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๐จMAJOR BITCOIN CUSTODIAN TO FALL? | CZ Court Case #CryptoTownHall
Recorded: June 8, 2023 Duration: 1:23:32Space Recording
Short Summary
The crypto space is experiencing significant trends, including increased regulatory scrutiny, potential consolidation by traditional financial institutions, and a shift towards self-custody among users. Declines are evident in the financial stability of some companies, with warnings of potential bankruptcies and a reduction in available trading pairs on platforms like Binance US. Meanwhile, macroeconomic factors and political themes continue to influence market dynamics.
Full Transcription
Hey everyone just gonna send out the invites and we can kick this off.
Rand, I've sent you an invite.
I'm not sure where Scott is, I think you'll need a couple of minutes.
Just sent you an invite.
Are there, Scott?
Set you both an invite.
Rand, we'll take him, Scott, we'll take him about 30, you know.
It's given about 13 minutes to find the invite and another eight minutes to click on it.
So we're gonna kick this show off in 26 minutes, just waiting for Rand to accept the invite.
Can you hear me guys or am I talking to myself?
We hear you, Marr. We hear you. We hear you.
Yeah, we hear you.
I'm glad you like my, I like my, you like my humor.
Let's see if Jeremy's still black, a shadow band, Jeremy Kaufman, sending him out an invite.
I saw him in the audience yesterday and still he didn't see the invite, but I did actually see him the first time.
Yeah, we can't send him through, um, Dan held, we can't send him through an invite.
via DM because he's shadow band.
I don't know what crazy shit.
I don't know what shit he posts,
but obviously Twitter doesn't like it.
All right,
I've sent out all the invites, guys.
We had the same situation with John Rice
from Blockworks yesterday,
and he said someone told him
that you can get a three-day shadow ban
for posting a bunch of links in a row on Twitter or something,
but we couldn't get him up either.
Question, Ryan, can you see the co-host invite?
Yes, sir.
Perfect.
I'm accepting a noun.
Beautiful.
Beautiful.
Alright guys, so let's kick this off.
Maybe Randy can give us a quick overview as always
on what you covered in your show
and then Scott will do a market update.
Um, okay, so, look, we covered the, the fight between, um, uh, CZ and, um, and, and, um, the
CEC. It looks like that fight's getting dirtier and dirtier. We, we, we, we covered, like,
you know, the DMs and stuff like that. And it looks like that fight's really going to get dirty. Um,
the more I read it.
the more I think that maybe a DOJ announcement could happen.
And I guess if we just have to prepare ourselves for it.
I think so that's the first thing.
The second thing we covered is Coinbase against
SEC against Coinbase specifically we focused on the fact that Coinbase have come out and said we're not ending our staking service and we're not delisting these tokens of the SEC are saying our securities and we're actually going to go and fight and that's the first time that I think anybody has actually gone up against the SEC was such a figure.
I know Brian Armstrong's come out and said look we're going to get this job done. So that's another thing that we spoke about. But we did focus on the dirty tactics that the SEC is actually adopting in a clean fight.
When I say dirty tactics in a clean fight, the fight could be a clean fight.
Go to court, determine whether it's a security or not a security,
determine whether you should have registered or shouldn't have registered,
and then let's get legal precedent.
That would have been a clean fight.
But the non-clean part of the fight is that the SEC know exactly how much money
Coinbase is making, because Coinbase has filings.
And what the SEC is doing is they are...
using multiple weapons to cripple Coinbase in the fight.
So what I mean by multiple weapons, first thing is, cut the banking so that people can't
deposit money onto Coinbase freely.
Second thing is, declare a whole lot of token securities and therefore, you know, hope
that Coinbase will delist them so that they can't make the trading revenue from them.
Third thing is keep watching Coinbase's financials because Coinbase is a listed company
and obligated to post financials.
And then you'll realize just how much money they're losing and just how hard you have to push them to get them to a point where they tap out because they run out of oxygen.
So we covered that.
And then we looked at the macro events.
We looked at two events which the market is, you know, we've been so busy in crypto world that we forgot that next week we've got CPI data.
And straight after the CPI data, we've got the FOMC.
On the CPI data, the Cleveland Fed is forecasting a massive drop in inflation from 4.9 to 4.1.
or 4.13. That's a massive drop in inflation. And they even forecasting a bigger drop in
inflation the following month, back to 3.2. So on inflation front, it looks like the Fed may,
I mean, they may actually stop increasing interest rates for this, this FMC meeting on the 14th.
And that may actually be the Fed's first pivot, so to speak.
So that's what we spoke about.
Rand, just quick question.
I know we've got David Bailey up here,
and David, we've got a lot of questions for you, man.
But before that, Rand, you talked about the DOJ announcement coming this week.
I know there were rumors that the price action we saw yesterday with BNB relates to that.
Has there been more clarity on that point?
Anyone else come up with the same rumors,
or just that one source that we were debating behind the scenes?
Yeah.
So there are multiple rumors, and that's always the case.
And just because they're rumors doesn't mean that it is true.
But when you read, you know, I've had time to now read through all the accusations and allegations,
as well as I read through Catherine Coley's, who was the XEO of Binance, I read her testimony,
which was a whole lot of pages.
And look, like, there's a lot in there.
And I can't judge whether it's true or not true and what the excuses are, but they've just got a lot of incriminating or things that could potentially be incriminating.
There's just a lot in those documents.
And I think that the DOJ, if I were the DOJ and I thought that these things were true, I think I would have enough to go criminal.
It's not to say, you know, sometimes the DOJ wouldn't do that,
or they'd wait for the case to play out.
Or, you know, the DOJ is not under any time constraints here.
You know, they can keep us going for a long time.
They can wait to see the outcome of what happens in the SEC case.
So, look, it wouldn't surprise me if there were.
I hope there won't be, but I wouldn't surprise me in the least if they were.
Scott, any quick thoughts before we got a David and maybe a quick market update?
I mean, everything's flat in all markets right now.
So looking at Bitcoin down 1% at 26,417 with Ethereum in 1848.
I mean, stocks, nobody cares, but literally everything within a, you know, 12 bibs or something flat.
So the S&P up 0.12%, crude oil down 0.5.8%.
Not really much to talk about there.
And I think we should probably start digging into the topics at hand.
David, man, how are you?
Hey, what's up, fellas?
Yeah, you caused quite a stir there.
I'm not saying in a negative way.
It's justified.
But, man, you've become the talk of Twitter in the past 24 hours.
We pinned the tweet, obviously, above.
Major custodian about to declare bankruptcy without last minute bailout.
Take your Bitcoin off exchanges, even Bitcoin-only platforms.
Now, I don't know if you're inclined to tell us.
who that is if you were great but i have a feeling not but can we just dig into this a bit because
obviously in the uh current environment we need to take things like this very seriously yeah and hold
on one second i'm turning off my uh fountain outside i'm uh making a little bit of background noise
here hold on i wish i had to i'm gonna by the way scott scott this is where david this is
where david blocks me because i'm going to pressure him to try to get a name given reasons why he should
share it um and he's going to get pissed off and block me just a heads up scott
You wish you had a fountain.
Don't you have a fireplace,
an indoor golf range,
and bowling alley.
And then I can turn on and off.
Whatever, man.
We all dream.
Listen, if David doesn't want to show who he thinks the custodian is.
Let me quickly read out the tweet for the audience.
So David tweeted 15 hours ago,
Major custodian about to declare bankruptcy with that last minute bailout.
Take your Bitcoin off exchanges, even Bitcoin only platforms.
Again, even Bitcoin only platforms.
That's the part that got me.
The latter part was the one that hit me.
Exactly, yeah, same here.
He hinted.
There's hints there.
Go ahead, David.
Yeah, so the only reason I don't want to say the firm's name, and, you know, if you go read the comments, it does seem like, you know, there does seem to be consensus around this probably already, but the rumor is prime trust. I'll go ahead and say it. I mean, the rumor is obviously prime trust.
The only reason I didn't want to say a company name is because they're not dead yet.
And, you know, the information that I have is that they need to receive $25 million in funding by the start of business on Monday.
So, you know, that's five business days from now, or two business days and two days over the weekend.
So a lot can happen in four days.
And so...
You know, I don't want to permanently damage a company's name while they still have a, have a, you know, a fighting chance.
But yeah, it's, you know, unlike maybe an exchange going under,
A custodian going under is a bit more unique because they power a lot of different platforms.
