Welcome back, everyone. I am Cass PNC.
I'm joined, as usual, by my partner in crime.
We've already recorded an episode today, so we're just
going to jump right into it. We're going to talk about a
company called Wire Wire spelled Wyre.
Weird Company wound down in June of this past year.
But yeah, I want Bennett to kind of walk us through this.
He wanted to record an episode about this, and I think it is.
Once you delve into the the weeds of it a bit, it's pretty
fascinating. Wire is a cryptocurrency payment
processor, one of the most common targets of our IR on this
channel, and it was, like many cryptocurrency payment
processors, seeming to do things a little unusually and part of
this story. The beginning of this story in
my mind involves Ryan Breslow, who I've made a couple videos
about on this channel, but we've never done a full episode on him
because, frankly, he's not that important.
Ryan Breslow has a couple of different companies.
One was called Eco. Eco was a company that said it
could earn its users yield and it claimed to do this by lending
to people like Goldman Sachs and Fidelity, but was actually
lending to people like Wire and Blackfy.
And so that's how Eco was making its yield for its customers
that. Was a Ryan Breslow company, but
so was Bolt, the one click payments company that at one
point was valued at like $11 billion or something crazy,
before a New York Times investigation revealed that they
had misrepresented what they were able to do to people in
order to get them to sign, and then misrepresented the nature
of those relationships in order to get other people to sign.
Before Bolt was exposed for that, they put in a $1.5 billion
offer for wire, making it at the time one of the.
The most valuable cryptocurrency acquisitions of all time.
What makes this even stranger is that this acquisition was
announced in April of 2022. One month before that, in March
of 2022, Ryan's other company, Eco, had notified users that
they were moving off of wire and.
And on to Prime Trust. So one company moves off in
March, April, they announced they're going to buy the
company. And even more interesting, Eco
didn't actually get all their funds moved off until the end of
May. Shortly after that, in
September, it's announced that the deal's not going to happen.
Bolt backs away. And a couple months after that
very end of the year, December beginning of January, Wire
announces they're going to be scaling back.
Operations and laying people off after this deal blew up.
And that's like the first phase of wire, right?
It's a cryptocurrency payment processor doing what
cryptocurrency payment processors do, making risky
loans, throwing funds around into D5 protocols, announcing
acquisitions that never actually happened.
It's a classic crypto payment processor.
So when I go to wire their website, which is still up, it
says wire is winding down and it talks about what they did and
how they're ending. And they basically, it seems
like they tried to do this in a way that allowed people to get
their funds off of the payment processor in time.
I don't know if you know anything more about that than I
do. Funny enough, I'm I'm like Bolt
is still around though. And this is Ryan.
That's still Ryan Breslow's company, right, We.
Didn't even get into all of Ryan Breslow's fuck ups, right?
Like he had the movement Dow that he gave away to like a
known fraudster that was separate from like his movement,
not-for-profit, that ended up like embroiled in some other
scandal. We've got some articles we'll
link in the description, and there's some videos we've made
on this channel about it, but like Ryan Breslow's whole like
group of companies is a fucking mess.
I'm looking through his career and just some of his stuff in
general. First of all, this guy is 29
years old. He's younger than me and 29 is
very, very young. Crypto pharmaceutical startup
The Movement, a dance nonprofit. I am confused about this guy's
entire life. Surprise went to Stanford.
Gosh, I'm. I'm all over the place here.
Just 'cause I'm like, wow, so eco.
So Eco didn't work out that that's gone right?
Eco still has a website. Yep.
And they're still tweeting and they still have a token that's
down, oh, down 70%. Remember, there's two tokens,
right? There's ECO and there's ECO X.
What does ECO X do? Well, that's the deflationary
supply token serving as the governance asset that's used to
secure applications on the ECO network.
Of course it's deflationary. Why is it down 88%?
It's not deflationary enough. I feel like this is so similar
to our discussion about Terra Luna Man.
We're not going after Ryan Breslow stupidity today.
They're all interconnected. Wire bolt.
Sure, Eco, love, whatever the fuck these are like.
And they're all doing poorly. They're all stupid.
How much money was going through wire?
There's some answers to that I'll get to.
Not as much as you might be thinking.
Very beginning of 2022, Wire announces they're scaling back
operations and doing these layoffs.
And then on January 7th, Wire announces that they're going to
be changing withdrawals, limiting how much you can
withdraw. You can only withdraw up to 90%
plus other daily limits five days later, though.
Things get better when Wire announces that they have
received financing from a strategic partner that will
allow them to continue their normal course of operations.
And this is always good news when crypto companies get
strategic financing from undisclosed partners.
That takes us into the Binance, US era of wire finance.
US in the beginning of 2022 was using Prime Trust as their
principal payment processor. They started switching off of
Prime Trust and by May 25th, 2023 had much of their funds
stored with wire. What makes this especially
fascinating is that Wire's CEO used to run compliance for Prime
Trust. A company we've talked about
before in which we've highlighted some of their non
compliant behavior and wires VP of Compliance at this point used
to run compliance for Binance US which you may also know as the
firm currently being sued by the SEC for their non compliance.
That takes us up towards the very end of wire and this is
where things can get interesting.
What's also interesting is that the total amount that Binance US
transferred over was in the range of like $10 million.
Right, like the amount of actual money Binance US had was not
that much, but Binance US using Wire made it much more
important. And this is when Protos decided
to do some digging into Wire through their various terms of
service and their different entities, and we discovered that
it was a mess. One of the entities they
referenced was in liquidation. