Projects
![]()
No projects found
Investors
New
DAO Treasuries
DATs
Lend / Borrow APRs
Chains
Categories
Spaces
GALA DUMPING | Staked hacked | FTX sell-off happening! #CryptoTownHall
Recorded: Sept. 4, 2023 Duration: 1:15:40Space Recording
Short Summary
The crypto market is witnessing significant shifts, including a decline in Gala due to internal conflicts, a rise in Frentech's TVL, and a trend towards increased regulatory scrutiny in DeFi. JP Morgan's optimism about a Bitcoin ETF reflects growing institutional interest, while the acceptance of credit cards in Web3 gaming showcases innovation. However, the market also faces challenges with declining DEX volumes and low volatility, indicating reduced trading activity.
Full Transcription
Yo, how are you, man?
Happy Labor Day.
Ah shit, Evan Luther's joining us today.
I just saw him on the invite list.
Oh, it's about the gala discussion.
What do you know about the gala topic?
I mean, just I think superficially, we'll probably get into it later, but basically that the two founders apparently are at odds and suing each other.
And that means money is moving elsewhere.
And, you know what I mean, man.
I think that we won't be talking about any of this in a week and all these pumps that are happening will retrace.
And that's just the nature of the market where we're at.
But always interesting to see these.
Hold on, what pumps?
There's been money basically moving from Gala, or allegedly, you know, that's the rumors that we're seeing like Vulcan Forge and a bunch of other Naka.
I know what Vulcan Forge is, and a.k.a.
I know Vulcan Forge.
Yeah, of course, I know Vulcan Forge.
But, and others are kind of seeing this liquidity from people in gaming flowing out of Gala, which is going down and into all these other coins that are going up.
But like I, you know, I tweeted kind of about this earlier, but I just.
In the pre-having year, nothing lasts.
These narratives don't last.
These pumps don't last.
It's a great time to take advantage of them and take profit.
But it's, you know, these narratives move on in a week.
I mean, remember us obsessing over Frontec two weeks ago?
Cool.
Yeah, no, no, no, no, no, no, no.
Don't get too excited.
Yeah, exactly, exactly.
I saw the agenda is going to.
I know, the TVL's up, Scott, for the first time.
Hooray.
Have you guys ever seen, they ever seen bear market bounces?
No, no, no, I want to actually challenge what you said because I just spoke about it for a while.
But Scott, don't you think that this feels very much like the end of 2019, the beginning of 2020.
And I just want to remind you what happened back in the days just to give you context.
So Bitcoin went all the way down to $3,000.
Then we had a pump and Bitcoin went to like $14,000.
And then it started to go down again and went all the way back down to $4,000.
And I'm trying to remind you what was happening at that time is that there were a whole lot of lawsuits.
It was like the first time that we were getting big crypto lawsuits of founders, fighting founders, investors, fighting founders.
It feels to me a lot like that time.
Yeah, but your timing's off.
For your timing, you know, 14,000 was the beginning of the summer of 2019.
And everything didn't bottom until March of 2020.
Correct.
Correct.
I'm just saying not, I'm not saying in terms of duration.
I'm saying in terms of like how it feels in.
So it's like for people who never sold the 31,000, now we're getting this slow bleed done.
It's the same as those people who held on all the way down to 3,100, caught the pump to 14,000 and then held on again.
to all the way back down to 4,100, hating the fact that they never saw that 14,000.
Yeah, I agree, but I think that implies that we're going much lower because we, you know,
14,000 in, you know, June of 2019, effectively would be the equivalent of 31,000 in June of this year in the cycle.
I'm not saying that's my opinion on what's going to happen.
I'm just saying if we're comparing apples to apples...
I think we're saying the same thing because I'm saying that right now at this part of the cycle is when these narratives don't last.
We go down.
We go down.
We go down.
And then we get to that sort of final capitulation that I think Ben Cowan's been talking about this whole time.
Yet again, this is just analysis, right?
It's not necessarily my opinion.
But the last, but the last capitulation that was triggered by Black Swan events by COVID.
Right.
Yes, but it's the same in every cycle, regardless of that narrative or not.
If you look back at the other pre-having cycles, you get like kind of one more higher low generally.
And listen, that higher low could be 25.
I'm not saying that that means we're necessarily going lower.
I agree with Rand that this is doom sentiment right now.
But that was my point, is like, this gaming thing,
I'm not, I think gaming will be a huge narrative of the next cycle, but I don't think what's happening today in the market, like where things are flowing is going to last.
Just like all these other, we've had these mini...
rallies in different little areas. Look at Unibot. I mean, like a month ago, the telegram trading
bots were the future of crypto and I was like, nah, this shit will be done in a month. Like,
I don't care. And I'm not saying it won't be the future. I'm just saying that you can't,
in my opinion, depend on these mini pumps and price action right now because this is just the
downside of the cycle. Look at Google searches. Look at price. Look at volume. Look at the
This is the lowest volatility year so far in crypto we've had ever.
And that includes a move basically in January all the way up from 15 to 31.
I mean, we're setting records for how boring this is, which is not a bad thing.
I think that that speaks to a lot of potential for the future.
But I just don't think you're going to get something meaningful where the liquidity actually stays and the hype lasts until we get a true bull run out of Bitcoin.
Yeah.
Let me read out the news very quickly. Just a quick update. I think those quick recap of the news over the weekend. So we got majors, I'll do what Scott usually does a quick market update. Major's flat, very little volatility in top 50 coins. There's nothing there. And we'll get Scott to dig into it a bit deeper. Tell us how flat it really is.
I've got JP Morgan, it's probably the most exciting is
JP Morgan said that the Bitcoin ETF will now be approved
or will most likely be approved.
So it's coming directly from JP Morgan.
So for me that's pretty bullish.
Google searches for crypto hit a five year low
I'm not sure. So that, hold on, five years. So we're back to, what are we now? So 2018 levels. So what? The beginning of the Bay Market.
Yeah. Can I say something really quickly about that, though? Just, I hate to interrupt the news update. But I think the Google search thing is a good metric, but a bit misleading because every cycle more people know about it naturally. I mean, it's on the mainstream news. It's on CNBC. It's on Fox business. So there's less people that are going to need to Google it in each cycle because they understand it.
Yeah, and I think you'd want to look at how much people Google defy, how much they Google NFT,
how much they Google Ethereum, not just crypto.
So I think people are more educated now, so they'll have more Google search results.
But still, you know, crypto could be included in sentences, et cetera, crypto exchanges, top crypto
exchanges, best crypto projects.
And to be at a five-year low is not a great thing.
It's not a perfect indicator, but it's one, an indicator nonetheless.
A gray scale has been identified as the second largest eth owner.
You got the so Bynast news got two pieces of news so CZ says that Bynes is way ahead of the game when it comes to US regulation
But at the same time we got the head of product at Bynas who left and Wobie's doing well they're the second highest spot market share they got the high second highest spot market share after Bynas
Another bad indicator just shows how bearish we are and then I'll talk about the greed and fear and greed index at the end
But Dex volume is the lowest has been since August 2020
Yeah, that's three years, it's the lowest been in three years.
Could head lower then.
So, co-founder wants FTC sold, redistributed to customers.
So we'll talk about FTCS liquidations.
That's probably one thing we're not, yes, in the heading.
So we want to talk about FTCS the potential liquidation that's incoming.
and the sole call founder is asking, I don't know, it's a reasonable, I don't know, Joey can tell us if it's a reasonable ask to actually distribute that soul to owners rather than, to customers rather than liquidating also.
It's impossible. It's impossible because remember, remember, Solana is not owned by the people that, by the people that had Solana and their, not every FTX old had Solana in their accounts. That Solana was,
the fact that FTX or Alameda invested in Solana
or bought OTC Solano
or invested very early in Solana
and they got a whole lot of tokens.
Now, imagine that you were an FTX creditor
and they say, well,
imagine you hate Solana or you never even,
on your agenda, you never even thought of buying Salina.
And now all of a sudden you get like a distribution of like
a thousand dollars in
sold tokens
you're like what the hell
I didn't ask for Solana tokens
I don't want to be set tokens
well Ryan is in that
I might have misunderstood it
I thought they wanted to distribute
the customers
the Solana that was
O to customer funds.
