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WHY IS CRYPTO CRASHING??? w/ Marc Cohodes #CryptoTownHall
Recorded: June 10, 2023 Duration: 2:21:55Space Recording
Short Summary
The crypto market is experiencing significant regulatory scrutiny, with the SEC taking aggressive actions against major exchanges like Binance and Coinbase. This has led to a decline in altcoin valuations and increased uncertainty in the market. The trend towards regulatory compliance is evident as exchanges delist tokens and countries draft new legislation. Despite the challenges, there is a focus on the need for true utility in the crypto ecosystem, and the market is showing signs of recovery as investors adapt to the changing landscape.
Full Transcription
Scott.
What it's time to be alive, my man.
What the hell is going on, man?
I wake up and I didn't look at the markets.
I'm chilling, and then I just see your message saying,
what a blood bath.
That's my morning.
I just got off a jet ski, so, you know.
I'm glad this is emotionally getting to you.
It seems that it's really impacting emotionally.
No, I mean, it's, you know,
I think not at all unexpected that this would hit on a weekend with, uh,
thin order books and when nobody's defending the walls so to speak but i i do think that uh you know
i was trying to dig through this morning uh quietly through the books on some of the exchanges and
i can't substantiate this at all i would love the research to look into it but it kind of feels like
maybe some of the market makers just disappeared and all the sudden the books are just really thin
that's interesting why do you think that would be
Well, I mean, if they're afraid to do business on any of the larger exchanges, they might stop providing as much liquidity and keeping the spreads tight.
And then if there's some major sellers coming in, you know, you get these very dramatic.
So you think he's pulling out of some of these changes just from the regulatory action we saw with Binance and Coinbase?
Yeah, like I said, I can't be sure it was just sort of my first take.
I don't want anyone to take that as gospel, but, but.
But yeah.
Because I saw the news like that usually the market is not, I know someone said that
yesterday a day before, but usually the market is, if anything, it's a forward-looking
indicator so that it's not usually a lagging indicator when it comes to news.
So they factor in as much as possible, obviously it's inefficient, but they factor in
as much as they can in terms of news.
And if anything, remember when Binance, when B&B dropped, everyone was speculating that
this is due to imminent...
in imminent action by the DOJ.
Yeah, exactly.
So the market is forward looking, yet in this case, people are saying,
hey, they're reacting to the news we saw over the last 48 hours.
But then for me, it just doesn't make sense.
Like, we knew this for two, three days now.
And we're actually surprised that a lot of these outcoins did not respond,
did not react.
So for you to say it's probably market makers pulling out,
makes it really interesting.
Let me get Gore Avenue as well.
Okay.
And, you know, I literally haven't checked the market in three hours, guys.
Sorry, so, but, you know, I obviously noticed.
It's pretty the same place it was, well.
Bonomatic ABA were sort of the 20 plus percent movers, and those are the ones that were immediately listed on Robin Hood.
that they were going to be delisted, excuse me, from Robin Hood,
which, by the way, I can't imagine there's that much liquidity on Robin Hood for these coins anyways,
so it's more of a news event.
But, you know, these are the coins that are relatively large gap that are being named
in every single one of these sort of suits.
And you see Robin Hood pulling out.
Then, you know, I'm just trying to dig through some of the breaking news our channel now, but there's some metrics indicating that some of the larger funds have moved there, those coins on to exchanges.
But then why is EOS one of the worst performing ones? I don't think it's really mentioned anywhere either, right?
I mean, I've been looking through it, and it makes sense for all the fear to be surrounding like Solana, Maddick, and Ada.
But then Eos is like one of the worst performers, and I haven't seen it in any loss at all or anything.
Yeah, was Eos mentioned?
I think it was mentioned.
It was being pulled out of Bynes U.S., wasn't it?
I mean, everything was pulled off of Binance U.S. on the tether pairs when you look.
Like we said, we're joking the other day.
It would have been almost easier to identify something that was still there than something that was removed.
Yeah.
Yeah, so back to, just back to, Dusty, back to Eos.
Eos was mentioned, but I don't know if it was mentioned by the SEC.
I can't remember if that was the case.
Not at least not in Bina's the coinbase as far as I've seen.
Because I'm looking right now at the overlap again,
and I don't see EOS in either of those cases.
So not sure.
No, it's not in other cases.
If you want a good laugh, then you'll see, go back and watch the Gary Gensler video praising Eos before he was SEC Commissioner.
Got a good one on Algo, too, and of course, lots of it on Ethereum.
But, Mario, I'm going to let you, you know, get launched and start talking.
Yeah, yeah, we'll do. I'm just organizing all the advice, but just get initial thoughts from the audience.
Anyone else looked into the markets, any explanations from anyone on why we're seeing the sell off today with all these different outcoins?
Like linking it to the SEC action makes sense, but why is it so lagging?
And what sense could you make out of it?
I mean, I've got some thoughts here, but go ahead, Fred.
Let's go, Fred.
I'd rather Fred, because I know Brad you're going to make everyone depressed when you give us your thoughts.
I know what's going to happen.
Hopefully Fred could be a bit more positive.
Well, there's some rumors that Cimitar Capital dumped $2 billion of all...
Don't you think that was just made up, like a made-up capital?
That's just a fair company.
Yeah, that's not a real company, I don't think.
So, again, the market moves on rumors, and the market continues to move.
Conflux is down 40%.
Polygons down 37%.
This is accelerating.
It's not slowing down.
You know, these coins were down 20% an hour ago.
They're now down 40%.
Dash is down 31%. EOS is down 26.
Aptos, 35%.
Chills, 33%.
I'm just looking at coin market.
So has anyone looked at the order books, Fred?
Have you looked at the auto books and what Scott said potentially market makers
pulling, market makers haven't pulled out?
Is that plausible explanations?
It's fear of delisting.
People don't want to be in something in liquid.
Okay, and then how if these start getting delisted, how does that, I was talking to Gorav, Scott, you know, a bunch of you, Bruce, you know, Gorav.
So we're just chatting before this space and trying to understand from it like what's what will happen to the market.
I expected a more aggressive response from the markets when the delisting initially kicked off.
And the reason is I thought all this liquidity pulling out, all U.S. investors, you know, getting spooked and for a good reason.
But then go, I was like, no, they'll always find a different way.
They'll use different subsidiaries to get in.
And, you know, there's the rest of the world.
The world doesn't revolve around the U.S.
Could it be liquidity pulling out because of all these different tokens now being labeled securities in the aggressive action by the SEC?
And if that's the explanation, though, why is it, again, markets are not a lagging indicator?
Why are we seeing the reaction now?
You know, it's interesting.
20% of Polygon's market cap has traded in the last 24 hours.
Think of that.
It's over a billion dollars has traded in 24 hours.
And this is a massive, massive sale.
This isn't just, you know, U.S. retail.
This is people who are concerned that this is going to go global.
You know, you see Australia is starting to do their choke point two.
You see, you know, Europe with MECA still hasn't dealt with stable coins and all coins.
That's yet to come.
And, you know, the SEC has this habit of if one U.S. citizen touches something on an exchange,
even a foreign exchange, then they'll go after that exchange.
And so I think right now it's institutional investors are dumping because of risk.
causes retail to react. Retail takes a little while longer to react, and this is all just reactive selling.
But you can see BTC and ETH are relatively stable considering what's happening in the other markets.
So it's not an overall abandonment of crypto, but it's definitely altcoins and anything that people view could be viewed as a security.
Okay, and is it plausible, you know, can we expect, because again, that was another question I was asking Gore over now discussion, is like, can we expect other countries to take a similar stance to the U.S.? And what you just mentioned now, Fred, is that we're seeing a similar action by the Australian regulators and their choke point, 1.0, I guess. What are we seeing in Australia?
Yeah.
Essentially, banks are limiting the amount of fiat that can be sent to exchanges.
They're putting in instant delays, meaning mandatory delays of 24 hours for transfers.
And they're including the right to decline transfers, which is essentially saying they can subjectively not send money to an exchange, even if you want them to send it.
Okay, and Julian, I want to go to you before going to Brand.
What happens to all these different, the whole concept of utility tokens is
Should we just forget about that concept?
I know all this should be litigated over the next few years.
And a question I asked in the meeting in the space we had,
I think it was yesterday, day before,
it was like what happens to all these utility tokens?
And Ryan, he'll be jumping on in a bit.
He said, Mari, like, these things take time.
This is going to be litigated over many years.
And during that time, those projects continue building,
but the uncertainty is what concerns me.
So for a VC like myself, and I see Wizard requesting,
Wizard, I'll bring you up in a bit as well.
We'd love to get your thoughts.
is what happens to all these different out coins, you know, the utility tokens on Web3 games and Define, all these different sectors of the ecosystem.
Yeah, look, I think we have to face the uneasy truth that a lot of people, and I would say 99% of the capital flowing into this space is people speculating, wanting numbers to go up.
And I mean, this is just how it is.
For example, I mean, if you compare this with AI, check GDPD.
Every month, if you want to call it, people dollar cost average, if you use the plus version, $20 or $30, I don't know exactly what it is.
So let's say $30 a month, you dollar cost average and you check GDPD.
But no one does that.
thinking, hey, maybe I can lift that for profit. Maybe I could sell this thing for more. I'm going to
buy for 30 and I can sell it for 60. No, people actually use it. But in crypto, I mean, how few people,
and this is really kind of actually pointing the finger at everyone. I mean, I also want to
point the finger at our platform, everyone, right? We need to really drive the use cases, not so much
only the speculation. We would like, if you look at the bitcoiners, the Bitcoin is us, a stack sats. Yeah,
I get it. Like,
sack you of $50 a month.
I get it, but why are you doing this?
You're not doing this because you want to use Bitcoin
because you actually have very little places to use Bitcoin.
You're not doing this with Ethereum.
You're not doing this with these coins.
So I really think we need to,
I think as an ecosystem,
really show the US, the regulator that
we actually plan on using crypto.
And I think the US has this low risk right now
and really kind of going against crypto
because they are saying in the worst case,
we are kind of, I don't know,
shutting down an online casino,
there's very little actual use case.
And in, I don't know,
if over the next year or two,
suddenly there is use case,
then I don't know, they're gonna reverse all this.
And I just think that's the uneasy truth
and we just have to face it.
And I think we as an ecosystem,
we just have to kind of be better and step up.
And I'm pointing the finger at anyone.
I'm really pointing a finger at myself as well.
And I'm seeing, just giving an update for the audience,
Bitcoin is down 3.1, 3.2%, Ethereum 5.6.
B&B's down 10%.
I think it's hitting the lows that we saw when the SEC action,
the report first came out as the SEC swing by NAS.
So I think we're hitting those same levels again.
I'm going to check out the chart in a bit.
XRP's doing it.
Okay, 7%.
But then we see the rest of the out coins are just bleeding.
Cardano's down 18%.
Doge is down 12.
You got Solana's down 20%.
I think it's 25% earlier.
Polygon is still at 25% down.
Avalanche at 20%.
Avalanche at 20%.
So we're seeing, Wizard, I want to go to you
and again, I'm kind of leaving Brad to last
because I know what Brad will say.
So I'm just trying to get some sort of positivity first.
I'll go to Wizard, then we'll come out.
You've got to bring Joe Carlos Ari up.
I brought him up here.
He's here in every show, man.
I've just sent him an invite, Joe, if you've got time, jump in.
So I'll just send him an invite again.
But in the meantime, Wizard, you know, you're obviously more active in the Outcoin world.
how do you look at the price actually we're seeing today and the we haven't spoken since the
the announcements regarding coinbase and binance so maybe getting your thoughts on everything we saw
this week hey how's going man thanks for having me up here um you know it's
The SEC Binance and SEC suing everyone and all that, you know, obviously it puts a lot of pressure on those specific coins.
You know, in the short term, I don't see any reason that we'll see outperformance on any of those coins.
Regardless, if you agree...
with the SEC or not from a market standpoint, you know, and you're kind of seeing that,
you know, those are the ones under the most pressure.
The, you know, like, what is there, what is your upside to buying?
Like, if you're an investor, right, like, so people out there who are deploying capital,
you know, what's the upside for them to buy the coins that are specifically being targeted
by the SEC relative to the ones that they haven't mentioned at all, right?
Like something like Ethereum wasn't mentioned at all.
So, yeah.
that just makes it like, you know, from a
performance standpoint, those
alt coins definitely, you know, don't have a
reason to, you know, see that
kind of capital inflow anytime soon.
Will it, will it be down the line?
Yeah, sure, you know, I mean,
XRP is a good proxy with a
how, you know, the government and SEC is like, you know, litigating.
I mean, these things take for years, right?
So what's the, what's the reason for any investor to buy into some of these all coins that are going to be under pressure?
And if these are under pressure, you know, all the other all coins that are related to it,
that act as a proxy by algorithms will also be under the pressure by default, right?
So...
That's kind of the base case scenario at the moment.
The reason you're seeing like, you know, Ethereum and Bitcoin still kind of holding pretty significantly, you know, relative to FTX levels.
Like a lot of these all coins are basically an approach, if not below FDX level.
And that's primarily because, you know, a lot of people keep their assets on, like hard wallets and, you know, not on centralized exchanges.
they'll usually swap to BTC or Ethereum when they're getting out of positions rather than straight to stables
So what this ends up doing is gives Ethereum and Bitcoin a little bit of a bid and then usually you'll see like the second wave come down
That's usually the case. This kind of what you saw yet last night happened you saw Ethereum and Bitcoin kind of have a bid as all coins are crashing and then you just saw like those kind of come down as well
So that's kind of what I'm looking at right now.
Do I see any bottom over here?
Unfortunately, I think there's more pain in the head because not only are the headwinds from this SEC issue, there's also a lot of headwinds on the macro side.
Stocks.
I put them a phenomenal rally and you kind of saw crypto kind of just kind of range bound.
You could say that it kind of built up a little bit more correlation to gold,
which is the narrative that's been kind of been pushed for a while.
And if you look at the rolling correlation over the last, say, three, four months,
The correlation to gold relative to NASDAQ, which usually has been high, has been going up significantly.
So you could say that, you know, it's kind of building on that.
But I think the capitulation that could possibly come from stocks at some point, maybe in July on the back of further rate hikes, could, you know, seep into crypto a little bit more.
So we could see further pressure.
You know, obviously there'll always be relief on alt coins, on everything out there.
But the fact that since January, we haven't seen any even local highs on any alt coins is definitely problematic.
It's possible that.
you know, large whales were kind of in the know, which is definitely possible.
And they were tee whopping out of positions, which just kind of kept like a resistance across the board.
But yeah, overall, I think, you know, if you're looking to buy, I think there's definitely going to be better levels to see.
You know, I'm kind of looking at the, you know, 1420 to 1600 that range on Ethereum to, you know, maybe dabble a little bit.
And, you know, same way.
whatever correlates to Bitcoin.
But when it comes to all coins, honestly, you know,
as an institutional investor side,
or even my personal stuff,
you know,
I don't see a reason to kind of fight the SEC
until there's more clarity on a lot of these old coins.
but what happens?
On that specific point, let me go to Dusty and Brad guys.
I'll go to Brad first.