So even if you trust the exchange that they're using, even if you trust the team that you're working with, you know, even if they're not taking a lot of the same risks as other exchanges, if they share the same.
back party back office custodian, then you can still be exposed to the risks and issues of
that other platforms have, even if your exchange doesn't do it. So this particular company, they power
their custodian for a lot of companies. I don't know how many are still clients. I know they've been under distress for
you know for a while i think it got to a kind of a critical situation after the f tx blow up
um and i'm i i know that they've been kind of peeling off because that that distress was
known um but it does seem like maybe the events the past couple days have accelerated things uh and um
Yeah.
How did the events accelerate things?
If you can dig into a bit more detail and explain what a custodian is just for people that are new in the space.
Yeah.
So a custodian is basically a company that provides the service of holding your Bitcoin that's designated to you.
in a like arms-length third-party way.
So, you know, you have exchanges that are also custodians where they hold their own Bitcoin.
In my opinion, you know, there's tradeoffs to the model.
Like, there's a reason why you typically separate an exchange from a custodian.
Mike Belchie from BitGo talks about this a lot.
So there are reasons why you don't want the exchange to be the custodian, aka FTX.
But then at the same time,
There are reasons why you do want it, aka Cash App, because you know at the end of the day, like Cash App is the one custodying your funds.
Cash app is the one taking accountability for making sure your funds are safe.
So, yeah, in terms of like what could have accelerated over the past couple days, you know, if you look at this firm's client list, some of the companies that have been hit in the past couple days,
are the clients of this of this firm.
So, you know, if there was an acceleration of maybe certain companies leaving the market,
perhaps that means, you know, a critical revenue source was lost by this firm.
Perhaps, you know, perhaps it could be more, more nefarious as companies pull out customer holdings
if there was a hole in a balance sheet somewhere.
Yeah.
you know, maybe that could be revealed.
I think we don't have enough information about what's happening right now.
And I think we're going to have to kind of wait and see.
But I think the appropriate reaction for people to have listening to this
just be risk off and take possession of your keys.
David, can we talk about...
what a bankruptcy for a custodian would actually mean because obviously very complicated right because a company could theoretically go bankrupt but they should still have all the assets custodied one for one in theory they should have never dipped into custody assets right correct so in theory that's correct and i'm working from the assumption that that's what happened here
I have heard, I have heard the rumor mill has been swirling for months and maybe that's,
maybe there's more to the story than what is typically supposed to happen.
But that's, I would operate from the assumption that they did what they were supposed to do
and customer funds were totally segregated.
There is questions around what happens in the event of a bankruptcy of,
of a custodian and,
and,
It's complicated.
Way more complicated than you would think it would be.
And some of it comes down to state-by-state regulations.
You know, if there is a hole in the money, is there any clawbacks?
It gets very complicated.
And in fact, the...
God, man, I'm doing such a poor job of trying to...
No, I don't think so.
I think it's exceptionally...
I think it's exceptionally complicated.
There is one blog post that was published by the company in question
right after the FTX blow up happened.
And it was basically a question of like,
what happens if we go bankrupt?
And there...
Yeah, anyway.
So what happens if we go bankrupt?
And, you know, let's just say their answer,
the blog post answer they wrote was...
uninspiring, to say the least.
It would depend on state-by-state regulations.
There's not clear precedent.
It is extremely uncertain.
Who actually has a claim on the assets?
Who actually owns the assets?
Yeah.
So not a super inspiring blog post,
and then about like 10 hours after they published it,
they deleted it.
Oh, that's great. We love that. Yeah. So, right, so digging in there, the company could theoretically go bankrupted, even if they had the assets backed one for one and segregated, those assets theoretically could become a part of the bankruptcy claim and then we go down this.
Yes, the money's there, but how long until people get to, who gets it scaled out in what manner,
dependent on what regulator or legislation, dependent on the state jurisdiction, it's extremely
potentially messy.
Yeah, exactly.
And David, what would that mean for the ecosystem?
You know, looking at obviously best case scenario, they get bailed out and, you know,
we continue business as usual.
If that does not happen, how bad is it?
And what are the repercussions?
Hard for me to assess that.
It is a fairly large company and the company has a variety of different products.
I don't know who the customers are of all the different products.
You know, they were a very successful business and I do feel for them.
I know they're CEO and, you know, I know that their hearts are in the right place of what they're trying to do.
So, you know, I think there's going to be a lot of service disruptions.
And, you know, this, like, you have more than just custody provided as a service here.
So, you know, you have on ramps, you have, you can kind of go through the list of all their different products that they have.
So, you know, I think in the short term disruptions, I think in the long term or in the medium term,
all their clients are going to need to go find a new home.
So in one sense, there's an opportunity there for competing vendors that maybe aren't turnkey,
but they provide one slice of what this company offered to pick up new business and new clients.
Yeah, I can say right now, just David, looking at this is from a tweet,
but we're also checking their website to vet this.
But a year ago, effectively...
I mean, I can run through the names.
There were 16 clients listed on their site.
Finance US Swan, OK coin, dapper, Crackin, advisor peak, on-ramp, strike, AVE, DV chain, start, engine, Republic, Bittrex, Abrea, Securitized, T0.
And if you look now, it says Abra, Aggio, I don't know them.
Okay, coin, Swan, trust token, on-ramp, but Swan has already responded very clearly that they left Prime Trust.
If we're talking about prime trust as a custodian.
So there's only, I mean, that's 16 down to five in a year.
Well, that's, that's who's mean that they list all their clients on that page.
Correct.
Like I said, we're just going by literally their website.
I have a few comments here.
I think the first thing is that that client list is outdated.
Yeah.
And they lost,
and I think,
you know,
I don't,
I don't want to spread the,
the FUD circle into other,
other companies or other clients,
et cetera.
I have been kind of monitoring the language on some of these blog posts
or some of these announcements that different people have put out.
Yeah.
There is a small amount of ambiguity baked into those.
I thought my gut would just kind of say intentional ambiguity because no one quite can be certain about what happens here.
But again, I would just advise people, even if everything seems, you know, hunky dory, you know, to take the maximum conservative approach.
I think there are a few things to notice here.
I think there's a few things that we need to talk about here.
The first thing here is in the bare market, there will be casualties.
You know, the bare market, we're interest in crypto is at an all-time low.
and the fact that they cut off the banking on ramps and off ramps and they reduce liquidity.
And the happenings of the last couple days, that scared a lot of people away.
And a lot of people being scared away means they're selling their Bitcoin and removing them from custodians.
And I think that this is the first of a series of...
ethical and honest bankruptcies if it happens.
And when I say ethical and honest,
yeah,
we had the FTXs and the Celsius,
but this is like,
this is a business that probably has great intentions
and probably did everything by the book.
But,
you know,
when the market changes so quickly,
if they don't raise funding,
they're probably gone.
Second thing that's probably worth talking about Jerry's,
it feels like there's an undertone of,
trying to get the current, trying to clear the grounds so that the current financial institutions
can actually capture the space. So it's almost just like they want all the crypto companies gone,
the big exchange is gone, the Binance that you is gone, the Coinbase US gone, all those gone,
so that they can then come in and almost do it with the incumbents that have been
pain and I've been lobbying.
And I wouldn't be surprised if we got an announcement from J.P. Morgan and if we got an
announcement from other such companies.
I don't know.
I don't know if it's just me that feels that.
I'd love to hear from the other speakers.
And who has been telling you this?
Who has been telling you this in these spaces and has been laughed at?
Kim.com, but he hasn't been laughed at.
No, I told you guys for the longest time that this crypto war is coming.
The U.S. government has no interest in any competing cryptos.
You know, they're going to roll out their CBDCs.
And they want to have full surveillance abilities against financial, you know, transactions.
And they want to be in control.
So they're not going to allow any decentralized cryptos, even Bitcoin, to exist.
So what you are seeing now, you know, has been coming for a long time.
I just pinned a tweet, Rand, above that I sent on 111522 right after FTX, so you know that I agree.
Wall Street is going to sweep in and buy up our entire industry for pennies on the dollar watch.
Who said that, Scott?
Nothing about that.
I did.
I did.
On November 15th, right after FtX, because to me, exactly what Rand just spoke is sort of the nefarious intent, what Kim.com is saying here, obviously seemed readily apparent.
That's if I'm assuming they want the industry to exist, but I think that it, and rationally, I think these regulators and legislators won't control.
And we all know that obviously they're in bed with the banking system.
