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BINANCE RESIGNATIONS PRE-DOJ LAWSUIT | GEMINI SUES DCG #CryptoTownHall
Recorded: July 7, 2023 Duration: 1:15:31Space Recording
Short Summary
The crypto market is experiencing significant shifts, with Bitcoin showing strong growth and reaching a 52-week high. Solana and other altcoins are also performing well, although Bitcoin's dominance is increasing. Regulatory challenges are impacting major players like Binance, with key executive departures and ongoing investigations. Additionally, Gemini's lawsuit against DCG highlights legal and financial instability in the industry. The focus on institutional involvement, such as BlackRock's potential ETF approval, and the importance of secure crypto storage solutions are emerging trends.
Full Transcription
Hey guys, how are you? Can you hear me fine? John, Simon?
I can hear you, Marriott.
How are you, man?
Good, good. Another day in Crypto.
And how concerned are you from what you're seeing?
With the executives leaving?
Yeah.
Expect it or just shows that it could be worse than many people made it out to be?
So if we're trying to give a parallel,
obviously if you want to go to the worst case scenario, then everyone would have
really bad memories of what happened with FTX prior to the ship falling.
But if you want to have a more happy ending, then compare it to Bitmex.
So BitMex was, you know, a bunch of executives had to leave.
The CEO had to leave.
They had DOJ, SEC, CFTC, money laundering,
issues and then it looked like Arthur Hayes was going to be criminally prosecuted
and then they ended up settling and turning Bitmex into a very different business
the adults kind of took over the the crypto OGs left and and then they
relaunched through a different segment and made sure that they're a hundred percent
out of the US market I'll go with a happy ending man
I'll definitely opt for that one.
We're going to make the comparisons later.
It sees everyone is making the FDX comparison.
I'm glad you brought up the Bitmex comparison.
Let me just pin the tweets above and kick it off.
For the record, RAN is on a plane.
and Scott is, I don't know where Scott is,
but he's not going to be with us.
He might hop in here and there,
and they'll both be back Monday.
So it's a lucky day for everyone listening.
It's going to be a pretty good show.
Rand can't hear us.
There you go.
I don't know if it's Ran from a plane sending waves.
Rand, if this is you in a plane sending waves,
because I know you can't speak,
put a thumbs up if it's you.
No, it's not.
Someone using Rand's account.
All right, John, I'm just going to send you through an invite.
I think it's really important to have you in this stage today
because we're going to be digging into By now.
So I'm going to send you an invite again via DM.
Do you do that now?
And that's John Reed Stark.
Just sent it out.
All right, Gareth, how are you?
I'm doing wonderfully well. How are you doing?
Generally, Scott gives us a market overview, but today's a lucky day.
We have you to give us a just a quick update.
Maybe actually do a deeper dive into the market.
We didn't give a deep dive into the market yet this week.
How is everything looking if you do an equities update, but more and then focus more on crypto.
Over today and over the last few days.
Yeah, absolutely.
Yeah, so we saw the non-farm payrolls number come out. It came out a little bit less than expected. Yesterday, we had the private sector numbers come out amazingly strong. And we did see the market selling off a little bit yesterday on the back of that because it increases the likelihood the Fed will have to hike rates more and more and more to try to cool the labor market down. Today, with a slightly less...
impressive jobs report, it looks like maybe the labor market is finally weakening and maybe the Fed
won't have to hike quite as much. So that's kind of the macro overview. Next week, we have some
really, really important economic data, the CPI data next week, I believe. So that will be something to
watch.
In regards to the equity markets, they are...
Gary, just on a macro perspective, one thing we were discussing yesterday,
and let me know if you agree that macro does not always matter.
It does not always matter the same way.
So right now, people are caring less about macro,
and the market is reacting more to, obviously, AI is what's driving the bull run in the equities market.
And then in crypto, everyone's watching BlackRock.
Is that a fair statement that right now macro matters less than it did a few weeks or months back?
Yeah, so the way it works is usually investors are momentum driven, right?
So they're emotionally driven.
So you're right, the hype where every, you know, every player is talking about this AI
craze and how it's going to revolutionize thing.
So it really gets the investors excited and they see like, oh my gosh, I got to get in on this
space because it's the newest, greatest thing.
So yes, that is true that sometimes macro doesn't matter as much.
But I will say that we are coming to this pivot point where...
The Fed, again, this data, I mean, if we see the jobs number weakening today more and more in the coming months,
you are now talking recession again.
And so you're seeing this kind of sway back and forth where it was, hey, is this going to be a perfect landing?
We're still kind of in that potential camp.
Or if we start to see jobs weakening more and more, then the economic data starts to matter more and more because that means earnings are going to suffer if we go into that recession.
Yeah, and I've got some quick notes here from the F-1C minutes from yesterday.
We didn't talk about it yesterday.
I'm going to went too deep down the Larry Fink.
rabbit hole with his interview on Fox.
But the Fed staff predict a mild recession
likely to start later this year.
There's little evidence of inflation heading to 2%.
No rate cuts in 2023.
In fact, no rate cuts until mid next year.
Almost all officials noted that additional rate increases will be appropriate in 2023.
Some officials favorite 25 basis point increase at the June meeting.
So it's just a quick update from the minutes, but I didn't see much in terms of market reaction.
Let's dig into crypto, Gareth, maybe quick equities and then get into crypto.
Yeah, so equities right now, it looks like markets initially pre-jobs number, they were down slightly, then they rallied up on the jobs number.
We are starting to down-tick a little, and this would be my one fear is that overall we've been riding this wave of perfect landing.
Now that we're starting to see a little weakness in the jobs numbers, I do wonder if the market starts rolling a little bit lower.
We've had such an amazing move in equities.
So I do just...
urge caution out there is that the market has priced in no recession at this point.
If it starts to come back on the table, that would be a reason for profit-taking inequities.
Looking at crypto, crypto amazing.
Yesterday, we saw that pop early above $31,000 on Bitcoin.
That's been the level I've been talking about.
There's a level at $31,000 that Bitcoin has struggled and struggled to get above.
Yesterday it retested it and then it closed at the lows of the day.
Today you're getting a little bounce, but again, I'm watching the 31,000 level to the 30,000 level.
If we close below 30, that's a warning sign.
If we can close above 31, we should have a leg to about 35,000.
And then looking at else as well, Gareth, anything interesting?
Yeah, I mean, I think the biggest thing for me is, I mean, the strength in Solana has been impressive lately.
Again, today having a very good day at 8%, I think.
So again, on a daily basis, that chart continues to look very, very strong.
The other alt themselves, you know, we have Ethereum here.
Let me just bring that up on my charts.
Okay.
You know, Ethereum's bouncing back, but it's still kind of stuck in this in this kind of sideways choppy fest.
But right now, again, there are certain alts that are having strength overall.
It continues to look to be a very risky play to be an alts due to, you know, what the Fed is doing to the all-coin market in terms of quality.
But you don't think the Fed actions are already priced in.
You know, we saw Alt stout.
I think it's like 24, 48 hours after the finance lawsuit.
So my guess is there's going to be more shoes to drop. So I think that for the most part, that Bitcoin dominance is going to increase, which which either tells us that Bitcoin's going to fall a little and Alts are going to fall a lot or Bitcoin's going to go up and Alts will just go up less. But to me, still that Bitcoin dominance breakout a
above 549%. Now I think we're at 51, 52%. That has upside on the charts until about 57 to 58%. So there's still more room to run. It may take months to get there, but I do think Bitcoin dominance continues, which means ALTS will underperform Bitcoin.
And then last question for you, Gareth, before we go to the panel, and today's going to be pretty...
