoin. We may build out the transaction through Whirlpool, but they keep their own keys.

Starting point is 00:25:08 and because they keep their own keys, we don't have control over the funds, therefore, section 1960 violations don't apply. The government's saying that's wrong. The government is trying to read 1960 more broadly and saying that Congress had this really expansive statute. We'll see who's right. But to Hoddle's earlier point, when we test this theory, we want to make sure we have an impeccable set of facts to give us the best chance in front of a judge.

Starting point is 00:25:33 And from our standpoint right now, I don't know that this is the right case. Well, it's also, it's going to get real technical in court because the government is sort of alleging the samurai as a mixer. The coin joint is a mixing process. And coin join is not technically a mixing process. It's much more better thought of as like a smelting process where like we all throw our gold bars into a vat and we create new gold bars rather than I'm a dirty person. I give you clean money and you're a clean person. You give me dirty money and we go on our separate ways. Yeah.

Starting point is 00:26:02 Yeah, that's the way that it's being alleged by the government. but that's not technically how it operates. So is the smelting process that is, you know, coin joining and moving to new UTXOs, is that, strictly speaking, the same thing as mixing? Personally, I don't think it is. I don't think the samurai guys think it is either. And that's why, you know, Wasabi and Samurai were operating. Clearly, one of the samurai guys was living in the U.S.

Starting point is 00:26:26 You know, you don't live in the U.S. if you think you're doing something illegal. I don't, they didn't think they were doing anything illegal. But to improve the facts using your, you know, analogy there, you would want a business that does not extract a fee from the smelting, right, that's not extracting something and also isn't controlling the smelting. You want it to function independent. And my understanding just from reading the government's allegations is that, you know,

Starting point is 00:26:51 the whirlpool feature would not work without them building out those transactions on the back end through Samurai. Correct me wrong. Yeah, no, it's a centralized coordinator. And it's also, you know, one of the problems is that privacy in general is like anytime you have to opt into privacy. Now, it shouldn't work this way, but it does work this way, is that it's, you know, by default, seeing that you're doing something nefarious because you're opting in to be private. We don't have good base level privacy on Bitcoin. And that's an issue that,

Starting point is 00:27:17 you know, maybe hopefully we can solve technically, but as of right now today, anytime you're doing something extraordinary in order to gain privacy, you're going to be, you know, suspicious by default, unfortunately. What do you guys think today? There was a lot of news on this SAB. 1-21, getting approved through the House. The White House then comes out and says that they're just going to veto it. And this is to allow the banks to custody digital assets. What a turn of events that's looking like they all want to play ball. They're working on the, I don't know, it still has to go through the Senate before it would then go to the White House. Is that correct?

Starting point is 00:27:56 So it got the approval in the House. Do we know if it's going to get the approval in the Senate? I haven't read up on that. Does it look like it's going to go through? I'm not sure of that either. Jeff, do you know? I don't know. I would assume it would, but I don't know. I think it's going to, it sounds like it's going to get approved. It's going to go to the White House and Biden's going to veto it.

Starting point is 00:28:15 I have mixed feelings about that too, though, right? I mean, as a Bitcoin or like, do we really want the banks to take custody of our Bitcoin? That's not the direction we want to move anyways. I mean, there's so many things that are coming to the forefront right now that are so interesting to me talking about this privacy. privacy is not a base layer feature of Bitcoin. It never was, right? It's decentralized, secure, permissionless money. It's not privacy money. And so is that a hill, it's a layer two application of Bitcoin. And if you do that, to Hoddle and Joe's point, you're going to attract the ire of the U.S. government. And is that a battle? You want to fight for the rest of

Starting point is 00:28:50 your life? Some people, it's a hill worth dying on. And some people, it's not. I've been waiting for this to happen for, and I'm sure you guys have too, for five or six or seven years. You see these things happening and you see people flaunting criminal activity, at least criminal in the eyes of the U.S. government, you're going to rain fire down on yourself. And so is that what you want to fight for? I have massive respect for people who fight for this privacy. And I, you know, I'm a freedom maximalist. But again, it's not a base layer feature of Bitcoin. And so I have very mixed feelings about all of this kind of stuff. I'm just not quite sure how to feel about it. And Joe, you know, as an attorney, right, you have to tell people, do not evade taxes, do not.

Starting point is 00:29:30 not do things to draw the attention of the government unless you want the government focusing its headlights on you. And so these are very difficult issues. And as a community, this is what we have to decide is where do we want the future of Bitcoin to go? Do we want banks to take custody of it so we can get things like B-locks, right? I like the idea of those, these Bitcoin lines of credit and all these features you could have if you had somebody, these traditional financial institutions taking control and custody

Starting point is 00:29:54 of your money. But now you have all these other custodian risks. and you risk that government confiscation of your Bitcoin. So I don't know. It's a crazy time. It's a crazy time to be involved. You know what's interesting, Jeff? While we're trying to figure things out internally on the Bitcoin side, what do we want?

