Weekly Roundup 05/03/24 (CZ sentenced, Roger Ver arrested, Coinbase earnings) (EP.525)

Matt Walsh
Brought down by bad mortgage investments. Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International group AIG $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping in to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis.

The bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars, and. All of a sudden, people start to worry. So out of this worry, we have. Something called a bitcoin.

Nic Carter
Bitcoin. Bitcoin. Welcome to on the brink. I'm Matt Walsh. And I'm Nick Carter.

Matt Walsh
And this episode is brought to you by coinmetrics. And here is the metrics minute. Today we're looking at the coinmetrics trusted exchange framework. It quantitatively evaluates centralized exchanges based on data quality, transparency, resilience. The top three ranked exchanges according to this framework are Coinbase, bitstamp, and Binance.

Nic Carter
They all get an a during market sells like the bitcoin spot ETF launch. Binance and Coinbase, unsurprisingly, showed correlated trading volumes. In contrast, upbit showed uncorrelated volume spikes deviating from authentic patterns. A lead lag analysis revealed pricing asymmetries with up its market lagging binance by 14 seconds, while Coinbase and Gemini showed no such lags. I don't exactly know what that is meant to imply, but can't have a lag.

Matt Walsh
What are you doing? Having a lag. There's a lag. As of April 26, trusted crypto trading volume, derived by filtering out fake volume, stood at 40 billion daily, about half of the $80 billion peak seen in March this year. That is your metrics, minute.

Good metrics, minute bit stamp. The oldest cryptocurrency exchange out there. Funny to mention that, Matt. Funny mention that. Recorded.

Nic Carter
That was on my holiday quiz from 2020. It was a very hard holiday quiz. It was a hard one. And I. Yeah, it's.

Matt Walsh
I got the answer. Yeah, you're actually nailing a lot of these questions. It came up because apparently you got second place in jeopardy at East Boston. Yeah, it was a really disappointing performance. So ETH Boston was this past weekend in Boston.

That team did a great job. Uh, Jake, um, Jake lynch in particular, who kind of spearheads the effort there. And I was on jeopardy. Crypto jeopardy. To end it on Saturday night, and I lost to Josh Lim, which, if you're going to lose to anyone, losing to Josh Lim.

I can take Josh Lim. There's no shame in that. Yeah, he's been in the industry longer than I have, and he, uh. He crushed me. And you know what?

The. The question I got wrong, I knew the answer to, but I just froze, and he got me faster. So it was. What was the name of the estate that Sam Bankman freed lived at in the Bahamas? The Albany.

The Albany. And I was just a little bit too late on the update. Easy. Should we do a holiday quiz this year? We should.

Nic Carter
I don't know. Why. Why did I do one in 2020? I used to just do stuff like this. I had so much more joie de vivre back then.

Matt Walsh
What was that restaurant you used to go to in the north end up here? Giacomo. Giacomo. Yeah. I used to come into the office of Fidelity and say, what'd you do this weekend?

Well, I ate at Giacomo's three times, and I wrote about 47 pages about cryptocurrency. First of all, Giacomo's was and remains great. And second of all, I did used to write so much more, but I did just write a new, very long article. But I'm on a cadence of, like, one a year now. I don't know what happened.

Yeah, you're like Bill Simmons, you know, you prolific writer, and then you just stop. It's like, who's the guy that wrote catch on the rye? I should know this. Salinger. JD Salinger.

Nic Carter
He wrote, like, one book, and that was it. Pretty good one. It was good one, though. That. That's me.

I'm done. Like, I'm retired. I don't know. Like, I don't have it in me anymore. Well, one piece left.

Matt Walsh
We're traveling so much these days. I mean, we're both zigzagging across the world these days. Yeah. Okay, so let me ask you some questions from my 2020 holiday quiz. See if you can nail these.

Do I answer them, or do we let the listeners have a. Have a beat? Well, do. Do. Do.

Nic Carter
Do you want to give them a pause so they can try and answer it? Yeah. And if you're listening on two x, maybe slow it down to one x right now. All right, this is painful to listen. To us on one x.

This is an easy one. The Mount Gox parent company was named T Bon Limited. Who was T Bon? Do you need the options, or do you know the answer? Well, it was.

Here are the options. It's Mark Garpella's, his aunt, his goldfish. His cat, or a character from his favorite anime. His cat. It was his cat.

The cat had diabetes. Also died recently. Oh, really? Yeah. Reptiles.

Matt Walsh
Too bad. Actually, that was one of his excuses as to why Gox collapsed, was that he was busy tending to his diabetic cat. I. Yeah, I could see it. Malleability bug or the cat.