So you would have to imagine that if crypto is going to exist, they would prefer to exist within that system.
Dave, I saw you at your hand up.
Go ahead.
Yeah, I mean, look, speaking to someone who worked on Wall Street at these firms, you know, in the belly of the beast, as it were, for the better part of 30 years, there's a couple of points that are important here.
The first is that the government is not monolithic.
We saw a very encouraging tweet from Ritchie Torres yesterday from the, who's a Democrat who, you know, is a Democrat who,
breaks with his party in many things, admittedly, but is generally very, very popular where he's from and deservedly so on regulation by enforcement.
There clearly is a faction within the government. We won't name them. We all know who I'm talking about.
Who believe that, yes, they want to see both banking consolidation and all market consolidation in the hands of a few players that they can whip and drive and get power from and donations from.
That is true, but it's not dominant.
It's a very powerful now in ascendancy faction, but it's not necessarily dominant.
So we'll see how that plays out.
But it is really important to understand the second point, which is that the Wall Street firms that we're all talking about are absolutely awful at innovating.
And so what they always do, and look, when I work for city, we bought multiple firms.
They actually, the company called LaVa Trading, they bought for $300 some on million.
They proceeded to break it.
And it went from profitable under their stewardship to losing money.
They asked me to go re-run, actually fix it.
And I did and turn it back to profitable.
Then I left.
And three years later, it was bankrupt.
And they basically closed it down.
This is fairly typical on Wall Street.
Their ability to innovate is awful.
So if you read between the Tileas, what does that mean?
If, in fact, they are successful and have Wall Street ownership of all of the crypto industry,
expect the U.S. digital asset market to basically die on the vine,
and we will be left in the dust as the rest of the world transitions digital assets.
I mean, it's a fact that a lot of people understand.
Isn't it dying on the vine as we speak?
Well, certainly it is.
I mean, every company is moving.
But the point is that what I just said is well known to multiple people in, uh,
you know, in politics. It is, you know, there are multiple people in Congress and the Senate who
understand what I'm basically saying that dynamic. To crush American innovation is a bad thing.
Now, I am still, maybe I'm being a Pollyanna, maybe I'm just more hopeful, but I do believe
at some point, saner people will end up in charge. I hope Kim is wrong, but the threat is absolutely
right.
Look, here's a great opportunity, guys.
Let me just chime in real quick.
I think the Democratic Party completely underestimates how big the crypto scene is now.
And by doing this, they are setting themselves up to lose the presidency, lose the House and lose the Senate.
Like, if they are going through with this and it looks like they will, they're going to completely fuck themselves.
Right.
But Kim, Kim, I want to challenge you on that point. I want to challenge you in that point.
Yes, I believe that a lot of people have bought crypto.
So I think that if the stats are correct, one in every four households in the US has bought crypto.
But the stats are also that 90% of people that have bought crypto have actually lost money.
So we don't know if it's 90, but we think it's about 90.
The official stats are about 70%.
70% of people that have actually bought crypto
have actually lost money.
So I know that we are a bunch of crypto bros on Twitter
and that we're all very passionate about this movement,
but we're a very, very, very small minority
when it comes to the vote.
Right. And I think that by knocking the prices down, demotivating us all further, I think there's a very small subset of us that actually will stay here through thick and thin that believe so strongly in the technology for thick and thin. I think the average person that actually bought crypto is bought it to try and make quick cash, came to crypto, lost.
I'm not going to say actually hates this space,
but kind of couldn't give two ships about the space.
They came to the casino, they put their money in the casino,
they didn't realize it was a casino.
They thought it was a hot-haired balloon that only goes up,
and they lost money.
Now, I don't think that for the vast majority of people,
other than the X million people here on crypto Twitter,
I don't believe that for the vast majority of people,
crypto is actually a vote issue.
I think for us it is.
But I think in the big scheme of things, this is a very calculated move by the Democrats to say, look, you know, we don't, this is not a very big community, especially if we weaken them further.
We can justify to them, you know, that, you know, that we, that we, that,
Crypto is a bad thing and most people lose money, et cetera, et cetera.
And I must be honest, I'm not sure that it's such a voting issue.
I wish it was, but I'm also a realist.
We made it easier for, Kim, let me add two things to it, Kim.
We invited them with FTX, with Lou Nye and recently, you know, with the recent pumping meme coins and Pepe.
We're inviting regulars.
We're like, hey, we fucked everyone else.
We fucked the retail market.
Please come in.
All right. So, Ren, I disagree with you for two reasons. Number one, you know how tight elections are in the U.S.
It doesn't take 77 million to change, you know, who's going to govern. It takes a much smaller number.
And I think the community that believes in the future and the independence of decentralized crypto is
big enough now to make that dent.
Then in addition to this, you cannot forget what CBDCs are going to do, what they are going to
try and implement here.
And more and more people are waking up.
to what's happening in the United States, you know, with the proxy war, with the way the economy is going, you know, all the things that are taking place, you know, you just see a trend here of people not having any more faith, any trust in the government, in institutions and in agencies.
And if you combine that with an aggressive crackdown on a massive crypto community, that is also, you know, don't forget, it's not just the U.S., this is a global movement.
And people online, you know, they are hurt. We have, fortunately, the situation on Twitter now where, you know, the community can,
talk openly and freely, and you will see the magnetism that the enthusiasts about crypto will have
to change the vote in 2024. So if you think that this is not a major issue politically,
I think you are miscalculating that.
that. Before you answer, Ryan, David, I wanted to go to you. So I'm going through the comments,
and just for the audience, if you don't know already, the bubble at the bottom right corner is how
you can comment and ask us questions. People are asking...
expect people that just came in.
If that custodian does fall,
and I know you've answered it already beforehand,
and you can't predict the outcome,
but if they do fall,
what does that mean for the entire market?
And not just Bitcoin, just crypto in general, VC funding,
and other areas of the ecosystem, NFTs, etc.
Yeah, I think it's another blow.
I do think that, you know, if they were doing things how they were supposed to,
customers won't lose funds, which is the kind of the critical key thing.
Like, we need to avoid there being another...
you know, more consumer damage.
And so hopefully, you know, they can be wound down if that's what comes to be.
And you won't see any kind of devastating headlines.
If there is a hole in their balance sheet caused by FTX, you know, that will be a sad situation.
And I'm not exactly sure how to answer the question.
I will just piggyback on the political question.
Okay.
The, um, we fund an organization and,
and co-founded an organization called the Bitcoin Policy Institute.
And so we spend a lot of time working, uh, with, uh,
different political factions around this topic.
I can tell you that the latest polling that has come back is that crypto has a negative impression
amongst voters right now.
Bitcoin has a neutral impression amongst voters right now.
Digital assets has a slightly positive impression right now.
Anti-Cbd-C has a very strong impression.
positive view right now.
So that's actually why you're seeing all these politicians come out with an anti-Cbdc view.
It plays very nicely.
And then I totally agree that crypto and, you know, our focus is on Bitcoin, but Bitcoin is
becoming, you know, a very serious political theme.
There's very few political topics that don't have pre-existing fault lines.
where there's already, you know, a 50-50 divide over the topic.
And so this is like fresh terrain to battle over.
And there are voters in critical states that are like up for, you know, gaining.
And at the Bitcoin conference, we had multiple presidential nominees come to the conference
because they see the growing kind of influence of this community from both political sides.
And we were in negotiations with...
What's his name?
A guy from Florida, DeSantis.
We're in negotiations with DeSantis to come speak and give a policy presentation on Bitcoin and CBDCs up until the very last minute.
So, like, this is going to be an ever-growing...
political theme, but I do think crypto has a negative impact right now.
There's also a lot of covering people wanting to cover their ass because they took money
from crypto.
Turned out that the people who gave them money were scammers and now they want to be perceived
as tough on scammers.
Yeah, David, just listening and sort of unpacking what you just said, what is the actual statistical metrics behind that?
What does, like, what does slightly, you know, anti-crypto means slightly in favor of Bitcoin extremely, you know, against CBDC?
Like, can we put numbers to that?
Because I'm wondering how fast those numbers could flip.
Listen, we all know that, frankly, if all of a sudden, which I don't think is going to happen, we jumped into a massive bull market, those numbers would be wildly different.
And we know that all those people that hate it and lost money would be buying it top once again because that's what people do in markets.
Because it seems like certain politicians have jumped on that exact survey you're saying, right?