Starting point is 00:30:12 Where are we going? The government is trying to figure things out on their side. And with this new move by the Biden administration to ban, you know, banks from taking custody of digital assets, it's very interesting because it's very bipolar between some of their other stances. It seems like they can't, they can't as the U.S. as just a entity, cannot figure out if it wants to bring Bitcoin in and attempt to co-opt and control it, or if it wants to keep Bitcoin out, because by keeping Bitcoin out,

Starting point is 00:30:38 its system is safer. And I think that tension is really interesting to watch play out. And it's all like chess, right? Because what's better? What do we fight for as Bitcoin? Do we want the government to accept it and co-opt it? And then we fight that battle, or do we want it to stay out at arm's length and be kind of treated as this extra governmental thing where then we can fight that battle. The battles are totally different and it's so interesting. The consequences and the second and third consequences are really hard to think through. Keep in mind just in terms of knowing which part of the government, to your point, we're sort of quarreling with. SAB 121 comes from the SEC, okay, Gensler's SEC, which has been antagonistic towards

Starting point is 00:31:19 quote-unquote crypto and Bitcoin for a long time. And from that standpoint, point. It's really, yes, the Biden administration will said they will veto the bill repealing SB 121, but it's really coming from Gensler's SEC. Which is influenced by Warren, which is also part of the Biden admin. So maybe this is like a third rail in American politics or whatever. But I mean, listen, we got an election coming up. Nobody wants to say, Alex Leishman was just putting this on Twitter. Nobody wants to say the T word. It's Trump, baby. If you want, if you want Bitcoin to do well over the next four years, we need Donald J. Trump, okay, and his magnificent head of hair.

Starting point is 00:31:54 Lead him in there. Joe Biden is not going to get it done for us. It's going to be four more years of antagonism if we have a Biden administration. And did you see Trump's response today? Yeah. He just addressed that. She said, that's something we should talk about too. Yeah. Sorry, go ahead. One of the things, well, one of the things that I wanted to just bring up is, is all of this confusion from a governmental standpoint, actually a bullish thing for, Bitcoin that they just can't even figure it out. The fact that they're quarreling, they're trying to stop it, they're not trying to stop,

Starting point is 00:32:26 but they're bringing it in. They're not bringing it. You've got all this legal ambiguity that's happening. And meanwhile, it just, TikTok, here's another block. Here's some other country that is figuring it out. Here's another country that's opening their arms wide open for companies to show up and arrive. I don't know.

Starting point is 00:32:42 I think that them not being able to figure it out is just very bullish for Bitcoin to continue to just reach its tentacles in deeper. We just had an, I know, Joe, I saw your comment. The Hong Kong ETF was very lackluster, the amount of inflows that initially came out of it. It doesn't mean that it'll always be like that or, you know, over in Asia, but tapping into these other markets, like just the fact that that vehicle is there, then I saw in South Korea, they're getting, they've got a new president that just came in and a whole new administration that's going to be pretty pro crypto Bitcoin there and that they're going to have a vote, I think it was in. June. And so you're seeing these other countries that are taking action. They are there also kind of recognizing that this is a global race, global game theory that's playing out. And I just don't know that any of it's bad. I think that in a way, maybe it's good that we can't figure it

Starting point is 00:33:37 out. What do you guys think? If Bitcoin was ever going to succeed, it would have to be a Trojan horse, right? In the early days, there was plenty of opportunity for the government to come down hard and shut it down in the United States, right, crush it for 10 years. They didn't. They sort of, whether it was through underestimating the asset or just not understanding it, it doesn't really matter. They didn't take the requisite steps that would have been necessary very early on in entities like Coimbase and others to just clamp down hard on the industry. They didn't. Now they're sort of, I guess, screaming at the wind, right, trying to stop what's coming in their direction. And I think it's all futile at this point. I do agree with you. I think most of their efforts are just

Starting point is 00:34:19 sort of haphazard and not clearly thought out. There's dissension among different bureaucrats. And I think there's enough people now. I mean, I know judges that hold Bitcoin. I know justices on appellate courts that hold Bitcoin. It is spreading throughout society. And the genie is out of the bottle. I don't think you can put it back in at this stage. Yes, I totally agree with Joe. And not not from like a prescriptive standpoint. Like I think think this is the best way for things to happen, but just from a base level reality, descriptive standpoint, is that Bitcoin is an open, permissionless monetary network that's global. So we have no ability to gatekeep it. We call ourselves Bitcoiners. We're very involved with what's going on. We know people

Starting point is 00:35:01 who are at the intersangdom of Bitcoin. To some degree, we are too. And still, it doesn't prevent us from, you know, Wall Street gaining a lot of Bitcoin. It doesn't prevent us from China, at gaining a lot of Bitcoin or Russia or anybody who, you know, we may be at odds with, or the United States government may be at odds with, all of your enemies are going to use Bitcoin. Bitcoin's going to be, you know, the world's money or the world's reserve asset or the world's greatest digital property, Michael Saylorism, whatever you want to call it, it's going to be a really big thing and we cannot prevent people gaining access to it.

Starting point is 00:35:33 So with that in mind, that is a framework going forward. You have to think to yourself, okay, so it's going to go through this period where they're going to be a bunch of entrenched entities that are going to try and get their hands around it, right? What happens after that? And I think that's the most interesting question to me. There is no way where we like evade capture. Like Joe was saying, like, you know, pretty much Bitcoin was like, you could almost think of it as being designed to be captured in a way. You know, it's like you throw chains on King Kong and you take him to America and you think you're just going to display him in a zoo and then boom, he busts free and he's got, you know, what's your face

Starting point is 00:36:09 at the top of the Empire State Building? That's Bitcoin. Like, you know, you know, you're That's how I see it playing out. All right. I'm going to shift gears just a touch. Japan FX intervention swap lines. Jeff, did you see this? I did. Again, another thing we probably knew was coming, right?