It was one of the other. All right, let's see here. Oh, yeah, that was actually another question. When Gox was hacked, Carpel is blamed the losses on what exploit 51% attacks node, Dos attacks, eclipse attacks. Transaction malleability.

Transaction malleability, yeah, Segwit fixed that. It did. Okay, here's a. Here's a tricky one. Launch in August 2013, raising 4700 BTC.

Nic Carter
What was the first IcO? And here are the options. Counterparty. Ten of bricks, mastercoin, mycelium or ethereum. The answer would be, what is Mastercoin?

Correct. Junior Willett, Jer Willett, everyone's friend on LinkedIn. Here's what people don't know about this. It was the first ICO ever, and it was the most successful protocol ever for a while because it became omni. Omni was what tether was issued on.

Matt Walsh
Correct. So it actually was very useful, but not for what Jarrah Willett originally intended. Well, the other interesting part about that is that Vitalik went to Jarrah Willett and said, I have some ideas. I think we could incorporate them into Mastercoin. And Jarrow Willett said, yeah, yeah, I'm good.

And then Vitalik went and built ethereum. Okay, here's another good ancient history, one announced in April 20. Eleven and discussed by Satoshi on bitcoin talk. What was the very first altcoin forked from bitcoin? Xcoin.

Nic Carter
Name coin. Dogecoin or litecoin, that would be. What is namecoin? Correct. Correct.

Name coin, as discussed by Satoshi, as a valid use case for bitcoin. Okay. Domain names. All right, let's see. This one's about Luke Dash.

Luke Dash famously inserted text into bitcoin. So he's not a fan of ordinals. He doesn't like arbitrary content insertion into bitcoin. However, in the year of our Lord 2011, he inserted arbitrary content into bitcoin. So anyway, is there a question there?

Yeah, yeah. I just wanted to point out that he's a hypocrite, first of all. Okay. Yeah, his pool. He used to have a mining pool.

Lygias. He put in some text content. What was it? Was it a roman catholic prayer? Was it an indictment of altcoins?

Was it a memorial for his friend? Or was it a marriage proposal? That's a tough one. I don't think. I know, but I'll say roman catholic prayer.

That's correct. Based on your knowledge of Luke, right? It is the divine praises, which is a. Yeah, I guess it's a. It's a catholic thing.

Okay. Yeah. So you guessed that one correctly. I thought it was. He's the guy that killed contraparty, right?

Yeah, I think so. He also killed a coin.

Okay, so here's. Here's the question. What coin did he attack into oblivion with his mining pool? Elegius. The options are prime coin, coiled coin, nova coin, and fry coin.

This is actually deep lore. Give me the. Give me the options again. Prime coin, coiled coin, nova coin, and fry coin. I don't know the answer to this, but I'm going to go with prime coin.

It's coiled coin, coiled coin. People don't know this, but he destroyed an early altcoin with his mining pool. Yeah. Just overwhelmed it, huh? With this one computer, probably.

Yeah. I don't think it took a lot of hash rate. Wow. I did not know. That's deep lore.

You know, there's people that got, like, all of these questions right. Oh, is that right? I'm not surprised. Like, insane. Like, I probably would have only gotten 20 right out of 44.

Matt Walsh
That's. Those are pretty good questions. I think we need to make one and just automate it this year at some point. Maybe put it out to the listeners, and we'll competition. I have one last one for you.

Nic Carter
It's about airdrops. Which of these this people won't know this one. Which of these coins did not do an airdrop to bitcoin holders? Ripple, stellar byteball and steemit. Ripple, stellar byteball and steemit.

Matt Walsh
And did not do one to bitcoin holders? I am going to say byte ball. Buy ball. Did do an airdrop that to bitcoin. All.

Nic Carter
Probably the only reason anyone knows about them. Steam. It did not. But Ripple and Stellar did do air drops. I do remember that.

Matt Walsh
Yeah. And Stellar was doing airdrops on, like, Facebook stuff back then. That was a long time. Bitcoin. There was a thousand XRP airdrop in 2013 to bitcoin holders, which I guess is worth something later on.

Oh, of course. Yeah. That's worth a lot now. All right, so that. Those are some of my questions from the quiz.

Nic Carter
I'll put it in the show notes if you want to take it. It's a telegram bot. I think you can still take it. Is it a telegram bot? Yeah.

You took it through telegram. Wow. All right, maybe it still works. Who knows? And yeah, maybe we'll do another one this year.