Brad, with that lack of clarity, and I know what your position is, but with that lack of clarity,
what do you make with all these different startups that are trying to create a utility token,
trying to abide by the regulation, the aggressive approach that the SEC is taken,
and we're seeing other countries potentially follow suit?
Well, I don't think that utility is a real valuation metric that people should try to judge their investments on when it comes to cryptocurrencies. I've been saying this for years.
I used to be in that camp when I was drinking the Kool-Aid back in the last bubble.
Which one? The latest one or the 2017?
2017. I mean, I worked for a crypto fund back then, and I was on the investment committee,
and I did due diligence on like 80 ICOs, and we were drinking the Kool-Aid on MV-E-E-E-E-Q and utility tokens and all this stuff.
And once the SEC came out with their guidance that the Dow was originally done, it was a security,
and that Ether Delta, the decentralized exchange was dealing in understricted securities,
and Floyd Mayweather and all the celebrities that were promoting ICOs were unregistered broker dealers,
I mean, that put a damper on the whole market combined with Twitter, Instagram,
and everybody banning Ethereum ICO advertising and just ICO advertising in general.
And the whole market, you know, the bottom fell to the market and we realized, oh, this is just VC money pumping this stuff up.
It wasn't a new type of way to do venture capital, really.
It was just do venture capital the traditional way, just raise money, issue equity.
And then you weren't going to have to deal with regulatory risks of being fined by the SEC or the DOJ coming after you or breaking banking laws because FinC and all the money regulators all over the world started commenting on this stuff saying...
you do an airdrop, you're breaking anti-terrorism rules.
You do an air drop, but you don't do KYC on the people you're dropping stuff too.
This was in 2018.
Like, they were saying this literally.
So it's no surprise that this is happening.
They've been signaling this since 2018.
And really, you've got to fundamentally take a step back
and look at all the prices of a Cardano and Maddoch and all these coins.
Right.
before the Fed dropped the interest rates to 0% and they did $8 to $10 trillion in stimulus
and just inflated every single risk asset bubble in the world because prices are going
to fall back to where they were before COVID stimulus and all that broke everybody's brains
and we thought, oh, I guess the regulators are disrupted now, like they don't matter.
that's kind of what everybody did they're just like they didn't give us clear regulation well yes
they did they consistently gave clear regulation and took actions but it was kind of the government's
fault because they they re-inflated the whole bubble and then you had all these super
influential thought leaders and finance like ral paul and mike novigrats and all those people
that were like shilling these narratives again when
if anybody was taking a look at the regulatory landscape like this was not in compliance and what a regulators do they regulate like they're not just going to give up their hundred year monopoly on the on the money printer to token developers in silicon valley and all over the world just to disrupt the the monetary regime like of course they're going to use every power they can to destroy it so it's no surprise
So, Brad, and maybe move to Dusty right after, but get your thoughts, Brad, is that why is everyone acting surprised?
There's a lot of smart people in the ecosystem.
If Gary Gensler said in, I can't remember a few years ago, I think in 2021, the vast majority of crypto tokens that are being sold today are securities and should be subject to the same basic protections afforded to traditional investors.
under the federal securities law.
Another quote here, I believe that many tokens qualify as investment contracts and are there for securities.
Jay Clayton, even prior to Gary, said, we have seen, no, this one's better.
The SEC will continue to scrutinize the crypto market and take action against those who violate the securities laws.
And the quotes continue.
So they've been clear about this, and I've been saying this for a while.
They've been clear about this since 2016, 2017.
So then why is the market responding as it is now after the action we saw in the last few days?
That's question number one.
And then question number two, if anyone could take it after Brad, is I want to go back to what Scott said.
Marketmakers pulling out and we're seeing very thin order books.
If anyone's looked into this and if anyone got some more clarity on this, I'd be really interested to hear it because the question is, why is the market reacting today?
It wasn't yesterday or the day before the day before.
Brad, you're honest out?
Yeah, I mean, I put some receipts in the nest.
If you go back just the second last tweet, and that's the tweet there.
Like, I've just, I've been talking about this for a year and a half now.
That, like, it was clear when the bubble was really just frothy and out of control that the regulators were not going to come in and just pop the bubble.
The SEC was, didn't protect investors.
They let FDX happen.
They let...
You know, to Bruce's points that he always makes, like, the SEC is not our friend.
It's not like we need the SEC to like...
control what you invest in. But the point is that everybody's going through this like this this cycle of
you know the Ross Kubler emotional cycle of of trauma like that they're kind of in denial or angry.
They're maybe some people are in depression or whatever and they're they're not looking at the facts and the fundamentals.
And it is true that the SEC let this get out of control.
They didn't regulate properly.
They didn't provide clear guidance for how to be doing it compliant.
Okay, fair.
But just the main thing there is that they did not come in and pop this thing.
All the crazy Ponzi schemes, like 3 euros capital and Terra Luna and FDX and Celsius,
they like A16Z, all the American and the large crypto VCs,
they're the ones that cause this thing in the first place and they're the ones that popped it.
So all the bad behavior in fraudulent markets and pump and dumping and ponzi's and everything,
that's what blew this thing up.
And I was saying back in 2021 that the regulators are not going to come in and pop this thing
because then they'll be held responsible for destroying like,
a trillion dollars of value of people's investments.
They're going to wait until the whole thing blows itself up,
and then they're going to come in aggressively and sweep this whole thing up.
And that's what they're doing.
So you're saying that things are going to continue getting worse and worse for the market.
Yeah, I mean...
I've been saying that capitulation has not happened and like people are laughing at me and all this shit.
How you say, can you still say that now?
We saw the, what the essence is not capitulation.
This is not capitulation.
In my opinion, we're not, this is a perfect repeat.
Look at the tweet there in the first tweet I have in the, or a second tweet I have in the nest.
In 2019,
We started the year where Bitcoin had a 200%
300% run by the end of the year.
It entered into accumulation mode.
That's 2023.
Crypto in 2019, when Bitcoin went up,
all the shit coins started going up.
Everybody started pumping again.
They're getting excited.
All the market makers in Wales
are starting to put liquidity back in.
Well, what happens at the end of the year, complete capitulation.
A lot of shit went to literally zero.
A lot of like ICOs that people bought, their safs were just, their safs were just like
the liquid.
They didn't, they weren't worth anything.
So that's what I'm expecting to happen by the end of this year, like real capitulation
in crypto, not Bitcoin so much.
I think, I think Bitcoin's going to range around here for a while.
Okay, Jeremy, I want to go to you and Dusty.
As a strategy, obviously you can add whatever you like to the discussion so far, but also as a strategy, accumulating these utility, quote-unquote utility tokens and investing in those startups.
It seemed like a good strategy when we saw the capitulation during FDX's collapse.
It's like everything is on discount.
The market is collapsing and we're weeding out all the scams and frauds.
But now what we're seeing, what we're seeing regulators take action, does it still make sense for VCs to be investing in the ecosystem?
Because the lack of clarity makes it very difficult.
What we're seeing now is different to what we saw in 2018, 2019, and it's different to what we saw during FTCS.
Because now we're talking about regulation being the reason for the market crashing.
Jeremy, you want to go first on this one, then we'll go to Dusty.
Yeah, I'd love to.
So thanks.
So this is Jeremy Kaufman.
I'm the CEO of Library, which made Odyssey.
And so first, I have two points I want to make.
First, I think anyone who has it in their head that there's anything at all that is going
to be allowed by the SEC has to get that out of the way.
We were found guilty of securities offering after a five-year fight of even small dollar
sales fully KYC that were directly consumed by the user after purchase and that user signed
and more than one.
users signed affidavits
also claiming that in addition to blockchain
evidence, you can clearly say these tokens
were consumed to publish
content still
securities offerings. Okay?
So that's just the legal reality. As much as we might not like it,
that appears to be the legal reality.
And so that's going to
I hate saying this because I don't like it, but I think that includes basically everything if the standard applied to us was applied more broadly.
The second point that I wanted to make, I'm not a soothsayer, so I can't say why specifically these have gone down just today.
Although I find the money-making explanation superficially plausible.
I would encourage people to think about the market making, yeah?
The withdrawal, yeah, yeah.
But let's go from first principles as investments.
I mean, go through these, you know, go through the top coins on, you know,
coin market cap or whatever, and go through and look, is there anything here?
What can any person use in the real world today in all of this stuff?
After hundreds of millions of dollars, billions of dollars.
Look at how much money, you know, EOS spent.
EOS spent more money on the voice domain, you know, than my company spent in its entire lifetime.
Okay.
And if you look at third-party metrics of what's the largest Web 3 app in the world,
it's still Odyssey.
It's still Odyssey at, you know, 10 million or so users a month.
And there are three people working on it right now.
I mean, there's nothing in this space has come to fruition for real people.
And that's the most fundamental reason.
So why it happened today, I honestly couldn't tell you.
But why it's happening, there's very little there, unfortunately.
And I wish there was more because I feel like we could have done more.
And I feel like more is still possible.
But, you know, I think the reality is there's just very little there.
And, you know, someone kind of has to say that.
So the question I free, Joe, go ahead, Joe.
Isn't this just similar to a bank run in all reality?
Like people are moving their, selling their funds, moving their money out of finance and Coinbase in the U.S., maybe in some other countries as well.
And it's a bank run.
And it'll readjust.
Money will move overseas and kind of be where we are.
Yeah.
Yeah, it's a little bit.
This is a bubble collapse.
This isn't a bank run.
This isn't a bank run.
This is not a bank run.
A bank run would mean that the coins are not backed.
And I mean, it sounds, it looks more like this is selling, not so much withdrawing.
So I don't see the bank.
Well, they need to sell into Fiat, so in order to get their money.
Sure, but that always means there's a buyer, right?
I mean, you cannot sell without a buyer.
Otherwise, the price would go to zero.
So the reason why they're going to buyers, because there's a buyers, may a few buyers.
But you also have to look at, you know, when exchanges start changing terms, like Binance recently just changed their terms, that they can at a given moment's note is unlist a coin and automatically convert whatever your holdings are into some other coin of their choosing.
You know, that's essentially like saying a bank is going to, you know, your deposits, by the way, happen to be our property.
And in the event of whatever we decide, we can do whatever we kind of want with it and put you into some other asset.
That causes a lot of people to be afraid and withdraw their money.
How do they withdraw? They have to sell it.
Sure, but that's still mean...
They can sell the Bitcoin and withdraw to Bitcoin.
This isn't a bank run.
This is like the fundamentals coming to bear in the market.
Let me give you some numbers.
So CZ tweeted, let me see where I've got the numbers here.
In November last year, we saw $7 billion in net outflows out of Binance.
Yesterday we saw in the last 24 hours we saw 400 million dollars so the outflows out of Bynas and I know you're not referring to the exchange in this case Joe
But the outfows out of Bynas are significantly smaller than FTX
But it just seems that for me what's odd and Dosty I'll let you jump in Haseeb good to see you
And what seems odd dusty is that why we're seeing that response now like I would have expected that that meltdown
When when the SEC when we first saw the case by the SEC
and the filing by the SEC and what all the different tokens they listed as
securities and just for the auditors to remind you what they've listed as
security like how how wide that is Solano was considered a security
Ada Cardano, Maddick file coin Adam Sand all of these were considered securities
so why didn't we see the market respond in such an aggressive way when when that
was first announced dusty and maybe you can comment on Scott's speculating
that its market makers putting out
Yeah, so thanks for having me.
Honestly, with regards to the market making, I can't say.
I just don't know.
The volume looks to be up, but we can't really.
I'd say it's pretty hard to see exactly who would have pulled out of what exchange to what degree.
What I found peculiar as well is, like you said, the Robin Hood news has been out for a couple of days.
And I'd say that nobody really thought that Robin Hood was going to be defending crypto in a similar sense as Coinbase, you know, at the start, at least not standing by XRP when the allegations are.
of it being a security came.
So I didn't expect Robin Hood to stay solid then
and keep it on there.
So I would have expected everybody to sell at that point.
What I have come to notice, though,
speaking to a lot of people,
doing a couple of live shows today,
to just kind of see what the market is thinking,
what the people are thinking.
And I noticed it's just fear of what's going to happen next,
propelled by, for example, the news today.
I have one headline in front of me.
Nigeria regulator says local finance operations are illegal.
So together with the fact that
We have another meeting, I think, Tuesday.
Hold on, Nigeria. Hold on Nigeria said that.
Yeah, this is on rooters.com.
Nigeria regulator says local finance operations illegal.
Like from...
I didn't expect this from Nigeria.
Okay, go ahead.
And it's like, I think five hours ago, maybe more ago, like I think this morning or somewhere yesterday potentially.
But yeah, so it's just that everybody's now starting to notice, okay, they're starting to draft bills all around the world.
And one thing that's very important to notice is the U.S. is not the entire world.
So whenever people talk to me about, oh, but they're doing this in the U.S. with regulations to say, well, I mean, it doesn't really matter for crypto.
Look at China.
Even though it did bleed crypto down for a significant bit, people were scared.
At the end of the day, crypto's reaching an all-time high with or without China.
And the same thing would apply to the United States.
Even if they were to ban every single crypto
and try to hunt down every single company,
okay, that move.
Eventually, crypto will be bigger than never before anyway.
So I would have expected,
but now I'm thinking,
perhaps this fear is continuing on
with the idea of, okay,
if Europe now with their bills,
could potentially get something negative going,
if Nigeria now is all starting to turn against it,
if all these countries are now starting to turn against it,
and Australia, UK, Canada,
all these...
jurisdiction is trying to block exchanges as much as possible and the banks make it as hard as possible
that it's starting to kind of affect the users like okay what if i make a million dollars how do i
cash it out will i ever be able to cash it out to my bank will my uh country basically or my bank
that i haven't on now actually accept this money that i've made from this crypto and will it ever
be able to be because we got to be honest here a lot of the people in crypto are not here for the
actual utility like
we talked about a little bit earlier.
A lot of people are just there to make a quick buck.
So a lot of them care so much about having these fiat pairs
and being able to get it back to their bank.
So when we're seeing that there's some pressure on that, they get fear.
And I think the Nigeria news, even though it's not headlines, is a very big part.
It is, it is.
I didn't, yeah, I didn't expect that to happen in Nigeria.
It's not hitting, I don't think it has much impact
to what we're seeing today, but it's still,
it's still like my concerns, like whenever someone says,
yeah, and Bruce, you say this all the time.
The world doesn't revolve around the US, right?
But, you know, Hong Kong is becoming more flexible when it comes to crypto.
China's testing it through Hong Kong.
Still, that's barely, they're starting to dip their toes in the water,
and we haven't seen how, you know, what happens next.
And we could see other countries, you know, Dosti just mentioned Nigeria.
And Bruce, I'll go to you and Gareth.
We saw what was happening in Nigeria.
So then my question is, when you say the world doesn't revolve around the US,
we had another speaker, I think it was Fred, who mentioned Australia,
The rest of the world doesn't seem that friendly towards crypto either, Bruce and Gareth.
And Gareth, I have a question about human psychology for you.
So, Bruce, maybe you can touch on that one, the rest of the world.
Because we talk about Dubai, but Dubai is a drop in the ocean.