Starting point is 00:36:25 I mean, so we've been watching the yen crash and burn. Whether or not this was intentional or not, that's one question, right? Maybe they want their currency to weaken. I think Joe has talked about that. I don't disagree with that. What's the textbook of financial repression, by the way? high inflation and low interest rates, which is something that I think we should talk about, by the way, and how that pertains to all countries, including the U.S.

Starting point is 00:36:49 But so they open the swap lines, right? And so the way I understand it is they have the ability to not sell their treasuries because, of course, the U.S. does not want Japan selling their treasuries. In fact, Lord willing, they'll buy more, right? Because we're going to open the floodgates and we're going to continue to put more treasuries on the market. And so we don't want them, the largest buyer, the largest international buyer, to be selling their treasuries. would if they could just short the dollar and strengthen the yen? Wouldn't that be a great solution? And so it's sort of a synthetic solution to their problem.

Starting point is 00:37:19 Again, it's just monkey. Sorry. Oh, no, I was just going to say, just for a little context, then I want you to keep going there. Japan has the second largest amount of treasuries. I think it's, oh, let me see here. There's $1.2 trillion sound right, about right? Yeah. For Japan.

Starting point is 00:37:35 And then China has the highest with $3.1 trillion of U.S. treasuries. And so, I mean, they have the lion's share of these trade. They can't, we cannot allow them to just step into the market and start selling these to defend anything. So they open these swap lines. They allow them to print a bunch of yen, to swap them for dollars. And then all of a sudden, they don't have to come up with dollars to defend this anymore. But yeah, keep going there, Jeff. Just so people are going to sum it up to say it's just shenanigans, right? It's just clown world shenanigans going on where everybody's dead is spiraling out of control. The, the debt is, demographic situation in Japan is absolutely horrendous. The debt to GDP is horrendous. To me,

Starting point is 00:38:17 it's just a completely hopeless situation. And they're just sort of monkeying with the little knobs trying to do something right now. So anyways, I just think it's shenanigans. And of, and of course, this is what they're doing. And of course, I'm so glad there's Bitcoin as an alternative to these monkey shenanigans. Anyways, Joe, you probably have a more articulate response on this. No, I don't know about that, but I'll give you my thoughts. So folks know that I think you could Preston, you talk about this all the time. The yield curve control at by the Bay of Japan and their dominance over the JGB market effectively has created really bad results for their currency.

Starting point is 00:38:54 And even though they have abandoned, at least or let the lower bound rise of the yield curve control, right, it's significantly lower than where it should be relative to its peers, right? So you've got that interest rate differential. among government securities from the Japan through every other currency. And because of that, you're dealing with the FX pressure. Now, why do they have all these treasuries and what kind of risk should you really be concerned about with this?

Starting point is 00:39:22 And I think it's so strange to me why people are surprised at the intervention, considering that has been the path forward for Japan for decades now. This is not like they just decided to do intervention. I mean, anybody who's been following Japanese credit markets, really since the early 90s, has seen the BEOJ increasingly become dominant in the marketplace. And with respect to these concerns about a credit event, I think they make no sense at all. They want to do the following.

Starting point is 00:39:50 They want to basically weaken their currency, which is going to be very helpful from a trade standpoint. But aside from weakening the currency, they want to weaken it in a slow and orderly manner. That is the concerted policy of the BOJ. They don't want it ripping towards 160 or 170 in a month or two. That would be disastrous for them. But if it hangs around in this range, it's going to be fine.

Starting point is 00:40:12 And by the way, they have the treasuries, as you pointed out, Preston, to defend it if necessary. Now they have swap lines. So, you know, the notion that this is going to all blow up and be some sort of huge credit event, I think that's a lot of panic over nothing. But the important takeaway, right, is that intervention will continue to come, both from the BOJ and from now the Fed with swap lines that is entirely expected. And there's more than enough ammo in the gun to keep their current. in the desired range without more volatility they can stomach.

Starting point is 00:40:43 I'm just pulling up a chart here of the USD to Japanese yen, and we're seeing lows against the dollar in yen terms that, I mean, you can go back to 1998, and it's putting in lower lows than we had back then. So, yeah, I think the low, this chart here, oh, here we go. Let's see here. Yeah, we're putting in lows that are on par with 1990. Pretty crazy what's happening right now over there. But I agree with you, Joe. They can't allow it to get much further out of control than where it's at right now. I don't think. I think them opening the swap lines is a huge massive move to just demonstrate. We're going to back this. We're not going to allow this to unwind beyond a certain point. And I mean, the swap lines are typically, correct me if I'm wrong or if you guys see it differently. But once they open those up and they're just basically, hey, print whatever you got. give you dollars for it is, is, uh, the charade that's played of, you know, not, uh, what's the