But I don't think I have as many facts as I once did. There's so many things that have happened in this industry over the past few years. Yeah. We could come up with some fresh ones. Okay, OTB Christmas quiz.

Stay tuned for that. So busy, busy week all around here. So we're recording this very late on, I guess it's Thursday night. The days are all kind of blending together here. Yeah, that's my bad.

I was traveling and I know you're up at 04:00 a.m.. Tomorrow. So you're really being a trooper for this one. Trooper. Trooper.

Matt Walsh
For the listeners here. You sat down with Ian Cain, US Senate candidate for Massachusetts, on the show this week. Very special episode for me. So I go way back with Ian. So we went to high school together and then we went to business school together and now he's running for us senator in the great state of Massachusetts against Elizabeth Warren, who, as I said on the podcast, is a current senator from Massachusetts, although she is from Oklahoma, which, which not a lot of people know.

Nic Carter
Little trivia for you there. Didn't know that. Born and raised in Oklahoma works not really for the people of Massachusetts as much as she does for the anti business side of the country. But Ian is running for senator and Ian knows a lot about blockchains, I would say. His view is that the people of Massachusetts generally don't really care about crypto.

Matt Walsh
So he's not trying to make that the core issue, which I think is probably very smart, but talked about stable coins, talked about the market structure bill, talked about all the good things that he's trying to do to create jobs in the great city of Quincy, which is the 6th largest city, I guess, in Boston. So he's outside of Boston in Massachusetts, rather. So he is the president of the city council in Quincy. So I had a good time with this episode. I suggest everyone check it out.

Nic Carter
Did we ever figure out if John Quincy Adams is named after Quincy or the other way around? I think it's the other way around because I think it was all called Braintree back then. And then they renamed it to Quincy. Okay. Yeah, good.

Look, when. Good little, good little city. That's where they have the Boston blockchain week. Yeah, Boston blockchain week is not. He and Ian made that happen.

Matt Walsh
It was like an invasion of Boston blockchain week. He grabbed it, he blew, brought it out to Quincy. It's like 5 miles away now. So there were a lot of deals this week. I don't even know if we can read all them.

Nic Carter
There may be too many deals. Just a tremendous amount of capital formation right now. Just a lot of new startups getting off the ground. So first one up is movement labs. This is a protocol development team.

Matt Walsh
They raised $38 million from polychain, HackVC, placeholder, Archetype and maven eleven. Then we have open delta bitcoin focused stablecoin. They raised 2.1 million from six man ventures. Then we have location based service. This is a blockchain gaming company that raised 10 million from Spartan OKX seven X and foresight.

Nic Carter
This next deal is pretty interesting. Tether has an arm known as Tether Evo now, and they invested 200 million for majority stake in Blackrock Neurotech. No relation to the asset manager, which is a Salt Lake City brain computer interface company. Wow. I think it's safe to say that tether, if you just look at it from a nuts and bolts perspective, revenue, profit, it is probably the best business.

On planet Earth right now, for sure. Here's my prediction about Tether. In ten years, we're going to forget that there was ever a stablecoin involved. And they're just going to be gigantic conglomerates, kind of like Berkshire Hathaway, you know, just take the float from, in this case, the stable, coin their case from the insurance, and deploy it into other kinds of stuff. It's incredible, the scale of that business and the.

Matt Walsh
The revenue per employee is. It's definitely the best in the world. And they just are sitting. They earn billions of dollars every quarter and they don't know what to do with it. So now they're putting it into brain computer interfaces.

Well, hey, that sounds pretty cool. Put it somewhere. I mean, it's better than putting it on. Like, whatever Sam was doing with the money down at FTX when he didn't know what to do with it, it wasn't even his. At least it's theirs.

Next one up is bakkt. This is a company focused on tokenizing real world assets, and they raised 9.5 million from gnosis and blockchain founders fund. Then we have x ten, their crypto exchange, that raised 6.5 million from Tioga, Symantec and Starkware. This is a big deal. Securitize, the company focused on the tokenization of assets.

They raised $47 million from Blackrock, Hamilton Lane, Parafy, Tradeweb, Apto Circle and Paxos. Really big deal there. So Blackrock led that round yeah. Huge congrats to Carlos and the team over there. Awesome to see them thriving like that.

Nic Carter
Next up, we have baxis. They are a company building a wine and spirits marketplace using the blockchain. They raise 5 million from multi coins on adventures and FJ labs. Oh, man, I love it. So I am.

Matt Walsh
I am an angel investor in a spirits company. I believe you are as well. It's called Rosaluna. Rosaluna, the mezcal brand. I think we need to get that thing on a blockchain AsaP.