Slightly negative crypto, that might be enough for the Biden's, Elizabeth Warrens, Gensler's to go all in anti.
But slightly favorable Bitcoin, we're seeing quite a few presidential candidates not ever mentioned crypto.
but talking about Bitcoin in a favorable life.
I would like to chime in real quick, if I may,
because this is very important for everyone to understand.
The only reason why there's any negative notion about crypto is because we have...
allowed this great innovation to be turned into a fucking speculation casino when it was always meant to be utilized for people to have an alternative financial system.
Once we stop gambling with fucking crypto and trying to rip people off with fucking pixels, this whole thing is going to become our savior.
And that is right, but that's not going to happen.
I agree with you, but it's not going to happen because people are gamblers, right?
So like we have to talk, I think, I 100% agree, but I think we have to talk in the reality of where we're at.
And I'm not going to pretend that we're not going to make the same mistakes in the next cycle.
Yeah, well, the key to winning the crypto war that the U.S. government has unleashed now is utilization.
speculation needs to be a side show and utilization needs to become the focus of the crypto community.
And once we achieve that, there's no shutting it down.
Yeah, David, so what are the metrics behind that?
Just really quickly, Joe, I still want to get the answer that question.
Because I'm just wondering how quick, how close to neutral that is.
So I was given this information, like let's call it two months ago.
So I mean, you know, this all moves pretty quickly.
I don't remember the exact numbers off the top of my head, but like this is pretty close approximation.
Like a negative 10 point favorability rating on crypto, like a one point favorability rating on Bitcoin,
which basically you take the unfavorability, you take the favorability,
and you subtract them against each other to see what your net favorability is.
The favorability of digital assets like,
five points and then anti-cbd-c like 20 points.
And when you're talking about digital assets, is that effectively asking about NFTs as a separate asset class from crypto and Bitcoin?
Are we talking about everything, all encompassing?
Yeah, it includes, it's crypto.
It's just a different word for crypto that they haven't heard in the same.
You know, they're just asking.
That's interesting.
Crypto at minus 10, but favorable to digital assets really shows you what people think of crypto versus Bitcoin.
And I'm wondering where that more favorable view is weighted because that seems like it makes it just a...
semantics on the language.
It is. It is. I mean, it's just like this, the, the polling that politicians do, you know,
like what term should I use to describe? Should I call it crime or should I call it?
I'd like, yeah, it's just classic politics and low information voters that are just weighing it on their, on their inference from words.
Uh, yeah. So, um, uh, I, I think it's, uh, it is definitely, like on the, on the political topic,
Dejure, um, what, like two groups that we've been working with, um,
Club for Growth, which is the second biggest Republican super PAC in the country, is very strong on this topic.
And they just formed a political action group, a C4.
Club for Growth plus Tim Ryan, who's a Democratic independent congressman, who has a lot of connections in the House, was like a former whip.
And then...
Biden's campaign manager from the last election.
So you actually have basically the moderate Democrats and the conservatives,
the free market conservatives teaming up to really champion this industry in D.C.
And they definitely see the political opportunity.
And Scott, just to give an update for the audience.
So this kicked off with David Bailey who's on stage right now.
If you don't know, David, we can check out his bio just on stage to kind of get the credibility.
But on the tweet and while we're covering it, and the tweet reads the following,
major custodian about to declare bankruptcy without last minute bailout.
Take your Bitcoin off exchanges.
And then the last bit is even Bitcoin only platforms.
And our guess is prime trust, but this is just a guess.
That's why we're not putting it in the headline.
And they've got 48 hours, I think, David, to try to get.
How much money do they need to keep running?
I was told 25 million by start of business Monday.
Now, you know, I'm hearing this from investors.
And so it's possible that that timeline is off, but that's...
And any insight into the...
I heard anything about the meetings with investors?
What's the sentiment?
Like I remember when FTS was looking for dollars last minute,
a last minute bailout,
we heard pretty quickly that it wasn't going well
and that we saw publicly a lot of these investors pulled out.
How's it looking here?
I know a lot of it is behind the scenes.
I mean, all I can say is that we're a media company
and when you're coming to us for funds,
that's not a positive sign.
Joe, I jump in.
Yeah, I mean, I think what people were saying that survey, they just don't understand the link between things and about people, about politicians wanting to stop scams.
You know, there's a, there's a Nigerian prints that's been using email for a really long time that's scammed.
Actually, they're not banning crypto.
They're not banning crypto.
They're not saying, you cannot use those cryptos.
They follow existing rules and regulations.
I don't like, I push back when people go crazy at shitting at regulators.
It's a very easy thing to do, very popular thing to do.
But I don't understand that if there's existing regulation, I understand that it's not perfect.
I understand the ambiguity.
I understand that could have been clearer earlier and a lot of people trying to play by the rules.
Brian Armstrong being one of those people.
But then to come in and say, hey, you know, you didn't ban email.
Why are you banning crypto?
They're not banning crypto.
Bitcoin is still legal.
When we're comparing to China, China banned crypto.
They were a lot more aggressive.
A lot of people are giving credit to China now for finally starting to open up slowly.
Still, the US is more friendly than China when it comes to crypto.
So I think we just, you know, we should just stay realistic.
But, Mario, they're trying to make it as difficult as possible.
When they can easily solve all these problems with these centralized exchanges by launching an ETF, which they haven't done, you wouldn't have so much money on Bitcoin, on Binance or money on FTX.
Majority of the wealth in crypto is in Bitcoin.
That would have been an easy fix and that's not what they're doing, right?
So to me, this is a war on crypto.
They don't want it to compete against the dollar the way Kim said.
I disagree that it's a big voting issue.
I don't think it is.
What does that do when it comes competing with the dollar?
Because a lot of the tokens that are considered securities that has nothing to do with competing with the dollar.
Well, they don't want an alternative financial system.
Can I just weigh in on this real quick?
Please.
Go ahead, Dave.
Please.
Politicians don't really give a fuck about what's happening.
They don't really care about people competing with the dollar.
They don't even think about that stuff.
They don't really care about people getting scammed.
They just care about being perceived as being okay with scams.
So it's all a perception game for them.
All they really care about is money donated to them.
Like, that's how the incentives in D.C. work.
I don't mean that in some like, oh, they're all corrupt.
Though you can maybe frame it like that.
I mean it like, they're just thinking about how do I keep my job?
How do I get reelected?
How do I say the right things, the right platitudes?
And how do I get enough money in my campaign coffers so I can run again?
And so for them, solving problems is not actually how you get the most money into your campaign.
The way you get the most money into your campaign is to leave problems open-ended and then go to the people who are stakeholders to those problems.
and be like, without me, your problem can't be solved.
And so that's why you need to support my campaign.
That's why you need to put money into my pack, et cetera.
And so...
I agree.
Perception is everything, David.
I work in marketing.
The thing is is...
When people really start believing in Bitcoin is when countries try to put a CBDC or inflation goes double digits.
Like you're seeing in Lebanon or Turkey or Argentina, all of a sudden, everyone loves Bitcoin.
Until that happens, they don't.
Guys, guys, it's a non-issue.
Actually, they love stable coins and they send them on Tron, but that's a different conversation.
I...
Trust me, I think they should love Bitcoin.
But if you actually dig in what people in countries with hyperinflation generally want is dollars,
and they usually send them the cheapest and fastest way possible security be damned.
But I don't think that's the future, but that's just the factual reality.
And those types of policy discussion are happening at Turkey, it's different.
If you look at Turkey, it's different than Lebanon.
Like Lebanon, yes, they are going for stable coins.
You look at Turkey, they're going for Bitcoin.
They're using Bitcoin like a savings account and Stables as a checking account, let's say, almost.
Newer countries that have been switching over.
I don't disagree.
Trust me, I'm a Bitcoiner.
I'm just saying if we're looking at a factual, yes, in theory, we love to talk about people using it as their savings account.
But most people in hyperinflating countries don't have savings.
David, I know you're jumping.
They need money to transact every day.
Bringing back to topic, David, how is the ecosystem going to look in the next six months?
Now with the news that broke today, we saw what happened with the war escalating with Binance and Coinbase and potentially the DOJ announcement coming this week.
Are we going to see Wall Street take over crypto?
And how is that a good thing, a bad thing in the short and medium term for the ecosystem?
Again, short and medium term because I know long term, it's not a good thing.
You know, I don't know how to answer that question.
I can just, like, my impression with Wall Street is like there are some Wall Street firms that are very savvy and they are long term bullish on the space.