Starting point is 00:41:46 word I'm looking for? I mean, it's just a total Ponzi scheme at that point, right? Always was. I think to Joe's point, by the way, to Joe's point, there are many people speaking very hyperbolicly about this, like this is a doomsday scenario. Yeah. I couldn't disagree more with that. I mean, to Joe's point, they're going to control this. Things are fine. They're just shenanigans. They got it under control. I don't think that this is going to set off a major event. Personally, I'm not worried. I don't think this is going to set the world off into another major calamity. We're not on the precipice of another massive bear market recession, and we can get into those macro stuff later if we want to. But anyways, everybody,

Starting point is 00:42:22 you know, people love the clickbait hyperbolic headlines, and I just don't think we're going to go there. I think this is going to blow over personally in not too long. Yeah, let's go down that path. So your opinion is basically they're going to do whatever it takes to manage this. They're going to print whatever they got to do, they're going to open whatever swap lines they've got to open and then they're going to do yield curve control. Because I can pull up a U.S. Treasury chart here. Let me pull it up. So when we're looking at this, you know, I mean, this is looking like we're kind of going to keep selling off through the thresholds that maybe we hit there in October of 2023. And if we do, like, does things start getting a little disorderly? I kind of think it may. But,

Starting point is 00:43:07 They're going to step in and try to backstop it, right? Well, what are you guys' thoughts here? And, like, what's the ramifications from a broader, like, Bitcoin standpoint as well? I don't mean to keep talking, but I just continue to be just extremely bored by all of this. This choppy sideways nonsense, right? I think we're just kind of at normal levels now for treasury yields. I think that inflation is going to continue to chop sideways. Joe and I have probably been talking for 12 straight months in spaces about this,

Starting point is 00:43:35 about how we're going to be talking 12 months from now about how it continues to chop sideways. Inflation is not going back to sub 2%. It's going to be up at these higher levels. We're not heading into a recession, so we're not going to have a deflationary bust anytime soon. We may have it in 2035, 26 somewhere. Sure, we can talk about that, but that's in the future. For now, that can has been kicked down the road. So if we have decent GDP growth, which we do, both in the U.S., by the way, and now around the world,

Starting point is 00:44:03 I think it looks like the entire world's economy has basically bottomed and has recovered and is starting to move higher, including China, including Europe. And so personally, I think these recessionary fears are just overblown, in my opinion. And so we should see these rates to be about where they are. And I think the Fed is just going to kind of continue to keep their Fed funds rate about where they are. They may lower it a little bit. They may raise it.

Starting point is 00:44:26 I don't know. I don't think we're at risk for runaway inflation. Like, yeah, this is one of the first times I have ever disagreed. So which probably means I'm wrong, but with Jamie Diamond, who continues, he continues to throw out that like 8% number on rates. And I think he's wrong. I think people are thinking we're going to head back into a 1970s like, you know, double inflation peak. I just don't see that at all. Outside of a major war, I just do not believe that's going to happen. So I think we're going to muddle along and crab sideways and everybody's just going to want to kill themselves because it's so boring. And we're going to continue to argue over just this, you know, choppy sideways price action forever. How does it relate to Bitcoin? I think at some, point, people are going to realize, hey, you know what, the economy actually isn't that bad. And banks are actually going to start lending again as economic gears start grinding again. And things like M2 money supply, liquidity, you know, and we can talk about that or not,

Starting point is 00:45:16 I don't really care. Eventually, that will start rising again. And the economic wheelhouses will start rising again. And what that's going to do is push people, push money outside further on the risk curve into risk assets, into stocks, and especially into Bitcoin. And I think that's going to be what propels Bitcoin higher as we head into 20. Sorry, I've been talking a lot. No, no, no, you're good.

Starting point is 00:45:36 I just pulled up the global M2, so I'm combining all the major currencies, whether it's the yen or the yuan or the euro, and then dollars, and I've converted them all into dollars, and then this is the trend that they've stayed within for a very long period of time going back to 2008, and you can just see how they just keep expanding this. What I find interesting on this metric, because a lot of people will just pull up like the U.S. M2, and I don't think that it does it necessarily justice. I like kind of adding in all the others because it's, I think it's completely globally coordinated. So that's why I did the global M2 chart. It looks like this is really kind of diminished volatility in the amount that's being

Starting point is 00:46:19 added, and they're really trying to hold it. And to me, it seems like there's going to have to be some type of major move up here by the middle of the summer based off of this kind of going sideways since, when we start going sideways, March of 2020? Yeah, 2022. So notice that that kind of follows the path of risk assets, right? How it peaked and then rolled over and everything rolled over. What I would say is I don't actually expect a huge surge higher like you see back in 2020, where it suddenly ripped higher. I think we're going to creep along. And what we're going to see is, like I said, the economic engines are just going to start kind of revving up a little bit. And we're going to creep up along the lower aspect of that line and just start heading into a more

Starting point is 00:47:00 healthy response and a more healthy increase in global M2. When you look at interestingly, and I'm sorry I keep talking, but you know, you look at the spike that we had from COVID in M2, right? All the transfer payments and everything that happened. We had that huge fiscal and monetary impulse. We have absorbed all of that now. And looking at that bottom line, the upper right hand corner where we are today, it's all been absorbed. And now we're ready to just start going higher again and grinding higher again. So that's what I'm just generally optimistic, but not wildly optimistic, like we're going to see this massive blast of liquidity like we saw back in COVID.