Nic Carter
They need all the help they can get. No, they don't. They're doing great. They're doing great. I hope that the founder doesn't listen to this podcast.

Uh, yeah, no, it's great. Mezcal, strong. You can get at the Soho house. You can. You can get it everywhere.

Matt Walsh
I was at a restaurant down here in south shore, and they had it the other day. I actually personally don't like Moscow, but Rosalina is good. Just a founder bet for you. Yeah, look strong team founder, market fit, good terms. Yeah, we like Rosaluna, and we'll put it on this blockchain for sure.

Next one up is Agora. This is an on chain governance platform. They raised 5 million from Han Ventures, seed club and Coinbase. Then we have a really chunky deal. Optimism, of course.

Nic Carter
The ETH layer two. There is 90 million in a direct token purchase from a 16 Z crypto. Then we have Hopper. This is a decentralized privacy platform that raised 1.5 million from Gnosisdao. Then we have Milky Way.

They're a celestial liquid staking protocol. There is 5 million from polychain, Binance, and hack VC. This is a good one. Department of XYZ. This is the crypto venture fund that is started by Matt Homer, who's a former NY DF's regulator.

Matt Walsh
Great guy over there, and excited that they have launched their debut fund. So congrats to Matt. And we've already co invested with them. In fact, we have. Yeah, that's a great angle for a fund over there.

Nic Carter
Yeah. Love it. Mitosis. That's a layer one blockchain. They raised 7 million from Ambergroup, foresight and big brain holdings.

Matt Walsh
Then we have resonance. This is a cybersecurity company that raised 1.5 million from Arca Fabric and Blockchain founders Fund. Blockchain founders Fund has been on the board today. And lastly, Pantera have made an undisclosed investment in Tan Telegram. Open network.

Busy. Busy deal week, huh? Busy on the news front. So people love this on Twitter man Cz, of course, sentenced for four months in prison. Definitely on the light side.

Nic Carter
Not what the prosecutors wanted. CZ loves the number four. This is of cosmic significance, I think. Like, what are the odds? Poetic, really.

Matt Walsh
I mean, he. So $4 billion fine and four months. It really is a. I mean, do we have to. Listeners probably know the significance of four or should we go through that again?

Nic Carter
Well, actually, not everyone knows the provenance of four. Yeah, I'm not sure we know it. I vaguely know it. Let's pull up the tweet. Let's pull up the tweet.

Matt Walsh
Alright, so we'll explain that the. Why this is funny. So CZ had this tweet, it was on January 3, 2023, said, we'll try to keep 2023 simple, spend more time on less things, do's and don'ts. Number one, education. Number two, compliance.

Number three, product and service. Number four, ignore fuD, fake news, attacks, etcetera. In the future, would appreciate if you can link to this post when I tweet for. There you go. So four, ignore the fuD, fake news and attacks.

Nic Carter
All right, so four is a metonymy, a numerical metonymy for ignoring FUD. Correct. And then he would just get in the habit of tweeting the number four. Right. As a shorthand.

And then four took on a life of its own. And then he was sentenced to four months in prison, which is actually not that bad. And a $4 billion fine. And yeah, it's honestly, it's not that bad. A lot of people said that he won this whole engagement by, you know, his reputation still pretty intact.

He's still billionaire, presumably. I think he was like one of the only shareholders in finance still worth a lot. Obviously he only has to do four months in prison. I don't like, if it were up to me, I would not be a billionaire in exchange for having no prison time. I mean, I think he's worth like $47 billion.

So would you, would you rather be a mere hundred millionaire but not have a criminal record? Or would you rather be a billionaire? But you have to do time? I mean, it's like a 47 billionaire or a one billionaire. I think there's a difference here.

Matt Walsh
There's a chance that this guy is the richest person to ever set foot in the US prison. And my follow up question would be, what type of prison are we talking about? Because this guy might be going to like, a country club in Connecticut for all we know. Well, didn't, didn't. Our friend Sam Bankman Fried said that after a certain level of wealth, the net utility of each billion declines.

Nic Carter
So there's that. What he said. Yeah, Sam said that. Right. Was Sam ever an actual billionaire?

Well, you know what he said? He said his utility function was actually linear, whereas most people's was logarithmic. If I'm not. So, like, he had this view that because he could create so much goodness in the world with his philanthropic activity or whatever, that his utility function actually was linear and would always increase with his wealth, which was, I thought, a pretty elaborate philosophical justification for saying that him having a lot of money is good. Yeah.