So any customer that had Salana on FTCS,
how should be those?
But paying, I mean,
that tweet that you're talking about comes from Andatoly.
Now, all respect to Anatoly,
he's a great guy and he's a great founder,
but I don't think he's quite understanding
of how this process works in law.
And if he needs any guidance
of how this process works in law,
he must just go and look at how Mount Cockney
worked where first the liquidator has to go the bank you know go through the whole bankruptcy
process and collect all the assets and then maybe in a long long time they'll take all the
assets and either distribute like that um myn clocks are distributing bitcoin or distribute money
uh from the collection.
On the collection.
But either way, I can guarantee you, I mean, it's such a, I read it, and I covered on my show,
but it's such a ludicrous thing to do.
Say, hey, just pay all the salina holders out in kind.
It's just, it's just so ludicrous.
It's just, it shows, look, Anatol is probably one of the smartest minds in the world
when it comes to telecoms and to blockchain and salina.
But I just think in this case, you know, he tweeted at Adlerochen, and he said, you know,
if you've got any ties to the liquidator, um,
First of all, Adam Cochran has zero ties to fucking liquidate.
And second of all, even if he did, there's no way that that paid Salina out in kind.
I mean, just pay what?
All of a sudden, you get a distribution.
Hey, you got an FtX gun.
Hey, can we please send you 30 Salana?
Please send us your sole address.
I mean, just think about how ludicrous that sounds.
Well, I mean, this is not, sorry as you say, this is not so uncharacteristic of the Chapter 11 process.
I would say the F-2-X is actually well ahead because they have at least Galaxy helping with the liquidation.
I mean, listen, I'm a Voyager creditor, so I've been through this.
But, I mean, Voyager literally...
took to effectively trading to try to pay people back and sold the deadest bottom of Bitcoin right before a major pump,
sold the deadest bottom of every single altcoin against Bitcoin after that happened and basically liquidated it totally the wrong times,
and then still offered back most of the larger crypto, Bitcoin, Ethereum, etc., in kind,
which I actually took and was up on in kind on the very pittance that they gave back.
But I mean, this is...
less an indictment of what's happening with FTX or Solana that it is just a shitty Chapter 11 process.
But I would say that at least you have galaxy behind this liquidation who has some knowledge of what the hell is going on.
How much did you get back, by the way, Scott, from Voyager?
Well, okay.
What ratio is...
They called it 35.6% or something like that, right?
35.6% of your balance.
But remember that it was your balance based on the depth of the bear market last July.
So, you know, you're talking about your balance based on when Bitcoin was, you know, 19 or 20,000 and.
And when Ethereum was, I don't know, 11, 1,200, something like that.
So the day that they actually liquidated, if you look at what my, what your average, your bet person's balance would have been because I was primarily holding Bitcoin Ethereum, it was actually about 24% of what, you know, if I actually still had those coins.
So it's pretty bad.
I mean, you're talking about less than a quarter of your money.
And.
and even worse, obviously, when you think about that as the fact that the only reason it was a quarter of the money and not 75% of the money is because...
of chapter 11, right?
If they had liquidated on the day that they,
instead of declaring bankruptcy, we would have gotten
72% of our assets.
They had the $6 or $700 million hole.
And then in that process, they did a failed deal
with FTCS, which by the way is probably a good thing
because we would have become Voyager and FTX creditors.
And then did the failed deal with Binance US,
each of those costing hundreds of million dollars
creditors on top of what was happening with the thing.
And then finally, after two failed deals,
you know, did that pit.
I'll just wrap up with the last piece of news.
We'll go to Eric just for a quick market update.
But we've got, so I'll talk about the fear and green index is at 40 out of 100.
So we're in fee territory.
Again, we were neutral last time we did a space.
I think it was Friday.
Lastly, the Front Tech TVL is started to rise again.
So I think that's...
That's a really good indicator in my opinion.
Like we're in a bear market.
You've got Frentec.
So when something is a hype, when something just get pumped and with no substance behind it,
when it dies, it never revives again, generally speaking.
And if Frentex TVL is rising again, for me that's a really good indicator.
I was surprised.
I haven't looked into it.
I'm starting into it now.
I've seen some of their updates on the X page.
I'm not a, I don't own much of, I don't have any shares in Frentice or anything.
I'm not even active on.
They haven't been active for like two weeks.
should probably get active again.
But that's a really interesting indicator.
Hopefully soon we'll get another
Fentech space going.
I'll try to convince Rand and Scott,
especially Scott.
But before...
I'm open to it, but don't you think,
I mean, nothing goes straight down, right?
I mean, like a little bounce in TV,
I don't know.
I don't know, but how big...
We've got to give it time, though.
I don't know, but that's like everyone's...
Wait, hold on.
But you know, Bitcoin was 69,000.
59, guys, we gotta bounce.
52,000, we got to bounce.
42,000.
Yeah, but when something collapses, you go ahead, man.
I think we need to be fair here.
I'm not a big fan of it because I explained you the shortfall in the model,
but they are making some moves.
They made a move today.
They're starting to accept credit cards for playing the game,
for participating in the network.
Like, that's quite a cool move.
You know, like, if this team can innovate and improve their product over time,
they may be onto something, you know?
And I said to the one.
That's a big, but, man, before you could do it, that's a big move.
The credit card one, it's a really big move.
That's what will bring in the retail audience.
That's what it's what it shows.
It shows that they're thinking.
Now, listen, I would have, I would write off Friends Tech completely.
And I'd say this is just another garbage social network.
But the reason why I'm not.
is very simply because, as I said before, the reason I don't like socialify in crypto is because
I think you cannot penetrate the network effects that all the big networks have, Facebook, Instagram,
Twitter, Snapchat, TikTok. But these guys are actually leveraging off the network effects of the
existing social network and not trying to start their own social network. And that's why I wouldn't
write these guys off. I wouldn't write these guys off. They've got to,
They've got a slight chance of success.
Let's put it that way.
I would have given that.
I absolutely give them that.
Sure.
Why not?
Yeah, exactly.
If they were competing with the other social media platforms,
we're going to move on guys to the topics at hand.
But we are talking about competing with Facebook,
competing with Twitter,
which is what Big Cloud was.
And Big Cloud's probably the clearest example of what these guys are doing.
If they were competing against those,
then they're likely to succeed.
It would be a lot less.
And I'd be a lot more bearish.
But for them to be like, hey,
you can buy and sell tokens and people.
This is what we do.
We're not a social media platform.
For me, that's a really interesting selling point.
It makes sense.
But let's dig into the topics at hand.
Eric, maybe give us a quick market update.
Your thoughts on,
I know we dug deep on the weekend.
Anything else to add markets over the weekend
and then we could dig into the FDX sell-off.
No, we want to talk about the quad-witching.
Quad-witching.
Yeah, we can...
I saw that...
Eric, I saw that quad-witching on the agenda.
I thought the team did a typo.
So I'm not going to embarrass myself and mention it.
But obviously, it's not a typo, so Eric can go ahead.
No, indeed. It is the quad witching is upon us, actually. So, you know, I think what you guys kind of brought me on here to talk about was basically most people know that September is generally a down month, right, for pretty much all markets. Bitcoin included, of course, as well. And that is very true. That is very, very true. But when I actually dug into the data and looked at things a little bit more closely, I found something that was very, very interesting that I think is maybe worth knowing, which is...
For about the first half of September, yeah, that is one of the most downside typically does happen.
In fact, for Bitcoin, my current model is suggesting if there is going to be downside within this next 10 days is basically when that would be expected.
But on the third Friday of every September, we have something called quad witching, which quad witching, if you're not familiar with the term, is basically a major expiration for options for both indices and just regular stock options and then the same thing for futures for the indices and just regular futures.
And this is a really, really, really, really big deal.
It only happens four times a year.
And the reason why it's a big deal is because all of the big money managers,
the big hedge funds, the big quant firms, these sort of things,
they typically will have major expirations coming up on that date,
meaning that they either need to roll their positions over to the next major,
quarterly contracts or change things up.
This is where they typically make big decisions, big money managers,
people who actually move the fucking market, it's not...
you know, not the retailers or not anyone else, really.