A pretty polarizing discussion, because we're going to dig deep into Binance and what it means for crypto.
But, Gareth, the question for you is BlackRock and Binance, either of those priced in if we get an ETF approved.
And if Binance, people are speculating DOG action, we pretty much know it's almost for certain now.
Has that been priced in yet?
Yeah, I think for the Black Rock news in terms of an ETF getting approved, approval will bring new money in. So I don't think it's fully priced in yet. I think people are assuming it's going to be, but with this little hesitation because the crypto markets have been hammered so much by regulatory issues and by rejection. I mean, it's like someone getting...
trying to ask a girl on a date a million times. She keeps on saying no, and you're hoping this
time. And it's like that same feeling here. So I do think that an approval would be a nice leg up in
Bitcoin, absolutely. In terms of Binance, my big concern is, again, I read about some of the top people
at Binance leaving. That's a little bit of a concern to me. I don't know if there's more shoes to drop
there. But I do want to hear from the SEC in terms of
what these allegations are.
I want to see proof.
I want to see more information.
And I do think that investors need to be cautious until we see more information.
Yeah, we had James Safe Art come on yesterday and he gave us a, you know, he was like 55, I think he's about 55%.
I likely that the ETF will get approved,
which in other words are saying 50-50,
so he's hedging his bets.
So I'm not, you know,
it's difficult to price in something that everyone disagrees on.
L&O, before we get into Binance,
I wanted to get your thoughts as well.
We tried to get you yesterday.
On the interview with Larry Fink yesterday,
that was, you know,
from one extremely bullish day to today,
a bearish day when it comes to the news.
And we all found it to be pretty bullish.
We had maybe one speaker on stage that was kind of, you know,
you know, iffy. Where do you stand on this, Eleanor?
Yeah, yeah, for sure. I mean, I think we saw, I'm pretty sure it was yesterday morning, right,
that we saw Bitcoin hit, I think a 52 week high, came off it, you know, kind of later in the day.
But I think Larry's comments were, it was crazy. I was talking to Charlie this morning about it.
Like, really was kind of fuel to the fire. And, you know, we see he did a total 180 kind of from his comments back in 2017,
2018. He's really kind of behind the whole...
crypto thing now. It's not even just Bitcoin. He said crypto as a whole. I know we mentioned
Bitcoin is kind of the international asset, but he seemed really bullish on crypto. And, you know,
I think, you know, I said this on the spaces yesterday. I think when the, you know, the CEO of the
biggest international, or not national, well, biggest asset manager, I think it's the biggest
international as well as American, you know, $9 trillion under management.
When he goes bullish on Bitcoin and crypto, that's a really good sign.
So, I mean, I think it's going to continue to kind of have that bullish feel.
With the Binance news, you know, I think we'll get into that in a little bit.
It's interesting.
You know, I'm pretty positive.
Cool.
Appreciate the update.
Well, can I dig into Binance now.
Let me see if I can get Wizard to come on.
Just give us a very quick two-minute update on the NFT market as well.
Wizard, I've just sent you an invite before we move into Binance.
If you want to give us a quick update.
Okay.
So just accept the update.
Otherwise, oh, there he is, perfect.
Wizard, can you hear me?
Mr. Soho, can you hear me, man?
Wizard.
Wizard, you got on mute, bro.
Perfect.
How are you, man?
Yeah, good, good.
Appreciate it coming in last minute.
Listen, man, we're doing a market update,
so I want to get your quick overview on the NFT market.
We touched on it yesterday.
It took a pretty big dump in the last few days.
How is it looking and how's the sentiment like?
Sure, yeah. So, NFT market specifically, you know, we had a big liquidity event with Azuki doing their secondary mint. And then obviously there was a lot of fun issues with, you know, some of that execution. So regardless, it was a $40 million mint.
Yeah.
which resulted in, you know, obviously a pretty significant amount of liquidity leaving the market.
This is in addition overall, you know, after other side had their $250 million mint, like almost a year ago,
and then $170 million burnt in gas.
again due to pure execution.
So you just had this back-to-back
bare market mince that have just extracted so much liquidity
that any time you have any large mint like this,
you know, you just see people, you know,
because it's a limited set at the moment,
so you see a lot of people selling other NFTA
to kind of, you know, mint new things, you know, like shiny new things, right?
That's market psychology in general in crypto or anywhere else.
And then looking and then looking and then was it looking at crypto as well.
Gareth was telling us he's watching the 30K and 31K marks.
If we close below 30K, Gareth, correct me if I'm wrong, if we close below 30K,
it's a red flag.
If we close above 31K, I think it was, that's a really positive sign.
Your thoughts on the market and what to expect over the next few days and weeks?
Yeah.
Sure.
So a majority of the market today being driven is, you know, payrolls number we had, obviously.
It was mostly mixed because you had the headline number that came in lower.
You had revisions that came in lower so that, you know,
is good for the Fed, but then average hourly earnings was higher.
So you're seeing July getting priced in.
But for crypto specifically, I think, you know, the bigger is all this ETF, you know, stuff going on.
In terms of technical analysis, I think I'm a buyer.
You know, I think the last time I came on, I said, listen, 30K has been pretty strong.
I'm buyer all the way down to 28, 200.
If it breaks below that, I think we could retest, you know, like 25K again.
But I think the probability of that in the short term is kind of low.
I think we see a push towards 32K again.
You know, obviously that's a big resistance level.
So if you break that, you know, you got 35, 38 on the horizon.
But if we kind of get that triple top of...
32k again, I don't see why we don't touch the 28-ish again.
So I'm a buyer there.
I'm not a big red flag if it goes below 30K.
I think anything below 30k is a buy.
It's more if you break below 28-200 with a lot of strength and volume.
That's a bigger concern.
I don't see that right now, like unless something, you know, a major happens.
But yeah, net net, I'm, you know, bullish on BTC.
and kind of small bullish on the interior, but yeah, I'm sitting long and strong right now.
Cool, appreciate it.
All right, guys, so I'm going to dig into the topic for today, which I think is one that,
I remember in the early day Simon, not sure if you remember, and Andrew was there too when we did those spaces.
We were very critical of FTX, we were critical of crypto.com and a whole bunch of exchanges and players in this space, even DCG.
Andrew, you came on the space, the infamous space now.
We started, you know, leaking some things on DCG and then it started getting public a few hours afterwards, the 24 hours.
following the space and we got a lot of a lot of hate for it but we always hesitated whenever we
talked about binance and we got a lot of pushback well now bin ass is the focus of the discussion
and back in march the cfTC alleges so so we saw cfTC su binance they allege that
binas failed to register with the cfTC as a futures commission merchant or as a designated contract
market
And then we saw them also sued Binance for failing to implement and enforce adequate risk management controls.
They also failed to maintain or allegedly failed to maintain adequate records of its trading activities and apparently Binance engaged in false and misleading statements about its compliance with U.S. law.
And then in June, so about a couple of months afterwards,
charges, so Bynas, the SEC sued Bynas and charges included
operating unregistered exchanges, same as Coinbase,
broker dealers, again, same as Coinbase,
and clearing agencies, but that's where I guess concerning,
misrepresenting trading controls and oversight
on the Bynas US platform and the unregistered offer
and sale of securities.
I think there were more charges
that don't have them listed here.
And then first, John, did I miss anything before we get into today's news?
John Reed Stark or David?
Oh, sorry.
No, I got it.
You know, I think if you're looking back at finance and everything, you also want to focus on the fact that it's been very public that there have been a DOJ investigation with lots and lots of different reports.
And the interesting thing is that...
The first time I've ever seen this done, and in my almost 20 years at the SEC Enforcement Division,
I never did this in a complaint.