There's a good number of Wall Street firms that they are just heard followers as well.
Like they're such big companies.
They're basically like their own political entity with political stakeholders internally.
And the things that people care about at those organizations is not to lose face, not to lose political capital internally at their organization.
And when they see shit like this blow up...
it's a bad look and they don't want to be,
they don't want to put their credibility on the line internally.
And so I don't think that this is some concocted strategy by Wall Street to take over crypto.
I think there's a lot of firms right now that are begging a Wall Street plan.
for him to come take them over and there's no input.
That's right.
I just, for the record, even when I sent that tweet,
it wasn't the implication that it was like some evil conspiracy.
I just think that Wall Street wants to get in and they're going to get in at the bottom
when this contagion is at its peak.
Yeah.
And there are very, very, very legit, uh,
Wall Street firms that are in heavy on this, like heavy.
And they're not going.
Yeah.
And Franklin, Templeton.
Yeah, there's like, yeah, exactly.
That caliber.
And there's probably 50 of them, you know.
And they're not going anywhere.
And they are eyeing what things to do.
But it's not like there's thousands of them.
You know, it's not like this is a widespread thing.
It's really just the sabbiest.
Sorry, I was eating bro.
And I was going to go to Rand.
Ran, did you hear my question?
My last question?
Ryan?
My, I didn't.
Sorry, I didn't.
I was trying to get onto the spaces.
All good, man.
With the escalation of the war, how is the ecosystem going to look like in the next six to 12 months if Wall Street comes in, which is what we're speculating?
Look, I mean, the one big concern is that they've got to resolve this whole what is a security and what is not a security.
Like, and I think that, to be honest, I think that's the biggest fight.
That's the biggest fight in the world is this, is this what is the security and what's not a security.
If they are right, when I say they're if they're right, if they win in court that all of these tokens are actually securities.
That changes the whole landscape because most these tokens then become almost unusable, let alone, you know, not tradable because, you know, the rules of trading securities in the United States are so complicated and so limiting that it's a bad thing.
So I think that's the first thing that has to be resolved.
But I think regardless, I think, you know, here's how I see it.
I think that they let us play.
Brian, before you continue on that point, sorry to interrupt,
but on the point of them becoming unusable,
so why are we seeing that reflecting the price?
Like, I'm going through those tokens that were considered
securities by the SEC.
They mostly recovered from the drop they experienced along with the market.
And the drop wasn't, you know, that catastrophic.
Because the battle is a five to seven year battle.
This is not a battle that's going into court next week, Tuesday.
This is a battle that's going to be,
it's going to take five to seven years to possibly resolve.
The XRP case has taken, what, three years?
And, you know, it's not even really, really, really in court for the biggest fights.
So I think that's the first thing.
The second thing is think about it from a regulator's point of view who,
or think about it from...
A political party's point of view who has been lobbied by the banks and the financial institutions.
I mean, we know that the biggest money behind D.C. today is drug companies and financial services company.
I mean, that's not a secret. Everybody knows that.
So you think about it from their point of view.
When crypto was too small and not really threatening the institution, well, then they, what
they did was they said, let them play around unregulatively.
Let's see what this becomes.
The minute that we hit a couple of trillion dollar market cap, these guys turn around and say, oh, hold in a second. Hold on a second. This is not, this is this is this is really something. Okay, now how do we get how do we get it? Well, let's mess them up with regulation. Let's weaken them. And then you can kind of buy the, you can pick up the pieces for pennies and the dollar in certain liquidations and and stuff like that.
And so I think like that, you know, look, that can be an end game.
That can be an end game here is to just transfer this into, you know, into the incumbents,
the ones that have spent so much time lobbying.
That could be one of the games here, so to speak.
You know, not saying it is, but certainly something that's plausible.
I'll tell you that much.
And then,
Hey,
go ahead,
David.
I totally agree with that,
that take.
the question is,
it's really about security's laws.
You know,
all of these tokens are securities.
I mean,
I hate to be like that point blank about it,
but they're all securities.
the problem is that our security laws are broken and out of date.
And we need to have new securities laws.
And,
I don't think there's any issue with someone launching a token that's a security.
but,
let's go one step back.
Let's go one step back.
Let's work on the assumption
that every single one of these things
is a security.
What does that mean for a network like Ethereum
given the fact,
let's,
let's play this in two parts.
They go to court,
in the court,
and,
the ruling is that all of these tokens are indeed securities.
What does that mean for the usability and the usage of blockchain in the United States?
And I mean, let's just look at it from a Salina point of view,
because maybe Ethereum will be excluded, but let's just say Salina point of view.
So the validators can't stake the tokens because it's very difficult to stake securities.
The holders can't use them to pay gas fees.
The users of the DAPs.
can't use them to pay gas fees, right?
Because you're going to paying 0.00 something salina.
I want to just use the network to do multiple transactions.
Every single time I do a transaction,
I'm actually transferring a security,
which right now, if I'm not mistaken, United States,
has to go to a registered broker-dealer, blah, blah, blah, blah.
So it makes, it kind of makes these, I don't know,
maybe I'm wrong, but maybe someone in the U.S. can enlighten me here.
Does it render the networks useless?
Well, where it really blows them up is it means all the exchanges who want to not be regulated
like a securities exchange.
We'll need to delist.
The liquidity will dry up.
The on ramps will become more difficult into those networks.
And the value of a network that no one uses in which the price is going down because there's no liquidity of it,
like you have like reverse network effects kicking in.
So I actually think that.
Whoever is deemed not a security, there's going to be massive consolidation around those assets.
So if it's Ethereum and Bitcoin are the two things that are not securities,
you know, which there are some central points of failure in Ethereum that Ethereum community needs to be worried about.
But if those are the two, then I think you see a consolidation around those things,
and that's where all the securities issuance happens.
Because these securities that are being issued, AKA tokens, they rely on the liquidity to work.
Okay, now let's play this out a little bit slightly.
Let's go one step further.
What happens if in Asia they're not securities?
And then the US really realized that they're falling behind in the blockchain technology game.
What happens then?
Well, that's the dynamic we have right now.
But now, but by that time we hopefully have an administration change or something.
Yeah, well, I think that...
So hold on.
Also, let's just go one step back and say, right now we don't actually have that
because Hong Kong has just opened up, right?
They're like, just, just, just, just opened up.
You've got Japan just, just changing the tax laws.
So right now, we're not in that, in that...
It's like the beginning, beginning, beginning stages.
But fast forward two years from now,
let's assume that everything is going well
and these networks are actually being used.
How does that change things?
Well, it doesn't make these things not securities, but it does ratchet up the pressure of changing the securities laws.
And I think if you have a market like Hong Kong where this stuff is blessed to happen, you're just going to have massive regulatory arbitrage.
You're going to have every project based out of Hong Kong.
People are just going to use VPNs, which is the status quo already.
And any laws that are passed in America just will come ineffective.
But like when you see stuff like what happened was happening with Binance, I mean, they're fucking calling CZ.
I mean, an interesting situation for CZ to be in,
but that's the game that they've been playing,
and the U.S. government is basically saying,
uh-uh, none of that.
So, you know, I, the U.S. does take a perspective,
like their laws supersede all other nations' laws,
and they apply everywhere in the world,
and if you get big enough, you're going to have a target on your back.
So I don't know.
I think it's, it is an interesting dynamic.
Dave, can you dive into that a little bit?
I know that you just DMU had some thoughts.
Dave Weisberger, if you're there, go ahead.
Yeah, I mean, I think that David Bailey,
you're making a distinction without substance
in terms of securities or outside the United States.
The U.S. is the only place on the planet
that has two different regulators
for different types of investments.
Everybody else is the same.
But the real issue here, and it's a core issue,
and you started, you were around the edges of it,
and I've been having this argument on Twitter
with a couple people today,
is that token projects, whatever you think of them,
are trying to do something that is literally impossible
to do in the United States under securities laws
for very technical reasons.
And the reason is to do it accredited investor rules
and the way that the securities registration process works.
So we have things like pink sheets and stuff.
We're really very, very loosely regulated,
easy to register stuff that can trade on platforms
that are sort of restricted, but they're there.
People can buy them.
But what you cannot do
is register a security in the United States like this and let anybody trade it.
For the first year, it has to quote, season.
During that time, accredited investors are the only ones who can trade it.