Starting point is 00:47:34 I just think we start heading higher and people are one by one going to turn from being these pessimistic, freak out, hyperbolic statespeople looking for clickbait. And they're going to make, well, I guess the economy isn't that bad at all. And I guess there is a basis for why the stocks are grinding higher and Bitcoin is heading higher. So I don't know. Joe Hoddle, do you agree with that? Yeah. Well, I was, oh, go ahead.

Starting point is 00:47:56 Go ahead. Go ahead. No, no, you're first. I was just saying I'm looking at the chart and like, you know, I'm hearing what Jeff is saying. I can anticipate some Bitcoiners being like, oh, well, that means we're not going to have this crazy pump and everything. But if you look at 2017 versus 2020, 2021, Bitcoin actually didn't do as well, even though there was much more expansion in Global M2. So I don't know, just an interesting data point. Let's take a quick break and hear from today's sponsors.

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Starting point is 00:51:55 But Joe, what were you going to say? So can you pull up the chart of the 10 year? So let's go through a couple things on this. So if you and this is just stick with me for a minute. I'm going to try and get through this quickly. But if you look at that chart, okay, we have that bottom that was put in the bond. market where the yields hit, what do we hit? We had five. On the 10 year, on the 10 year, on the 10 in October, you were, well, so the high, I would argue that the local high here, like,

Starting point is 00:52:25 price wise, was December of 2023 where you were at a 3.7% yield. Is that what you're calling out, Joe, the yield? The yield. High yield, Joe, second. The high yield, oh, right here. Which is the bottom of the market. Yeah. Okay. So right here, you were at 5%, yes. Yeah. So in October, right? And then, And what happened after that? After that, we got several very favorable, optimistic prints from CPI prints, month-over-month prints, annualized prints. They were pretty solid. And that also coincided in October with the release of the quarterly refinancing announcement

Starting point is 00:53:00 where we found out that Janet Yellen was not going to expand the coupons issued into the market. So I think both those contributed to a significant bid of the bond market, which is why those yields fall very consistently, basically throw in my money. for October through the end of the year. Okay. So what happens after that? After that, we've get the following. We start to see some uptick in the issuance of coupons into the market. And we start getting successive month over month prints where CPI comes in over expectations. We got the December print, which we got in January, right? It's a month delayed. And that showed

Starting point is 00:53:34 Supercore expanding. I think it was like came in point three or point four over expectations. We got the really bad March print, which is really the February print, but in March, that really sent the bond market into a hard sell off, which yields rose. But to Jeff's point here, okay, the question is, where do we go from here on these prints? And if we continue to stay stuck in this range, you know, say closer to 3%, but not necessarily at 2%, the bond market should reflect that. And I think the interesting thing for me right here is that people look at this 10-year chart and say, well, the 10-year selling off so-s,

Starting point is 00:54:10 significantly. No, it's not. Look at the Fed funds rate. Fed funds, effective Fed funds is at 5.3%. And as you know, Preston, basic, you know, arithmetic with respect to bonds, you should be charging a term premium, right, for the longer duration. Yes. And in a healthy economy, the longer end instruments should always have higher yields than the lower engine instruments. So for people that I think we're entering into some hyperinflationary period or the 1970s like Jeff talked about, why do we still have an inverted yield curve. Why do we still have the long end significantly yielding lower, and yielding significantly lower than the front end at 5.3%. To me, it's only really two options. Either there's a lack of coupons circulating in the economy, which is possible, right, because a lot

Starting point is 00:54:55 of that's sitting on the Fed's balance sheet. But aside from that, it's that inflation expectations, whether you look at like break-evens or five-year, five-year-fours, they don't show the type of, you know, 5%, 6% inflation that a lot of the inflation easters are ringing their hands about. They show stickier, higher, closer to 3 than 2% inflation, but they show that against the backdrop of an economy that I think I saw Atlanta Fed's real GDP now at like 4%. Right, Jeff? Did you see that? Did you catch that today?

Starting point is 00:55:24 Yeah, of course. They're projecting 4% real, you know, real GDP for Q2 now. I mean, that's like double the trend that the Fed has for the next 10 years. So I don't understand the recession argument at this point. I really don't get it. And maybe Jeff can convince me. Well, this is why people want to kill each other during this. And I'm sorry, Preston.

Starting point is 00:55:44 I'll stop quickly. This is why people want to kill each other is because what did we just get? We just went through this period where people were like, GDP growth was so much lower. The economy is weak. And then inflation's rising. Oh my gosh. And everybody's panicking.

Starting point is 00:55:56 And I'm like, just wait, wait a week, wait two weeks. And I promise you the data will change. When you get in these crabby markets and you get too far to one end of the spectrum, if you're too low, it's going to bounce back up. If you get too high up here, it's going to go down. It's just what these markets do and they drive people insane because people can't handle this choppy sideways action. Sorry, Preston. Go ahead. No. So for a person that's hearing this, that's a bitcoiner, what's the message for them? Because they hear all this, they hear us talk all this bond stuff. It gets us all excited. We're talking about what we think this means.

Starting point is 00:56:26 From just a liquidity standpoint, I think that's why we really do love covering it is because as we're talking about the global liquidity that's in the system, what's the message for them? Yeah, I think if Jeff is right and it's going to be crabby for the foreseeable future or in the interim here, then you basically don't want to wait to buy. And you also don't want to, you know, over lever yourself either, assuming there's a big bull market one week away. So basically just if you got, if you got dry powder, now's probably the time or, you know, sometime between here and there, probably not going to get a crazy deal. You might, but like just DCA in and chill.