Yeah, I mean, the U.S., no, the rest of the world doesn't revolve around the U.S.,
but the U.S. has vast, vast influence.
It used to have more influence.
You know, in the 1950s, Detroit...
This is the craziest stat you've ever heard.
Detroit had 50% of global manufacturing.
One city in America had more manufacturing than all of the rest of the world combined.
So we used to completely dominate.
And same with securities and everything else.
Look at the United States securities market.
The New York Stock Exchange, you know, when I started in the 90s, was...
The thing. I mean, it was so much more market share, and it's just lost market share consistently for 30 years every year.
But that's fair. But Bruce, my question is the rest of the world doesn't seem that friendly towards crypto either, unless I'm mistaken.
So this is the point. You know, the U.S. does influence the rest of the world quite heavily.
Most other regulators look very carefully at what the SEC does. If the SEC cracks down on something, they're more likely to crack down something.
If the SEC says something is okay, they're more likely to.
So it does have vast influence.
And also our direct laws, you know, OFAC and things like that, those directly affects banks.
And every country in the world is deathly terrified of America because they're afraid that, you know, you cross America.
You're going to get bombed or arrested or declared a terrorist.
You know, they're terrified of America.
Yeah.
So, I mean, you look at, I mean, UAE, where you and I are, it's just full of, you know, every bank.
The banks aren't concerned about their own regulators.
They want to, you know, they're actually pro-business and pro-economy and pro-trading family
and pro-entrepreneur, and they want people to do well.
The only pain in the next that you've run into in the UAE is concerns about the U.S.
They say, oh, boy, wait a minute.
You're right.
you're Russian, hold on, I don't want to get in trouble for letting Russians in because America
doesn't like Russia.
Exactly.
You didn't say the right woke thing and that's not good.
And then you did business with Alex Jones.
He's a forbidden speaker.
You know, they're terrified.
So most of their concerns about like OFAC and stuff.
So we do have quite a bit of influence.
So this does, this does unfortunately influence the world a lot.
I wish we would go back to our roots of being a free country and a freedom first country that
the rule of law and has transparency and be a model for the whole world of a more, you know,
free, freedom-based system.
Garrett, let me go to you and I want to talk about human psychology for a reason.
And I've asked it a few times why are traders responding now or are they responding now to the
news we saw earlier in the week?
And if so, you know, you understand markets a lot more than I and I appreciate you joining.
Am I wrong in saying that markets should be forward-looking?
Right.
No, you're right that generally markets are forward looking. I think crypto markets are a little bit different because there's such a big presence of retail investors. But it's interesting if you look at the price action on Ethereum and Bitcoin, when it initially fell on the Binance SEC kind of lawsuit and then the rebound that occurred on the Coinbase lawsuit, if you look at the rebounds that those two had, they basically negated the
the down move from the finance news.
But if you looked at Cardano or Polygon or some of these other ones that were labeled
securities, the price did not rebound.
It basically had a flat day.
And again, when you look at the price action there, what that's telling you is that
retail investors were buying that dip.
But price wasn't going up like Bitcoin and Ethereum because you had no other money.
In fact, bigger money, you know, what we would call smart money was unloading those into them.
And that kept price stationary on those assets, Cardano, Polygon, etc.
And then as human psychology goes, you know, you're just asking about that, which is a fantastic point.
Humans have this way of when we're told we can't do something or something's not okay.
We have this fight mentality initially, right?
No, you can't tell me that.
I'm going to show you.
I think the SEC is lying about these allegations.
I'm going to go in and buy this dip.
But over time, as price starts to decrease, as those buyers that were furious initially
kind of subside because they run out of money...
and price starts to drop, you start to hit max pain points on investors, right?
So as price comes down, it starts hitting leverage stops.
I mean, if you did a 10x trade, you're getting stopped out here.
You know, if you're someone who was really adamant initially, you're starting to get scared.
And that's where the cascade effect comes in, where you see this final flush out,
where it just wipes out all of these longs that bought or these leverage traders.
And I think that's why you're seeing the bigger move now as reality setting in and people stop.
are getting hit and the panic is setting in.
And then what do you expect to see over the next few weeks and as we see the more clarity with and potentially the DOJ taking action and more clarity with with
actually the clarity will take time. So with that lack of clarity, how would the markets respond?
Yeah, so, so you know, with clarity, I think that's going to be where the bottom is going to be put in.
Once we actually know the rules, I think it's, I think, but that's, that's years.
So that's years, years, years ahead.
I know.
I know.
And that, that may be the problem for crypto in the, in a while.
And maybe that's why we see 95% of these coins actually go out of existence is, is it's going to take that long.
And investors are going to leave the space until there is clarity.
I mean, again, how many investors, obviously retail wise, they're involved, but.
You don't have big money, at least a lot, not a lot of big money involved.
And so I'm looking at it like I'm a trader.
I'm going to be trading these things.
I mean, Cardinal Pierce double bottom is getting a little bit of a bounce.
You're seeing some other technical levels.
But I think the bigger question is, is there another shoot-a-drop?
I mean, Gary Gensler saying that we don't need another currency in a statement there was very telling.
And I would be as an investor in crypto, very concerned about tether or do they go after one of these other bigger fish?
which actually couldn't really be the next shoot a drop.
Okay, okay.
So what you're saying, Gareth, things can,
and that's what Brad was saying earlier,
that things are pretty bad right now.
The SEC is, you know, unsurprisingly, in my opinion,
they haven't changed scores, and they're cracking down,
and they haven't listed Ethereum, thankfully.
XRP is not listed either, interestingly,
where they've listed Cardano, Solana, Polygon, etc.
in their little sort of against it by and us but we're saying you mind if i jump in for a sec mario
yeah please do there's just a perspective here that again is kind of being glossed over that i
i really don't think that this is a much of a story around retail as much as a story around the
fundamental construct of what caused the prices of these coins to rise in the first place again you go
back to the low interest rates and
and silicon valley bank signature bank silver gate all these a 16 z all these large funds basically
borrowing and investing billions tens of billions of dollars into activities that in the traditional
regulated markets would be seen as illegal and would cause the market makers to lose their licenses
and get fined and have the scouragement against them literally like these crypto casino exchanges and the dexes as well
The funds come in and they like A16 Z and multi coin and three hours capital, Alameda, they're all doing the same thing.
And it's the same as when FTX was insolvent.
And what did they do?
They went out and did this confidence game.
The same with Luna.
When Luna was going to collapse, what did Dolkwand do?
He went out and he said, I'm going to buy $4 billion of Bitcoin.
I'm going to backstop the exit hatch with Bitcoin.
Like Luna is safe.
It's the same thing that the Federal Reserve does when the banks start to get runs.
Like they come out and they do this confidence game.
So what are you going to do if you are a huge market maker, like say jump or just even
Binance's market making arm, whatever?
And you've got Coinbase.
Coinbase venture capital arm has billions of dollars in potential profits sitting in their
venture arm for the pre-mines that they purchased.
So what are you going to do?
If you're one of these guys, you're going to try to go out there and signal confidence that these markets are just being unfairly looked at by the regulators and everybody wants them.
And you're going to try to do what you can because it's a gray market to provide liquidity and to make it look like there's activity and to make it look like people are buying this and that the price, the chart levels aren't going to fall below where they're going to capitulate.
So as long as there's not something crazy existential and they feel like the risk is worth taking to like burn millions of dollars on market making and propping up prices, they're going to do it.
And that's what they've been doing this whole time.
But now that the shoe finally dropped and the regulators are getting more.
I think that shoe, like in my opinion, that shoe dropped a long time ago.
And what we see now, that should jump.
Mary, this is the point. The shoe, it was clear what was going to happen. How long did it take FTX to collapse from when we knew that they were pretty much insolvent to when they started signaling that they were fine and their market making FTT and Solano coin and they were saying they were going to buy and rescue all the crypto companies?
Why do you think they did that? They did that because they had billions of dollars and profits that they could make if they kept the markets going.
So of course they're going to signal that everything is okay and they're going to try their best to turn the tide because they've got billions of dollars on the line.
But really, this market was overvalued. It was extremely overvalued.
And it's not the SEC's fault. It's the fact that they over they pumped this market up to Valhalla level prices.
But Brad, you can say that the AI.
Hold on,
there's an article,
there's an article by
CoinDex,
millions worth,
I'm just reading it,
I haven't read it yet,
millions worth of Polygon,
and Haseeb,
I want to go to you
right after I read this
because I just need some positivity
and everyone's,
a lot of people are pretty bleak
and concerned right now.
Buy Bitcoin.
And what you guys,
I see this is exactly where I need you to jump in and Mark, pleasure to have you as well.
Let me read out the article by CoinDesk.
Millions worth of polygon appeared to be sent by key market makers jump trading in Cumberland to crypto exchanges on Friday night ahead of a nearly 30% drop.
according to blockchain data.
Analytics firms look on look on chain said in multiple tweets on Saturday
that Cumberland had deposited 9 million Madd worth over $6.3 million to finance
and 5 million Maddock worth $3.5 million to Coinbase.
The firm added that another crypto wallet related to Cumberland, Jump Trading and Robin Hood deposited a total of $9.4 million to crypto exchanges.
So, I see, we want to get your thoughts on everything's been said so far.
And you know what your strategy is over the next 12 months, the Dragonfly.
Yeah, look, I have zero insight into price action any more than...
Honestly, I don't think anybody on stage here has any idea what happened last night.
All we know is that a bunch of people sold a bunch of all coins, and they didn't sell Bitcoin, they didn't sell ETH.
And why it happened then, you know, there's speculation that maybe it was connected to Robin Hood.
There's some fake news about some fun that blew up that was a joke, but that's been perpetrated.
Your mic is in and out. If you can fix it while I ask you, so what's the rumor?
The rumor is a big fun capitulating.
Yeah, there's some, there's some rumor about a fund called Cimitar Capital.
Yeah, yeah, Fred.
Fred, yeah, that's one that Fred mentioned.
Yeah, cool, cool.
Okay, that's right.
So there's no big fun capitulating.
And Prime Trust has already happened, and it's not as big as everyone thought,
and it seems to be being, it seems we're talking about it yesterday,
and Bitcoin's bailing it out.
So that one's good.
And we've got the news from Binance and Coinbase.
So then what do you, I know we can't know exactly what's happening,
but then what do you make out of it?
What should we expect?
What should VCs do?
What should...
projects do, entrepreneurs do,
because you know what Jason Calacanis tweeted a few days ago,
something along the lines of anyone in crypto pivot to AI.
Yeah, look, I think in general,
the price level that we're at now is not too far
from what the price level was when FDX is blocked up
and when things got really bleak last year.
This is a bleak moment, right?
The SEC has put on its full frontal assault against all coins.
And clearly the SC doesn't want this industry to exist.
The question is, will it still exist?
Right?
Someone was talking about Nigeria earlier.
Nigeria is not exactly a bellwether because Nigeria has been pretty anti-crypto for a long time.
Central Bank has banned crypto, I think, in 2021, although it's very unevenly enforced because, you know, it's Nigeria.
And so things are, you know, the ability of enforcement there is kind of a mess to begin with.
But the reality is that a bunch of countries around the world are positioning themselves as pro-crypto.
I was just hearing a bunch of stuff about Rishi-Sinok being very pro-Crypto
and wanting to introduce pro-cifto legislation in the UK to try to attract more talent away from the EU,
which of course is past Micah and people have some misgivings about Micah.
I think the world is complicated.
But the clear thing is that crypto is not going to disappear because the price went down by 20%.
And the idea that smart contracts are going to go away, decentralized applications are going to go away, that just seems so obviously incorrect.
I mean, if you look at on-chain addresses, or sorry, daily active addresses, daily active addresses are pretty close to an all-time high.
People are using this stuff, and they're using it for different things.
The tokens and the use case are different.
Like the tokens are what they're going after.
They're not trying to stop you from making decentralized applications.
And by the way, the IMF and Swift, look at, you know, Swift just announced they're launching a global payment system based on Ethereum, right?
I mean, the adoption's not going away.
It's to your point.
The tokens are the issue.
Yeah, the question, to be clear, though, the question here is also, if you're asking about decentralized applications, the question is, is it possible for this whole ecosystem to develop on Ethereum?
Like that Ethereum is the only game in town if you want to do a decentralized application.
You have to fit it into Ethereum block space, which Ethereum can do about 15 transactions a second.
The tech is basically eight years old at this point.
There's been very little change to the execution layer of Ethereum.
That's obviously not going to happen.
So what happens to Polygon and Solana then with what we saw from the SEC, considering them securities.
What does that actually mean for all projects building on those blockchains?
Honestly, I don't think it means that much other than, hey, your price is going to be marginally lower.
But the reality is that these things are going to continue to exist.
The SEC is not going in and shutting down the Polygon blockchain.
They are saying you are not allowed to trade this in the U.S. without a license.
All right. Well, that's going to be challenged and it's going to be several years until we actually have an answer on that, whether one, through the case resolving or two, because of legislation that might be passed in the interim, you know, it's going to take probably three years before this case, if it is let to its own devices to play out.
But it's very possible, if not likely, that Congress decides like, hey, people are really mad because the SEC is trying to make crypto trading outlawed in the U.S.
And making it so that, you know, investors cannot buy and sell these things.
And the reality is that people want to.
And believe it or not, America is a democracy.
And especially as we're going into an election year,
the first proxy for what people are going to do is what's popular
and what gets them votes.
And right now, I think as you're going into the 2024 election,
my guess will be that people will start seeing a different year.
They're not saying you can't do it.
They're just trying to say this is not in compliance.
And if you want to do it, you have to do it in compliance.
That's the thing.
So, look, so, Mark, he,
Yeah, go ahead, Fred.
I'll go to Mark on this particular point.
Fred, I'll let you respond quickly.
Yeah, so it's, again, it gets back to how was capital raised for these tokens
and they're traded as securities?
They need to be registered.
The SEC has purposely been dragging its feet on registering them.
And yes, you can argue that Gary Gensler has overreached his authority,
and I'm sure you're going to see Congress react to that.
But it's going to take two years.
We have a presidential election.
crypto is a very
very partisan issue.
What do we do that overreaching?
You know, I'll let a lawyer
You know
John, John would probably
Yeah, John would be
John would be great for this one.
John, did he overreach his authority, John?
No, not at all.
Well, not with the lawsuits.
Not with the lawsuits.
They brought 150 cases.
They've won every single one.
They haven't had any losses.
They hit initial coin offerings.
Then they hit simple agreements for future tokens.
Then they hit staking programs.
They hit, pardon me, then they hit lending programs.
Then they hit staking programs.
They have said time and time again in every single regulatory pronouncement, every single speech.
that all of these tokens are securities,
that all of these entities who trade them,
all these intermediaries need to be registered
as broker dealers, as exchanges, and as clearing firms.
They sued all the famous people who were promoting them
using Section 17B,
And everyone settled because it's a strict liability statute.
So, you know, and you talk about this Operation Choke Point.
It's not Operation Choke Point.
It's basic SEC prosecution in the 80s to hit the penny stocks.
They went after all the boiler rooms.
in the 90s to hit the microcap stocks.
They went after all the broker dealers.
Now, what they've done recently with Coinbase and with Binance is really extraordinary.