They actually made reference.
The SEC staff actually made reference in their TRO to the criminal investigation that DOJ was conducting.
And then they footnoted it to, they said there are public reports of a criminal investigation.
So normally there's a lot of speculation of the nature.
and the size of a criminal investigation.
And I think that all still remains because, you know, you have informants, you have whistleblowers,
you have grand juries, you have search warrants, you have international cooperation.
You really can't guess the scope of it, even if you're a target of it, you don't know.
But in this case, what I do see are a lot of unusual signals.
And I think also you have the CFTC focusing on more of,
the futures, derivatives, aspects of the violations pertaining to finance,
then you have the SEC focusing more on the securities violations and the registration violations.
And even though the CFTC mentioned the AML a lot, the money laundering problems and sanctions evasion,
the use of the exchange for those things,
It's interesting that the SEC did not mention that much at all.
Whenever I brought cases like that, if there was even a hint of problems with money laundering, I would put that into an internal controls charge.
But that seems to have been carved out in that they're not focusing on it all.
So not only do they mention the criminal investigation, which is...
is something every SEC enforcement lawyer is sworn never to comment on and could not only lose their law license, their job.
But so you do have a lot of that.
And then there's what's going on in Europe, right?
With Paris and Australia, there's all kinds of it seems like the company is under siege before you get into the value.
Yeah, I'm going to write down what's happening in France and Australia.
All right.
So I'm going to ask you that question in a bit.
All right, so I've got the, took note there, I've got the notes on the Fortune article that came out yesterday.
It is a pretty damning article.
And I'll read out a few points that I've written down.
So Binass is facing internal disruption due to ongoing regulatory investigations globally.
And the question I have for you, David, John and others, is what that mean, you know, what could happen to Binance?
Is it common for...
for executives to resign when there is a criminal investigation,
especially since we've known, or at least insiders have known about it for a while.
I'll read out who resigned.
So apparently, CZ's approach to these investigations has led to the resignation of the following executives.
General counsel, Han, chief strategy officer, Hillman, who we've talked about a lot in the space,
SVPO for compliance, Christie, all left the company.
And then we also saw the exit of Matthew Price.
He's the ex-I-R-S agent who was in charge of global investigations and intelligence.
I can't remember exactly when you resign.
And then Fortune says these departures present a management risk, a management crisis for Binance amidst considerable regulatory pressure.
And then it says the executives reportedly left over CZ's handling of the investigation, the DOJ investigation, into allegations of regulatory evasion and money laundering.
Rumors suggest CZ may step down.
We've talked about this before.
But CZ has not given any indication that he'll be stepping down.
And lastly, he says in addition to the DOJ's investigation,
Binance faces regulatory lawsuits from the SEC and the CFTC,
which we've just talked about as well.
The first question I have, it's an obvious question.
A lot of people are debating on Twitter.
David, I'll go to you first.
How common is it to see resignations like this?
Like, I don't want to get into the debate.
Did they resign because of the investigation or not?
Are there other reasons they're resigning?
I think it's a silly debate.
You know, they all just met in Dubai.
I think it was a few days ago.
They all came for a meeting here in Dubai.
We were talking about that.
And then right after the meeting, we see a bunch of them resign, and Adam Cochran's was saying that these are only the public ones.
There's others that resigned that, you know, they're not public about it.
So I want to get your thoughts, David.
Are we looking too deep into this?
So I just want to jump in here and talk about Adam Cochran for that.
He is killing it right now.
I mean, I know Roberts is on this call, the article that precipitated this.
I mean, this is, is it common?
It's absolutely common.
You know, the rats are jumping off the ship.
Everybody knows this is coming down the pike.
But this is incredibly common.
We see this all the time.
The high paid mercenaries who financed hired, who are all U.S. citizens...
who all were doing this to give Binance the veneer of legitimacy
are all jumping ship this week.
And they're all jumping ship just like professional athletes
to go spend more time with their families.
David, you just cut out.
Oh, you're back.
Sorry, my phone.
Nobody believes that these people are jumping ship
to spend more time with their families.
I think Steve Christie also said he sat and the Zemphic wasn't on the finance insurance plan.
I mean, I can't make enough jokes about this, but it's incredibly sad because for the last two or three years,
when people talked about how finance was going to survive going from what some people call,
and I don't, a criminal enterprise, into legitimacy, what they're saying for the legitimacy,
we're all of these hires.
the IRS hires, the compliance hires, and all being U.S. people.
So, yeah, we're watching the rats jump off the ship right now
because you can't pay someone enough money for them to be part of something going to jail.
Yeah, so I'll read out what the, and before we go to Simon and John,
I'll read out what Patrick Hillman and Christy said.
So they tweeted all this publicly, pretty supportive.
So Patrick Hillman says the following.
Apologies for any typos, you know, weird for him to say that.
Maybe it was rushed. I don't know.
but I was not expecting to be tweeting about this today.
I don't know why you're not expecting to tweet about this,
but that's the news of the entire ecosystem.
It's true that I'm leaving Binance,
but I'm doing so on good terms.
I continue to respect and support CZ,
and I'm grateful for having had the incredible opportunity
to work under his leadership.
I've been here for two years,
and it's simply time for me to move on
and to head to the next challenge.
I've taken this company through a lifetime
of industry crises and regulatory challenges,
from Luna to three hours capital to FTX.
Despite all of these challenges, the company has continued to grow and thrive.
My wife is literally going to give birth to our second child any hour now, literally.
So the time is right for me to step aside.
I'll continue to cheer on my colleagues at Binance and support this industry as it matures and evolves.
blockchain and crypto is here to stay and I'm excited to watch it explode in the years ahead
and now read out Christine a bit Chris he's a bit longer and so I'll get some thoughts on what we've seen
remember guys that we're not talking about 20 employees leaving at least executives there's only three of them
and Bynas has I don't know how many employees I'll check that in a bit so John and I'll go to Simon right after
Your thoughts, do you agree with David that this is very common and concerning nonetheless?
Oh, yeah. No, I agree with him. I think it's certainly common in spaces like this.
When they're, you know, Judge Spork, one of the early directors of the Division of Enforcement, used to say,
if you lie down with dogs, you wake up with fleas.
And I always told my students that. When you look for a job, if you get entangled into these entities, it's hard to
to get yourself out of it because you can get sued by the SEC,
investigated by the SEC, the DOJ, class actions.
You know, you get involved with these people and you can have lots and lots of problems.
But why would they, but John, why would they quit, though?
Like, they're not being investigated on a personal level.
Is it just a pressure or a reputation or what exactly?
That's the flip side to what I agree with David,
but I also think that, um,
When it comes to these resignations, if you're a company, you want to do everything you can to avoid them.
Because when I was investigating at the SEC, one of my favorite things to do was to subpoena former employees.
And why was that one of my favorite things to do?
Because ethically, if you work for a company, you're presumed to be represented by that company.
So if you're an enforcement lawyer at the SEC, and this is a matter of state law, so it varies a little bit.
But generally, if somebody works for the company and, you know, Wilmer Hale is representing the company or the general counsel is presumed to be your lawyer, you're bypassing an attorney client relationship.
But when the person is a former employer, I can do whatever I want and the company will never know unless the person tells them.
So it opens up an incredible area of inquiry for criminal prosecutors.
It's not that they couldn't investigate these people anyway,
and they couldn't subpoena their testimony in front of a grand jury or otherwise,
but now they can do so without the company knowing.
So typically a company will try to keep those people on because otherwise you're letting them out there.
Could they also end up becoming whistleblowers as well, John?
Oh, absolutely. Well, that's what I was going to say.