Starting point is 00:57:03 Stay humble, stack, sets. It's the same advice, Preston, all the time. How is the same advice? How about this? What do you guys see happening going in closer to the election? Because, I mean, there's no way, based on how corrupted, everything's getting, like, I'm sorry. But like going into middle of the summer into November timeframe, like, I just expect

Starting point is 00:57:22 them to totally goose these markets. What do you guys think? I'll just say the person listening to this, that's just a regular person, just trying to figure all this out. They should reject the notion that people have promoted, at least some people in Bitcoin circles or Bitcoin adjacent circles, that it is a doom insurance type instrument. It is not about doom and gloom with Bitcoin. Bitcoin is about the most pristine asset that can soak up global liquidity, which we know will continue to expand. We know the system's not going to fall apart because there are so many tools at policymakers' discretion.

Starting point is 00:57:54 And Bitcoin is going to increasingly be identified as a tool that protects you from long run debasement of your currency, debasement of your unit. It's not a consumer price inflation instrument, right? So a lot of people are disappointed because when we had high inflation, Bitcoin sold off and did not really do very well during 2022. It is a long run debasement protection instrument, and it's going to be used by, I think, a lot of people across every segment of society, from the very poor to the very, very wealthy. But going to your question about the election, right? The election, I think I had see two candidates, both of whom, whether you pick candidate Red or Candidate Blue, they're going to spend a lot of money.

Starting point is 00:58:32 Candidate Red will spend a lot of money in the form of tax cuts, which are going to try to spur economic growth. And Candidate Blue will spend a lot of money versus in the way of entitlements. So you pick whatever you want, but I'm going to pick Bitcoin. And I'll jump in there because you're asking about the election. I don't think it's a coincidence that we see the beginning of the huge bull markets happen right around election time. And I think that's going to hold again this time.

Starting point is 00:58:57 So my guess is if we were talking, what is it? May 8th. So six months from now, say it's November 8th, that's right around, you know, the election happened by then, whoever won, to Joe's point, lots of money spending is going to happen. There's going to be, you know, zeal in the air. People are going to be feeling optimistic. That will start pumping. I think that's when we start talking about Bitcoin heading much higher. To go back to your chart, you showed earlier, press on about Global M2, we're going to start tracking along at least at a minimum tracking along that bottom line and heading higher. The economy are going to be starting to generate at that point, people will feel optimistic. I think that's

Starting point is 00:59:34 the start of the bull market. And I love looking at past cycles and just kind of thinking about them. It's uncanny how similar this cycle is right now to the 2016 cycle. I think the ETF hype got people a little too hyped. And so we have this period of cooling that I think is going to disappoint a lot of people for the next several months. But then it's slaying the groundwork for the next bull move higher. And to Hottles point, you know, it's always a great time to be buying I put a tweet out a day or two ago saying what stage of the Bitcoin cycle are we in? And I showed astronauts boarding a rocket. That's where we are right now.

Starting point is 01:00:09 This is your last chance. And I'm telling people, just a guess, right? This is not individual investment. This is your chance to get on before the rocket takes off. Because the rocket, I believe, is going to take off again. And I believe we're going to have another parabolic move higher. And I might be wrong. But I will be very surprised if one year from today, May of 2025, we're not well above,

Starting point is 01:00:29 $100,000 per Bitcoin and I think we'll be moving much higher at that point. I feel like Jeff is like the ultimate like road trip dad where like he's like children. It's going to be very boring for like several hours. Do not annoy me. Do not annoy me. And then everyone on Twitter is like, are we there yet, Jeff? Exactly. Yes.

Starting point is 01:00:51 Oh, my God. I agree with you though. I think you're I think you're all over it. All right. I got one more. I don't even know this is a deep. question, but it's a funny question. Roger, you guys fall on what happened with Roger, 50 million tax bill. Did they ball them up? I think they did, right? They're hauling them back

Starting point is 01:01:12 to the U.S.? What's going on? He was, how is that a funny question? That's that that that's I'm not a fan. I am not a fan of him. Sorry, it's not funny. It's not funny, but I'm not a fan of him. Preston. Had you read the indictment? Did you read it? No. Okay. It's amazing. So just to just to give some TLDR on it. I have a threat about it, various different, but they apparently got a ton of emails by in between him and his lawyers, okay, where,

Starting point is 01:01:39 you know, he was specifically asked to sort of pretend assets that he was holding personally were transferred to a company on a certain date. There's so many emails in here from his lawyers giving him advice and then him ignoring it or, you know, skirting around it, that what it tells me is that it's very likely,

Starting point is 01:01:57 obviously speculation here, but it's very likely that his lawyers are cooperating witnesses with the government. Because they're so, I mean, they cite these law firm one, law firm two, law firm three. Well, they got a liability at this point. So I'm sure they are. Of course. Of course. But, you know, when he had his anticipated expatriation from the country, right?