You know, again, having worked there for 20 years in the enforcement division, I can tell you that,
and having brought quite a few temporary restraining orders, asset freezes, and emergency relief...
What goes into an emergency relief case is an extraordinary amount of work.
And if you read all the papers from the Binance case, like the memorandum of appoints and authorities, all the declarations, only one of the declarations from one of the enforcement staff has been filed, the one from the forensic accountant, not the one from the staff attorney.
But when you read these papers, in my opinion, they allege a vast criminal enterprise.
and they're going to have a hearing people are saying all this is going to take years
and years and years
it's not in finance you have a hearing in a couple days then you have expedited
discovery then you have another hearing for preliminary injunction
if the TRO is granted maybe 15 days after that and most every every time I ever
brought a TRO they consented to that and
You know, in the meantime, my view, again, this is just my opinion, is there's got to be an indictment under seal against CZ and maybe other people involving Binance.
There are probably dozens of informants and turncoats and whistleblowers that DOJ has who are cooperating because all of these allegations are just egregious.
I just can't imagine having, again, taught at Quantico at the FBI Academy, having brought.
maybe several dozen cases jointly with the DOJ over the course of the 20 years I was there,
I just can't imagine.
Now, normally, when the SEC brings the case, if there isn't a parallel DOJ component,
then that means DOJ is likely not to bring the case because DOJ usually leads.
Obviously, the SEC is only a civil authority, which is evidence in the case they tried to bring against terror.
They couldn't even...
serve Duquam. They tried to serve him in New York. His lawyers said that the SEC didn't have
jurisdiction, which is ridiculous. I live in Maryland. The Washington Nationals have a 40 or 50 million
deal with Tara, and they claimed he didn't have personal jurisdiction. The district court said,
yes, the SEC does. They appealed to the circuit court. The circuit court said yes, the SEC does.
They've appealed to the Supreme Court. Meanwhile, the guy's been arrested and was an international
fugitive from justice.
So the ST is just a civil agency, but when it comes to emergency restraining orders, there's quite a lot that they can do. And if you read those papers, it's a very extensive evidentiary record replete with just mountains of inculpatory information, sclercings.
scathing emails. So in my opinion, after 150 cases and so many regulatory pronouncements,
both like Mario said from Jay Clayton and from Gary Gensler, Gary Gensler, the head of the SEC,
David Hirsch, the head of the crypto unit, Greer Gruel, the head of enforcement. They all made
the same speech about 50 times each. They said that all these intermediaries were running out of runway.
I mean, just Google the term running out of runway.
You'll see it said by 5,000 different SEC officials.
It was clearly their main talking point.
He told Yahoo that all of these intermediaries need to be registered.
So this is an operation choke point.
What this is called is access theory or gatekeeper theory.
And it's something the SEC did in the 80s and the 90s, and now they're doing it with cripple.
crypto, it's the logical progression after ICOs, after SAFs, after focusing on Section 5,
after focusing on Section 17B, to now look at the registration provisions for intermediaries.
So before you respond, Ryan, I'm going to give the mic to Mark to give us his thoughts
and I know he's got a lot to say.
And then the reason I'm doing this, Ryan, because I'd probably need your help to kind of balance
out the discussion.
Mark, pleasure to have you.
Thanks for joining.
Well, thanks. I love Stark. Stark is the best, especially on a Saturday morning. I think the one factor that people need to understand is all these VC firms, SAC's firm, Andresen Horowitz, all these guys who pumped all these alt coins. They're now trying to shift as fast as they can into AI and other things. And it was probably one of the, this.
Alt-coin phenomenon, this pump and the dump now, is probably one of the great VC come-to-and-end
phenomenons we've seen. It's just simply supply and demand, and there was nothing behind these
coins to begin with other than hot air in being pumped by these air quotes, the smartest guys in the
room, Sequoia, Andreson, Sax's firm craft ventures.
through Cross River Bank, through FTX, and now all this shit's getting unwound.
It's no more complex than that.
You had bad actors looking out for themselves, making billions of dollars on the backs of working class people.
And the SEC is dead right because these things are securities.
They trade like securities.
And basically the world had it pulled over by these VC firms.
That's the missing ingredient here.
But isn't, so Mark, a question, sorry to interrupt you, just a quick question, but didn't that already happen with the FTX collapse?
Like, didn't we have a lot of these VCs go under back then, and we saw liquidity dry up relatively quickly, and VC money coming into the ecosystem is down 90 whatever percent?
So I just don't know what, like, what we're seeing now...
I just think it's different.
Like there's not much.
During money, VC money is putting out just because of the ambiguity.
Go ahead, Mark.
Hold on, Brad.
We'll go to you after.
Yeah, go ahead, Mark.
When you're down 80%, going down another 50% gets you down to 90%.
So it's all part of the collapse.
Whatever price Salon is at is still up from 50 cents.
So the VC firms didn't per se go under.
Silicon Valley Bank went under, but these VC firms now are trying to shift as fast from
the crime scene as they humanly can, which is why you'll start hearing a ton about their
movement into AI.
And And Andreessen Horowitz put out something, you know, today or yesterday, that AI is the next
big thing.
So they're all going to try to run from crypto as fast as they can.
because the DOJ is involved and the SECs involved.
And now people are starting to figure out that there was just no there there.
And when there's no there, things can go down 99%.
I mean, Silvergate went from 216.
It's now at 90 cents.
Signature bank was seized.
The ramps have been closed.
Binance is finished.
And the progression just goes all the way to the top.
And then once that's done, you will then see 2.0 come out of the ashes.
And how does 2.0 look like?
And while you speak, Mark, I do want the audience to let me know their thoughts on what Mark is saying, what other panelists are saying and any questions you have for Mark or others in the comment section in the bottom right corner.
And that's an interesting question.
Like, is crypto 2.0 just a tritefy merged into Web 3?
Yeah, merged into the government having a hand in it, whether people like it or not, whether
the SEC having a hand in it, whether people like it or not, and these things trading and
being treated like securities.
And if there is manipulation and pump and dump in stocks, the SEC and other regulators
get involved, you know, hopefully or maybe.
But obviously, people have seen enough and people are tired.
of watching their hard-earned money go up and smoke, especially on a weekend, with no explanation.
And my explanation is simply you follow the money, and you follow the money behind these pumps and who pushed it.
And you follow the government going after these guys, albeit slowly, but with force.
So 2.0, in my view, is going to be an iteration of this.
that's safer for people who want to invest and or trade in this stuff with the government having a hand in it.
And it doesn't matter who the administration is because you can't get the lid back on the peanut butter jar.
I mean, you've already heard that pop and you can't re, re, reseal it.
So that's my view and I think it gets worse from here.
I said on our first call, Mario, I told everyone to get out of these offshore exchanges to get their money out of this crap,
that this is going to end, that the on and off ramps will get blown up, and no one knows exactly what's going on.
And this is just another brick in the wall.
And it's also not going to stop.
And Coinbase made a huge mistake.
publicly going after the SEC and you just don't cross swords with the government like that and
you know we'll see what happens but this is just again this is just a progression that should be
obvious now for people to see ran i've got a question for you ran and mark i want i want you to answer
the same question what does that mean for all the startups that have a token that is paramount
to their ecosystem because you know decentralization's here to stay but there's a concept of having a
utility token what happens to that
So I just finished the show.
That's why I was a bit late to our spaces.
But I think I covered this pretty well in the show.
And I said, look, I know this feels like the sell-off was because maybe Robin Hood made the
announcement that they're stopping support for Solano, Cardano, and Matick.
Or I know that maybe it's because crypto.com exited the US or closed down the institutional
offering in the US.
But it's actually much bigger than that.
And I think it goes to what Mark is actually saying.
So I think, look, I think we've all known for a long time that a lot of these utility tokens really border on whether or not there are securities.
If there is indeed such thing as a utility token.
Now, there is because we know that in Ethereum, we know that ETH token is a utility token, although some people will argue that it's changed since it's gone to proof of stake.
I don't want to get into that debate.
But I think the reason for the sell-off yesterday.
was because the market actually realized that the US is banning old coins.
Now, what do I mean the US is banning old coins?
They're doing it in a very roundabout way.
They know that they can't ban old coins if they go through Congress.
Because that's not going to work.
You're going to have too many people fighting against it.
It's going to be too much of a process.
So what they're doing is they're banning altcoins by enforcement.
And they're using the SEC as the pawn to ban all these old coins.
They know they can't ban Bitcoin because too late.
They know they can't ban Ethereum because headman and because it's probably too decentralized and probably too big.
They ripple XRP is a gray area because it's in, you know, in this, in this litigation.
But I think they've now driven a very strong message to everybody else, every single other old coin in the market.
And what they've said is the following.
They've said, look, we're not going to tell you which old coins are securities because we don't do that.
But what we are going to tell you is that if you are caught selling illegal securities or unregistered securities to people, you will get into the lawsuit of your life, like Coinbase, like Binance.
And they've done that by going after the two biggest ones.
And in both of those lawsuits, they issued two separate lists with an overlap, but two separate lists with an overlap of tokens that they just decided are going to be our securities.
Right.
So what's the message that they're driving?
They're saying, look, if you are serving U.S. customers right now and you are a centralized
exchange, then you need to know that at any point we can come to you and we can just
decide at our own discretion that these are securities.
Therefore, the message is delist all the altcoins.
Right.
You can only trade Bitcoin and Ethereum if you're in the United States.
If not, there's a huge risk that we're coming for you.
And if we come for you, it's going to be penalties.
It's going to be disgorgement of all the profits that you've made.
If you need the SEC charge against Coinbase,
they're saying that Coinbase must return all the money that they're made
on the trade of all these old coins, plus the staking service, plus interest,
which is over $6 billion if you do the maths.
That's a very big statement.
That's a very big message to the market to say,
Hey, exchange, hey, platform.
If you are trading altcoins in the United States,
there is a risk that we're going to come for you.
And it doesn't matter which altcoin,
because in the next summons or the next action,
we're going to give you more altcoins.
I think what they aiming for is exactly what Mark's saying.
They're aiming to make all of these things securities.
Now, when there are securities, we as crypto people know that that makes the networks unusable.
Imagine that every time you paid gas on ETH, using ETH, you had to, you're transferring a registered security.
Just imagine what that does the network.
Imagine what that does is taking.
It makes it almost impossible to use.
So my theory is here that what they've done is that they know they couldn't have gone through Congress and the Senate and the House to get used.
crypto banned that you they also know that the optics of getting crypto banned um through that way
would have led to public you know public dissent public would have gone and said no this is a democracy
how dare you ban old coins whatever else but if they do it this way through enforcement and then they just like
look at robin hood
Robert Hood delisted the tokens.
Why did Robert Hood delisted tokens?
They probably looked at this and said, hold on a second.
Do we really want a summons?
The SEC has now said that Solana, ADA, and Matikos are securities.
Do we really want to fight the SEC?
No, not worth it.
We're out.
I wouldn't be surprised if Cracken follows...
I wouldn't be surprised if whatever other US exchanges they are follow.
And that's for me how they are banning old coins in the United States.
So what does that?
But right, right, right.
What does that mean?
What does that mean for people in the ecosystem like me and you?
It means probably that there's a long fight ahead in the United States.
As I've said before, I'm glad that we've got Brian Armstrong fighting.
He's got $5 billion of cash on his balance sheet.
I don't think he's going to spend that much, but at least we know he's got it if he needs it.
But I mean, that on the background of Coinbase actually is bleeding cash.
He's going to fight the fight.
And within probably five years, seven years, we'll have some kind of regulatory clarity.
Yeah.
But in that five to seven, what happens in that five to seven years?
What should investors and VCs do and what should startups do?
I just don't see a lot of these projects function when they're talking to security.
They're doing it already.
A lot of them are exiting the United States.
But if other countries follow the U.S. in their regulation, a lot of regulators watch the U.S.
and look at them for, look at the U.S. for guidance.
Yeah.
Not really. I mean, if you look at Japan, Japan's not following the US.
If you look at Hong Kong, Hong Kong's not not following the US.
If you look at Singapore, Singapore is not following the US.
Emirates is not following the US.
Europe's not following the US.
This is one of those times where not a lot of regulators are actually following the US.
I think it's the wrong framing to say that they're not banning alt coins.
This isn't banning all coins.
And all these other countries, they're not just like letting the same nonsense happen
that has happened over the last couple of bubbles.
They're actually taking all this stuff into compliance.
I just think it's the wrong framing to look at it and say that the SEC is trying to ban altcoins,
but go look at Hong Kong and Dubai and all these other countries where they're like opening up hunting season for whales to come in and do more pump and dumps.
No, they're taming the markets. They're creating regulatory frameworks so that people that want to do altcoin stuff can still do it in a compliant way.
I don't think that the U.S. is trying to completely ban altcoins.
Yeah.
But if you say these things are securities, that's kind of the case, unfortunately, that's, I wish, that you could just legally, you know, work with these in the U.S., but unfortunately in the U.S., if you said...
But aren't they doing that everywhere, though, Bruce?
Weren't you kind of like...
Guys, guys, if you'd allow me for two seconds, Brad, I want to just ask you a few questions.
Let's just make sure we're fully aligned.
If all, if East and Seoul become securities...
Can we still use them as we use them for their use case?
Just a yes or no?
Yeah.
Yeah.
You can? I mean, if it becomes a security, can you pay, can all apps just pay the gas fees in Ethan?
Can we just stake them and earn?
No, no, no. This is the thing that I was just getting at.
Wait, what do you think there are use cases, Rand?
No, don't get it. Stick on the securities point. His point is that if, if, if, if, if, if, if, just take F for example, we had these conversations years ago when there was a big debate about Ath and there was the Henneman speech and everything, but.
if that was a security or any of these things, ADA,
it kills it in the U.S.
You can't put it on a wallet.
You can't move it around.
Nobody can touch it at all other than a registered broker-dealer.
And even a registered broker-dealer can't really touch it.
That's a reach, though, Bruce.
That's not what their...
SEC is not able to do that.
Literally the SEC is saying ADA is a security in the U.S.
The SEC can't touch individuals using all coins.
Like, it doesn't...
Right, but how are you going to use it from?
Yeah, exactly.
You're holding it on the agency.
Does the SEC come after?
If you take a stock certificate and give it to RAN,
is the SEC going to come after you?
No, hold on, hold on.
You can't build a wallet or anything that hold securities unless.
You cannot use this because Bruce can't transfer security to me,
and this goes to.
I'm saying it would have to be the Congress or some other government agency
that would be...
in conjunction with the SEC.
Hold on,
is executive order 1335?
Could we could be, could we could be could we could you go ahead,
you go to Ryan and then we'll go to Mark on that particular point on Congress acting on this.
Go ahead, Mark Rand.
Again, my whole argument here is that they've gone against, they've done it without having to go to Congress
because of chances are, it wouldn't pass in Congress.
Chances are they wouldn't do it in Congress the year before an election because it's just too dangerous, right?
Why too dangerous? Why too dangerous?
Over 90% of Americans lost money in crypto.
Why is it dangerous for Congress to act on this in a negative way?
Because regardless of...
I just look, this is the wrong thing.