So in this kind of situation, especially the lawyers, and I wrote this very early on with FTX,
On the first day, I was like there are going to be a dozen whistleblowers running to criminal
because the idea of running to the criminal prosecutors, and David does this very well,
the first person who gets there is the one who gets the deal.
And I've done these.
I've worked a lot of parallel criminal cases and they can line up outside the door and you can
say, hey, you can cooperate and tell me what's going on and maybe I'll cut you a deal or you can just
be silent, there's 10 people waiting outside the door.
So those are things to think about also.
What's also, what are things to watch, Mario, is...
Two things I would watch for.
You know, first of all, it's the fact that these law enforcement people are the first people to leave is always interesting because they can smell when things are bad and they just get like get the flock out of there.
That's number one.
Number two, you know, when it comes to these types of situations, I put in the comment section the communications I had with Patrick Hillman.
And he was really a very interesting guy in the sense that he was so belligerent with me and it threw so many ad hominums at me.
You know, I've dealt with professional communications people most of my professional life and I never...
If you take a look at that exchange that we had, I think you'll find it pretty incredible that somebody would be that rude and that obnoxious.
And, you know, whenever anyone resorts to name calling, you know how that goes.
Once they're name calling, it means they've lost the debate.
So it's, and you just kind of smile and walk away, you know, but the two things I would look for next is Wilmer Hale is representing Binance and the lead lawyer on it is Bill McLucas, who is sort of the, the dean of the defense bar, the dean of the SEC enforcement defense bar. And the reason he is that.
is because he was the longest serving enforcement director at the SEC,
I think definitely in SEC history, and he's legendary,
and he's a completely no-nonsense guy.
He's probably like 75 or so years old.
He's a very, very tough guy.
John, let me...
Let me just, I'm going to read us this quick breaking news that just came out and then I'll go to Simon and Andrew.
So Gemini just filed, let me just confirm this is correct.
Yes, Gemini just filed a lawsuit against DCG and Barry Silbert.
That was expected, but there's a thread.
I've just pinned it above, I think yes.
If I can see it above, and for our lawyers, John Dieton, everyone else, you can check out the thread above and we can discuss that as well.
I know it wasn't on the agenda.
Okay.
But I'll read out the thread just came out now by Cameron Winklevoss.
Today, Gemini filed a lawsuit against DCG and Barry Silbert personally in New York court.
Barry was not only the architect and mastermind of the DCG and Genesis fraud against creditors.
He was directly and personally involved in perpetrating it.
The complaint, so I'm mute everyone, the complaint tells the whole story.
But let's start here.
When Gemini notified Genesis, it would be terminating the Earned program in October 2022.
Barry reached out to set up a meeting to introduce Gemini to continue Earn.
He did this, knowing Genesis was massively insolvent.
Barry claimed that Genesis faced only a timing issue, a lie that hid the gaping hall on Genesis' balance sheet.
When three hours capital collapsed in June 2022, it blew a $1.2 billion hole in Genesis balance sheet.
Instead of coming clean, Genesis claimed that everything was business as usual because DCG had stepped in to absorb the losses.
It's now clear this was a carefully crafted lie.
DCG didn't absorb any losses or provide real capital.
Behind the scenes, DCG wrote Genesis a sham 10-year promissory note with a measly 1% interest rate worth just a fraction of its $1.1 billion face amount.
Genesis was wildly insolvent.
Barry, DCG and Genesis all conspired to create false financial reports to hide the truth from Gemini and creditors.
One report pretended that this phony 10-year promissory note was a current asset, a total lie and complete misrepresentation.
got almost on more than 70% of the way.
A falsified balance sheet pretended that the note was receivable
with a value of $1.1 billion.
Another lie.
Genesis loan duration figures just pretended the promissory node didn't exist
because that was the only way to hide it.
They literally didn't include it in the calculations.
Yet another lie, and there's evidence under every tweet
or at least screenshots from the lawsuit.
This fraud goes to the very top.
Barry Silber and other DCG executives were directly involved in these lies,
and they lied again and again to conceal the truth from Gemini.
Merck, who's at Murph, Mark, the DCG then COO and current president was copied when Genesis disseminated its fake financial reports.
He knew that the reports lied about DCG's financial support for Genesis.
Didn't he bother to correct them? No.
Mark Murphy directly lied when he told the creditor that DCG had absorbed the three arrows capital losses.
12, the whole promissory note scheme shows that Barry and DCG were in on the fraud.
Its design and execution requires full participation and cooperation from Barry, DCG and Genesis
and only works if it's hidden from creditors.
Pretty much done last two points.
DCG and Barry personally.
And very personally are direct participants in the fraud that has damaged Gemini and hundreds of thousands of earned users.
This complaint is an important step in holding them accountable for what they've done.
And there's more. You can find the full complaint here.
We'll look forward to your day in court.
So that was just tweeted by Cameron Winklevoss eight minutes ago and I've pinned it above.
I'd love to get your thoughts, Andrew and Simon to kick it off.
We and we're going to get back to Binance.
We've been talking about DCG for a long time now.
I think we're one of the first two, you know, very openly and publicly on a large stage,
criticize their financials.
And it seems what we said was a worst case scenario back then.
is materialized and we talked about it exactly it's materialized and we said that this is going to kill
crypto kind of we were being a bit emotional back then some of us said that but it seems to have passed
gradually over a period of time people kind of you know became immune to it I want to get your
thoughts Andrew and everyone in the audience I'm going to go through your comments the bottom right
corner in that purple circle just get your thoughts everyone your initial reaction on what I just read
Yeah, so Cameron and Tyler have known that DCG and Genesis, you know, kind of collectively have been in, and I'm going to try and keep the hyperbole limited, but have been in really, really, really bad shape since the summer of 2022.
As he states in that thread, you know, they...
attempted to have conversations with Genesis and then by extension DCG.
And as he states in that thread, you know,
buried directly.
And when you're told something by, you know, a partner,
And then you're shown documentation knowing that if that documentation is fraudulent,
that that person is committing fraud, you don't think to yourself,
oh, this person is openly committing fraud, you know, right to my face.
And that has been at the foundation of the, you know, the UCC.
Obviously, the Cameron and Tyler and Gemini being the largest creditor in this whole process.
Um, from the very beginning. So let's call it October and November when, when all of this started to break. The, the commentary and the messages that I would get is if Barry doesn't play ball, he's going to have really serious problems connected with fraud.
And so that fraud word kept coming up as a whisper saying, there's, there's fraud stuff here.
Don't say anything. Don't, don't, don't, don't directly, you know, tweet it. Don't just be careful with this.
But I'm telling you, there's fraud here. And so as those whispers became conversations amongst larger and larger creditors, that fraud was associated with.
they were circulating a balance sheet and documentation associated with
We're, you know, we're in a good spot.
We're not only are we not insolvent, but we've got everything handled.
And the reason why you should take our word for it, here look at this documentation, and you should re-up on your commitments to your loans, to Genesis and to your putting more money into Genesis as a firm.
So, yeah.
folks that are smart and have, you know, millions of dollars associated with what Genesis was doing from a loan standpoint.
You know, they got a whiff of stuff when things began to hit with FTX.
You know, it's called summer of 2022.
and then assets began to drift lower, right?
So people that have millions of dollars associated with that,
you know, loans associated with those types of assets
are like, wait a minute, I'm just gonna go get my money.
This is the biggest organization,
DCG is the biggest organization in crypto,
should be no problem, right?
Well, the problem started with, okay, yeah, sure, you know, you can do that, pull it out.
But, you know what, put it back in because look how strong we are.
We're going to be the winners when it all shakes out.
So look at this documentation.
Look at these spreadsheets.