Starting point is 01:02:15 The whole gist of the scam, right, if you believe the government is that basically he was taking the portions of the hundreds of thousands of Bitcoin that he held and that he was moving it towards companies that he could avoid that. tax when he expatriated. They've got emails to him basically showing him advising people to directing people to transfer, make these transfers and, you know, manipulating documents and ignoring legal advice that he had to claim certain income. It's pretty damning. And, you know, it's one of those things where it just catches up with you if you behave yourself like we know Roger did. Does that mean, in your opinion, Joe, does that mean jail time? Oh, yes. Oh, for sure. I mean,

Starting point is 01:02:54 this is fraud. And keep in mind, you know, unlike other portions, of the tax code, a tax fraud has no statute of limitations. You know, if you, if they can, and there's a reason for that, right? The reason why is because the burden for proving beyond a reasonable doubt that someone knowingly and intentionally sought to defraud the IRS on their taxes is high, right? Because a lot of people can just say, you know what? I forgot to include this, you know, extra Bitcoin. I got over here in this wallet.

Starting point is 01:03:22 I didn't remember it. I'm sorry. It was an accident. I pay taxes on everything else. But when they charge you with fraud, They really, more often than not, I'd say in almost every case I've ever seen, they have the goods, they have documents. They have it where it's, you know, I don't care what you say. There's no plausible explanation for why you may fail to report this income.

Starting point is 01:03:41 What kind of a prison sentence is he looking at if they have him dead to rights on this? Yeah, that's a good question. I didn't do that deep of a dive on it, but it's serious. I mean, I think like 10 years? I know it's over 10 years for sure at maximum sentence, yes. Man. That's wild. Because Roger, Roger was a convicted felon before, which was for selling dynamite through the mail, right? Or firecrackers or camera. It's eight, it's eight counts, you know, eight separate counts that the grand jury indicted him on. That's not good. It's not funny. I feel bad I said that. But, yeah, I do. I know what you meant. I shouldn't have said that. I shouldn't have said that. That was rude.

Starting point is 01:04:21 Listen, Roger pulled a lot of shenanigans that we didn't agree with and that. Yeah, that's where it's very, very consternating. Yeah, but it is hard to get mad at a guy who tried to keep his own money. And maybe it's not the smartest thing in the world to do it. Like morally, it's not like he killed somebody, you know. Yeah, yeah. Speaking of old things like that, Hot-all, are you still running Bitcoin X-T? No.

Starting point is 01:04:48 That's funny. I admitted that on stage, actually. I was kidding. I thought that was awesome when you admitted that. It was confusing times back then, Jeff. I was confused too. I was a, can I just say this?

Starting point is 01:04:59 I switched sides multiple times during the block side of the work because I just didn't know what was going on. I just didn't, you know? So I have a question for the three of you, and especially Preston, I love your take on this. And I'm not going to give you my opinion, but for variety of reasons.

Starting point is 01:05:14 There are folks that talk about Rogers case here, and they believe that there's no way he would have been prosecuted, especially this many years after the fact, had it not been for his association with Bitcoin and that this indictment is yet another arrow that's been shot from the government to try to say, don't mess around with us. We're coming for all you Bitcoin DGens that are, you know, playing fast and loose with the rules. I'm interested in each one of your thoughts on that, if that is true or if that's just a

Starting point is 01:05:45 coincidence that, you know, Rod, it, you know, go ahead. This has so much to do with a comment that you've done. made earlier in the show, Joe, where it's like if they have just hard evidence and they have a high profile from a marketing standpoint, have a very high profile person that everybody knows, that they know everybody's going to talk about on social media. That's a win for the government, right? Like that's the shot they want to fire is everybody's going to be talking about it. We have hard evidence. We don't even have to try because the evidence is so damning that it just makes a whole lot of sense for them. So, yeah, I think that that's, I think it was definitely in their playbook to

Starting point is 01:06:22 strategically go after him. Yeah. I had heard behind the scenes. I'm not sure if you heard this as well, Joe, that there were two other guys who, you know, got this same treatment, who had expatriated around the same time, who were both OG bitcoinsers, but they're basically anonymous. Like, you know, nobody knows who they are. You could probably like look it up, you know, but they're not high profile like Roger. I do think that like, yeah, I mean, one of the ways that, you know, I mean, one of the ways that just put it broadly like this, man. I mean, Bitcoin's going to be one of the most valuable things in the world. Governments are going to need it and want it. And if you've been cheating on your taxes, you just gave them a really easy hook to get some more from you.

Starting point is 01:07:01 You know, so be smart. Pay what's out. Render to Caesar, what's owed to Caesar, move nimbly, make a full faith effort, et cetera, because that's an easy, easy, easy maneuver they can use to extract wealth from you. Don't allow them to do that. And if you just DCA and you never sell, well, you don't have anything to worry about anyway. That's right. Hoddling has no taxable events. Just hang on to it and don't sell it like an idiot. Well, to that point, sorry, Jeff, did you have anything to say in that?

Starting point is 01:07:32 My only comment to if this is what you're getting at is based on anecdotal evidence, I firmly believe that if you are a public bitcoiner, that you are red flagged by the regulators. and just from anecdotal evidence, I can say I confirm that suspicion if that's what you're asking. It is. And it kind of dovetails pretty nicely into a tweet I saw from Brooke Mahler's, where she tweeted out, and I'll quote it on the 25th of April. When we were audited, the IRS Crypto Committee told our accountant that cold storage was a huge red flag. So to your point, Preston, you know, even hoddling Bitcoin. Even to me, it's kind of bizarre people don't have this in their mental models, but even just

Starting point is 01:08:17 hoddling Bitcoin in cold storage, and I don't mean this to scare anybody, I'm just saying, just know it's a reality, right? You're going to go into databases, I think, that are probably not databases you want to be in if they can tie that to you. So it's not, I don't mean to discourage anybody, right? I do this myself. Okay, I'll just say that. But I just think it's just reality, right?