The one thing...
The one thing that you can't do in the United States is take people's rights away without getting some kind of up.
Regardless of whether they have lost money or made money on it, the U.S. is very sensitive to rights being taken away from them.
And what they're doing here is they're taking away your rights by enforcement.
Because if you're going to be living in the United States, very soon, you won't be able to buy old coins.
Because what's going to happen is the exchanges are just slowly, slowly, slowly going to remove the old coins.
And you know what I think is going to happen next.
I think they're going to go for the decentralized exchanges.
I think they're going to go to Uniswap because Uniswap is a registered company in the United States.
And they're going to say for the Uniswap front end,
if please limit it and make sure that no American users use it.
And then Uniswap in the United States is going to have to make a decision
as to whether or not they want to comply with us.
And I think they will.
And I think they will.
Mark.
And on that day.
Yeah, go ahead, Rand.
I'll let you finish off.
I've got a mark.
Mark.
Yeah, go to Mark.
And that's the end of old coins in the United States.
Well, Ryan, if you're being this pessimistic, I just, yeah, it just, it just doesn't sound...
Doesn't sound very promising to the ecosystem at all.
I was expecting you to be the shining light in this discussion.
Mark, like, maybe you could switch positions, Mark,
tell us, like, maybe, is there any positive path forward?
Like, if we see Web 2.0 come in with the traffic coming into the ecosystem,
I just don't know, like, how would these tokens in these projects operate?
How could these projects function if the token is considered a security?
Yeah.
Well, first of all, one of the solutions is going to be the board of directors of Coinbase getting rid of Armstrong and coming clean and saying the path we've taken clearly is not working and clearly is not going to work.
And if we spend one to seven years fighting you, one, we're going to be out of cash, two will be out of business.
So there has to be some admission that the way 1.0 has gone has failed and failed miserably.
And how do we all get together, put up the proper guardrails for people in legitimate players in the industry,
underline legitimate players in the industry, and move forward.
Because a lot of these guys are nothing but hucksters.
And hucksters don't want regulation.
And hucksters would love to fly under the radar.
But the powers that be, however you guys want to fill in the blanks, have clearly had enough because, as you said, 90% of people have lost their money.
Some people have lost it all.
So the optimism I would have is the industry or the ecosystem, instead of blaming it all on someone else, needs to say we need competent adults in the room to set up the proper guardrails so we can trade this stuff.
And if we win, great.
And if we lose, great.
But at least it will be a fair game.
It'll be a fair market.
You won't have these pump and dumps and rug pulls and shit moving 20% on a weekend on no news with whatever story.
And I feel bad for everybody, but it's all been laid out.
It was all there for the taking of what was going to happen.
And because the government or the SEC did nothing for a period of time,
people thought nothing was going to happen.
You know, when you weigh 380 pounds, you are going to have a heart incident.
Just because you don't have it at age 40 doesn't mean you won't have it at age 45.
And everyone has been flirting with disaster here.
walking on the third rail, people in this country are admired because they're worth billions of dollars,
but all they are are scum of the earth who push product that people don't understand
so they can make their billions while Joe Sixpack loses.
And it's sickening and it's time it stops.
So the legitimate players out there are,
should embrace this change because the government or powers that be have had enough.
And the legitimate players will succeed.
And the hucksters and the frauds will go out of business and or go to jail.
So it's a natural evolution of what happens.
And as Stark, you know, says, and I have great respect for Stark, this is, you know, there's nothing new under the sun this happened with,
Penny stocks in the 80s happen with all sorts of bullshit in the 90s running in front of research, mutual fund scandal.
This always goes on when, A, money is cheap and regulators look the other way.
And this is just a result of it.
So I wouldn't be so negative on the goings on.
It's.
It has to happen.
And the sooner it happens,
and the sooner everything gets cleared up, the better.
So I'll be with you, Mark.
I almost agree with you.
The only part I don't agree with you is around the VCs,
but I almost agree with you.
I think that you're right.
I think that that, and I've said it tomorrow earlier this week,
and we had a bit of an argument about it.
And I said, tomorrow will never see another ball market like the ball market we had,
because the next bull market is going to be a regulated bull market.
It's going to be a bull market under regulated conditions,
and those bull markets under regulated conditions,
don't do 10xs on a Saturday because there's no liquidity.
It just doesn't happen.
That's right.
But you guys, Mark, both you and Rand did not answer the, like everything you said, Mark,
makes a lot of sense.
And I've been one of the few for the last year saying like, you know, we should be welcoming
to regulators because we fucked up bad, you know, the self-regulation concept, we tested it
and we failed miserably.
And I get a lot of hate for saying this.
But then my question is, is that going to stifle innovation?
Are these startups able to function if their token is considered a security?
That's my concern.
What's the innovation?
It's not my concern because if you have innovation with a good idea that's pressure tested,
you can raise money anywhere if it's a really good idea.
I mean, again, the traditional model used to be,
VCs would invest in startup companies.
Two out of 10 would become Googles and apples and Adobe,
and eight out of 10 would fail.
And failure is part of this economy.
It's part of free markets.
It's part of free enterprise.
It's okay to try and fail.
Not everything succeeds.
But in this market, when all these pumps were going on,
everything was going up thousands of percent.
And it's just not realistic.
It's just not realistic on how things work.
So if you have a good idea in this country, you could always raise money.
You may not like the cost of the money and you may not like the terms, but you can always raise money.
If you have...
a bad idea, you should go out of business and you should fail and come up with a better idea.
It's the way things work.
But now everyone has the FOMO and wants to make a billion as fast as they can and they
don't give a rat's ass of who the fuck they run over.
And I'm glad to see this.
And I hope the government comes after these VCs who played all this shit.
And who encourage people to put their life savings in this crap.
That's where, to me, the everyone's eyeballs should go at the people responsible and who are in early on these huge pumps.
And that's where I think it's gonna go, which is why I've been so vocal on sacks and Kraft and Drison and all these other guys.
100%.
Yeah, so we'll see.
But the good news is when I started with you, Mario, on these calls, I used to be hated.
People thought I was out of my mind.
Everyone called me a boomer, you know, all this bullshit.
And now with Silvergate in the ground and signature in the ground and FTX in the ground, now people may start paying attention and saying, hmm, maybe that guy's on to something.
You know, and Stark, he knows. He's lived it. He's done this work.
And I had Bob Hanson, who used to work with Stark at the SEC on the spaces a couple weeks back, and he echoed the same thing.
No one has problems with these ideas.
People have problems with the way these things trade, with the light regulation, and the sleaze bags, and the pump and dumpers screwing people.
That's where the problem is.
You know what I hate about this conversation?
Can I jump in here?
Is there something from Singapore?
Yeah, yeah, before, Joe, I'm going to give you the mic right after Julian.
Julian, I know you want to share something about Singapore, but I wanted to ask you.
I'll let you do that, but can I add a question to it if you don't mind, Julian?
So if I'm a startup that raise a bunch of million, I've got a token, a utility token for my Web 3 game.
Now, I've no, I've but I've butchered that question.
Last time I asked it, but, you know, any investor would probably want an answer to this.
Yeah.
I've got two questions actually.
So what happens to my token?
What happens to the, like what, how are these projects going to pivot or do they need to pivot
other than moving out of the US?
And then the second question is considering everything is being discussed now, I just,
other than seeing some sort of action around against tether or so stable coins or
or decentralized exchanges.
Beyond that, which people are expecting or speculating that it could happen, there's not much more that could happen.
So my question is, has everything been factored in?
Or could capitulation be pending, as Brad mentioned earlier?
Okay, three things.
So first, we've been in Singapore for the last seven years.
We have not been open to the U.S. market by design.
And we did this on purpose because we feel actually the rest of the world is actually
quite well regulated and the US is not at all when it comes to crypto. So it's this open kind of field.
And so anything can happen. And so I don't think it's a surprise what's happening right now in the US,
but I think it's a surprise that it happens now like this week or something. The story here in
Singapore on the street is that the reason why the cell of happened.
happened in the past eight hours is because of Binance selling off their outcoin treasury.
I want to be very clear on this.
The story in Singapore has also always been that Binance was the one who has been pumping
the crypto market because they've been selling off their BUSD the entire year.
This hasn't been really picked up by the rest of the world, the teams.
But yeah, so that was always Singapore kind of seeing this.
So that is why now Singapore, why now the sell-off has happened in the last eight hours.
Yeah.
to me,
I ran,
I see this
a bit different
than you do.
I don't see this
as an attack
on alt coins.
I see this
yeah,
Yeah, like also I think Brett said this. Mark said this.
To me, it's really, it comes down to compliance in the U.S.
Other jurisdictions, we're licensed in Europe.
We fall on the MECA there as well.
We are applying for a license in the UAE, Singapore.
I don't know, for us are the only place we haven't really filed for a license
because there is none is the U.S.
We don't know how to do it there.
And I don't know, we just didn't see the risk reward in that.
That also means, I mean, there's always, and I think that's the price discovery now.
This always meant that we could never reach the kind of same scale,
if some of the miscarriage.
But, okay, we don't have these issues right now.
So, I don't know, there's always a bit of a flip side to that.
I think the future here is,
tokens really have to be used.
And if they get used,
then I don't think this entire discussion
about price is so relevant.
It's really about actually using them.
Your mic, Julian, your mic, man, your mic.
But you can hear you about your mic
if you can improve it a bit.
In and out.
Okay, sorry.
Yeah, so as long as these tokens get used,
then...
this entire security discussion goes away.
We don't have this in the rest of the world.
The US has this and I understand why.
And I'm not a lawyer, I'm not an expert on the US.
I would assume a lot of these tokens,
especially if they did an ICO, gonna have an issue.
So the interesting question now is gonna be 2024,
and that's really me.
I'm not a US voter.
I'm looking at this from the outside.
We're looking at this from Singapore.
What's going to happen in 2024?
Are presidential candidates daring to not only probe the market?
Because to me right now it feels more that candidates are probing to see are the crypto people,
are they actually large enough to really kind of help?
There aren't.
But we're saying to see, but Julie...
What we're seeing, I've had RFK on the space and we'll probably have them in a crypto space.
And they just don't seem to care.
So I believe that.
So to me, that's just probing right now.
And if that doesn't happen, if we don't see a super strong pro-crypto candidate in 2024,
then it's really going to come down to one thing and one thing only.
And that's true utility.
That's all I want to say, a bit of a sharing of it here from Singapore.
Can I just say that like, you know, the reason that if you've been able to operate overseas,
it's just because of regulatory arbitrage.
And just like what Mark was saying, this thing was pumped up by VCs, mostly in the United
States.
And you've been operating in gray areas, not you specifically, I'm just saying people that
have not chosen to do business in the United States, you've been.
you've been taken advantage of the uncertainty and because the United States liquidity is all drying up right now because anybody that's in the United States, whether it's Uniswops co-founders or Robin Hood CEOs or whatever, they're going to want to comply with
with all these US regulations and as the liquidity dries up,
even the people that have been overseas,
like crypto VC funds and market makers
and defy yield hedge funds and all this,
they're not gonna be profitable anymore
and the global regulatory regime
is gonna come in line with what the United States is doing.
So I think this is just a short-term thing
that people have been able to,
maybe for the last couple of years,
take advantage of operating in Gibraltar or the Cayman Islands or something like that
and kind of shirk all these like owners U.S. regulations or avoid the regulatory risk and
the legal risk of operating in the U.S. But over the next couple of years, the fundamentals
are going to come to bear on these markets. They're overvalued. These coins are not worth
what all these BCs have been pumping them up to. And that's the fundamental thing we should be
those coins have dropped
so much that's what I'm trying to say
let me let me move it out
dude look at look at shit
that's like currently priced
in the billions of market cap
before it was pumped up by the VCs
in 2020.
So give me,
that's where it's going.
It's going back to like 50 million archa-
But you can't compare,
but you can't,
you can't compare to back in 2021
when you tell you can.
For example, Solana wasn't where it was.
You didn't have all these projects.
Mario, you're in denial.
You're in denial.
No, I don't hold any,
but Brad, I don't hold any soulman.
I don't hold any polygon either.
I don't hold any of these tokens.
So I don't mind if they disappear,
go back to 21 levels.
But I just don't like we cannot compare the utility of these protocols today and that's the point. That's why I'm just finishing the point here that
Go ahead. The conversation shouldn't be we shouldn't be saying like so much focusing it on the SEC and the regulators and cheering for their regulators like the crypto people like to say that bitcoins are doing which we're not. We're just identifying reality. What we should be talking about is fundamentally
People have been lied to.
These markets were fraudulently pumped up, and the utility value is fantasy and Kool-Aid.
And if you really want to talk about what's valuable in the space and do the true free markets way and the libertarian way, let's have a debate about why crypto is crashing.
It's because it's overvalued nonsense and garbage for the most part.
All right, so let me read out.
But three markets work, John.
Yeah, let me read out, Bruce.
I want you to respond.
But let me read out what John Deaton, who are just invited and Ryan Selkis as well, both
have been on the show multiple times.
John Deaton says the following.
When Senator Warren chose to run for re-election on an anti-crypto platform, it was sealed.
Her and Gary Gensler have free reign over our banking and financial markets.
POTUS is bringing up crypto traders in speeches, and Gensler just called Brian Armstrong, Jesse Powell and Brad Galinghouse, or anyone else leading a crypto company, quote, hucksters and scam artists.
This administration has gone all the way on its war against crypto.
This is why I've been saying we must fight as hard as we can in every court.
Congress isn't helping on to late 2025, and only if we get a new president and Senate.
Ryan said something similar.
There is no future for crypto in the U.S. with this Democratic Congress or president.
If reasonable Dem reps and senators want to prove me wrong by overriding their radical left colleagues,
I'd love to see it happen, but I'm not holding my breath for the lowless and the corrupts.
So we're seeing both Ryan and John saying, you know, John saying that we need to push back.
We need to go into the courts.
And then Ryan kind of politicizing it and rightly so because we're seeing a lot of pushback from the left.
Not so if the right will be different.
I want to get the thoughts you have on that particular point as well, Bruce, as well as your response to what Brad mentioned.
Yeah, I mean, the thing is, free markets work best.
It may be regulatory arbitrage, but it may just be what happens throughout human history is that people march, and they vote with their feet, and they march towards freedom always.
That's why people, when our country used to be a free country, they came to our country.
We had to stay.
Freedom from their savings if they're buying shit coins.
Yeah.
That's their right, Brad.
Brad, that's their right.
The market disagrees.
Come on, it was a joke.
It was a joke.
Wait, wait, let me finish this point.
The market disagrees with you, Brad.
There's 55 million people who want to buy these things.
Let the market work.
It's not the job of an anti-state politicians to get in there and say,
I think this coin works and this coin works.
And it's super, super naive to think that that's not going to hurt Bitcoin,
that you can just sit back and say, well, they can't stop us.
We're unstoppable.
Yeah.
Yeah.
Do you really want to find out?
First, that's why I said, let's not talk about like cheering on the SEC and the regulators.
Let's talk about the fundamentals.
This is Bitcoin's valuable.
But you have an idea.
But you have an idea that the regulators can, you know, kind of like what Mark was saying earlier, that regulators can solve these things.