We're fine, right?
So the fraud begins with...
don't worry about your money. We're going to send you documentation that shows you that you should
keep your money committed or recommit that capital or add more capital to your position here at Genesis.
And those conversations at some of the highest levels were being had by Barry specifically, right?
So out the door goes,
oh, these are separate companies that we have nothing to do with, you know, Barry penned that long letter saying these are individual companies.
I don't know anything about this. I don't know anything about that. That's not true.
So we're at a point now where you have an organization like Gemini, Cameron and Tyler,
Paul.
publicly and openly, and then taking legal action associated with.
There is fraud.
Look where we're at.
Simon, I remember me, you and Andrew were on stage,
and we're having these discussions,
Bynast Bailey mentioned,
and Andrew was talking about potential fraud back then,
and, you know, I was getting a lot of criticism for even having Andrew on stage,
and I think, I don't know if Barry blocked me,
but a couple of other notable people started blocking me.
And obviously what we're seeing now, Simon, is becoming the norm and the market is not even reacting.
But when I get your thoughts, Simon, on that lawsuit and then slowly shifting it back to Bynas,
because I know you put your hand up back when we're talking about Bynas, Simon.
And Andrew, later on I'll get your thoughts on Bynes because I know you've been critical for a while, Simon.
Sure.
Sure.
Okay, yeah, lots of grounds.
Man, like at the same time, at the same time,
we're talking about the likely criminal investigation into Binance.
While we're talking about this,
Gem and I Sue's DCG about exactly what we're talking about a few months ago.
Yeah, if you remember, Mario, I came on and you asked me,
and I was sharing some stats about the size of it and the contagion.
And I said that before we can enter back into a ball market,
we've got three fundamental issues to understand what the outcome is.
And we said, finance, digital currency group and tether.
So it seems to have played out in that type of.
I still have...
We still have...
So, Simon, just to be clear, like, out of these three, so just for the audience,
I remember asking Simon, how big is DCG to kind of put things into perspective?
Like, Mario, this is big.
We're talking back during the FTX spaces.
And we talk...
He's like, Mario, this is fucking big.
And there's only three big players now post-FTX, and the three biggest players, many other big players,
are DCG...
tether and binance. And today we're talking about Binass's future being, is it in jeopardy on the
the SEC action, the lawsuit by the SEC FTC and possible DOJ lawsuit as well. And the one we
haven't talked about yet seems to be tether. Is that the last one standing, Simon?
Well, let's not go down that rabbit hole, but stable coin regulations is first on the US list.
So that will be the first one, you know, to really adjust to what is the regulatory environment saying.
And there are some interesting things happening behind the scenes with stable coin.
But I don't want to go down that rabbit hole.
We'll get back to the Gemini side.
So I think...
Andrew did a great job of explaining the background and the fraud.
What I think is an interesting angle for people to understand is the strategic side.
And I can try and tie that together to Binance as well.
So obviously the fraud, correct me if I'm wrong, Andrew, was I believe that they represented the 10-year promise re-note as a current asset, which falls due within one year, rather than putting it as a fixed asset, and then marked it to market to hide their insolvency.
And I think that's like the roots of how they try to hide the financial position.
And then this is all coming to light from that perspective.
What I think is really interesting is if you look at the settlement that the Winkle Voss twins or Cameron tweeted,
it actually came down to a game of playing the Bitcoin cycle.
because if you look at the details,
Cameron actually wanted to denominate the debt in Bitcoin.
And Barry obviously wanted to use the Chapter 11 process
in order to dollarize the claim at the bottom of the market.
So feasibly, that dollarized claim in Chapter 11 can be repaid,
but Cameron wanted to do it in Bitcoin.
So if you have a Bitcoin debt...
that increases over that period of time,
Barry Silver is clearly playing the time game
in order to try and be bailed out by the halving cycle.
And the Winklevosts don't want that.
They won the debt denominated.
So that's really the strategy.
And so why haven't they got to the settlement?
It's because Barry was waiting for the market to recover.
The Bitcoin to be worth more.
The biggest problem is something like all these big players are just betting on the market to save them.
And that's kind of what got, you know, got FTCS in trouble, got the others as well.
Is it FGX dependent?
Three hours capo?
We had, we had,
not Sue,
we had Kyle Davies on stage a few days ago.
And he was talking about,
you know,
making bets that we'll see a recovery,
we'll see a bounce back,
and that bet is what kind of,
triggered. But just real quickly, Simon is right about the beginning of the fraud being the
games being played with a promissory note and in that promissory note being hidden from
from large large creditors. And my guess is, is from a legal standpoint, you know,
that will be the largest piece associated with fraud. But
Point being is, is in a protracted, you know, legal process.
It'll be interesting.
And I've had information sent to me again over, over months associated with
And I've seen screenshots where downstream employees are reaching out to creditors and have been told to give information associated with this safety and reliability of...
balance sheets of promissory notes and bringing more capital in based on that lie.
So it's it the fraud starts there to some extent, but then it was, you know, it was throughout the entire organization down to, you know, sales folks. So it's, you know, it's, it's, uh, and I've seen documentation of it. So it's not like.
You know, these guys are just making allegations hoping that it will, you know, bolster their bargaining chips at the bargaining table.
This is not that.
Yeah, it's just, you know, this is getting serious.
I want to go back, some, before you respond, I do want to go back to the core focus of the space.
And that's the worries around Bynas.
And later we'll talk about what would happen to the markets of Bynas.
you know, does fall or they don't survive
the action they're facing.
We don't know what the DOJ investigation,
what it involves,
DOJ hasn't announced anything publicly,
so everything is speculation.
And Adam, again, we're gonna refer to Adam a few times,
been going, he's been going crazy with his tweets.
But he's been critical.
He said, one thing he says,
FYI, the three executives confirmed leaving,
and I want to go to John Deaton's thoughts on this.
The three executives confirmed leaving bynes
are just the ones confirmed publicly.
Every indication I heard is that over the past few days
suggests that the number is higher
and will climb as we get more confirmations.
I'd guess eight to 12 seniors and leads over the next few weeks plus other mids.
So that was by Adam, I think it was yesterday, and then he talks about this being part of a meeting, the emergency meeting they had in Dubai.
And he says, based on the DOJ investigation, senior executives in compliance and legal quit means the DOJ investigations exists and filings forthcoming and your lawyers and compliance officers only resign if you're really fucked up.
John, I want to get your thoughts, especially the last statement that I just read.
Your lawyers and compliance officers only resign if you're really fucked up.
Because based on John reads comments earlier, that this isn't too surprising.
This should be expected.
Okay.
Yeah, listen, I think you see people, they see a sinking ship and they start jumping.
Now, I'd be what much, it'd be a much bigger deal if Noah Perlman had resigned, who is the chief compliance offer.
Exactly.
former U.S. attorney, former global head of financial crimes from Morgan Stanley.
And I'll read John before, and I'll read out.
No, I did not just for the audience.
I was going to read his tweet.
I'll do it now.
I'll let you continue.
John.
He says, I'm getting a lot of calls from media asking if I'm leaving finance.
The answer is unequivocally no.
Not easy not leaving.
He's very public about it.
He says, I'm proud to be part of this incredible organization as we navigate the growing pain
of the crypto industry.
So, Johnny, I'd love to get your comments on this.
Yeah, and so on one side, you've got wild speculation saying that these people have flipped and they've been given immunity and they're going to be witnesses for the DOJ.
And then the other side, you got CZ saying, look, this is normal turnover.
And I believe the truth is in the middle, you know, because I wouldn't call it normal turnover.
The one guy said, you know, I've been here two years.
Two years isn't that long.