Matt Walsh
Interesting. Well, you got Sam doing a 25 year stint here. You've got CZ is number one nemesis, doing a four month stint, and CZ walks away with his. All of his billions, and Sam doesn't. And, you know, you really have to just remember that CZ didn't steal anyone's money at the end of the day.

So all of his charges were around. You know, they're bad charges. It's anti money laundering. He wasn't doing sanction screening, and, you know, he was. He deserves punishment, obviously, but he didn't steal people's money like Sam.

Nic Carter
Yeah, I was just thinking about it. Imagine if the facts of the case were identical, and then you have this smooth talking californian wonder kid american, and then you have, you know, CZ, who's canadian, actually, but, you know, of chinese descent, is foreigner, you would imagine. Ceteris paribus. The courts would treat Sam better just because the inherent bias. Right.

But the facts of the case are so disparate. I mean, Sam just wantonly stole billions of dollars. CZ finance operates in a mercenary fashion. That's. That's a fact.

Like, they are very cutthroat. We experience this. We're aware of this. Everybody that operates in crypto knows this. Yeah, they're.

Matt Walsh
They're cutthroat on the venture side. They're cutthroat on a lot of different. Yeah, I mean, they strike an extremely hard bargain that I would say, if it was happening in lit securities markets would maybe be considered illegal. Okay. Some of the things they do.

Nic Carter
But he did always try and run a solvent, functional exchange. Now, one of the things that's really interesting about this is that there was a number of. There are sealed documents in this, and so there are a lot of things that did not make the light of day that the judge considered as part of the sentencing. I believe the prosecution was asking for three years. Do you want my theory here?

Sounds like there's a conspiracy coming up. Yeah, I mean, we don't know why he got the more lenient sentence, but if I had to guess, it would be that Binance has unbelievable data on who is using that platform, and that would extend to a number of enemies of the United States. And so my guess is that there are intelligence agencies that have been in and around binance for quite a while and that CZ has been helping them identify the bad guys. And we're probably going after the bad guys. If I had to guess, I will say that I think.

I don't know if this is true. Is this the first time that someone has faced criminal sanctions for BSA violation at the corporate level, like an individual? Well, no, because Arthur Hayes faced them, right? Hmm. Yeah, that might be true.

It does seem to me, though, that having a lax compliance program, if you're a banker, the executives don't go to prison for that. Right. Like HSBC, they laundered hundreds of millions for the cartels. Nobody at HMS HSBC went to jail. You know, that's what I've been saying.

Matt Walsh
For a long time. Jamie Dimon should be in jail for all those sanctions violations that JP Morgan's had over the. I think we should get that narrative going. But the point I'm making is bankers don't go to prison for this stuff. They just don't.

Nic Carter
Unless it's the icelandic bankers and they had the financial crisis. And that was the one time bankers don't go to prison. Crypto executives do for the same crime, basically. So we are held to double standard. That is true.

Even if it's a light sentence, it's still actually pretty harsh. It's big fine. And he's going to literal, actual prison. Well, I think all in all, if you told CZ a year ago that he could have this deal, he would take it. And my guess is that he comes out and he turns into a philanthropist.

Matt Walsh
And he has a second chapter here, so I think he'll be all right. He says he wants to do education. Yeah, that was number one, right? Education. He's pivoting to one now.

Nic Carter
One, yeah. Smart. Very smart. Well, let's talk about another case here. So Roger Ver, who was a controversial early bitcoin evangelist, often known as bitcoin Jesus.

Matt Walsh
He was arrested in Spain this week on tax fraud. So Vaer had previously given up his us citizenship. And as part of giving up your us citizenship, you need to pay an exit tax. Then I believe you have to pay taxes for the next, like seven years. And it sounds like sounds like the US government does not think that they were paid what they were owed here.

Nic Carter
Yeah, I mean, he had hundreds of millions of dollars worth of bitcoin, even back in the day, and he didn't disclose any of it, it seems. Well, I think he disclosed some, but there's. There's some documentation that says that he hid some and against the advice of his own counsel. So if these allegations are correct, he's definitely in trouble. I mean, it looks pretty serious.

The allegation is that he evaded $48 million worth of taxes. Kind of crazy. It's like, all right, so you hit the jackpot. You bought bitcoin for under a dollar. You made hundreds of millions of dollars, probably later worth billions, and you're going to now go to jail over $50 million that you refused to pay to the government out of principle.

Matt Walsh
Yeah, they're asking for $47 million here. You wonder what happens if he has 47 million still? I don't know. He probably lost a lot on bitcoin cash. I saw a lot of hardcore bitcoiners defending him.