Anyway, so when I dug into the data and I looked at that specific date to the end of September,
I found something that was completely different than what I think most people are talking about
with regards to September. And it is this. For Bitcoin specifically, because I believe that
this chat is primarily focused on Bitcoin, only two, only to,
of the 13 September's in the full history of Bitcoin have posted negative gains from that
quad-witching date to the end of the month.
Of those two, one of them was just negative spot 70%.
The other one was about negative 3.5%.
Everything else was positive or neutral, basically.
For about an average return, sorry, my girlfriend's playing Zelda in the background.
It's very exciting.
Is it like the original?
No, he's got tears in the kingdom.
He screams like crazy.
It's insane.
The neighbors think something's going on here.
But it's Finland, so no one talks.
Anyways, yeah, so the average return for those winning months was about just over 5.
And a quarter percent.
So that is why the 15th in this particular instance is the most important once the third Friday for September.
And like I do say, you know, short term over these next 10 days, not only is that data, you know, more on the more lean towards the downside.
So is my own personal model for Bitcoin right now, which does say, you know, if we are going to see an actual, like an actual move to the downside, like an actual crash, if you will, it very likely happens within this next 10 day spread.
But once the 15 starts...
I'm going to majorly change my tune-around at least for some sideways, most likely.
And then we can play the same game in October as well, of course.
But I think that's kind of the majority of what I wanted to say, and hopefully that was in some way valuable.
Yeah, I mean, I think that's actually really interesting insight because we have this notion that September is such a bad month.
But if you actually drill in, you know, to what Eric's talking about, you sort of have this bad initial two weeks.
And I think we also know that as bad as September is, people have the same notion, which may or may not be,
overblown about October and that things start to get going in the next quarter.
And I think to add to what Eric said,
something that we often talk about is, you know,
it's window dressing season for the big,
big money managers.
If you're coming out of a boring summer,
you've got profit this year.
It's been an epic year and this, you know, applies to all markets.
You're going to take some profit, pad your books,
make sure that you're going to get your nice thing.
Wait, wait, wait, wait, wait, wait, wait, wait.
So for crypto, September is generally a bad month.
For traditional stock markets, actually, September is actually a bad month.
However, I covered a tweet earlier on the show, in that tweet, it says in years like this,
where the NASDAQ is up more than 15% in the first seven months of the year.
And I think down in August, which is I think how it was, the rest of the year is actually very, very bullish.
I think with an average of 11.7% return in the stock markets for the rest of the year.
So, you get to the Klaus rally.
But that, yeah, this is exactly what generally big money managers do kind of to Eric's point is you take some profit after the summer.
Things are way up.
You kind of have a slow whatever and then you rally into the next year and especially, obviously,
coming into an election year.
Well, no, September, September is also green.
September is green.
September is green.
September is green.
October's green, November's green and December's green with an average of 11.7%.
Now, every month is green.
It's not necessarily for a crypto.
In traditional markets, I made a statement last week.
that really rubs some people the wrong way it appeared.
But I do believe it, or at least it's not that I believe it.
It's just it's what the statistics are,
which is the only thing I care about.
And based off of what's happened this year in August,
I do believe that traditional marks have very likely
already seen the low for the year.
And if history is anything to go by the last 20 years,
we can expect or it would be statistically, you know, relevant to be looking for new
all-time highs in traditional markets.
It might not be anything crazy.
It might be like 2007, you know, where it's slightly new highs and then dump to hell.
But ultimately, that is what that sort of particular set of had.
Eric.
Are there statistics?
It's funny because, listen, we all know that if you zoom out far enough, markets just
go up anyways.
So on an average of all time, I would imagine almost every month is probably green for
traditional markets, correct?
Um, I don't, I don't know.
Yeah, eight out of ten months for the last, I think, 30 years are green.
Yeah. Yeah. So it's hard in traditional markets, unless you're zooming in, obviously, on the sort of brief, bearish times.
I mean, every if you, and I think on any 10 year period, even in the stock market, regardless of,
how bad it's been, including the Great Depression, you end up with a 7% yearly.
Guys, can I ask you?
And usually the down months, Scott, usually the down months just very briefly.
The down months tend to be, you know, elevator down.
So they're more painful, like they're more remembered.
Of course.
But most of the time, it's just a stair step up for a month.
Yeah.
I would imagine that it went over all time every month if you average out, you know,
100 years of markets that they're all green.
Yeah.
Yeah, so I know we're going to discuss the gala topic in a bit as well and the matter there.
But before that, I've got a curveball question.
A while ago, we were discussing Binance and all the fight around Binance.
It's about, you know, during the FTCS days.
And everyone was saying, like, if Binance walls were all fucked, crypto's dead.
At least that's what I was being told when I was hosting the FTC spaces.
Yeah.
Yeah, we're seeing a lot of news on Bynas in recent months, and we still, you know, the potential DOJ investigation.
If Bynes does fall, which I don't think it will, and I'm pretty bullish, I think RAN as well, I'm not sure with Scott.
I think Scott you're on the same boat as us.
But if Bynes does fall, and, you know, that question got triggered when I saw Andrew on stage and Mike in the audience, because I know they're both very critical of Binance.
Are we past the stage?
Like, have we matured to a stage where the big guys will just cover for them?
And there's, you know, Coinbase is doing pretty well.
They're fighting the ACC.
They've had a couple of wins recently in direct wins.
And then we have that new exchange launched by Fidelity, whoever it is.
Does that mean if Binance does fall, it's no longer that big of a deal as it was a year ago?
Scott, Andrews, kind of a question goes to you guys, and Rand, because I don't know.
I bet you.
I agree to, Andrew.
I think it's still a very big deal, but it increasingly lasts with time.
But go ahead, Andrew.
I think that it's a relevant question still.
It will be, the question will be,
What will the fallout be and what will the charges be?
You know, is it a day event?
Is it a multi-day event?
Is it a full month?
What kind of lifespan does it have?
And what does the quote-unquote fall of finance even mean, right?
If there are DOJ charges, right, that's United States-focused.
Are there other countries that are involved?
You know, here's the reality about finance right now.
There are different tiers and levels of them backing away from or being removed from different countries, right?
That's been happening for a period of time.
So in my mind, as I look at it right now, I think that there's a bit of Binance being muted by law enforcement, whatever that means.
I think it's pretty priced in at this point.
I think that there may be an initial reaction if action is completely over the top.
But at the same time, there have been organizations, other exchanges, other parts of quote-unquote crypto architecture, which have moved into the spaces that Binance is still in. For example...
Coinbase now has an international exchange that they've stood up and that architecture exists.
Gemini has done the same thing.
These both Ethereum futures-based ETFs, spot Bitcoin ETFs, yeah, there will probably be some fallout for altcoins in general.
but at the same time,
there's probably a large portion
of volume that will spread itself out
to other exchanges.
For example...
You know, we were all around when this happened to, quote, unquote, Bitmex, right?
Bitmex got hit hard.
Their executives were, quote, unquote, on the run.
And Bitmex volume crashed, right?
Well, at the same time, that particular story lasted, I don't know, a week, three weeks, tops.
The exchange volume associated with Bitmex fan.
fanned out, to be fair,
a large portion of...
But there was no spot.
I think you're correct, by the way,
in the general assessment,
but they did not dominate the spot market
remotely like Binance does, right?
I mean, that was just a leverage
that they created the perpetual swap.
Well, one could...
So I want to add something...
That Binance's dominance of spot,
again, has been decreasing a bit.
You know,
you know exactly the past six months right to decentralize exchanges for sure yeah exactly so
this is the best thing guys i think that andrew i think you fit onto something here which i've been
meaning to talk about for a while i just haven't found the right the right um platform but i think
that the pace at which this finance thing playing out is the best thing that that could possibly
happen for the industry
even better than nothing happening to Binance.
So if you would have asked me, would I prefer for nothing to happen to Binance or would I prefer for things to be playing out as they're playing out now?
I would prefer for things to be playing out as they're playing out now.
And the reason is finance was too big.
They were too centralized.
As much as I love Binance, it's an exchange.
As much as I use Binance, as much as I respect, Z, et cetera, they were too big.
and we need it.
It's a very unhealthy market.
Now, what you said is exactly right now.
People are starting to fill in the gaps and people are migrating to other exchanges.