Now, it's been a long two years considering everything that's happened.
And you got the other guy saying, you know, my wife wants me to wash dishes more.
Now, maybe I minimize that.
I should say I am a divorced man.
So maybe I should pay more attention to those kind of requests.
But the truth in the middle, I think that the people that said this is normal, it's normal, uh,
in the sense that a DOJ criminal indictment is probably coming,
and people are either going to, you know,
bite down on their mouthguard and join in and commit to the fight
or they're going to tap out because they just don't want any more stress
or they don't want to be linked with certain allegations
that are going to be alleged in the complaint.
And so, but if we saw Noah, then I would say, now that's a big deal.
I'd say this is normal.
So there's interesting, John.
This is a silver lining.
So Noah is not only not departing, but his tweet is a silver lining.
Would you say, so what does it mean?
So when you see Hillman and Christie quit, potentially others, but you see Noah stand his ground and tweet publicly.
And Hillman and Christie were pretty, you know, they're pretty positive in their tweet.
And, you know, that doesn't mean much.
I'll do some comparisons to FTX and others in a bit.
But what does that indicate to you, John?
Remember, these are the insiders, and I'm showing the meeting.
My guess is that in the meeting, CZ would have said that, hey,
we're going to see the lawsuit coming soon from the DOJ,
and this is what we expect based on the information we've received.
So, John, based on that meeting and the people that quit
and the people that remained, what would you speculate?
I look at who left. So you have general counsel now that you could read into that.
You have the chief strategy officer and you have a senior vice president for compliance.
And before that in June, there was the global vice president of marketing and communications.
And before that, a senior director of investigation.
So this isn't normal turnover. I would say it's normal turnover when you anticipate
an indictment that's going to talk about
uh... u.s. sanctions being violated uh... terrorist potentially funding
money laundering
and some people just say listen i'm this isn't for me and this is going to be a
stressful long
uh... investigation lots of litigation i'm just out you know and i think that's what's
most likely happened i'll read out cez uh...
this point i would say that
that the DOJ, I would assume that they've already got their witnesses,
and if there've been any immunity deals cut,
it's probably already done by this point in time.
But John Reed would probably be a better point.
Yeah, so Stephen Christie, you guys both refer to the cleaning around the house.
So Stephen Christie tweeted a thread about why he's left, and he said,
and apparently it's one of his tweets in the thread,
and apparently I need to start helping around the house do chores
and start making dinner a few times a week.
And as any happily married person out there knows,
happy wife equals happy life.
So my departure is far less sensational
than articles might make it out to be.
I've enjoyed my time at Bynast,
I've learned more in the last year
than any other period in my career.
And then there's a nice tweet here, is everyone seems very supportive.
He says, I am proud of the compliance program at Bynas, the work that is done day in, day out,
and have nothing but respect for the highly talented individuals that dedicate themselves to doing the right thing.
The compliance function is in great hands with Noah Perlman, so it's just still with the company.
And then he says the executive leadership team at Bynas has invested more into compliance, the people and the technology.
Thank you.
than anywhere I've ever worked or even heard of in my career.
And again, he's been at Binance.
No, sorry, he's been in crypto compliance since 2015.
I don't know how long he's been in Binance, though.
But yeah, so let me go to John and then get David's thoughts afterwards.
Yeah.
Yeah, you know, first, I've spoken to Noah Perlman.
You know, it's not Perlman's son.
And he also, like John Deaton said, I 100% agree with John Deaton that, you know, if Noah Perlman were to leave, that would be a huge deal.
I don't understand, you know, when I've been in these situations before on the private side and on the public side,
as well, why you don't just tell these guys,
look, we'll pay you for six months,
and you can just serve as an advisory role,
but you're really not doing anything anymore.
To avoid, again, that way you're connected
to anything that DOJ, SEC,
or any international authority wants to,
if they ever want to talk to these people,
you're going to be in the loop for that.
And that's, I'm sure, what the lawyers advise.
I can't imagine that the lawyers said,
cut these guys loose, unless there's some egregious,
conduct that they've had.
It's also unusual to issue this statement.
I mean, one guy says essentially I had to leave
because I gained too much weight.
The other one says I had to leave.
Have you seen such public statements in the press?
No, no, have you seen it among other companies?
Because that's the first I see in this.
Again,
And when you make, when you're, when you, and I do a lot of labor related work, I'm not a labor lawyer, but I can tell you this is that you don't say anything when you leave a company because you never know, you might be suing them. You might, you know, whatever these statements are, they're going to come back to bite you. And there's no reason to make any. So it's just, it is unusual to list to sort of list these proclamations as to why you've left.
Unless maybe you receive the payout and you're doing it in a talk.
At this point, let me get, let me guys, let me, let me get David's thoughts.
Have you, I haven't gotten your thoughts on this.
Go ahead, David.
Go ahead, thanks.
Yeah, I mean, I think, first of all, the Noah Perlman thing is a little bit different.
Noah Perlman's been there for seven months and has plausible deniability for anything that happened before them.
So a lot of these people who have been there for years and who have been there for even before,
I mean, the guy remember, finance isn't all that old, but no apparelman is in a very
different position for taking over.
I have to imagine, I don't know this as a fact, that all these people left with some form
of severance packages, which talks about how they were going to leave, how they were, what
they were going to say publicly, what they were going to do.
But ultimately, this is just a terrible, terrible look for the company.
It's a terrible look that the people they brought in for the legitimacy are now leaving.
And, you know,
No, I've been saying this all morning on Twitter.
This is just a, this is just, for lack of a better word, a betting, a Vegas betting line for which one of these people are going to be turned off as witness A and witness B for the prosecution when the DOJ indictment comes out.
Because you know some of them are turning to save their own skin.
I think John was talking about this.
Look, Patrick Hillman was a troll on Twitter.
He would go after anyone, including me, including John,
who said anything about Binance.
And everything he said now is going to come back and bite him and Binance in the ass
when it turns out statements he was making just are not true.
And they weren't true when he made them.
David, David, this question.
You said this is a bad look.
I'm just waiting to jump into us.
You like...
Other than being a bad look, would you have expected it?
How concerning is it?
Like I'm trying to look into it, trying to speculate how serious the DOJ allegations will be.
If you saw these guys resign, would you tell me, if I ask you that question, it's like, hey, David, does that mean that things are worse than we expect?
Or would you have expected this already for these resignations?
What would be your answer?
Yeah.
I would think that this is exactly, this is not worse than we think.
This is exactly for the people in the space, this is exactly what they expected.
That for the first couple of years, Binance existed, they did some bad things.
I see Z bought more adults into the room.
The adults who all just quit in unison, I'm calling it Binance Exit on Twitter,
but they quit in unison.
Those were the adults in the room.
It's gotten better.
And I think someone like Noah Perlman, who's been there for all of seven months, is going
to, is also making it better.
CZ's argument here is, yes, we started off shady.
Yes, we started off doing bad things.
But since we've become a global powerhouse, and I did say this when we were talking about
FTX and finance, when SBF and CZ were taking shots at each other.
They were trying to come down because the one that was left standing was going to have the international power and clout to negotiate with governments.
And don't think Binance and CZ aren't going to negotiate with global governments to sell out all of their users and give over all their users' information to save their own skin and keep the business moving forward.
So as far as a shop that they resigned, I don't think so.
I don't think this is any worse than it was last week.
CZ's cleaning up and going back.
Do you think, I want to ask you one more question, David,
before we go to the rest of the panel is,
Is it fair to compare this to FTX?
What we saw in FTX, and Adam loves to make those comparisons, but if we saw Will, not
Will, sorry, Brett Harrison, who was the, I think it was the CEO of FTX, he says, he tweeted
the following, an announcement I'm stepping down as president of FTX.