Nic Carter
I'm not going to say that he got his just desserts because I don't like the guy. I think he just very blatantly and clearly broke the law. So it's not like I feel any catharsis because I think he's a bad person, which I do. It's that he's just very plainly broken the law in a very egregious way. Yeah, I don't think the dancing on his grave is very appropriate here.

Matt Walsh
It's not a very happy situation. And you can disagree with the fact that the US has an exit tax and a seven year roll off, apparently, which I didn't know. But this seems, you know, again, if this is all true, it just. It's a cut and dry case. Now, I have a bigger question.

Nic Carter
What's that? You know who else left the country?

Who's that? Traps. Well, I don't know about him. Oh, our friend Kyle Davies, he has apparently given up his US citizenship. Did he pay the tax?

Matt Walsh
It's an exit tax. And then it's a seven years. So are we getting checks to the US treasury from Kyle Davies? From parts unknown here? Because the seven year period is still going on right now and he's made a bunch of money on this ox whatever token.

Nic Carter
Yeah, probably not. Who's checking that treasury account? I think it's kind of like once you start to break one rule, you just keep breaking all the rules. Yeah, there's. Trust me, there's some more bad boys out there.

Matt Walsh
There's a bunch of these people that have left the country. I don't have a lot of sympathy for people that leave the United States for all the United States issues. Still the greatest country in the world. Yeah. I mean, okay, yeah, you're gonna go move to St.

Nic Carter
Kitts or whatever, Puerto Rico, like, to save on taxes, but you're going into exile for what, 20%? How is that worth it? That's not worth it. I don't. You have to live in exile.

Like, you can't come back to the US. Why would you want that deal? It's a terrible deal. It's a terrible deal. Like, especially if it's a small caribbean island.

Come on, dude. Just bouncing around. I don't know. So anyways, that's the Roger vers story slash Kyle Davis story. All right, let's move on here.

Matt Walsh
Consensus. So we talked about that. I don't know. I actually don't know if we talked about this. It was after we went to press.

Okay, so consensus is suing the SEC. So they're saying that the agency is gearing up to sue them and to assert that Ethereum is a security. And this week there is all sorts of follow up to that. So pretty interesting lawsuit. They're filing it in Texas.

We'll see if they can make some progress there. Um, this week, House Financial services chairman Patrick McHenry accused the SEC chairman, Gary Gensler, of misleading Congress in his previous testimony on this. Is ETH a security issue? So I really like this legal strategy. I mean, none of this is going to come to a head during Gensler's remaining term here.

Nic Carter
Well, I mean, yeah, I mean, Biden could win. Even if Biden. Yeah, but even if Biden does win, I mean, this is like a four year battle. I think Gensler would be running for office somewhere in Maryland by then wanting speaker one. Yeah, this is going to be like Gensler inheriting Clayton's cases.

These are going to go to his successor. I just don't get it. I. You know, gearing up to say ETH is a security after you just approved ETH futures. Yeah, he's just dropping bombs on the way out of the door.

Matt Walsh
I don't know. Is he leaving? We'll see. I don't know. How's that Senate race in Maryland gonna.

When is that, like a year from now? Two years? Maybe. He knows. Maybe he's seen the internal polling from the Democrats, and he knows.

Nic Carter
He thinks that Biden's not getting reelected. I don't know. Looks too close to call from where I said. So on the ETF front. I don't know.

Maybe we shouldn't talk about ETF's anymore. It's just catastrophic news on the ETF's. I mean, we just have some weak paper hands out there in this retail. We got shellacked on the ETF. So the launch in Hong Kong was done.

Matt Walsh
Yeah, Honka. Don't talk to me about. Hong Kong was a dog market. Hong Kong was. All these people, they were saying that chinese people were gonna play in this Hong Kong market.

There's no one showed. No one showed up. Five people. No one showed up. So that didn't work.

Nic Carter
Our onshore ETF market was a catastrophe this week. I don't want to talk about it. Outflows. Yeah. So outflows from, I bet Jerome Powell.

Matt Walsh
Just in the driver's seat on these bitcoin ETF's this week. Yeah, we got crushed. Okay. But we're going to dust ourselves off and we're going to keep trucking away. Okay?

I mean, inflation is a bear, but I don't know. This is not a macro podcast. But you think the Fed's going to increase rates here? Have you seen the national. No, it's not possible.

Nic Carter
Speaking of Blackrock, actually, Robbie Mitchnick, their head of digital assets, he said in an interview that they expect the next wave of adoption to come from sovereign wealth funds, pensions and endowments. Rob is a smarter. We need it. Keep your. Get those funds.