They can't.
They don't solve it.
They don't help.
It's only a negative.
There's no positive that they have.
All they do is cause paperwork and hassles for honest people.
The scammers don't follow the regulators.
Bernie Madoff was head of the largest regulator.
He didn't follow the rules.
The market is solving this.
Like, the shit is way over the value.
People lied about what they were buying.
Right.
And it was fraudulently pumped up.
So the market's crashing, not because the SEC has taken action.
It's crashing because all these people that bought crap that they realized was not what it was because they thought it was.
The market and people like Tone have done way more to protect investors than the people in Washington, D.C.,
Way more, way more. Not your keys, not your coins.
NVK, you, Tone, anybody who's spoken about is done way more to protect investors.
The entire ICO- So why don't we talk about that as much then?
Why are we talking so much about what the SEC is going to do and how this is unfair?
Because the tyrants are trying to, the best solution is a free and open market where people can make those decisions on their own and people like Tone can educate them.
Okay, but we're minimized.
And billions of dollars are put into maximizing and amplifying the voices of Charlotons and grifters and pump and dump artists.
So, like, how do we compete with that?
Exactly.
That's just the-
The market works.
Don't want to change the way the world.
Brad, those exist in every single industry, in every industry.
Tesla was worth more.
This is the free market.
I'm using my bruce.
Thank you for a shout-up.
Every car company combined at one point
and people were saying it was overpriced
and yes, it came down
but it's still worth a lot more
than most of the car companies combined
because they're doing more than just cars.
There's people believe in it.
What I don't like is if you strip
away all the noise from what a lot of people on here are saying is we want only accredited
investors to have the opportunity to invest in innovation and everyone else go fuck off. And I think
that's horrible. And that's what I really want to bring to the table is you're basically
saying the American person can't invest early on in innovation. Only rich people can.
I think that's why I love that's why I love what's the innovation. Let's talk about the
innovation. There's a lot of innovation. Let's use helium for example.
Let's use helium, for example, which has like an IOT network, which is incredible, and
now it's doing 5G.
Let's use render for an example.
It's down 97%.
There's a ton of them.
It's down 97%.
No, yeah, and 97% of startups fail.
And,
And 90% of startups fail, and then you'll call them a scam.
The same thing happens in the...
The alien network was pumped up by H16Z as a unethical sort of fraudulent pump and dump that would be considered...
insane to invest in if it was in the traditional markets.
The information asymmetry is the problem here.
You have people propping up bad logic like helium token is a good investment.
Like you're saying that helium token is a good investment.
It's a terrible investment.
It's down 97%.
It doesn't have any use case aside from selling it.
So was Amazon.
So was Amazon in 2001 when it went from $120 to $5.
But they kept adding users.
That's a good investment.
And that might make sense for some people because they want to roll the dice.
But the point of the SEC and the point, you make a decent argument to say, hey, you know, when it comes to accredited investors, maybe the threshold should be lower.
But that's not a defense to a legal case.
The thresholds are what they are right now.
So if you want to make your case that, hey, we should have more of a caveat mTOR type of economy in the U.S.
That our rules should allow for many public offerings that there should be some way to democratize.
those are those are good arguments i mean i've heard them for 35 years and the reality is that
tokens john no no no not what this was not an innovation at all it's just you're talking about
mathematical computational blather you know
You know, at least when you're talking about an idea like the Internet or the cloud or even AI, you know, it's something that people can grab hold of.
But when you're talking about the tokens, you know 90% of these AI projects are going to go to the wayside and people are going to call them scams as well.
Maybe and maybe they are.
But there'll be regulation around them so that at least...
you can trust the marketplace. But you know, you're talking about market makers in the crypto space.
They aren't market makers. They aren't registered as broker dealers like traditional market makers are.
So they go and do what they please. Read the Binance. You know, I can't believe there are people on
this call who actually would use Binance if they just read the pleadings in this Binance TRO.
It's unbelievable how much power one person has to move funds and buy whatever he wishes with the
funds that he moves and move them wherever he wants and wash trades and pump up markets.
So it's a complete den of thieves.
And when there's no regulator to make sure to have auditing, examinations, to have inspections,
to have net capital requirements, archiving requirements, cybersecurity requirements,
insurance requirements, licensure requirements.
Those are all the things.
They're difficult.
They're hard.
But it's the same reason why when I went in for heart surgery, I was very confident that
the heart surgeon was going to do a good job because there was all this licensure in place.
And the same exact paradigm should apply to crypto.
That's all I'm saying.
But, John, isn't that self-custody?
Doesn't self-custody resolve a lot of the issues you just brought up?
I don't know.
Ask the people at Atomic wallet.
Ask the people at Atomic wallet if that actually solves.
Or ask the guy who hit his point out one or two cases...
You got to look at the statistics.
You can argue anything by pointing one or two out.
It's a different discussion.
He brought up some great points, and then you shifted the conversation to self-custy,
which is nothing to do with the markets and what these things are.
I said it could solve a lot of the issues that he brought up.
That's not-
So you can self-custy a pump-and-dump-dump-ponsie scam token.
Who cares if you can self-custy?
He was saying that he was saying that...
You're the one pivoting because he was saying that
Why would you hold your money in Binance a guy who can just move his money?
The same exact thing that happens with banks, by the way.
If you self-custody, you don't have that problem.
Well, yeah, let me judge.
That's a real good plan.
Go ahead with that plan.
Joe, Joe, let me.
If you don't want to, guys, guys, go ahead.
Yeah, sorry, sorry to interrupt you, John.
I just wanted to bring you back because I'm going through the comments.
A lot of people are asking, and for anyone that just joined the comments in the bottom right corner, that purple circle, is that, and Joe, they want more clarity on the SEC action against Coinbase and Binance.
And I know you've probably gone through it since the last time we've had you.
So if you, John and Joe, both of you could give us a bit more clarity in what we could expect with Binance and what Binance is doing.
We had one of the speakers mentioned earlier that the price action we're seeing.
I can't remember who that was.
And that's just Binance.
Yeah.
Binance US is selling off a lot of their out coins portfolio.
So does that have, you know, does that make logical sense considering the action they're facing?
And what will Binance US do next?
Why they're stopping off ramps, a fee off ramp is that part of the action that they're facing?
And then if you can also link it to what's happening with crypto.com and cracken.
John and Joe, go ahead, guys.
Thank you.
I can, of course.
So first of all, like, for instance, Robin Hood's move, that doesn't surprise me at all.
Dan Gallagher, former SEC Commissioner, really responsible guy, former head of trading in markets.
He got win that these things were securities, and he's a general counsel there, and he probably said either take these off or I'm quitting.
Because it's just obvious that when the SEC proclaims these as securities and litigation like they have, it's a very important signal for the General Counsel and Chief Compliance Officer of any intermediary.
Now, understanding the difference between the Coinbase action and the Binance action is critical in some ways, but not critical in other ways.
So first of all, they're the same action in the sense that they both allege that these entities should have registered as exchanges, should have registered as broker dealers, and should have registered as clearing firms.
And if you go through the pleadings and look at, for instance, the Bittrick's action, you'll see a lot of the language is very similar.
They took what is indicia of broker-dealer behavior, what is traditionally indicia of exchange act behavior, and they laid it out in Binance's case in 136 pages.
and in Coinbase's case, 101 pages.
But what makes them very, very different is in the Binance case, there is massive...
fraud, wash trades, all sorts of chicanery engaged, targeting you as
when they shouldn't.
Commingling as well, right, commingling of assets between that are supposed to be individual
investors but aren't.
Now remember though, Coinbase could be doing all those things.
We don't know it, but they are a public company and they weren't alleged to have committed
fraud.
But the real difference between these two actions is that the Binance action is an emergency action.
And what two things that are true of every emergency action is the SEC believes, number one, that investors' funds are at risk, and number two, that they have a strong likelihood of success on the merits of their action.
So typically those are done ex parte, meaning the other side isn't there, and I've done lots and lots of these actions.
You walk into a judge's chambers.
You say, here's a declaration from our chief investigator on it, which I've done. I've done that declaration.
Here are the things that we found.
Here's the problems.
Here's the fraud.
Here's why we think investors' money is at risk.
And you should freeze all assets.
And you should also have expedited discovery, which is impossible.
Coinbase will have months and months and months to comply with the discovery once it gets going.
Months and months to write their motion to dismiss, months and months to write their motion
for summary judgment, months and months to delay their depositions, to delay all their document
requests to fight all those things.
Finance will have days.
And you're right in front of a judge on everything.
Expedited discovery is impossible for defendants.
You're a defense counsel and you suddenly wake up and you've got 15 requests for documents
that would normally take you a year to comply with.
And 10 depositions that would normally take you 100 days to prep your witnesses for.
And do these witnesses even want to come into the U.S.
because coming into the U.S. risks one thing above all other things getting arrested.
So with respect to the Binance case, the SEC has also asked for the repatriation of funds from outside of the U.S. into the U.S.
Usually that hearing takes place before the action is made public.
This was a very unique situation where the SEC actually filed their complaint first, then filed their emergency action second.
I don't know what the reasons for that were. Maybe it was a mistake. Maybe it was planned. Maybe it was
strategic. Maybe it was because, or strategic, maybe it was because, again, some informant came forward and they learned some incredible information.
But if you take a look at the declaration of the forensic accountant who was assigned to the SEC case, it's in the pleadings.
I also posted it on my Twitter. I also posted the memorandum of points and authorities, which are
Again, very lengthy, unusual documents.
Typically, a complaint is 30 or 40 pages that just tells a story.
These complaints are encyclopedias that are like a miniseries.
And they provide all sorts of minutia, extraordinary pieces of inculpatory evidence,
devastating, scathing evidence that normally doesn't come out until after discovery.
And when you look at the forensic accountant, she looks at all the accounts, or he or she,
I don't even remember who was, looks at all of these accounts.
finds that, gee, wow, CZ is in control of all of them.
Here's all the movement.
Here's some movements for a yacht.
Here's some movement that went off to another CZ controlled entity.
And you just see, and here's some movement through signature bank.
Here's some movement through...
all of these different mechanisms that traditional money laundering was taking place in.
So you have, if you look at the SEC case carefully, you don't see any allegations of money laundering.
Now, when I brought cases that involve money laundering,
I would bring them.
I would bring them as internal controls cases, for example.
There's lots of ways to roll in those anti-money laundering charges, but the SEC didn't
do that.
And my guess is they were leaving that whole area for the criminal authorities, for the DOJ.
So what you have going on in Binance is an incredibly expeditious process, which is going
on in D.C., D.C. District Court, as opposed to New York.
which is it where Coinbase is. And oftentimes with Coinbase, you know, in that case, again,
you can delay it for as long as you like. I just tweeted today. Coinbase has some of the
most absurd defenses. Their defense might be criminal because they're claiming that, hey,
the SEC approved our IPO. So in this essence, they approved our business plan. And I get it.
I can see why a layperson who's not a lawyer and not a securities lawyer might say, well, gee,
that makes sense. The SEC approved that registration statement.
And Coinbase seems on the up and up.
They're running around the U.S. marketing their services, doing all kinds of good things.
Their founders have become billionaires.
This looks like any other broker dealer.
Well, it's not.
And that's not a defense at all.
The SEC does not review filings on merit, does not review registration statements for merit.
They just review them to say, are they being transparent?
Have they said what they're going to say in a clear way?
Is this a fair and accurate depiction of their audited financial statements?
Are the audited financial statements consistent with the management's discussion and analysis?
So there's all sorts of things that you do, but there's nothing where the SEC gives any sort of opinion.
So this regulatory estoppel, uh,
position of Coinbase's, it's as I said, and I make this point in my tweet, that it could be
criminal because if you look on the legend that the Coinbase put on its registration statement,
which I printed on the tweet or which you can link to on the tweet, it says that essentially
the SEC makes no judgment as to the merits of this investment and making that sort of representation
could be a criminal offense.
John, of course that's true.
John, I agree with you.
I agree with you about that.
And I think it was a very strategic mistake from Brian Armstrong.
He made a video this week and he opened up the video by saying, like he's on a video campaign.
And it's on the video campaign.
He uses that as the first line of defense.
He says the SEC approved our business plan.
I think it was a very strategic mistake to do that because, as you say, that's the weakest thing in the arm up.
But I want to ask you now that question.
But, guys, it's not about the legal, they know that's a total ridiculous argument from a legal standpoint.
The reason they're raising is because their whole fight is in the court of public opinion.
That's their whole thing.
One second.
One second.
One second.
One second.
One second.
We heard crypto people in spaces with 10,000 listeners say that, repeat that.
Guys, I want to ask...
That's the first time Ran uses the mute all button.
I mean, you can't ask you.
I'm not expressing it.
I want to ask him over Joe's point as a valid point.
Okay.
I'll respond to that point.
I'll respond to that one, Brad.
I'll note it down.
Go ahead, Joan.
I want to just ask you another question.
You mentioned the head up.
By the way, Ryan, sorry, before, don't hate me.
Just quickly.
I just want to make me just because it's breaking.
The market is recovering relatively quickly.
Bitcoin is down only 2% now.
Sol's down only 10% percent.
It was 25% earlier today.
And BNB is only down 7%.
So just a bit of a positive update.
I don't know why the team's looking if there's any news.
But sorry, Duran, go ahead.
John, you mentioned Robin Hood and you mentioned the head of compliance.
And I reckon that any US exchange right now has a decent head of compliance and a decent head of risk.
Otherwise, I think they've realized the dangers.
What do you think these head of compliances are saying about the other old coins?
The old coins that weren't put into the Binance or the Coinbase complaints.
And the reason I ask is because it seems like no one, never before did we know that Solana, Cardano, Mattock and all the ones that were mentioned in the last two complaints were ever considered securities.
As a compliance person at an exchange, are you not now going, hold on a second?
Can we actually list any of these old coins?
You know, that's a great question.
You should be, you know, the head of...
I don't know what's going on with these head of compliance.
I know some of them.
I know Noah Perlman.
That's Isock Perlman's son, who's the head of compliance for Binance.
And I personally...
cannot believe, and he's a former Eastern District of New York attorney, a prosecutor with
tremendous credentials and well respected, I cannot believe he would work amid such a den of thieves
after that sort of complaint is being hired.
after that sort of complaint was filed.
Yes, if you're the chief compliance officer anywhere,
you are constantly reviewing all of these alt coins.
You're constantly reviewing anything that's going on in crypto
because there's no transparency in any part of the ecosystem whatsoever.
So I don't understand how anybody, I don't understand how any bank, if you're a bank, for example, and you want to do anything related to crypto, it doesn't matter what your compliance person says. If it's in the U.S., the Office of Compliance, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have both said, not only do you have to
to give them notice, but you also have to get their permission. So the regulatory onslaught is coming
from all sides. If it's a, the SEC jurisdiction over investments, there's a small part carved
out for retirement funds. And oddly, that goes to the Department of Labor. And the Department of Labor
has put out a regulatory pronouncement saying that if any fiduciary within the ecosystem of retirement
funds like 401Ks or the Thrift Savings Plan for Revenue,
for the US government or any other sort of IRA
is recommending crypto, it's essentially a per se violation
of fiduciary duty.