Now, if you look at almost every token project,
they're using these tokens to incentivize, this is the good use,
not the rugpooling, dumping, shit-coining,
and there's a lot of crap that goes on.
I'm not defending all of it.
But the core use of incentivizing developers,
incentivizing community members, incentivize users, most of those people they're trying to
incentivize are not accredited investors. And that's why token development in the US is so damn hard.
And that's why they can't register. They can't register because there's no easy way to do it,
but that's the issue.
Dave, I want to ask a question, and again, for the audience, we get the questions from the comments, so make sure you comment there.
The question to you is that if this is going to take, as Rand said, this is going to take years to settle.
You mentioned five to seven years.
So what happens in the meantime?
I don't understand.
What does that mean for the startup ecosystem?
What does that mean for projects that already have a token that are working on tokenomics and token structure?
If we have this battle going on that is pretty much essential for them, what will happen to the ecosystem?
Agreed.
It's moving offshore until people in the United States actually rally behind the actions,
some version of the bill that was proposed last week.
I mean, look, I'm not a conspiracy theorist by nature, but I do believe these actions, these filings happen to take the narrative away and take the oxygen away from what was a very unique action by multiple two congressional committees to work together.
But the truth is, Marrier, you hit the nail on the head. This at the core of it is about incentivizing innovation and development.
and I think Tom Embers understands it. I mean, he's been very clear about it. I think Warren Davidson understands it. He's been very clear about it. I think Patrick McHenry understands it. He's been clear about it. I'm not sure that Richie Torres doesn't understand it. I think maybe he does because based on his quotes today and, you know, he's a Democrat. I think that, you know, Christian Gillibrand last year kind of said this sort of stuff. So there is hope.
But the fact is, is if you're trying to, if the toolkit in the global economy to incentivize open source development is tokenomics and the U.S. bans it, that is not a good thing for U.S. innovation.
And I think that that may be one of my biggest understand.
Well, before, before, right, before everyone goes, so while this is a bleak outlook for everybody, just a reminder that we're still here for anyone that does have a startup and that's freaking out right now, do hit us up.
And I know probably not the best time to mention it, but I think it's a good time to mention it, that we're still pretty active in the ecosystem.
And if you want to hit us up to work with us, to be incubated, do so.
I could DM me, Scott, or Rand.
And that kind of leads to my next question.
And Dave, maybe you could take that one or maybe you have something else to say.
But what happens to VCs then?
Already drying up since FTCs, you know, down 90, whatever percent, over 95 percent.
I think, Rand, you mentioned.
So then what happens to the money flowing into the space?
And AI seems to be sucking a lot of it out of crypto as well.
I was just going to make an AI joke.
They're going to AI.
Yeah, I mean, look, VCs are a different...
This is a question.
Thesees don't rely on.
Sorry, I want to shut up.
Before you go there, hold on.
Before you go there, I want to ask you a question.
You mentioned some Democrats and you mentioned some Republicans,
but I keep hearing the same names.
I keep hearing Cynthia Dumas.
I keep hearing Patrick McHenry.
I keep hearing Warren Davidson.
Um...
What percentage, I keep hearing Tom Emmers, what percentage of senators and Congress people do you think right now actually give a shit about crypto and are positive versus what percentage do you believe right now give a shit about crypto and are negative?
I have no idea.
Name, do you know the...
I think that's one of the reason.
Name, maybe you have another thing.
I was just going to say I would be talking a couple.
Well, I would say...
the answer to that is do they care or not?
The real question is do they even understand it?
And what I wanted to say was just for a couple minutes,
if you look at the history in the United States,
we had the Great Depression,
then you had a major banking crisis,
and then in 1933, they made it illegal to own gold.
Okay?
So now modern day, the bottom line is,
is this U.S. empire we have is in decline.
That cannot be argued, and the U.S. dollar is at threat, okay?
Because we basically essentially have run out of road to kick the can at this point.
So...
What we saw in the Restrict Act, when they called it the TikTok bill, we had hours and hours of spaces on this where they inserted language in there that could have declared, you know, crypto or digital payment as a national security threat.
So they tried to sneak that in there.
So we know.
And then you had Lindsey Graham on TV.
Back to your question, Mario, is he didn't even read the thing.
but he was a co-sponsor of the bill.
So these guys are just given marching orders.
They don't even understand crypto or what they're doing.
But they see it, I think, is what Kim.com says as a potential threat to the U.S. dollar.
So they're going to go after companies like...
I don't think they care. I'm going to be honest.
I don't think they care either.
They're just going to vote for whatever they're told to vote for.
And at the end of the day, if it's a threat to the U.S. dollar, they'll do everything in their power to ban ownership or tradeability of it in the United States.
I'm going to push back.
I'm going to push back.
Don't be naive to think it won't happen.
Just they'll do anything to defend the US dollar.
I'm going to push back and I'm going to say that I don't really care about the US dollar because there's no real de-dollarization going on.
There were a couple of headlines in the last month.
But the reality is that those headlines have also died down at the moment.
And that the one currency that potentially they could be moving to, which is the Chinese yuan if you want to call it that.
Yeah.
isn't a viable option and everybody in the world knows that they'd rather be on the US dollar than be in the Chinese.
It's pegged to the dollar.
I totally agree with you there.
And it's pegged to the dollar.
I totally agree with you there.
And I think the de-dollarization talk is a little overblown in the short term.
But I think in the medium term,
things could unravel more
I don't want to go down the political path
Scott before Dynes starts to attack all of us
Can you just remind the audience of what we're covering
And you know David giving us this time earlier to come and share more details on his tweet
Regarding the custodian the next custodian to potentially fall and then we'll go
Danish to go angry at all of us
Sure, yes. The topic here is that a major custodian in the crypto space could potentially be facing bankruptcy, sparked by a tweet by David Bailey, who's
still here major custodian about to declare bankruptcy without last minute bailout take your
bitcoin off exchanges even bitcoin only platforms i think the uh latter part of that was the one that was
shocking to a lot of people because i think the perception has always been that bitcoin only platforms
are completely safe from the contagion so i think that that one got a lot of a lot of people
amped up donish i missed you this morning buddy i'm sorry i wasn't there but uh
Before Dynish comes in, before Dynch comes in, why aren't you talking about Gary Gensler being an advisor to...
That is so fun.
This is...
This is so funny.
Yeah, I forgot.
I forgot.
You guys surprised?
I mean, come on, this is the way it works.
Yeah, you know what I wanted to do...
So, Randman, before, tell the audience, can you give us the facts?
What do we know?
The facts?
Okay.
Okay, what do we know?
What do we know?
The fact is that Gary Gensler in 2019, before he got this role,
approached, allegedly, according to Binance's lawyers,
allegedly approached Binance to be an advisor.
And his pitch was that he knows the law and he knows how to get around the law
in the United States, and he met CZ for lunch eventually in Japan.
We covered this on my show today, that he actually met CZ for lunch in Japan in 2019.
Now, why do I think that's very funny?
And what happened?
What happened?
What happened?
What happened was, I think CZ said no.
Because he was never appointed as an advisor.
So, you know, I guess, yeah, I guess maybe this is a little bit of revenge.
But, I mean, there is something else here that I've actually asked our researchers to do.
And what I've asked the researchers to do is to go and make me a list of people that used to work in government organizations.
And where did they land up, whether they landed up working for the drug companies or the financial institution companies or the banks?
Because I know it's a big phenomenon, specifically in the United States, where people, for example, work for the FDA.
And then a couple of years later, where are you?
Well, I'm working for Pfizer.
I'm working for the drug companies or something like that.
And so I think it's like, you know, like I even know, to be honest, I even know that Jay Clayton,
who is the previous head of the SEC,
is actually an advisor to a crypto fund.
I'm not going to mention names,
but he is actually currently an advisor to a crypto fund
among some of the things that he does now.
So, you know, it,
It's the same games.
It's the same games that are being played here.
It's the same games that are being played here.
Over and over and over again.
Anyway, Donish, I know I'll catch you off there.
No, no, it's okay.
I'm trying not to do what Mario said I was going to do.
So I will try my best.
I want to make Mario look bad.
But I will say the name, what Rand already kind of said, what I was going to say.
But there's been this bullshit narrative around de-dollarization.
that the U.S. is in decline.
Declined against who?
Like who is on the other side of this?
Now, I will say-
So, Dan, I actually agree with you on the de-dollarization thing.
I do think that is over-hyped.
But the U.S. as a nation and even Europe is in decline versus who.
It doesn't really matter.