Okay. Pensions, get in front of those endowments. This is the hardest working man. That's what I like is when he refers to the largest pools of capital on the planet. That's what I need.

Matt Walsh
Like, I love that. I love that. All right, so here's a. Here's an interesting story. Politico had a report this week that our friend Adrian Harris, who is the New York Department of Financial Services superintendent, has been playing a large role in getting Senate Majority Leader Chuck Schumer to throw his weight behind stablecoin legislation.

And apparently Schumer might want to put this in an FAA funding package because stable coins go well with airplanes. I guess. I don't really get that, but. Yep, just pack it in there. And alongside a bill that would be focused on cannabis banking legislation.

And that's an interesting one because I guess Sherrod Brown, who's the senator from Ohio who leads Senate banking, who's a really terrible senator, he really wants this cannabis bill, and he's been blocking stable coin legislation. So I guess let's just put these things together and you get half a cannabis, half a crypto, and just move it forward. Big weed guy. Oh, didn't know that about Sherrod Brown. Yeah, I don't know.

I think he's just one of these guys that has Elizabeth Warren calling him every day and telling him not to do things that would advance early stage capital formation, stuff like that. So, Adrian Harris. I have a bone to pick with her, though. She wrongly sent signature into receivership, and I'm still upset about it, so. But she likes stable coins now.

Well, I guess she's been overseeing stable coins for a while, and. I don't know. I think New York does an adequate job regulating coins right now. Yeah. So it's.

You know, I don't think that this. I don't think this bill is going to go anywhere unless McHenry and waters can get on the same page. But if they can, I could see it going through. I'm also hearing things about SAP 121. Are you hearing things?

I'm hearing things. I'm hearing that there's progress being made on it. I don't know if that's going to be tangible, but I'm hearing that votes are being discussed on repealing SaB 121. And I'm furthermore hearing that the bank lobby is helping us here. Every week we think, we claim on this podcast that pro crypto legislation is coming, and every week it continues to not occur.

Yeah, but if you just keep on. Claiming it will eventually happen. Yeah, that's true. Yeah. But at least the bills have been written.

They exist. And apparently now some Democrats are on board here with Schumer. Maybe that's going to turn around. We'll see. All right, so do you want to talk about this DOJ stance on crypto wallets?

Coin center has been doing some good work on this. I'll put a piece in the newsletter about that. We had Cynthia Lummis chiming in, really pushing back on the DOJ's classification of self custody. Got a lot of people freaking out here. This has had an actual chilling effect on the industry already.

Nic Carter
So basically, the DOJ has upended, what, ten years of fincen guidance regarding non custodial operators? And based on the samurai case, they're claiming that you don't need control to have, I guess, obligations under. Under the BSA. Is that fair to say? Yes, but again, I.

Matt Walsh
This will be litigated now. Yeah. So it should be a matter that comes in front of a court, because this is massively overturning, like a decade of precedent. It's already caused other lightning wallets and non custodial services to leave the US to shutter their. Their services.

Nic Carter
So actually pretty bad. Everyone's scared. Yeah, it's not great. And this is your reminder. We don't give this enough to donate to coin center.

Matt Walsh
So they're doing some great work on this topic and really fighting for civil liberties in this industry. So encourage everyone to check out the piece that they wrote this week. Yeah, this has a lot of people very alarmed, I will say that.

All right, so let's talk about Coinbase here first, and then maybe we'll talk about blocks. Coinbase just reported earnings here for Q 120 24. Really good. So revenue 1.6 billion, up 72% versus Q four. Net income of 1.2 billion, up 331% versus q four.

They've got $7.1 billion in cash. They two x the amount of USDC on the platform quarter over quarter. And they have eight times more base developers than they did at the end of Q four. So that's a pretty healthy quarter there. Yeah, super impressive earnings.

Nic Carter
Good quarter, everyone. It sold off. Coinbase stock sold off. So the street expectations were beat. But the crypto native sell side analysts that figured this whole thing out from on chain data that was actually priced in.

Matt Walsh
Yeah, I think that's right. I think these. So the street was way off base in Q four. And what do you think the street is doing now? Just like running nodes on base or something?

Nic Carter
Well, I. The Delphi guys, I read their research. I mean, it's possible to back into the coin based numbers by looking at exchange volume base data. You know, looking at the blockchain I think you like, the estimates were actually spot on by the more crypto native sell side analysts. So given that actually shows that the market's following expectations of the more crypto native firms, it's interesting.