So, for example, I actually looked at the spot volume, but the spot volume is starting to move very much towards Coinbase, starting to move very much towards ByBit and a whole lot of other exchanges, which weren't big players before.
And like you say, that's happening with a lot of the other Binance things.
And so the pace at which this is happening is probably the best thing that could have happened to the market.
And if we can delay this action, I don't know if maybe I'm dreaming, being delusional,
but if this can go on for another year, then I think when it actually does happen,
it's going to land up like the BitMex moment where it's like, okay, well, we've all been expecting it.
Great. Thanks very much. Let's just move on.
No, but I don't need to, I agree 100%.
I don't think it even needs to be delayed.
I think he's already, as Andrew mentioned, it's already been priced in.
And like as long as Binance doesn't follow the footsteps of FTX,
which I think we can all agree that's not going to be the case,
that ship has already sailed.
As long as that doesn't happen, what's happening to Binance right now,
even if the DOJ, you know, we start seeing some things get public there,
I think it's already past the state that will have a massive impact on the markets and because it's already been priced in.
It depends what the action is.
It depends what happens.
If they freeze customer funds, it's going to be a big problem.
If they confiscate funds, if they freeze accounts, that's going to be a big problem.
But if it's just some kind of action, I think it's all being priced in.
Hey, really quickly, guys, we have actually a bit of breaking news.
Obviously, we saw this morning that there was allegedly that Stake was hacked.
It seems Stake, the gambling platform, has suspended deposits and withdrawals.
That's the biggest, isn't that, hold on guys, isn't that the biggest gambling platform?
Are they bigger than Roll Bid? I don't know, but I mean.
I think they are.
Does anyone know?
They are definitely bigger than Roll Bid for sure.
Stake has significantly more volume.
Yeah, there you go.
And do you know much more about the hack, Evan?
You're pretty pretty ahead of these things.
Shout out.
No, I don't actually gamble.
Shout out the Bit Boy is the steak guy.
Yeah, I don't actually gamble.
So I'm not really using the platform.
But I didn't know much the hack, but I do know, I don't do a deal with these guys.
I do know that they're much better than all.
But.
I guess that's pretty major news.
Yeah, as an aside, I told my team when, and I said it facetiously, and I said it as a joke, I said, when Bitcoin took off on the stake sponsorship, I said that's the end of steak.
And just after all the fun that's happened now, to hear this, it's like, oh, man.
Okay, I hope I look, we wish that the hack is not too bad and obviously, you know, a hack is different than a platform collapsing.
They've been hacks, it's unfortunate and I hope that all goes well there.
And as we get more updates there, you know, the team is sending it in our news group, so we'll mention it here on the space.
Also, I want to talk about Gala guys.
I want to move away from Bynas.
I think it was good to touch on it.
But Scott, maybe you give us what you know about Gala and then I would love to go to Evan because I know he's deep in the web three.
Evan is...
I think actually Evan should just go ahead and do it because I'm not that well-versed and he had the great thread.
Evan, what's the story with Gala?
It's basically the two founders are swing each other.
One guy is claiming the other guy embezzled funds from the company,
uses the funds for personal reasons.
The other guy's claiming one guy sold tokens OTC with hundreds of millions of dollars.
And we don't really know what's the reality.
I think it's going to play out in the code.
There's going to be discovery of facts.
But at the moment, one founder is suing the other founder.
Both are suing each other.
So...
that's that's really what the situation is and I guess that's yeah but why doesn't why doesn't
matter the how's it impact gala and then Scott said that the the some investors some people
are selling gala and going to other web three games that's true uh yeah I mean obviously
gala chart has taken a significant hit uh since this news came out
I mean, one of the founders is claiming that the other founders taking funds out of the company,
company funds for personal reasons, that already would make you lose faith in the company doing well long term.
And then the other founder is claiming that the founder is selling tokens OTC at a discounted price.
And for not just a small amount, for significant big amounts.
So I think that definitely long term would negatively impact the token value.
So it's not a surprise that people are getting out of Gala and going into other Web3 gaming tokens.
I think the point here is, I think the point here is that now we're starting to see that actually, hold on, this thing of a decentralized blockchain is actually not so decentralized.
And actually, you know, the central point to Gala is actually these founders.
And now the founders are starting to fight amongst each other.
Now in a centralized corporation, if the founders were starting to fight amongst each other,
that's probably a good opportunity for you to jump out and leave because, you know,
it's not the prompt of decentralization.
So it's like, you know, what we're seeing here is we're seeing the flash out of the 2021 market
where founders came together, thought it was an amazing idea, built something amazing,
And also started to spend a lot of money like crazy, buying private jets, cashing out $135 million.
These are just allegations in the court papers.
And now when the market's coming down, the pressure is starting to be felt, then there's all this fighting.
There's all this fighting amongst them.
And it's the cleanup. It's the cleanup.
We're cleaning up what was supposed to be decentralized.
We're now realizing, hold on a second.
This is actually just a centralized company for all intents purposes.
Yeah, but we knew that. Like we knew, and by the way, going back to the Bynast discussion,
what's cool is that during the bull market, and Jason, I'm going to go to you right after,
because I saw you on mute when we discussed Gala. But going back to the Bynes discussion,
one of the people who are critical about crypto, we're talking about crypto is not decentralized,
and Bynas is one of the examples on why crypto's not decentralized. And that was even a bigger concern
when FDX collapsed because Bynas has got more centralized. So now that we're seeing
regulatory action against Bynast, whether you agree with it or not, we are seeing, as RAN said,
funds moved to Dex's and Dexas, you know, I think they performed pretty well over the last few months.
And then linking that same argument to Gala, obviously we're seeing the shortfalls of decentralization
and the illusion of decentralization in many cases.
But Jason would love a bit more, like how impactful it is to the Web3 ecosystem,
the Web3 gaming ecosystem, which I'm extremely and vocally bullish on.
Sure. So the first thing is, and I've got to say this, and it's not going to be a surprise to anybody, is that I can't actually comment on either of the cases in any way, should perform.
What I would encourage everyone to do is actually go read the documents because they're quite interesting, and there's a lot of information there.
One of the things that I really want to stress is that this is something that is very much between the founders, and it doesn't really have a whole heck of a lot to do with the company itself.
We're still operating.
We're still moving forward.
We're still building stuff.
Not to say that it is, I mean, obviously I'm here and I have to talk about it.
So it is definitely a thing that we do have to deal with to a certain extent.
But mostly in the sense that it's...
something that other people are extremely concerned about and is generating a lot of conversation.
But I actually welcome it because I think it's going to, in the end, result in some pretty positive things for the ecosystem as a whole.
What are those positive things, Jason?
Well, I mean, I think that any time that you have light shining on a situation to allow people
to really dig more deeply into whatever is going on, I think that that's generally speaking
a positive thing.
You know, I'm those of you guys who know me or who have been following me in the space
know that I am a pretty big believer in decentralization and in the ethos that surrounds
all of that.
And you know, companies exist, companies do company things.
And when you, you know.
So there are certain elements of centralization that exist in all of these sorts of things.
Not a huge fan of all of that necessarily, but I think that overall, if this leads to a greater decentralization of what's happening, then that's good for the gamers, for those who are owning in-game assets and for the company as a whole.
And how is that impacting the Web3 gaming ecosystem as well? I'm curious. How's that impacting other projects?
Other, to be honest, man, there really isn't a lot of other projects out there that are legitimately gaming projects.
There's a few. I don't want to, you know, I'm not trying to cast aspersions, but I think that the biggest challenge that Web3 gaming has right now is that it thinks of itself as Web3 gaming.
And that's kind of the biggest issue. You know, one of the things that differentiates us is the games that we put out and the people that we partner with.
you know, when you go and you look at, you know, Champions Arena hit 70,000 downloads just last week in the first week of operation.
You know, it's different than, quote, unquote, web three gaming.
And I think that, you know, you want to lean into the Web3 ethos.
You want to lean into decentralization and player ownership of in-game assets and things like that without carrying along the...
On the point of...
Yeah, Jason, on that point of decentralization, like I'm linking both the Binance story.
And if you can mute your mic, Jason, it would be good just because there's a bit of feedback sound, a bit of feedback.
I want to link it to the kind of link the Gala story with the Bynes story, because the whole concept of decentralization.
Because we do have Patrick and Christian on stage.