But is there an alternative to U.S. dollar right now?
There is not.
So to this concept that the U.S. is going to go after crypto because they're worried about the dollar being the reserve currency is like, I will remind everybody that people were up here in good faith, I hope.
trying to act like bricks was going to be a thing.
They were trying to make fetch happen, remember?
And it didn't.
So just one, sorry, I'm aging myself.
I'm one of those people and I can defend it.
Go, Joe, go.
The point I was trying to make was trying to shore up more deposits
by not making it whatever illegal or whatnot to own crypto.
That's all.
Not as a de-dollarization or whatnot.
So I agree with you on.
Joe, don't try to defend bricks, Joe.
You're going to get annihilated on the stage, but...
I won't get annihilated.
You know why?
Because you keep saying that there is no de-dollarization happening.
So then why was 80% of the global reserve currency, the U.S. dollar, and now it's 56?
Yeah.
and now we have another competitor that's coming up,
which will take more.
Yeah, exactly.
I was like, you just made that up, Joe.
That's that isn't great.
No, I didn't just make it.
So on you, hold on it, guys, I'm not, I warned you.
I've just got a chart here, and again, I'm not the expert here,
but I've got a chart that one of the team members sent,
I think one of your team members ran.
In 01, the usage of dollar as a reserve currency, it was at 72% in 01.
It went up to 73 or so percent, late 01.
Now it's at 59%.
So there is a drop there, and I'll send you the chart.
It's in our group, Ryan, and I'll send it to you now, Donish.
And it keeps dropping.
So the utilization's already happening.
Yeah.
By who?
I'm sorry.
Donish by who?
IMF.
Right now it's happening because of the euro.
It'll happen more.
Hold on.
Don't know.
Danish used the source card.
Bloomberg posted it.
The source is the IMF.
Spend above.
Usage of the dollar as a reserve currency is on the decline.
I think what that means, and I stand corrected here,
is that it is a chart that shows the central bank holdings.
Foreign exchange, so this shows, this shows the foreign exchange hold on, hold on.
Rand's explaining the difference.
Rand, go ahead.
I can do it too, but Rand, go ahead.
Is there foreign exchange holdings in U.S.
dollars is a percentage of total allocated?
That's what this chart is showing.
So, and this is by the central banks.
It's not by trade.
We know that trade is majority in US dollars.
But isn't that an indicator, Ryan?
Yeah, we were talking global reserve, though.
We weren't talking about trade.
So I don't want to switch the conversation.
But let's go back.
Guys, guys, guys, Rand, go back, go back to CZ.
Let's have fun.
Go back to Gary Gensler applying to become an advisor to Bynas.
And how does that relate to the story we're seeing now?
Is it just a coincidence?
Or is there more to it than that?
Could it be a personal revenge?
I think there's a show called Billions.
And Gera has a similar storyline to that.
It's like the crypto billions.
Maya, Maya, Maya, Maya.
I can't keep saying this point enough.
Hopefully I'm going to say it again,
and I'll say it again for the last time.
Gary Gensler is a puppet.
Gary Gensler has sold out on his own beliefs.
I'm going to tell you why I think that.
He is a sellout because...
As I said to you before, there is absolutely no way in the world that you can create a course
and lecture the course at MIT unless you're absolutely, absolutely passionate about it.
Do you know any lecturer at an Ivy League college or Ivy League University that can create
and lecture a course on groundbreaking anything without being absolutely passionate about it?
It's impossible.
It is impossible to do shit like that.
Then you take that and you say, okay, he was passionate about it.
He came in and now he's gone completely negative against crypto.
What does that mean?
It means that he has sold out his own personal beliefs to get ahead in his job
so that maybe he can go from here to being Treasury Secretary
and maybe replace Yellen and maybe go even further.
These are people that are playing the system.
They're playing the system for a job.
These beliefs are not carried against these beliefs.
But Ryan, right?
His beliefs matter.
Isn't he even he might, again, I guess I'm going to sound very stupid and the audience is going to go crazy on me.
But isn't he, if crypto breaks the law, things that are considered security should act as securities.
If Binance said the wrong thing, actually should be taken against them.
So Coinbase, what is the SEC suing Coinbase for?
Listing Securities.
And the SEC has said multiple times, even prior to Gensler, all these, remember in 2017, 2018, all these ICOs are securities.
They've been saying this for this entire time.
So why now we're making it sound like suddenly they've shifted when the narrative has been the same throughout the...
I know they've been ambiguous, they haven't been as clear and they've been very slow, but the narrative hasn't changed.
I think that to be honest, I think they're doing the right thing when it comes to finance.
I know it's not the popular thing in crypto, but they do this to the banks all the time.
And I just read an article that Wells Fargo paid $3.7 billion in a certain settlement.
Now, you know, you're in financial services.
That's part.
Paying fines is part of what you do.
We were in crypto.
There were companies that were operating
maybe not as clean as they could.
Maybe it was because they believed that the laws were gray
and the law obviously believed that the law is not gray.
And Gary Gensler is doing what he needs to do.
And it just passed on the question.
So what's the issue run?
We...
You asked, I'm saying, I think that they dream the vaccine.
The issues with Coinbase.
And the distinction, Mario, is it's not that the SEC has been ambiguous.
It's that it is impossible.
There's a big difference.
It is literally impossible to have tokenomics under securities laws because the laws are outdated and they don't allow for it.
So go, so ignore the, yeah, but if you decide, okay, if it's impossible and a company and a startup decides to do it,
complain about the law, but if you know it's impossible and you're saying it's impossible, it's clearly impossible, as he said, it's impossible,
then if you break that law, which we all hate, and the SEC takes action, what is so complicated about this?
While we have to talk about Gary Gensler, applying to go to Bynas and he loves crypto, he doesn't like the crypto, he's a puppy, he's a puppy, he's not a puppet.
Because just, just...
The same reason that this is, it's amazing that we're five years in, but five years ago, people, you know, Hester and others saw a need for, you know, saw that there was a brand new business model that was encouraging enormous amounts of innovation.
And yes, a lot of fraud. I'm not going to, I want to be clear about that. And the fact is, and this is the point.
When you regulate, as opposed to what you're doing is you're using a scalpel instead of a sledgehammer.
The idea is to make it clear and distinguish between firms that are firms or groups that are legitimately building and people who are basically pumping their bags and rub pulling out the people after they sell it to them.
And when you go to do blanket bans, you can't do any of that.
That's sort of like why FTCS happened, pushed offshore.
But they...
Can I just piggyback on that and say that the regulations actually create the fraud
because the...
Like, they basically force companies that want to do tokens to contort their token
to make it, quote, not a security.
And to be not a security, you have to...
you basically as a model cannot make a profit.
And so they force companies to build this Rube Goldberg machine
in order to make some bullshit justification that they're not a security
when everyone realizes that these are fucking securities.
And if they just said, hey, you're a security and here's a straightforward framework for you to be able to abide by, every team would actually prefer that structure.
And then, okay, like, imagine what a shit show the Fortune 500 would be.
If you made all the Fortune 500 companies have to claim that they're not common enterprises, not make any forward-looking promises to investors.
not generate a profit, and they had to somehow make their price of their stock go up without generating a profit.
Like, everything would end up being a shit.
David, David, you're rightly so.
You're criticizing the laws, and I think it's hard to disagree with this.
But what I'm perplexed by is how the SEC taking action is suddenly the US government declaring war on crypto.
Now, there's other things that the US government is doing that is questionable, and the Restrict Act is probably one of the best examples.
But in terms of the action we've seen for the SEC, whether it's Coinbase or Binance, I just want to say, isn't this expected considering what we know so far in their narrative since 2017?
Yeah.
Mario, you can tell when you're dealing with a good faith regulator, they provide clarity.
You don't need an email, a stamp to send an email.
You don't need a broadcast license to post a video on your website.
And if they want to make...
Congress won't make special rules.
Good faith regulators tell you how to act within the existing rules.
Fair point.
Okay.
And they would have taken that meeting with Brian.
Exactly.
Exactly that point.
I was just going to say, then why doesn't he sit down with Brian Armstrong?
Right.
I mean, and why when Coinbase walks into the office because they say, just come in and talk to us.
and says that they want to list a product, ask exactly how they should do it.
Do they get sent out zero clarity and then get the threat of litigation if they launch without any clarification
as to why it would be illegal and why they can't get a conflict?
Scott, just for the...
It's not good faith.
True, true.