Matt Walsh
So another public company news. So block, we talked about them last week because they're building a bitcoin miner. They're also donating 10% of their bitcoin profits every quarter. Well, not donating, rather. They're just buying bitcoin with it.

So they're taking 10% of anything they make on their bitcoin line of business and buying bitcoin with it. Do we know if the. Is it 10% of their overall business or is it of the bitcoin business specifically? I thought they said the bitcoin business. Is that profitable?

I don't know. Could be some Hollywood accounting there, maybe. They don't have to actually buy any. Bitcoin well, it's like the Forrest Gump accounting.

Do you know about the Forrest Gump. Accounting where like the actors don't get paid a rev share on the film or something like that? I think it was the writer, I think the writer of Forrest Gump had some deal where he got a certain percentage of the profits of the film. Or something and they just didn't turn a profit. Yeah, they didn't turn a profit, although massive revenue.

They just threw a bunch of junk cost in there. Yeah, that's, I would say, common in Hollywood, actually. Dirty. Yep. So, yeah, it's, I'm reading it now.

It's 10% of their monthly bitcoin related gross profit is going to be used to buy additional bitcoin. So there it's gross profit. There's got to be something there. They can definitely twizzle the dials and not turn a profit if they want. I guess it's an incentive to buy bitcoin on block though, right?

Nic Carter
Yeah, we know that Jack Dorsey loves bitcoin. He doesn't need to prove it to us.

Matt Walsh
All right, so we got some heat on, or I guess I got some heat on warpcast, or maybe you did too. For our TikTok take, people said that we shouldn't be encouraging the US to shut down TikTok. Let me just clarify my position here. So if the US is not allowed to run its social media services in China, why are we allowing a chinese company to run social media here? Yes, I think TikTok is kind of stupid, but that's secondary point.

That reciprocity is the key issue for me. Yeah, it's just not fair. Like why should we let China feed their propaganda into the brains of our children, but we can't feed our propaganda into their children's brains. Give us a tip for tat. Let us release, you know, Facebook, meta directly to the chinese youths and filter it and put our propaganda in their heads.

Yeah, maybe we'll sell some of our carbohydrate food to them while we're at it. Yeah, get up. Give them the american seed oils, you. Know, so that's our stance on that one. Should we delve into another controversial topic?

Oh, what is that? The encampments on american colleges. I saw some this week. Really? You saw that?

Yeah, I was out in Chicago this week. I saw, saw them on the U. Chicago now at the northwestern. Yeah. Cuz I feel like UChicago is kind of a too serious of place to have that.

Yeah, it was, uh. Yeah, there's protests. Did you go and, you know, interview with the founder, the protesters, to, you know, understand their demands and things like that. Well, I was meeting a startup on campus and they were not protesting. These, these people, there was.

They were like building, building their startup, actually. So there's entrepreneurs and then there's people that camp in the quad and those are not overlapping. So that's what you're saying. Yeah. And I was.

Yeah, this is a tough topic to get into because you don't want to step on a third rail. But let me just say, when I was in college, I was not. This was not what I was doing. Yeah. I mean, when I.

Nic Carter
Where I went to school, there were certain parts of the quad that were very manicured and you couldn't walk on the lawn and you get yelled at. So let alone camp. Let alone camp on lawn. If you camped on lawn, they would probably execute you. So people in the UK are a lot more polite.

I think they are much more concerned with maintaining proper landscaping, that's for sure. Yeah. Yeah. So at St. Andrews, you just can't, you can't disturb the topiary or the nice groomed lawns.

Forget about camping. I think. I think there's a lot of misguided youth out there, to say the least. All right, well, we have some good episodes coming out next week. So do we have a busy podcast week next week?

I recorded a video podcast today. Well, we do have the ability to do that now. Yeah. Hopefully I don't have to edit it. If I don't have to edit it, then we'll publish it.

How about that? Yeah, I like it. I like it. Alright, so we'll have a few episodes next week. We're really starting to ratchet it up.

Matt Walsh
I think we're gonna get to a thousand episodes at some point this. This year. They're just cranking them out at this. That's a terrifying prospect. That's so much work.

Yeah. Well, we got a lot to talk about. All right, everyone, that is it. Everybody have a safe and healthy weekend and we will see you on Monday.

Weekly Roundup 05/03/24 (CZ sentenced, Roger Ver arrested, Coinbase earnings) (EP.525)

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1: Introduction to the Episode

2: Legal Outcomes in Crypto

3: Financial Reports and Market Movements

4: Broader Crypto Industry Developments

5: Social and Political Considerations

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