And going back to Bynast, and I'm mixing, and I'm going back and forth between Bynas and Gala.
But CZ did say that DFI is taking over CFI.
So I'd love to get your thoughts on this statement, Patrick and Christian, and what that means for Daxes as well.
Patrick?
The first thing I'd say is that we've already seen liquid staking has been one of the fastest growing, most consistently growing categories, really in all of crypto over the past year.
I think the total amount in liquid staking has doubled from around 10 billion to over 20 billion in the past 12 months.
And so, you know, I don't really see any reason why that trend wouldn't continue. And, you know, yes, we've seen volume indexes is near a three-year low right now. Liquidity indexes has also been down. But long term, I think it's pretty long-term.
it seems as though the trend is people moving from centralization.
Are you sure about that?
Because the narrative makes sense.
It's not the first time that narrative comes up.
But then you just talked about the metrics don't lie.
The numbers don't lie.
It is at a three-year low.
Are you sure people won't just get over the whole finance centralization
and what happened to FDX and then go back to the regulated sexes
and regulated central C-Fi?
Yeah.
So the reason why I think that people are going to move there is simply because,
The fact that Coinbase is betting so big on building out an on-chain ecosystem
tells me that they, being one of the largest exchanges,
also think that a lot of people are going to move on-chain.
Because otherwise, why focus on building out that new platform?
They already have a solid, centralized platform.
Is it a fair argument to make, Richard, maybe get your thoughts on this in Dave as well?
Is it a fair argument to make them that...
Everything has happened in recent months.
All the collapses of these centralized entities.
Gala is just another example.
We're not talking about the collapse of Gala.
We're talking about the issues between the founders.
And as Jason said, this is just an issue between founders.
But Rand pointed out, this is the highlights the problems with centralization.
So do all these stories over the past couple years, what we've been through,
Will that essentially lead us to another bull run with Defy, with decentralized applications?
Or is it too early to make such statements?
Christian?
Yeah, Murray, yeah, I think it's difficult to say, but I definitely believe that with all the regulatory things happening over the last few months, especially, but also with the outlook and with more people saying that the big regulations coming in in the coming years will drive, you know, more people away from crypto and to it maybe, or the other way around that.
Things can still be decentralized, but they always have to go through a central system in order to get to your bank or do anything with fiat funds or to have it connected to your personal finance.
And I believe that that will drive a lot of people to the C5 side in the coming years because it will just be too difficult for people to remain on the on the defy side.
Hold on so you're saying you're saying that will drive people to CFI saying regulatory action will just make it so difficult for people to use defy and then.
The whole narrative of things decentralizing, thanks to the action against Bynes, etc., is just an illusion because regulators don't want decentralization and now regulation is here, regulatory clarity is here, and we've seen the big guys come in, Wall Street come in, that will move funds back into C-Fi. And what does that mean for D-Fi then?
It's difficult to say, but I can see it happening that the regulations become so strong and so strict around anything decentralized that you basically have to go to a
a centralized system which we already know for us.
They already have, right? I mean, these are the IRS regulations. As promulgated right now,
if the new proposed rules we just got, they're going to require every defy application to do K.
YC in a 1099. Good luck. I mean, that's every defy platform is potentially going to be non-compliant
in the United States. I know the United States only one market, but good luck having a bull run without the United States.
Oh, and this is probably going to have to in Europe and basically the whole West, I think, in the coming years as well, where they will be very strict on this and that will drive people away or...
Unless they created in such a way where companies and apps and everything can still be decentralized,
but in order for you to link it to either your bank or your personal data or whatever,
you need to run it through a centralized system or something like that.
To me, it looks like the regulations will shift it and will make it so difficult for people to be in decentralized,
being it all in decentralized instead of being centralized.
This isn't like regulation that can come down the pipeline.
It's been proposed.
It will go into effect after the comment period, very unlikely to have significant changes.
And it proposes significant impediments to defy the United States.
Joe, though, just to be clear, I know you said, like, good luck having a bull run.
But this would be for reporting in 2025, which means it's in 2026 and we'll already be into the next cycle by then.
Just to be clear.
Yeah, if you believe cycles are a thing.
I mean, that's kind of silly.
Well, they're not.
So, I mean, we've already seen this like through this bear market.
Tell me a cycle where Bitcoin's been under the 50 week moving average for as long as it is.
Tell me a cycle where you had a double peak in Bitcoin where you had the, you know, the two, what, 65, 69Ks.
You've never had cycles.
There's, there's mythical things that you're trying to.
History doesn't repeat, but it rhymes.
I mean, I'll disagree.
It's always different.
It's always different in the cycles.
I mean...
You're seeing data on chain that's different.
I mean,
you're seeing data in volumes that are different.
You have a five-year low in trading volumes on these thought platforms.
I mean,
for people to just say,
oh, we're just going to be pet-
So do you think prices will be higher or lower a year from now?
I have no idea.
I'm not making price forecasts.
I actually have,
I think the sensible opinion is just like nobody knows.
Everybody's just guessing.
That's fair.
Yeah.
Scott, before going to David Haslop and Dave, just on that topic, C5 versus Defi,
because I think it is an important topic, probably should do a whole space on it.
I do want to say Jason and Evan, especially Jason as well, to stay on stage,
because I want to dig into the Gala discussion a bit more.
A lot of people in the audience are coming in, and there seems to be a lot of concerns.
They're super pissed.
Yeah, exactly.
Even I looked at Gala, the token dropped 30% in the last few days.
You know, that's not a 99% drop.
But people are saying like gala's rugging, et cetera, and, you know, that has been done about it.
So I want to dig into it.
There's a lot more fear than I thought.
But before doing that, Jason, again, I appreciate being on stage and taking those questions.
And I think anyone in the community should appreciate that Jason is even on stage.
I want to go back to the defyed discussion because I think it is really important.
And David Haslop, I'd love to get your thoughts on this.
And we'll go to Dave Weisberger.
Yeah, I think the capital flow into the defy scenario is actually going to be quite slow,
and I think that the centralized finance is kind of a necessary evil,
and so is regulation if you want to see a lot of this legacy capital flow into the markets.
And, you know, most people's entry to the markets are through a centralized space,
and then it's not until they're in the space already that they start to learn about what defy is.
So...
So in order to see that capital flow into defy, I think a lot of it's got to go through these centralized markets to begin with.
And that kind of makes it a necessary evil.
Yeah, but is there a huge advocacy for, you know, decentralization.
But I just think that without it, without those centralized exchanges and on ramps and regulation, you know, where are we going to find new money to keep building it?
So what? You're saying regulation and those centralized entities are important for adoption for people to come into the ecosystem and later gradually migrate to defy? Is that what you're saying?
You still got to get your money out. I mean, to David's point, I'm going to let him finish. But the notion that we can exist in only defy without off ramps in the current world does not make much sense.
No, but my question is, is there room for Defi in the first?
Like, if regulators continue to crack down on Defi and then, would we see that wealth flow into CFI?
Like, Dave, you're giving a hundred percent emoji.
Like, where do you stand on this, Dave?
Well, I think that this space has had so much conflation of stuff that it's hard to unpack.
But we have to remember, markets are not monolithic.
We have everything from individual crypto DGens to crypto-curious people, to small firms that can trade with lots of flexibility, to large money managers which need things, and to massive sovereign wealth funds.
And the fact is, is the exchanges of the future are going to end up with multiple capabilities.
And nobody has this right now.
But imagine a world where an exchange can have a centralized counterparty that people can use as a custodian, delegated custodians, and cell phone wallets,
as long as the person with the cell phone wallet does KYCs.
which, by the way, is exactly what happened in cash.
I always make the joke that, you know, 20 years ago, 30 years ago,
you could walk in with a briefcase full of cash and buy a car
or buy a condo or by a house.
Can't do it anymore.
Can't.
So why do we think that you're going to be able to do the same thing with crypto?
The answer is you won't be able to.
So that sort of tri-level exchange will be significantly used by individuals in DPI.
It will be much less centralized than today.
And it's clearly where the market's going to go.
It's just going to take time to get them.
Those are good points.
And I think...
the right direction to look in the United States.
I can't speak outside of the United States in a real meaningful way.
But when we're talking about defy, the right place to look is Coinbase.
Right?