Why? Well, first and foremost,
where are you gonna custody it?
And second, of course, because there's no transparency
into that marketplace.
So yes, you should be doing all this kind of scrutiny.
Maybe you're blinded by the millions or tens of millions that these entities will pay you.
I don't understand it.
As I said, as a former prosecutor myself, as a lawyer of 35 years, I would not work with any of these people.
I've been offered ridiculous amounts.
to go do that kind of work.
And I'm totally all for capitalism.
You know, I'd love to make more money.
It's not a problem.
And I think everybody deserves a defense.
So all the SEC lawyers who are defending Binance and defending BAM and defending CZ,
you know, these are all friends of mine and I respect them and they should be doing that.
But the ones who are giving advice, like for instance, Sullivan and Cromwell, the lead lawyer there,
four days before FTX collapsed.
a Voyager lawyer wrote to him and said, gee, I'm hearing all these things about liquidity issues at FTX.
And he said, hey, FTCS is solid.
This is just CZ nonsense.
And FDX is rock solid.
And any lawyer who says that in my opinion.
Who said that?
Who said that, John?
It's in an article I wrote up forgetting the guy's name offhand.
But one of the attorneys for FTX?
Yes.
Yeah, yeah. It's a, if you look at one of my articles, one of the articles about why there should be an independent examiner of FTCS. If you go to my website, it's just johnreadstock.com. All the articles are free. I don't make a nickel off of any of this stuff. Obviously, Mario, you know that.
But yeah, there's an email that came out in discovery, and it's part of the Voyager litigation.
There's an email from a Sullivan and Cromwell attorney four days before the collapse who told the Voyager attorney that FTCS was rock solid.
Now, to me, that's an egregious violation on multiple levels.
of not just being a lawyer, but you're enabling the crime.
So again, that's just my opinion, having seen that one email.
So I wrote an article about it and a bunch of other things.
And the reality of Sullivan and Cromwell is now making, I mean, literally a million dollars a day on this absurd notion of Chapter 11 for FTX, as if it's...
somehow going to go back into business. All these Chapter 11s are ridiculous. They should all be
Chapter 7s. You shouldn't be paying these lawyers, these obscene fees. The average fee at Sullivan and
Cromwell for the work that they're doing on FTX is I think it was between $1,700 and $1,700 an hour.
Now, I've taught law school at Georgetown and Duke Law School.
And my students who have graduated and maybe are one or two years out and are somehow working on this are charging like $8 or $900,000 an hour.
So the people who are getting rich off of this, exactly like Mark said, are the private equity firms, are the big shot lawyers.
And it's just a shame.
Okay, hold on.
If you're going to be, if you're going to be defending...
If you're going to be defending the SEC and invaying against the folks who are trying to make money off of all this,
I mean, what about Gary Gensler himself?
who apparently was running his public statements by CZ
and throwing himself at him as a potential advisor.
Oh, you don't know that that's true.
Is that not the exact same behavior that you're criticized right now?
And, you know, we've had, yeah, we've had sources, yeah,
we've had sources to see, but while I agree with your argument,
we've had sources to say that it's Gary,
CZ went to Gary Gensler,
And Gary said no about acting as an advisor for Bynast.
So I don't know which story is correct because I tweeted about it.
But we do know that Stamps spent $30 million.
Wait, wait, wait, wait.
Let me tell you.
We do, yes.
Sounds different.
So am I tainted forever because I've talked to some of them?
Am I gone from?
That's just a ridiculous argument, respectfully.
You know, you really have to...
But a better argument, though, but a much better argument, John.
Well, let me finish.
All everybody wants to say is Gary Gensler's this.
He's bad.
He's just bought and paid for.
Whatever.
You know, look, 90% of what I've written about the SEC over the last five years.
If it doesn't pertain to crypto, 90% of it is...
gazing criticism. I criticized them for the case they brought
events, Covington and Burles. I criticized them recently because their
administrative court is a kangaroo court and I don't agree with it. I've
criticized all of their cyber regulations. So, you know, try to
consider the fact
that people can have different points of view, and that just because I say the SEC is doing
something right doesn't mean I'm some kind of SEC shill. And just because Gensler, he's not doing
anything that he didn't say he was going to do. Read Coinbase's filing. Read their S-1. I put that in
the tweet today. It specifically says that we may be charged for failing to register as a broker-dealer,
failing to register as an exchange, and failing to register as a clearing firm because what we're
selling may be alleged to be securities. It's,
in their papers.
And now they sit back and go,
I can't believe this is happening to us
when they literally wrote themselves
in their filing with the SEC
that what they're doing could be unlawful.
Let me give a word on that
because this, like you said,
gets repeated all the time about,
hey, how could the SEC approve this,
blah, blah, blah,
when clearly the SEC does not approve
S1s, they approve disclosures.
That being said, the point that Coinbase is making is one that almost any human being adult can understand, which is that, hey, we among anybody else in the industry, every single other exchange, there's only one exchange in America that is public.
There's only one exchange in America is public.
And even that exchange cannot get a clear conversation with the SEC about what do we do and how do we register.
That point is not lost on anybody.
It's very easy to understand.
The SEC clearly is not making it easy for anybody to understand what is the path to registration for these things.
If Salon is going to be registered, who registered, how do they register it?
What are in the disclosure?
It's complex.
The path to becoming a heart surgeon is complex.
And all they're saying is they're not getting the answers that they want.
Yeah, exactly.
No, they're saying they can't get good faith engagement.
Look, the U.S. is not the only country that regulates crypto.
All these exchanges operate in many jurisdictions.
And where they do, they can sit down on the regulators and have a clear conversation
about how these things ought to be done.
I guarantee you.
U.S. is not operating in a vacuum where they're the only one place where they operate, they can't get a meeting.
They do this everywhere in the world.
They got 30, for their own statements, guys, they have 30 meetings with the SEC, okay?
And I can surmise what happened in those meetings.
They're saying you need to delist all these things.
And they found that answer to be unacceptable for the business model.
That's what occurred in those meetings.
It's pretty obvious.
Gensler has made very clear statements about every exchange needs to come in and register.
We're not going to bless it after the fact.
We're not going to give our stamp of approval.
And that's unacceptable to them.
So they've had this sort of, you know, shifting the goalpost saying, well, you have to.
You make it clear for us.
No, that's not how it works in a security.
How would they know what to do you list of, yeah, which ones?
Everything.
It should be everything.
No, but that's not America.
Whether ether is a security, did you see the congressional hearings?
Please let me make one point because I think it's really, really, really important on this.
No, not everything.
This meme that everything other than Bitcoin is a security is a bad idea.
And I'll give you one simple example, light coin.
It is the identical issuance mechanism of Bitcoin.
It did not.
raise money, it did not do a pre-mine, it did not do an ICO, did not do a fundraise of any core.
It is not a security in the United States.
If it is, then our country sucks and it's not a free country anymore.
What Charlie Lee did-
I agree with you. That's not the point.
Please, please, please, please let me make this point.
What Charlie Lee did is he took code...
open source code that has an open source license and under that license you're allowed to copy it he copied it he changed a few things he reissued the code and to be an extra nice guy i don't think he had to do this but to be an extra nice guy he let people know ahead so everybody could jump on it fairly and mine it if they want
in the United States that cannot be considered a security.
That is speech.
Charlie Lee has a right to write whatever he wants on his code,
and I have the right to write whatever I want on my code,
and we can release that and issue that to the public.
That is protected speech to write code and run code.
Now, when you get money involved-
Does he have the right to also then be the CTO of Coinbase
and list his token that he owns a huge bag of on Coinbase?
Brad, Brad, you...
Bruce, I disagree with you on this one.
The, the, you have to have a country that makes it so that Charlie Lee couldn't do, I wrote a tweet on it.
I called it the Charlie Lee test.
If you can't pass, and El Salvador seems to be going down this road, or at least Max wants them to go down this road, where everything other than Bitcoin is a security.
A couple major problems with that.
First, you're assuming that these tyrants are going to stop, and these people who hate Bitcoin are just going to stop all this.
Oh, finally we got, we closed down Ethereum and Lightcoin and everybody else, we're finally going to stop at Bitcoin.
So that's assumption number one.
Problem number two, you're going to end up with a world where politicians say what the real Bitcoin is or isn't.
And problem number three, it's speech.
And something like Charlie's case must be protected.
And I've been the first to say I've been SEC registered for my whole life.
So I knew these were securities.
I was the first to say there were securities.
There's not a single person that I think anybody can find before me who said there were securities because most people didn't even know they existed.
That the very first Dow, the minute it was announced, I said that's a security violation.
Okay.
I knew this was going to be, and I had many, many, many tweets predicting exactly what's going to happen.
But for one thing, it doesn't make it right.
But you have to have different degrees of things.
First of all, you must protect whether you like them or not or think they're a stupid idea, or you like Charlie, you don't like his trading or not.
You must protect like coin, Bitcoin cash, even Bitcoin as a V, because that also has a fair issuance mechanism.
You must protect these things in a free society because what those are is speech and code issued for free, given away for free.
Now, some things raise money. Does that make them automatically a security? Not necessarily. There are legitimate collectibles. There are legitimate other things that just because you raise money don't make them a security, even if you expect them to go up, just like collectibles. Usually, if you issue a token and you accept money, then I think you're in a certainly orange or maybe red area that you would want to look at. But not a blanket fresh.
Who enforces these rules? I like where you're going here, Burns, but who enforces these rules in your world?
Well, that's what the law is and what it has been and what it should be and what it's been for about 100 years and what it needs to be.
I mean, you never have to.
Bruce,
Bruce, hang on a second.
Before you talk about whether the thing itself is in fact an investment contract,
you have to talk about a business like Coinbase when they're going into the market providing quote unquote crypto exchange services,
what necessary registrations do they need to complete before they list any tokens.
And from the standpoint of the SEC...
In those meetings, they were told you need to become compliant from a registration standpoint before we even get to what assets can be listed on your platform.
That's where I disagree with you on.
Because if you're saying from an existential standpoint, you don't have necessary registrations, you're not blessed by us to engage in any exchange activity.
That has to occur first before you cross the chasm into what are these particular assets and whether they fall within a securities analysis.
Right.
Yeah, but they
And why isn't the SEC
Have to tell you what is and was it is not a security
That's the problem my friend
They're in the business of saying they want to cross trades in things like ADA
That's what their business is. They want to provide a market. And by the way, I think anybody in favor of free markets should be, even if they hate these coins, should be in favor of investors being allowed to have liquidity. And if, as you see, those are securities. So then Coinbase went and tried to create a couple broker dealers and said, could we put them on there? See, this is another thing that people should recognize. Suppose you do go and register and you are a broker dealer. It doesn't mean you can list these coins. We're a broker dealer. We can't carry ADA.
So it's not like it's a magic solution.
There is no way in the United States right now that somebody can trade.
If, in the example of ADA, for example, where the SEC has said in a lawsuit that this is a security.
And John's right on, we don't agree on everything, but, you know, as also a person who has served in compliance roles at ACC registered firms, clearly.
And I said this.
I got in huge arguments with people a few years ago about the XRP thing.
The second SEC said it was a security.
My position, we never carried it anyway, but my position, if I was advising somebody else,
would have been absolutely you're out of your mind if you carry that because you have a very,
very, if the SEC, you know, if the ATF comes in and they say, hey, that gallon of milk is a
is a sought off shotgun, that's illegal.
Do you sit there and argue with them or do you say,
go ahead, sir, please take the milk.
I'll talk to you.
I'll have my lawyers talk to you.
I mean, you, no, you, if the SEC says it's security, in my opinion, I must treat it as security in any wise.
Which, by the way, that's what Coinbase did, right?
At that point when that was filed in December of 2020, Coinbase suspended trading shortly thereafter of XRP.
You remember?
Then they pivoted.
Then they pivoted, right?
Then they said, well, we can't keep delisting these tokens as soon as the SEC says it.
So we're going to go to war with them.
And that was a choice they made consciously.
I have a question for you
Joe, you apparently know a lot about what happened there.
And there's something that Rand actually shared on the show that I had tweeted out that I pinned to the top about the fall of empires.
Right.
And I kind of see this as a roundabout way to kind of fight Bitcoin, to get people scared about crypto, at least the Americans, not create an alternative currency and things like that.
Do you see this as...
a roundabout way of going after Bitcoin?
I do not personally,
but I'm more commenting on a legal perspective,
but if we could shift back to what John said,
and I think John...
John, you had a masterful presentation there of just the dynamics of what is involved in a TRO and a preliminary injunction.
And I just want to emphasize some of those points because I think they're critical.
And I think it's lost on a lot of people how quickly some of this will develop, including the issue of the nature of whether Binance U.S. had to be in exchange, whether they are a lawful broker dealer in clearinghouse.
These issues will be, you know, there will be orders issued very quickly from a preliminary injunction standpoint.
in like weeks, right?
We're going to have precedent on this.
And the SEC has come loaded to bear with a lot of evidence if you read those filings that John was alluding to.
I mean, this hearing on Tuesday is going to be great.
I mean, it's going to give you a ton of information as to what I think, you know, this direction is going to come.
And with respect to the release that's being sought, okay, because there's the allegation of co-mingling,
they have effectively,
Binance U.S. and the Binance International.com,
they have opened the door to all of Binance's books.
And that's why the relief that's being sought
seeks the appointment of a receiver and a full accounting
and asks us to be remitted in the United States
to safeguard U.S. customers.
I mean, this is huge, guys.
And it's funny because I was listening earlier.
When you say huge, huge, huge, in what way, Joe?
Yeah.
Huge in the way of how the rapidity of how quickly this is going to happen.
Okay.
And this is imminent, right?
That is what you're at when you're in a preliminary release.
When you say what's going to happen, you mean by and SUSC exists, like Csius to operate, sorry?
No, no.
I'm just saying, you know, as John was alluding to, okay,
in a normal litigation, it moves at a snail's pace, right?
I'm involved in cases where it takes six months for the defendant's to appear and answer
and begin the discovery process, right?
It gets kicked and kicked and kick.
And the key thing is because portions of the complaints in the Binance and the Coinbase actions
are literally copied and pasted, particularly their commentary about exchanges and broker
dealers in these requirements, you're going to get rulings in the Binance suit that are going
potentially affect...
the Coinbase suit because of the very nature of what activity is, you know, what does it mean to be a crypto exchange in the United States?
And I think that was a calculated decision, right?
Those rulings in the Binance case will be cited in later rulings in the Coinbase case.
So to some extent, you know, I think that's calculated because they brought the TRO because they want to fight against, you know, potentially the bad actors.
And then they'll be used those rulings to cite precedent against the Coinbase.
So don't you worry about the same technique being used to continually stretch the definition of all, you know, where you say like, I mean, if I was down using this same technique, the next thing I would do is I would attack Bitcoin SV.
Because then every laser eye in the world, they'd like, ah, yeah, sucker.
And then we'd all be cheering.
And then they'd have this precedent that they could go in and say, yeah, a proof of work coin is a security.
See, Your Honor?
They lost in SEC.
You think the SEC is actually going to waste time on Bitcoin SV, Bruce, seriously?
Brad, you're not listening to my point.