Over the next few months, I'll be transferring my responsibilities and moving into an advisory
role at the company.
I have deep gratitude for my experiences at FTX in the last year and a half.
And then he talks about growing FTX, US, from three multitasking employees to a talented, dedicated team.
So he starts talking positively about FTX.
And then we got Adam talks about, you know, includes quotes.
I'm going to read out quotes you mentioned and then making comparisons to Bynos, what we're seeing now.
Quote, SBF says FTX is well capitalized.
SPF says Alameda has tons of funds and isn't balls deep leveraged in Bahamas properties.
SPF says, whoops, we thought we were well capitalized.
I'm so sorry.
SBF says, oh, there was an accidental hole in our funds.
And that was his response to CZ's tweet and his response.
and CZ was pretty, pretty, you know, pretty, uh,
common, you know, trying to ease fears by saying more fud about some departures.
Yet there is turnover at every company, but the reasons, the reasons dreamed up by the quote unquote news.
I'll completely wrong.
As an organization, we've grown from 30 to 8,000 people in 6 years from zero to the world's largest crypto exchange in less than five months from founding and held on to that position ever since.
We have been able to protect our users at all time.
We have been extremely lucky.
And then he talks about, you know, thanks all XT members.
and congratulate our own team, our existing team.
So he's just being very positive.
Is it fair to make comparisons to FTCS?
I think it's not fair.
I think we should make comparisons to any company that's under investigation.
But we'll let's get your thoughts, David.
So, you know, the way I'll say this is my dad has like eight different types of cancer.
And when he got Bays will sell cancer in his face.
He was like, oh, it's not even like a real cancer.
You know, today we probably normally
would be talking about how Jesse Powell
was rated by the FBI
a couple of days ago.
That's not even like making like a story
here. Should it? But should
it make a story? Because it's not cracking. It's
unrelated to cracking. Should it make a story?
That's what his lawyer says. But for the moment
let's just assume there's smoke but no fire
on that one. My point being
is that there's something
right now, Mario,
I'm with you. There's no explanation
explicit money missing.
There's no co-mingling to the billion dollars.
Scott and I have been talking.
I'm a big believer.
T-USD is going to blow up and finance is going to be part of that, obviously.
But right now there's no, there's nothing that's out there that says,
bam,
finance is doing things criminally that is the money's missing or anything like that,
which is why for the moment we're all not going crazy.
The markets aren't reacting.
This is just going after the cleanup old.
that we're going to be sitting here and talking about anything.
I don't think we're, let me rephrase that.
I'm hoping that we're not going to be talking about the next bankruptcy where everyone lost all their money.
For the moment, we're not seeing that.
Every time that CZ tweets about FUD, it gives me more pause.
I do think there's a lot of fire here that's going to come up.
But for the moment, there's no money missing.
But you would have said that about the same thing about FTX.
You would have said that about Bear Stearns.
You would have said that about Bernie Madoff.
Until it finally collapses...
Yeah, go ahead, Simon and John.
Go ahead, guys.
I want to touch on one more thing as you respond, Simon and John.
One more thing, and then I want to go to David.
You barely hinted at the T-U-S-D, the concerns around T-U-S-D.
So I want to touch on that afterwards.
But there is, as you respond, Simon, there's someone that tweeted out something that,
I thought was silly, but some of my team members disagreed.
And I'll read out the tweet.
It says BlackRock master plan to get approval will end up insider knowledge that Binance is wrecked.
And if it is wrecked, then technically crypto is fit for spot ETF requirements.
Biggest bottleneck now is Binance being in major exchange.
So I was a treat by someone in that BlackRock knows that Binance is quote unquote going to get wrecked.
Um, is there any merit to discussing this theory or just, uh, uh, silly conspiracy, Simon?
Uh, I won't go into the conspiracy, but in, in terms of what David said, there is, in the
CFTC allegations, there was co-mingling. Um, so they, they have already,
and the SEC, no, not CFTC. Oh, was that the, I think so. I think it's the CFC. I could
be wrong. Yeah. Um, but, um, but, um, I'll give, I'll give three different, three different
historicals that could make you think which one it is.
So the worst one is the FTX.
The FTX scenario is that the assets are not back one to one
and they're relying upon their token to market to market
in order to remain solvent.
So if the B&B token has...
you know, an 80 or 90% correction are all the assets there one to one. That's the FTX story.
I don't think that is the story. How the hell do we know? We wouldn't know. But that's one analogy.
You'd only be get to test that if the B&B token completely crashes. The second analogy or type of strategy would be
like BitFinnax.
So the BitFinex scenario was that the DOJ was investigating BitFinex.
BitFINX wanted to remove and continue as a non-U.S. company.
And one of their key executives, Phil Potter, was a New York resident.
And so they had to get rid of and shed all of the US executives in order to have non-US substance to continue as a business and settle with the various entities.
So that's one.
A second one.
The third analogy I gave at the beginning of this call, but there was only about 100 people, is the Bitmex analogy.
So the Bitmex.
wasn't doing KYC, didn't have an aggressive AML program,
wasn't filing suspicious activity reports,
and was run by Arthur Hayes,
who was very aggressive on Twitter
at kind of flying in the face of conventional financial services regulations.
And Arthur had to step down.
A bunch of adults came in the room, as David calls them.
And then you ended up with a business that committed to not taking on any US investors
and continued as a much smaller business, but had a very aggressive AML program.
I would say as well, like, as I know for a fact right now that finance, they're...
They're like for example if you're an institutional client
their onboarding program right now is extremely aggressive
way more aggressive than any bank or financial institution in terms of you
if you've got an omnibus account with finance you have to actually
you know provide pages and pages of policies and documents
and all sorts of stuff so that they're getting into that serious phase
The question is, is it too little too late?
That's what the speculation will be.
And are they one-to-one backed?
And those are the three different analogies that they could be adjusting to.
John, I want to get your thoughts on this, John.
And I also want to get your thoughts on some people's allegations comparing BNB token to the FTT token.
Yeah.
Man, I've got a, I've got to run.
So I'll just say one thing about finance in 30 seconds here.
There's really no, no reason to speculate.
Everything's kind of laid out on the table right now.
They've been kicked out of Canada, kicked out of Belgium, kicked out of the Netherlands,
kicked out of France, kicked out of the U.S., and...
Everyone that's leaving is not being replaced by like-minded people.
The people that they're hiring are lawyers that used to work at the SEC or the DOJ.
So their hirings are lawyers and SEC and DOJ former employees.
And the people that are leaving are leaving because they see the writing on the wall.
All of that is public at this point.
All of those points of reference are.
is public. Whatever the problems are, those will come out. But the reality is, is, you know,
get your money off finance. If you don't have your money out finance by this point, I don't know
what to tell you. But those are the facts, right? There's no need for speculation. They're
hiring lawyers used to work at the DOJ and the SEC. And high-level executives are leaving the firm,
and they're being kicked out of several countries. So,
there's finance
it's really
it's really important
that we continually marry
we always forget but
We assume everyone knows, but nobody should be storing their crypto at an exchange.
It's a ridiculous thing to do.
Time to get a hardware wallet.
Time to learn self-custody.
Correct.
The skill you need for the future.
So everybody just take it on right now.
Do not leave money at any exchange, particularly by now.
One other point of emphasis, one other point of Memphis, too, is we just had six or seven or eight, you know, new spot Bitcoin ATFs, you know, filed or refiled.
Did any of those organizations use Binances, you know, their partners?
So I want to go to the TUST as well, John, as well, if you don't mind.