I mean, let's pull back and let's take a look from a macro standpoint.
Coinbase is the only meaningful exchange that we should give much more
concerned to in the United States. Well, why do I say that, right? Well, take a look at the spot,
Bitcoin ETF applications. Coinbase is everywhere on that. Not only that,
But they are the pipeline to the CBOE, which is effectively the SSA mechanism for all these spot Bitcoin ETFs, right?
There is a clear, clear signal from, even though they're in, you know, they're in deep with the SEC.
I think everybody on this call would believe that there's a pretty good chance that,
they're going to win that particular case.
But Coinbase, you know, on-chain summer, right?
They're doing all kinds of stuff, right?
Those guys aren't, don't lack intelligence, right?
They've got a remarkable legal team.
They probably have a good understanding what the landscape is and what the landscape
will be over the next two to three years before it even becomes obvious to all of us, right?
And they have no skeletons in their closet, which is the most important part.
This is the one entity that didn't all those old coins in a hurry.
They didn't allow people to trade without the right KYC measures.
You know, that's the one.
You know, if you look at all the exchanges, they've all got like serious skeletons in their closet.
But, you know, when you're going to coin, which is the one that's out the cleanest.
Yeah.
You know, and for all intents and purposes, they have enormous scale, all right?
Listen, I've at times had my run hits with coin base, but the truth of the matter is they've built a remarkable business.
They've taken shots to the face, but they've kept at it, and they have a truly significant business.
customer base, right?
Well, what they're doing
associated with DFI,
what they're doing associated
with centralized,
their centralized exchange,
it's,
you can't ignore,
you know,
what they're doing.
You simply can't hear in the United States.
It is the roadmap.
It is the road map.
It is the road map.
The most regulated, the most regulated crypto exchange in the United States, the cleanest
exchange, as far as I know specifically of that size, in the United States.
shifting into D5, allowing C-Fi unramps into D-Fi protocol,
which is very, very, very unique.
It's one of the biggest steps that they've ever taken.
That's why a few weeks ago I kept saying that base was one of the most bullish things
that's happened in crypto.
It's allowing C-5 unramps onto D-Fi protocol with the token.
That's the point.
That's the model.
Right. That's the model right there.
You know, in December, in December.
What you have to see.
Yeah, what you're seeing there, you can't just see it as a fun, hey, this is a fun, cool thing, and everybody's making a little money on base and we're goofing around and doing stuff.
that you have to know that that has been
lawyered in ways that that would would blow our minds right they feel
comfortable doing that for a reason right it's the same reason why you know i put out
something yesterday that you know it's sunday so nobody cares right but when you have jp morgan
saying spot bitcoin ets are inevitable and you have black rock
being one of those that has, you know, submitted, it's over. That's going to happen. Those guys
get the answers to the test before the test is even considered, right? So what Coinbase is doing
is they're going to be allowed to continue to exist and grow because we're,
They're going to have to let somebody do it.
You can't not let somebody be the adult in the room in the crypto space.
They've essentially been knighted as such.
But I think the government would prefer, listen, I 100% agree with you.
I think Coinbase slaughters the SEC in court.
I think Coinbase is one of the most important companies we will ever see.
But if they had their choice, the government, I think it would be like an EDX markets run by Citadel Schwab and Fidelity.
right and we would see any incumbents disappear completely i'm not saying for people to be
clear that that's going to happen i believe in coinbase very much
But Coinbase may be the grand compromise for them, right?
As you said, the adult in the room from crypto.
Right.
That is a great phrase to you, the grand compromise.
I agree with you there.
And again, your Black Rock doesn't hitch its wagon, not in a very meaningful way,
but doesn't hitch its wagon to Coinbase, which is then hitching its wagon to CBOE.
I've had very, very significant lawyers in the space.
outside the space in
TradFi saying, listen,
Coinbase's relationship
with the CBOE is much
bigger than its relationship with any of these
spot Bitcoin ETF players.
That's...
That is going to be, what you'll find is, you know, you see Apple's earnings rotate over the last decade from how much they're selling in iPhones to their, their quote unquote, services revenue, right?
Coinbase will end up being a company where their quote unquote services revenue to all these, you know, issuers of XYZ.
It will become a really, really, really big deal.
So, yeah.
That's where we're headed.
I mean, whether you like it or not, that's where we're headed.
You know, effectively, Coinbase, and I hate this analogy, but, you know, Coinbase will end up being the Bank of America or the JP Morgan of crypto in the United States.
Yeah.
That's what we'll end up being.
Mario, just really quickly,
and I think that just something that we touched on here
because it's about the C-Fi-D-Fi,
and I know you want to move on.
But that bridge between C-Fi-D-Fi is so important,
and that's why I think BASE, as Rand said, is so important.
And there are also other huge...
centralized exchanges. I mean, Binance did try it to be fair with
finance, smart chain and all of those, but OkX, for example, has a huge
Web3 presence. That is available to United States customers,
and they've found a way to branch CFI and Defi. And I think that's what we're
going to see as the roadmap for most centralized exchanges. They have to
somewhat interrupt or disrupt their own business.
with decentralization and defy to be able to exist into the future and to be able to service people in jurisdictions where the centralized exchanges are not allowed.
I think just one other thing about...
How is it, but they saw that.
Yeah, I think just let's just talk about a few things around Coinbase.
So, number one, the exchanges make money out of derivatives.
They've just launched the international derivatives exchange.
And they are the first guys to get legal derivatives in the United States.
Up until now, no one's got...
No one has the right to do legal derivatives in the United States.
None of the crypto exchanges have the right to do legal derivatives in the United States.
And...
Coinbase has been the first one to be able to get legal derivatives in the United States.
Exchanges make money off derivatives.
There's no money in spot.
Spot is zero.
Spot fees 10.
Yeah, but I don't think it's reasonable.
Just to be clear, I don't think it's like perpetual swaps and the Bitmax and Binance.
It's effectively futures and like that will compete with a CME or something like that.
It's leveraged futures.
It's leveraged futures, which is very similar.
Yes, granted, it's not perpetual 100x leveraged futures, but it is leveraged futures.
Absolutely. I just think there was a lot of people who when they saw that news thought all of a sudden that you were going to be seeing that on Coinbase and unfortunately for Americans, that won't be the case.
That derivative's coinbase issue. That's a longer term play.
Right? That is a longer term play.
And to say it is, you know, not necessarily that big a deal.
They're the only ones that have been given that license.
It's a huge deal.
That makes them an institutional player.
Guys, features themselves are derivatives.
The CME has futures authority for Bitcoin.
I mean, the CME has authority to features drivers right now on Bitcoin.
Yes.
I don't understand what you're saying.
There's somebody said to comment that no one's gotten derivatives of approval in the United States.
That's just not true.
No, the point that I'm saying is that Coinbase is the only crypto exchange that's received it.
Again, that's another marker as to they've been knighted as, okay, we have to in some way.
We're going to be forced to allow somebody to be this company, and, okay, we'll allow, we'll allow Coinbase's just another marker.
I don't disagree with you, but the curious thing is that seems logically inconsistent with the SEC suit.
I mean, the SEC sued alleging that they don't have the...
ability to function as a broker dealer, they're not a properly registered clearinghouse or exchange,
those team inconsistent.
I mean, one has to be...
I appreciate the fact that it seems inconsistent, but the SEC has been taking it in the dick.
I don't disagree, right, but they might take it in whatever body part you want to call.
Andrew, I'm going to snap that.
Yeah, yeah, I know.
I'm going to get a clip out of Cryptotan hole.
The SEC's taking it in the dick.
Andrew, you got the clip of the day.
But the bureaucrats are extremely stubborn, and they have that suit.
It's a new filing, right?
And there's nothing to say, I don't disagree.
Eventually, that's the way it goes.
But that could be two years from now.
So if I could verbally, and if anybody follows my handle, I often will simply post Larry Fink's face.
So my response to the SEC, and it's a serious, I'll just verbally post Larry Fink's face right here.
Right. So that's the response to the SEC's issues with Coinbase.
Coinbase is tied at the hip.
Right.
with the biggest financial organization on the planet as their SSA process for spot Bitcoin ETF.
The reality is, is ultimately the SEC will lose.
They may be stubborn.