How did you miss my point just now, Brad?
I'm saying if the goal is to attack Bitcoin, this is how you do it.
But that's the point.
This is not an attack on Bitcoin.
It is bad because it's scaring the public about crypto as a whole.
How do you know that?
It's scaring the public as you guys.
It's the crypto bagholders and pre-mine benefactors that are scaring Bitcoin holders
and people that want to buy Bitcoin by making us.
all try to be on the same page when it's not SEC versus Bitcoin.
It's SEC versus insider pumping dumps and market makers running scans.
Forget the care.
Brett, Brett, forget the characterization of the word attack.
I mean, just put attack aside, right?
If you're suppressing liquidity to the crypto market as a whole, that will have an adverse effect on Bitcoin.
That's my view.
Okay.
I think if you're suppressing liquidity,
you know,
attacking the on ramps,
how can you possibly say that's
in the long term bullish for Bitcoin?
I don't think it, I think it's actually going to be a fundamentally bullish thing for Bitcoin, just like the China mining ban was fundamentally bullets for Bitcoin because it proved once and for all that if this flood that all the anti-Bitcoin people used to say was China controls it, if China ever bans it, it's doomed.
Look what happens. Like the hash power distributed away from China.
And it went more and more towards places that they want Bitcoin and they respect freedom or whatever.
Even if it's not that narrative, it's like it didn't stop.
Like look at the hash power of Bitcoin.
It's continually going up.
It doesn't matter.
Like if this, if the regulators come against crypto exchanges,
I think that's only going to be bullish for ethical Bitcoin companies
that are just providing people looking for protection from their debasement of their savings
that want to get Bitcoin to protect themselves long term.
That's going to be bullish for them because they're not going to have to compete
with all the billions of dollars that the VCs are putting into marketing all these garbage coins
as if it's like Bitcoin but with smart contracts are like Bitcoin, but 10 seconds faster.
Have you gone through the Restrict Act, Brad?
I don't, is that the thing that the, is that the thing that Minuton tried to put in before?
Yeah, so, Joe, Joe, I know you were there.
Can anyone give it just a bit of an overview?
Yeah.
So, Joe, can someone just give us a quick overview on the Restrict Act?
Because I know we've covered it, Joe, you were in those shows as well.
And the narrative that, go ahead, Joe.
Yeah, basically the way they wrote it, they could stop almost all crypto, and they're trying to feed it in by saying it was for TikTok.
And it's not.
It's for any electronic transfer.
And they put in a thousand different things in there, which included Bitcoin that they could stop.
So this is why I see it.
I think it's not about all coins.
It's a different conversation.
Clearly, there's some people like Elizabeth Warren that are, that have it out against Bitcoin and crypto.
of clearly I'm not saying that there's no people in government that want to stop
Bitcoin I'm saying that the SEC going after all of these exchanges try to bring
them into compliance it's not trying to ban altcoins or Bitcoin
She pulls the strings with the SEC Brad.
She's the most powerful, one of the most powerful senators.
Elizabeth Warren, really? Come on.
Absolutely.
Brad, I think that's, no, that's, that's, if I may, I may say something.
Where's Ryan Selkitt?
I think the point that Brad, I think the point that Brad is trying to make is that Bitcoin is mathematics.
So you can throw all the laws you want at it.
It's just going to find a new home
and the innovation is going to go away from this country.
I think that what Gary Ginsler is doing with the SEC
is tyrannical.
And I think that if you were to see...
all of the events that have taken place over the past year,
I think there's a lot of collusion happening.
And I think that people are going to come to the root awakening
that this technology, like Brad highlighted,
is a self-healing technology.
And it regulates itself through mathematics,
not through bullets like the U.S. government
has been doing over the last 300 years.
And Brian, we're sitting here talking about this is the end or this is close to the end.
We won't find out for years.
The total crypto market cap is down 3.7%.
It's hardly a blimp in the thing.
And I think it's hilarious that a lot of people, especially our very famous shorter, is on here spreading fud like crazy.
When in reality, the whole, the total market cap is not down that much.
Yeah, so I will bring in...
So far.
I'm going to bring up James,
because the market has recovered relatively...
Hasn't recovered, but, you know, Bitcoin is back up to 26K.
Seoul is back, it's only down 10% over the last 24 hours.
A bit more if you take it back, a few more hours.
So I'll get in, James, give us a quick overview again,
and I will wrap up the space very shortly.
But I'll go to Gorav.
Scott mentioned something earlier about market makers pulling out
and that, you know, making the orderbooks...
thinner. And then we had another person come in and say that this is Binance US selling off their
outcoins that's impacting the markets. I wanted to get your thoughts on these two narratives,
but also the thing you told me earlier before the space when we were talking and you said
that despite everything that the SEC and US regulators are doing, long term, this shouldn't
have much impact of the liquidity in the ecosystem because there's ways around it for US investors
to get into the ecosystem. Can you elaborate on that particular point?
Yeah, thanks, Mario.
Two things are separate from, you know, from each other.
One is market makers pulling up liquidity.
Market makers add liquidity.
Yeah.
in order to match existing orders.
And I'm obviously talking about the cleanest form of market making.
I'm not talking about the crypto being wild, wild west and people doing all sorts of things on the name of market making.
So the real market making spread management, taking.
taking in eating up buying and selling orders from both side that has nothing to do with the
with finance shorting or longing or anyone investing or divesting from the market right
the only thing it impacts is is a better tradeability of the market which means if there are
traders market making can facilitate it if there are none then you know nothing doing market
making orders will sit idle on the order book so i'll
throw this out of the window, coming back to finance or the investors divesting from the
US market. I gave you a very small example. Almost all of my US-based employees are essentially
dealing with us through their business.
family offices or their independent contractual entities from the Caribbean or other parts of the world, the tax destinations of the world.
So when they can, you know, I'm obviously, you know, I'm not hiring the chairments of the company.
So they're like making $10,000 to $100,000 a month kind of employees.
And if these simple, plain, common people have Caribbean and international tax-friendly employees,
entities simply to get their salaries from around the world, then I'm sure the large investors
or anyone with more than a million dollars in capital has an international setup to route their
capital. So what essentially might be one of the reasons of this
alt coin crash or the tiny crash is that people are, you know, divesting from the market.
They're making it, making their crypto turn into cash in the US tax system.
And when it's already accounted in, they can obviously send it out to their international
international.
shells or call them entities and then invest from that.
So their position would remain the same.
By now, and since we had this conversation, obviously we have lived a few hours and it's
already started to happen.
So the market is recovering.
So people have started moving their money back in and probably at better positions.
So yeah, that's essentially what I meant.
And, you know, the current recovery is sort of assigned to that.
Was I able to make yourself clear?
John, that particular point, yeah, yeah, yeah.
So the last question I have here and then we'll just do a quick wrap up of the market
and we wrap up the spaces of that.
On that point that Gore-I've made, Joe, actually, Gora, I asked you a question there.
So what about the tokens that should be used for their utility and they need retail users
for the ecosystem to operate all the startups that you guys have in your portfolio
that I have and others have in their portfolio?
How would they be impacted?
That's where the lack of liquidity concerns me.
I'm probably missing something here because I don't see these two things coming together.
In fact, this actually facilitates the users because those who really want the token utility and they want their token to be used.
I'm only talking about the use of the token, right?
The pure liquidity factor.
Sorry, utility factor.
I'm not talking about the monetary value of it, right?
Which only actually means...
connects it to being a security. So utility becomes easier because the token becomes cheaper.
Am I not thinking straight in this case? I'm just talking up I'm not so on that on the right.
I'm simply saying if okay so tokens people who want to use Ethereum let's say we'll get Ethereum for a cheaper price and they get to use Ethereum better.
I disagree historically from what we've seen, and I've been in this space for 12 years, the utility of Bitcoin, if we're talking about Bitcoin in this instance, goes up when the price goes up, because then you can do more with the token.
But on Ethereum's point, I do see what you're saying as Ethereum is gas.
The more people that get access to it, the more D-Aps.
The current market is largely about alt coins.
You know, Bitcoin only dipped 8% while alt coins were below 25.
So I think let's only talk about utility.
Bitcoin is that 2%.
I was back up to 26K.
Yeah.
So let's only talk about utility coins now.
Okay, so what I'll do now is I'll shift it to James.
Just a quick market update, James.
I know you came in late, we're just wrapping up.
You and Goroff came in late, but I'd love you to give us a quick market update.
And we've seen a quick recovery now, and any other quick thoughts you have, James, before we wrap up the space.
Yeah, I don't want to just repeat whatever anyone else has said, but I was just presenting my Bitcoin thesis and macro thesis at Coin Bureau in London.
And there were like 3,000 people there.
And in short, people were...
understanding why Bitcoin was so relevant compared to all the other cryptos.
They came up to me and was telling me, yes, now I understand why I have to convert my crypto into Bitcoin.
So it was quite mind-blowing to see that it's taken the SEC essentially to list these unregistered securities,
but to also educate people on...
why Bitcoin is different.
And I think it really, really hit home for all these people.
They were really appreciative.
So I just think it's more important for people to...
Yeah, so James, a quick question for you is bullish.
I kind of wrap up the space with one question to each audience member, to each panelist, sorry.
Very, very simple question.
Bullish or bearish, Bitcoin and then altcoins.
So Bitcoin, bullish or bearish, James?
After today, bullish, because people understand that theater basement is 100%.
And out coins, bullish or bearish?
Always bearish, Mario, who was?
Okay, okay.
So we'll go to Gorav, Bitcoin, bullish or bearish?
Always bullish. It's always a good time to buy Bitcoins.
How about Alcoin?
This is a good time to buy altcoins.
If you know what they're doing and if you have done your research, of course.
Joa, bullish or bearish, Bitcoin and Alkcoins?
bullish on Bitcoin
waiting another two days
to have an opinion on all coins
but I doubt it's going to be a bearish opinion.
Brian?
I just, I wanted to go back to one thing that was said, and then I'll answer your question.
Something was said about the Wild Wild West.
We are not advocating for the Wild Wild West as an industry.
We've gone in and we've asked for guidances year after year.
They refused to answer the questions that we're asking them, and then they sue us for
not following the rules after we've asked them for the rules.
So it's very clear right now that, at least in the US, they've been playing games.
To answer your question, this is not financial advice, obviously,
but I highly recommend anyone who's listening to taper their buys.
That means buy 5 to 10% of whatever you're making in a week
and spread your risk around.
I think one of the biggest mistakes that people make
is they come into crypto and they go all in on a single price
and then they're stuck on that position.
I recommend everyone in here to spread their bets
And then when it comes to all coins and tokens, make sure that you do your research,
make sure that the team is real and it's who they say they are, make sure that the products
are consistent.
Joe, bullish or bearish on Bitcoin and Outcoins?
Yeah, I'm bullish long term on Bitcoin. I think people are underestimating the effect of this hearing on Tuesday and what will come after it. So in the short term, I'm bearish on the entire all coin space. Very much so. So and on that hearing, again, it just goes back to the speed in which things will move. That's what people are underestimating. Just to summarize this, okay?
One of the requested relief is literally because there's been co-mingling, right?
They've opened the door to a full audit of all of Binance's books, including all the international.
So it is within the realm of possibility.
I'm not going to say it's highly probable, but it is more probable than not, in my estimation,
that you get an order freezing all of Binance International and the U.S.-based entities.
So how do you think the market's going to react if that order comes down?
And that's not fun, right?
Do they have the jurisdiction to freeze all assets of Binance International?
if they're going to comply with it.
Are they going to seek, are they going to just willfully ignore the court's order?
Are they going to be in contempt of court?
Because that's what you have to do.
You have to basically say, I don't think you have jurisdiction and I'm not going to comply with the status quo order that's being entered.
So roll the dice with that. Good luck, finance. I mean, they're in complying with the litigation. They've filed appearances. Their attorneys are before them. They've got documents where their attorneys have contradicted what their auditors have said that have already been put forward. They've contradicted what even their clients are saying. I mean, the attorneys themselves are in real hot water with, according to the SEC's filing because they've been consistently giving false information or misleading information about the status of assets.
I mean, this is all in the document if people would take time to read it, supported by affidavits and declarations.
So, you know, you guys can think this is a trivial thing and they're going to thumb their nose in the SEC and a federal judge all you want.
Generally, that doesn't go very well.
Brad, Bitcoin and out coins, I'm going to ask you anyway.
Bullish or bearish on Bitcoin at the moment?
And then actually, I think it could be bearish on both in the short to medium term.
Bullish or bearish?
On Bitcoin, forget out about Alcoins. I don't want to know your opinion there is Bitcoin.
Well, let me just say for all the people that are kind of on the fence here,
I just consider that what you've been told about Altcoins over the last couple of years
has potentially been fluffed up or lies to manipulate you into holding the bag open
while insiders dumped the pre-mine on you.
Uh...
Look, people should put down the crypto Kool-Aid.
I've been saying this for a long time.
Learn more about Bitcoin and just be skeptical of what all the influencers are telling you.
I'm bearish on crypto because capitulation hasn't happened yet until Mario removes that NFD-Exagon pick.
You know it, Mario.
But on Bitcoin, I'm bullish on dollar-cost averaging into Bitcoin.
And as the wise American Hoddle says, shit-coiners are into Bitcoin too.
They're just into your Bitcoin.
Bruce, Bitcoin and Altcoins, are you bullish or bearish?
Did you say me?
Yeah, yeah.
It's a very simple question.
Are you bullish or bearish on Bitcoin at the moment after what we've seen?
And are you bullish or bearish on Altcoins?
Bullish on Bitcoin, especially long term.
I'm very cautious about the United States.
Altcoin, very, very rarely, and it really depends on the coin.
So far, there's not many.
Remember, I don't know.
I think I'm like they are these breaking them all like scams or you know like Brad
All right so I think Bruce Bruce your connection is really bad but you're saying don't put everything to one basket and you know personally
I really don't I'm just too confused now. It's just too many things happening. I really don't know what to make out of everything
You know I think we should wait a few days, but I'm bullish again. I usually always say when Marcus are like this and there's so much fear that I'm bullish on out coins and
but I just
the whole concept of utilities
are being questioned right now
and I'm trying to understand it more and more
so I'll probably bug George
and Joe
Joe who's on stage now
and other attorneys in future spaces
to really understand
what's going to happen
to all these different projects
because I still don't have a clear answer
Bitcoin obviously I'm bullish
and to wrap up the space
we're bullish
my business is very bullish
so if you do have a project
that wants to come on the show
do DM me, Scott or Rand
but Rand is not on stage
just dropped out
DM us you can come on stage
because we're going to start doing pitches and Brad Mills will not be invited.
I'm joking.
And then if you have a startup that wants to work with us, hit us up as well, me,
Iran or Scott, and they can work with our incubator accelerator as well.
Otherwise, see you again tomorrow.
That was an unexpected space today.
If the market spikes up 20%, drops another 20%, you'll see me again here.
And if not, we do have a big crypto show tomorrow, but that's not the crypto town hall.
That's unrelated.
See you all for Crypto Town Hall.
See you all Monday.
Thank you, everyone.
Bye-bye.
Speaker
๐น๐๐๐
from
BUZZ