And by the way, did you see all the coins that Bynas is delisting?
They include...
I think M-K-H-K-H-E-Dow, isn't it?
There's ape, coin, there's one-inch, Avey.
They're all being delisted based on the list I've seen.
Have you looked at it, Scott?
Have you gone through it?
Why has anyone?
Yeah, it's a monster list.
I've been going through it.
And curiously, it's like, if you take a look, it's almost all.
There's nothing left.
USD-T pairs.
Yeah.
Right, it's almost all tethered pairs, which is obviously leading.
What's left?
Yeah, it's dead.
I mean, Binance, US is over.
They're winding down.
I think that's pretty clear here.
Yeah, have you gone through?
Has anyone gone through what tokens will be left on Binusus?
Anyone?
We should ask in the research group.
Yeah, it'll probably be a handful of tokens.
Yeah, we can probably find five.
I mean, it's crazy.
And the market, what's the pro?
Hey guys, I got to bounce.
I just wanted to say thanks for having me up here.
Enjoy the energy on this, on the spaces.
And if anyone is based in Puerto Rico, hit me up.
David, let me ask you one question before you jump off.
Bullish or bearish?
And what are your thoughts on the market's response to the action by the SEC?
Yeah.
Bro, I've been in Bitcoin 12 years now.
I'm always bullish.
And I'm totally focused on Bitcoin.
And I think if you're focused on Bitcoin, you can't go wrong.
And so I'm always bold.
And you've got three laser eyes in your profile photo.
So I'm not surprised by the answer.
I appreciate you coming in.
And if there's anything new to add, do send it to us if obviously we're able to share it here openly in the space.
And you're welcome anytime on stage.
Thanks a lot, David.
Thank you.
And Scott, you recommended we invite Corey, and Corey accepted the invite.
Corey, thank you for accepting.
I appreciate it.
Hey, what's up, Mario?
Hey, Scott.
How are you, man?
What's up, Andy? Your guy's name is being invoked constantly in DMs, and I know that you guys have offered clarity, and there's nothing I hate more than having a conversation or seeing someone's name without having them here.
So obviously, we wanted to get you up immediately.
I'm going to be here for about...
Guys, for context, Corey, is...
I was going to say...
I mean, you can introduce yourself.
No, it's fine. I'll be here for about probably 60 seconds because I'm about to drop off my kids at school and...
in a canyon and I'll lose reception.
But yeah, I mean, for us, this was really simple.
We started looking at basically custodian, you know,
diversification back in Q4.
And for anyone that doesn't know,
basically the reason that you use a trust company
as your qualified custodian is because you can create
individual legally owned trust accounts for every user,
which means that in the event of the...
you know, the broker or the exchange or whatever, fund company failure, and in the event of the failure of a trust company,
the assets are legally owned by the account holder.
So that's why you want to set it up that way.
So for us, there's no in between.
There's never any sense that we would want to custody Bitcoin as Swan for our users.
You either get people to self-custody or you put it with a qualified custodian with those legal protections.
So I just wanted to kind of point that out as the reason that we set up that way.
Now, the number of people that can actually set up individual trust accounts and open them basically instantly via API is fairly limited and doesn't include any Bitcoin-only custodians, right?
So you're talking about, you know, BitGo is almost there, but not quite.
They still require you to have Omnibus, which means you need your own MTLs.
Fortress has it, Zero Hash kind of has it.
Prime Trust was the leader as far as functionality
and having that legal setup for, you know,
obviously the last number of years.
But anyway, we just thought it was important
in the wake of the collapse of FTX
and all the crypto scandals last year that we diversify.
So we started working with BitGo in Q1,
started moving some states and some users over there
where we could, basically only on the high net worth side
because they actually had to open up a BitGo account as well.
And then we started working with the Fortress team a couple of months ago.
And for us, this is basically just a geographic coverage decision.
So when we lost New York about two years ago, I think we lost.
I thought I was literally taking my shirt off while the space happened.
I thought I kind of ended the space by accident with like my headset.
My heart just dropped.
But I think he's in the canyon.
To wrap it up, I just want to say, Scott, I want you to wrap up.
Everything was just discussed in the space and the news of the day.
and what Corey just mentioned.
But before you wrap it, I just want to remind the audience.
Let us know your thoughts in the comments.
Also, hit us up if you want to come on the show.
Oh shit, we're going to start doing Shark Tank pitches.
I've convinced Rand and Scott to accept.
So hit us up if you want to come on those
or you want to work with us with IBC, The Incubator or sponsor the show.
Just DM, Scott, or Ran.
And Scott, just give us, I think we should do this in every show.
Just a final overview for anyone that missed the beginning.
What did we cover today and what are your personal final thoughts?
Because everyone cares about your special opinion.
Well, my special opinion is that I want to see Gary Gensler's resume and
incentive finance because I want to see what he listed as his hobbies.
Very, very valuable, very funny, very valuable.
Everyone's laughing.
That's what we need.
That's what we do.
I see.
I see Donna's laughed, you know, but I paid him.
So beyond that, obviously the conversation here and it's pinned up in the nest was David Bailey's tweet,
Major Custodian about to declare bankruptcy without last minute bailout.
Take your Bitcoin off exchanges, even Bitcoin only platforms.
We decided to focus on that with David here to get some clarity.
Now, to be very, very clear, nothing we ever discussed is financial advice.
And we did not officially get a name out of him.
The conjecture.
across the board and it is just conjectures that that is prime trust we dug through who
prime trust custodies
16 different customers were listed on their website.
We know that may not be up to date a year ago.
Now there were only six and Swan, which is one of them.
Corey just as he dropped into the canyon made it clear we know for a fact that that was crossed
off the list and they were not one of them.
So the concern here obviously is that the messy legal proceedings that would come from a bankruptcy
even if the custodian has all of the customer assets.
could take a very long time to resolve,
could be state by state,
jurisdiction by jurisdiction,
country by country.
I'm assuming they're all largely U.S.,
so that might not be the case,
but really could get very ugly,
even if they have the money
for the way that it's released.
So his recommendation,
as it should be anyone's,
I think at all times,
is to effectively take your coins,
put them in self-custody,
not your keys, not your coins,
the original ethos of Bitcoin.
I think everyone agrees with that.
I can tell you,
I can tell you,
In my DMs and in our groups, I've gotten a lot more information that needs to be vetted.
So I think we'll probably rehab this conversation to a larger degree tomorrow alongside some other things.
But I got to get a lot more clarity.
But I think really I'm pretty amazing that we were able to focus on that singular thing and the implications of it.
Yeah, I know you want to talk about the fucking drama with with CZ applying to join.
Not CZ, what's in the Gary Gensler applying to be part of advice binance.
But that's pretty lame story and you started with the conspiracy.
So I'm glad we didn't cover this shit.
And you're not wrapping up the space on my end,
you know, this reminds me the FTX days,
not because this is similar to FTX is not even close,
but just because, you know,
the breaking news happening live on spaces.
But it's just, you know, I used to say before,
because I've been watching Rand's channel for,
I don't know how many years back in the old days,
and I say Rand is the best host
And I'm second.
That was my ego speaking.
But now Scott leading the show is a fucking beast.
So just hats off to Scott.
I didn't know you'll end up being,
because I remember your first space was pretty lame, bro.
Like you caught onto it really quickly because it's so different to YouTube.
And I never said it to you because we weren't as chill as we are now.
But yeah, I'm like, Jesus, like so funny how someone could be so good at YouTube.
You should go listen to my original podcast.
Holy shit.
It's the.
cringeworthiest content you've ever heard.
And actually my first podcast of all time was Catherine Coley from Binance U.S.
and I had this like long list of questions.
And no matter what she said, I just went down my list of questions.
It was horrible.
Yeah, it is uniquely challenging to manage 12 people here with the research teams and the
background and all of us sort of discussing.
You guys have no idea how much is going on in the background to produce one of these
spaces deal with all the guests.
And it's, I mean, it's absolutely mind-boggling.
I'm used to just having a.
one-on-one or one-on-three conversations with people about unicorns and puppies and how great crypto is.
Yeah, and to end it, we are expanding.
So we've got a whole team, me, or Ann Scott, expanding the crypto town hall to YouTube, podcasts, etc.
So there's a lot coming.
And, yeah, it should be fun.
Appreciate you all.
We'll see you all tomorrow.
It's Monday to Friday, whatever time it is.
See you tomorrow.
Bye, everyone.