They may, you know, appeal, yada, yada, yada.
Coinbase is moneyed.
They have the ability to fight it till the ends of the earth.
And whether they pay a fine, whether they delist a few things,
That doesn't matter.
They are literally adjusting and shifting their revenue streams as we speak, right?
I don't disagree, but the question is one of time.
Well, Joe, and they become stubborn a lot longer than you think.
Well, Joe, you also...
And again, that's fine, but also leadership at those organizations,
adjusts and changes.
So that's also true, right?
And my guess is that the friends that Coinbase has now in the traditional space...
I don't know. I'm not going to bet on Gary Gensler and the SEC folks.
And, you know, everybody knows that I talk to people inside of the SEC.
Sure.
Yeah. I mean, I've been told literally a thousand times that Coinbase was in trouble until they decided as an organization, that's enough.
burn the boats, we're going to court, and we'll go to court until they just get tired of us going to court.
And that's how they win.
And that's what we've seen.
That is their, that's what they've chosen.
I think that makes sense.
Mario, I think we should probably, because we had so much heat around it, to circle back to Gallo.
I think that's kind of the breaking story at the moment.
Yeah, let me just read a tweet by Evan, who also quote retweeted Jake.
Browatsky about Gala games.
So Evan Luther Street says Gala going to zero.
Obviously, he's getting attention.
I don't think Evan thinks is going to zero,
but we'll ask him he's on stage with us.
Gala is one of the largest ecosystems
in the Web 3 industry.
The founders of Gala are suing each other
over $130 million theft,
crypto theft.
Jake has the charges broken down six charges then Zach XPT is pretty critical has been critical of Gala last year
But let me read out the charges of Jake or the the charges that Jake tweeted asset misallocation
Kuremeyer whatever one of the founders reportedly siphoned six hundred million dollars from Gala games for personal use number two unethical loans
So one of them is accused, I think same one is accused of borrowing heavily from Gala Gains for personal gain.
Number three, competitive conflicts, established rival entities in Switzerland and Dubai.
Jesus, those founders really went all out.
Number four, power manipulation excluded board members, board member Thurston from crucial decisions.
It just seems like two founders having a fight. I don't know who the unethical one is or both of them are.
Fiscal responsibility submitted flawed or incomplete financial reports.
This is getting criminal.
Number six, depending where they submitted it.
Number six, opaque practices, concealed key corporate documents from True North.
I'm not sure who True North is.
Jason, since you're on stage and Evans on stage as well, these allegations are more serious than I initially thought.
And I understand why people in the, in the,
comments are going pretty wild about us covering this and the allegations being made.
So maybe give us a thoughts again.
I know you said you can't comment too much and I respect that.
But give us some thoughts whether, you know, I know you're a believer in decentralization,
but could decentralization in this case kill the potential of Gala becoming successful
decentralized ecosystem?
In the long term, no.
Oh, sorry.
You asked about me.
Sorry.
You can go first.
Go ahead, buddy.
Yeah, go first, Jason and Evan will probably crush you.
We'll see.
I just wanted to throw a couple things out.
The first is that those, basically everything that you just mentioned...
that comes from the countersuit.
So you should probably look at both of them.
I'm not going to comment on the validity or veracity of either,
but probably read both.
And...
potentially in order.
So that's the first thing.
The second is, I'm not sure Jake went through it in that order, but yeah.
I don't think that in the long term, this is going to impact the ability for this to become
a viable, decentralized ecosystem for gaming and entertainment across all verticals.
But I'd love to hear what Evan has to say, and we can kick that around a little bit.
I mean, my opinion would just be that any time there's
significant drama between the founders most of the times the company will not come out of it right
especially when it's the co-founders who are having this drama between them we don't know what are the
facts yet that's where there's a legal process that it's going to play out and we'll know what
actually happened one guy's blaming the other one for embezzling funds the other guys blaming for
selling tokens both of which are negative for the investors uh in the ecosystem
It is possible that because Ghali is the end of the day still a decentralized product.
All of the control is outside of the founders' hands, but they have significant sway on the market.
So I do think that they, because there's such a, just a nascent space and there are so many other gills and projects doing so much so well.
Maybe the other ones will take this opportunity and really do well, but I think it's going to be really hard for regard to come out of this.
Evan, and maybe Evan, give us.
That's how we saw the shift of money into Ultra and Vulcan forged.
I know you can't compare them on a like-for-like basis.
But I think the one thing what we're saying here is you cannot claim that Gala were decentralized.
I mean, it's completely, it's right now it's a completely centralized entity.
When you've got the two founders of centralized entity fighting like these guys are fighting, it can't end well.
It simply can't end well.
Evan, how big is Gala games?
Just for anyone that's not in the gaming ecosystem,
like me and you know, me and you are pretty big investors.
Again, for anyone does not, Evan,
is the one that convinced we get into Web 3 gaming
relatively early when I thought it was all a pump and dumb scheme.
So Evan, you're pretty deep in the ecosystem.
How major is this for the ecosystem?
Evan, you're muted, man.
Oh, well, I'll answer, I'll answer Evan's question.
That Gala games is pretty massive, guys.
That's why we're seeing some funds move from Gala to other games.
I don't know what their market share is.
Maybe, Jason, you could answer that one,
and then maybe respond to some of the points that Evan made,
including the point that it's very hard.
Doesn't matter who's, you know, what, the facts are,
when you have the two founders and they have such sway on the market,
so many tokens they hold,
it's hard for a project to come out to survive such a split.
Yeah.
Actually, that's a really great point.
I want to dig in on that a little bit.
They don't hold tokens.
That's kind of the point.
And that's one of the reasons that I say that this isn't an issue for the company as a whole.
It's very much a thing between the founders.
There are no massive amounts of tokens that these founders hold.
There is one major wallet that is identified on chain.
You guys can see it on Ethereum.
And it's got a couple billion gallon,
and that's all that the company and the founders at this point in time hold.
So that's very much.
What percentage of the supplies are?
Right now, I think it's something like 8% or something.
I can go look right now. I don't actually know on the top of my head.
It's in a multi-sig locked wallet. No one has access to it.
It would be under the...
But if that's the case, why are we seeing other...
Vulcan Forge pumped over 30% in the last couple of days?
So why are we seeing funds flow out of Gala at that level if it's not really that impactful for Gala itself, for the company itself?
I think that there's a lot of narratives that people are pushing right now that have, they have vested interest in seeing some of those changes take place.
I think that if you were to, again, totally not commenting on this in terms of price or anything like that.
But if you go and look at the short interest and things like that, you will see that there's definitely some reason for people to push certain narratives.
I think that in time...
You know, as people see more of what's actually going on and look at the project, you know, not necessarily from a headline perspective, but look at what's actually taking place, then, you know, some of those factors may change.
You know, I mean, we got 391 people in 36 countries building right now.
You know, these are employees.
These are not, you know, these are not like.
random people. And yes, of course, this is a centralized entity. It is a company, obviously. That doesn't mean that we're not building a decentralized ecosystem. I would definitely point out that those are two very different things. And one of the reasons that you have a centralized entity is that you have to have some people there to organize and build stuff.
You know, I mean, as much as I love, you know, I love the ethos of decentralization.
Absolutely love it.
But at a certain point in time, you do need centralized entities that make things happen.
Just like if we're talking about, you know, on ramps or off ramps in, you know, defy, you know,
there's always going to be some sort of centralized entity somewhere that actually pushes and gets things done, builds it,
and then decentralizes it for the rest of the world to then,
you know,
take and run with.
And that's,
that's what this is.
That's what Gallaghan is.
That's what all of the games that we're,
we're building ultimately are hoped to be able to do.
You know,
it's about creating something and then giving it to the world.
It's this birth of,
content of technology of a substrate that people can build on that's the whole point you know
there's definitely a central identity there of course nobody's ever said there wasn't we've always
talking talking talking talking about a platform you know taking a big hit and talking about
a survival of a platform maybe going back to stake Scott I don't know if there's any updates
there because I stopped yeah maybe that'll be it
Yeah, I think it's a huge deal when a platform obviously removes deposits and withdrawals, even if temporarily.
So I think that's something we should maybe track and discuss tomorrow.
I was listening to Jason talk about Gala.