Starting point is 01:08:35 Like there's an antagonistic approach to the asset and you have to be prepared for it. Now, at the same time, though, don't let something like that scare you into being like, well, I'm going to look at coins on an exchange because I don't know if everybody heard this interview, but my friend Jun Seth, who's a well-known Bitcoin OG, he caught one of these guys, these social engineering scammers on the phone yesterday and surreptitiously recorded the conversation. For 35 minutes, he got this guy to basically, he was a kid. He was like 18, 19. He was just spilling his guts about the way they socially engineer.

Starting point is 01:09:09 millions of dollars out of people every day. And on the phone call, he said that they had a $1.2 million withdrawal pending at Swan Bitcoin. They had socially engineered a Swan customer. I mean, I heard it. I reached out to Swan to the security department at Swan. They told me that their internal systems had already caught in flagged. But it lets you know that that's a real details. And it's a fascinating, if anybody wants to listen to it, it's very small claims on Twitter.

Starting point is 01:09:35 You can find the interview under his Twitter account. but man, it's so scary out there if you're leaving your coins on exchange because the way it works is they hack your Google, then they have access to your Google Authenticator because a lot of it is cloud synced, and then they can get into all of your crypto accounts. And they call you up and they scare you and they tell you fake stories and blah, blah, blah. So like what Joe said is true, but just don't let it scare you because it's not just the government that hates you and wants to steal your coins. There's a lot of enemies around the average Bitcoin. And if you're paying your taxes and your self-custiding, what are you worried about?

Starting point is 01:10:12 Right. You're not selling. It's a red flag, but it's legal. It's totally legal. Yeah. Correct. Yep. Correct.

Starting point is 01:10:19 Yeah. All right. We'll leave it there. Gents, this is always a pleasure. I really appreciate you guys making time to have these conversations. I find them very beneficial. I learn a ton every time we do this. Let's go around the horn.

Starting point is 01:10:33 We'll start with Hoddle. Give people a handoff. If you have anything you want to handoff. off. Go ahead. Totally. I think I swore too much. Preston asked me not to swear. I think I did I think I did a little too much. So I just want to apologize to Preston's editors. I'm sorry. And to the audience, the pleaps were they, that was me swearing. I'm sorry. I messed up. This was awesome. Preston. Love doing this. It's fun to have Hoddle on. I thought he did be good. I don't, I don't even take your swore. Just there at the end. Just there at the end. He was doing

Starting point is 01:11:00 great. So congratulations, man. That's good. Great conversation. Just be safe out there. I listened to that same John Seth interview, and it's very sobering. Highly recommend you listen to it. Basically, I thought the most important take-home point is, if you have Bitcoin on an exchange, get it off an exchange. Like right now, he's like, the kid, by the way, he's a high schooler, he said, so probably 16 or something. He said, if you have an exchange, it's super, super easy for us to steal it and to get it off the exchange. And he was just telling John Seth, yeah, you don't want to keep it on exchange. Get it on a, get it on in cold storage, keep it secure. never ever, ever, ever, ever give anyone your seed phrase.

Starting point is 01:11:40 That's just the dumbest thing you could possibly ever do. And this kid says every single day people give them their seed phrases and he steals their Bitcoin and their crypto. So don't do that. Be smart. We'll have a link to that in the show notes if people want to watch that or listen to that. Joe? Yeah.

Starting point is 01:11:55 So again, Joe Carlos Sari. If you Google my name, you'll find my law firm and you can reach out to me if you have a litigated matter. I have a ton of cases currently representing Bitcoin miners, commercial disputes. fraud cases. So I'd love to help you if I can. And if I can't, I can refer to you somebody that has expertise in that field and I do that all the time.

Starting point is 01:12:13 I'm also at Joe Carlisari on Twitter. And I'll just end with one thing. In these sort of sideways, trendy markets, okay, my one thing, if I can take away from this episode, it is so invaluable for you to continue to an approach of steady accumulation. Okay. I cannot emphasize this enough. I have so many people when the market was ripping, you know, in November, December, January, or this year, they were asking me about how much exposure they could get. They were asking me, you know,

Starting point is 01:12:42 when's a pullback coming? And then all of a sudden, the phones go silent and the text go silent. And hopefully if you're listening to this podcast, you're not one of those people. You're taking advantage of what I think are ridiculously cheap Bitcoin prices relative to all the issues globally we talked about today. And, you know, from my standpoint here, I think you're going to be looking back a few years from now. I don't know the time. I'll just tell you, I just think down the line, you're going to say, wow, I had months and months to accumulate in the 60s or $50,000 area of Bitcoin. What was I doing, not selling my chairs, so to speak?

Starting point is 01:13:13 Oh, Pierre, so good with all the memes and the memorable lines. All right, guys, we will have links to all of this in the show notes. Thanks again for making time. Of course. Thanks, Preston. Thanks, Preston. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use, just search for We Study Billionaires. The Bitcoin

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