But before doing so, for the audience, the PIN tweets is if you want to sponsor the show
or come on pitch on our Shark Tank segment that we're working to launch very soon.
Make sure you check the PIN tweets.
You can come in.
We can do an AMA.
We have the next sponsor on Monday.
Okay.
I've had pretty good response from anyone that comes on the show.
So hit us up.
The pin tweets.
There's an email there, email us.
If you can't be fucked, just DM me or DMRAN.
John, I want to get your thoughts, John Reed.
Get your thoughts on, I'm not sure if you read as well.
David hinted at the fears around TUSC or TrueUST,
which is controlled 90% of the supply is controlled by Binance.
Yeah.
Well, I mean, looking at finance, I think we also have to remember there's the TRO that the SEC obtained with Binance is incredibly rigorous.
I mean, it's almost like a receivership with respect to what's going on in the U.S.
And it calls for repatriation, calls for monthly reports.
So there's probably going to be a lot that kind of gets –
becomes available as far as evidence and information to the SEC and then in turn, of course,
to the criminal authorities.
So that could be going on as well.
There are two ways to look at it when a general counsel leaves.
You know, the general counsel could lead because the law firm came in and said,
look, this general counsel is just bad news, even though the general counsel is the ones that hired us,
and we need a new one, you need a more responsible one.
It could be that angle, or it could be that the general counsel was the one that brought in the law firm,
and now that that general counsel is gone, the law firm feels a little bit lost themselves.
So I think it's important what John Deaton said before, I think, looking, watching for...
Noah, Perlman, and watching to see if any of the law firms withdraw because they don't feel
like they're getting treated by their client with the kind of candor that they need and their
reputations become at risk or they're being asked to do things that are unethical. So I think those
are very important things to look at and whether or not, you know, I think that,
the facts are going to continue developing with respect to finance.
And you mentioned that all these ETF applications don't mention Binance,
but they all mention Coinbase.
And I don't understand why people think that the SEC is going to approve an ETF application
when the ETF application is using a company that the SEC believes
is operating unlawfully, unlawfully as a broker dealer,
unlawfully as an exchange,
and unlawfully as a clearing firm.
So I just don't think that that can be lost on anything.
That provides a very easy out.
You know, whenever any sort of,
requests was made to the other divisions.
If I was conducting even just an investigation into that entity,
that would raise questions.
But certainly if I were suing that entity
and the division of investment management
or division of trading and markets or division
Any other division that was approving some sort of whatever, financial enterprise or iteration of financing,
in any of those circumstances, when you're in the middle of suing a company that's involved,
I don't think that that bodes well for approval.
And I want to go to David and then get David's thoughts on this as well.
David, you hinted at TUSD.
What are the concerns there?
And if you could explain for the audience what it means to hold 90% of the token supply?
Yeah.
I would sorry, rephrase, not called control.
Go ahead.
I mean, TUSC is a stable coin, but I think I called it last week or two weeks ago.
It's like a D-list stable coin.
It really, you know, it wasn't, it wasn't, it's not one of the forefront stable coins,
but in the last couple of weeks with everything that happened at Prime Trust and then Binance,
they minted and I'm not going to pretend to be a full expert, but it's something like
over the last several weeks of months, like a billion and a half dollars.
And Binance now controls 90% of the liquidity of TUSD, supposedly.
And that concerns me.
Just like the concern of whether BNB coin is the equivalent of FTT coin, that concerns me.
You know, I'm a big believer that the third shoe to fall in the regulatory and prosecutorial nature of government right now is they're going to go after one of these stable coins.
And a perfect stable coin for them to go after would be TUSD right now, especially given the link to Binance.
And it be a, if it's true that, you know, there's not dollar for dollar backing, that there's other issues with the minting process, who controls the TUSD, there's a Justin's son tie that was denied.
Again, I give Adam a lot of credit for this.
He's been all over this story.
But you have a lot of shady things.
shady things going on with TUSD, and there's been a lot of using TUSD in the last several
weeks to prop up the price of trading and the liquidity on finance. Where there's smoke,
there's fire in the last few weeks, and I think the
story is going to come out with TUSD eventually that it's a lot of fire and there's a lot of
things that our government regulators are not going to like. And if I had to be, if I was a
gambling man, they're going to be the stable coin that the SEC goes after because of their
tie to finance and what's going on right on right now.
I want to go to Dave. Dave, we've talked about the resignations at Bynas with the speculation around the DOJ investigation.
We've also talked about Gemini suing DCG.
My question to you, Dave, and before Dave answers, just for the audience, I want you to do two things.
Number one, answer that same question I'm asking Dave, and also number two, that red circle on stage.
That's our account for the show that we're going to start hosting from.
Make sure you follow that account as well.
Well, Dave did drop.
as I was speaking, so I'm sending an invite again, Simon, the question to you,
with what we've discussed so far, how do you think this will impact the market?
What do you expect to see over the next few months?
Do you think it's all been priced in?
I don't know, you don't speculate much, but we'll be good to get your thoughts on this
before we wrap up the show.
Okay, yeah, you know, I'm not the TIA guy.
The issue is we've got several conflating fundamentals at the same time, so we've got
you know what's going to happen with stable coins what's going to happen with binance what's
going to happen with digital currency group i don't think dcg is much market impact but then
there's the whole gbtc side how that impacts and etf being approved at the same time so there's
you know we're at that stage in the cycle where we're preparing for the 2024 halving
at the same time as flushing out what the regulators consider the bad actors in the industry,
at the same time as the Tradfied players entering the market.
So to me, in terms of general fundamental market impact,
we just play the cycle again
and these are kind of neutralizing factors
of out with the old, in with the new
and the cleaning of the old in the international side
and then internationally remember
there is a world outside the US
and there is virtual asset service provider regimes
being implemented globally
all around the world.
They're mainly focusing on AML,
but eventually they'll be focused on market manipulation
inside the trading
and cleaning out some of the bad practices
in the token side.
Also, on the, for example, the...
the argument about they won't approve an ETF because Coinbase is being sued at the same time as being asked to be the custodian.
I got a slightly different angle on that.
I think the SEC wants Coinbase to get back to their roots and be a Bitcoin company.
And as a reward, they'll give them some Ethereum staking as kind of a as a reward and then make everything else a security.
Put it on their ATS.
They bought a broker dealer in ATS from us at Bank to the Future.
So they have those licenses.
Right.
And so being the custodian for a Bitcoin ETF, I think is what they want them to do.
They're in the clan because all these ETFs are choosing them.
But they want them to make everything else a security so that they can then start getting ready for some of those regulations around what they consider to be securities.
Cool. I appreciate the final update.
Guys, we'll see you again on Monday.
Ran and Scott will be back.
Again, Rand is on a flight.
Scott is running around in the UK.
Today is a bit more bleak than yesterday
where we discussed Larry Fink's interviewers
were very bullish, mainly focused on Bitcoin
with hints to potentially Ethereum.
That was our interpretation of the interview.
Today we're talking about the Binance resignations and while we're speaking about this,
Gemini sued DCG, which was expected, but they did a great thread on it as well.
Check it out. I've pinned the thread at the top and at the end, make sure you hit us up on the circle on stage or the pin tweets.
By the way, who's behind Rand's account? Unmute and reveal yourself. Come on. Is it you, Fred?
Come on, unmute.
Who is behind the account?
I want to know who has a RAN's account because I want to troll him.
We've got to tweet something.
All right, everyone.
See you again Monday.
Enjoy your weekend, everyone.
Thanks.
Bye.
We'll see you on the weekend if there's any breaking news.
If you don't see us on the weekend, music could relax and there's nothing to worry about.
Bye, everyone.