The thing that always strikes me in these conversations before we move on if we're going to is that once again, it seems like these platforms could be very successful without the token doing shit.
Right. And so it's like, why did that even need a token to be an incubator, you know, to do the business that they do? And so I think that there's always risk in viewing yourself as an investor as if it was a stock and a company when you actually just own the token for it.
Also, I just think it's just nonsensical that the quote unquote volume flows from Gala to these other projects when they have nothing to do with it. That's just a bunch of traders chasing narratives and trying to figure out where money's going to go.
like imagine if like Amazon had an issue and everyone was like oh we're just going to put our money in Google instead
it's no no no no it's not absurd like if you if you're if you're betting on the web three ecosystem on the web on web three gaming and and the leader takes a hit and you start questioning the survival of the leader but you still believe in the ecosystem then it wouldn't you know if gala does collapse which we don't I don't personally formal I've seen I don't think it will but
if it does collapse.
Yeah, but if that narrative is gaining traction,
then it makes sense for investors to go to other games
because users will shift to other games
and people that sell Gala that believe in the ecosystem
need to bet on another company and another...
I mean, I guess that's true.
Like if you have, say, like 10% of my portfolio
is going to be in gaming
and that has been sitting in Gala,
you might move it to another place.
But I just think that those...
Those are very temporary and scary narratives if you're investing on it because you're moving to something that's fundamentally different and doesn't because you're moving your money to it.
It goes to my exact point.
I was about to say the tokens in these other ones will now go up in value, but nothing's fundamentally changed for them.
Exactly. I was about to say, there's not, I mean, there's not many ecosystems that are similar to the Gila ecosystem.
So, you say, okay, well, just jump to another ecosystem. It's like, oh, well, I believe in gaming. I used to like Gala. Now Gala's gone down.
Okay, well, let me just put it into something else. That might be a piece of shit. I'm not saying any of them are in the shit. But that's like what we're saying here.
Yeah, that's exactly right. There's just some updates. We've blockchain tweeted. So gambling platforms stake.
is suspected of being under attack.
The loss assets include $6,000 E3.9 million in UST,
$1.1 million in USC, and $900,000 die,
which have been transferred or exchanged for other assets.
And nine minutes ago, he said,
while Ethereum funds were being transferred,
B&B chain and polygon assets on stake,
were also transferred in large amounts.
And Zach XBT monitored...
a loss of approximately $25 million and it adds a link there.
So that came out.
Yeah, and Mario.
Yeah, on top of that, the stake Twitter account is just tweeting as normal and hasn't addressed it.
I mean, that could just be a stupid intern, as we know, the social media person,
but it has not been addressed at all, I don't think.
Reminds me of the accounts on the weekend.
Reminds me of the crypto whole account over the weekend, which was just tweeting like crazy.
We were just eating hot fire. That was hot fire.
That was...
Whoever was on the account, I think it was Mario.
Were you taking Adderall, bro?
So I've got his Zach XBT saying, it looks like,
so I'm assuming the updates, another $25 million was drained on BSC and Polygon,
and that's on top of a $15 million that was drained an hour ago.
I don't know about the stake, just tweeting as normal,
for me doesn't mean that these allegations or we're looking too deep into it,
because withdrawals and deposits have been halted.
Scott, what was the source of that?
Scott, what was the source that were draws and deposits have been halted?
Was that someone or stake themselves?
Yeah, we saw it in our news feed.
I'm looking for the tweet.
Sorry, my mic, I missed with my thumb there.
But I'm trying to find it.
It's in our news group.
Sorry.
Yeah, I'm just looking at their tweets.
It does look like normal.
And let me see the commentator tweet 13 minutes ago, talking about another game.
Yeah, the comments are just destroying them, talking about the hack.
So...
Yeah, so good luck, you know, again, if it is a high, good luck to the stake team, and we'll keep updating this.
If it doesn't escalate and it's pretty major, and we'll try to do like an agent-strapes.
It was from an account called Infinity Hedge, I don't know.
It's only a screenshot that we have of it, but it's with an Ether scan address and says stake suspended deposits and withdrawals.
That's all I can see.
So that's coming from, yeah, it was based on Etherscan.
Yeah, yeah, cool.
That's from one source, but definitely a lot of red flags there.
But, yeah, I think this is, I think we've got a sponsor,
we've got a sponsor tweet that's up for everyone to have a look at,
sponsor for today.
So I'd recommend you all check it out if you go on your phone.
It's DOP DOP DOP again, one of our favorites.
Scott, maybe give us another quick 20 second update on who DOP is
because we love these guys.
Yeah.
Yeah, sure. I mean, I'd just give you the very broad strokes, is that all of us know that when you send a transaction from one wallet to another, generally, it comes with your address and then the person who's received that transaction can...
click on your wallet and see everything you've ever done.
So imagine if you sent someone a bank wire and then they could see your entire banking history,
how much money you have, who you've ever paid, who you've ever done.
It's kind of the downside, obviously, of the very transparent public ledgers that we so much love.
So what this effectively allows you to do, and it goes much deeper than this, obviously.
but allows you to abstract that away, to send the transaction,
but to basically hit a button and it goes privately
and they can't dig into the wallet that it came from
or any of the information there.
That applies for privacy behind all information,
not just obviously with those transactions, NFTs.
It's really, I mean, listen, people use privacy tokens for things like that,
but if you care about your privacy in the future,
this could be one of the very powerful ways to make sure
that everything you do is not transparent to everybody.
Yeah, and look, the best way to simplify for everyone listening is privacy on the blockchain.
One of the main issues with the blockchain is that it is one of the beautiful things and the
ugly things about the blockchain is that you could see everything is everything is very transparent.
That's all whenever someone makes allegations, what you do in crypto is like, hey, provide me
the transaction highest thing to do.
But the downside of it is that completely destroys privacy.
Like if Scott now uses his wallet and goes to get a happy ending massage in Thailand,
everyone will know Scott is getting a happy ending massage in Thailand.
Well, they would have had to have been at that place and know the name of it to know that that's who I was paying.
So they're probably probable and guilty as well.
Don't be too defensive.
It's a case, go.
But I've added the gala discussion.
We'll cover that tomorrow for Esquoise.
Mario, is that what biohacking actually is, by the way?
Ran, I don't know.
You want massage?
You want you want massage?
You come for good time or a long time?
How long time you come?
60 minutes, 90 minutes.
Biohacking.
All right, guys.
Well, you're saying this while I'm in the sauna.
So, okay, I'm not going to make an inappropriate joke.
Otherwise, look, I think we should wrap now.
I think it's a good space.
If the stake discussion, if there's more updates on stake, we'll cover it here.
If it's major, otherwise, we'll discuss it tomorrow.
And, yeah, there's a good discussion.
We talked about Gala.
We talked briefly about the markets and the FTX sell-off.
this app that could be coming.
And then we have what happened during the space.
It reminds me of FTX.
While I was doing a crypto space, FtX hack began.
And then Kyle, I never forget that.
Kyle is like, I'm a Kyle, Carl Chessay, Master Ventures.
Kyle, are you worried?
He's usually always chill.
Mario, I wasn't worried, but now I just got a notice from my team
just a few seconds ago that FTC just halted withdrawals and deposits.
And now I'm worried, and that was the beginning of the FTX saga.
So, you know, kind of getting the same feeling here from Scott,
who announced that stake halted withdrawals and deposits,
but obviously it's not the same thing.
I'm just saying that could be something going on if that is actually accurate,
if they didn't help the deposit.
If we've learned anything from crypto is when deposits and withdrawals on a platform
or halted, you should probably pay a lot of attention.
Yeah.
Again, hopefully the hack's not too major, and they've got a lot of fun, so...
Hopefully he's nothing too bad and I thought Scott with everyone that has money on stake
Guys I think we should wrap it up around Scott what do you think? I agree
Cool. All right, guys. Appreciate it. We'll see you again tomorrow, same time and appreciate everyone that's joined on the panel.
And for everyone listening, just do me one favor before leaving the space. Go on the panel. You'll see that big red logo. It's a beautiful logo. Very, very beautiful logo. So make sure you follow that beautiful logo. So make sure you follow that big red logo on stage. Thanks a lot, everyone. Really appreciate it. We'll see you again tomorrow, same time. Bye, everyone.
Thank you, guys.
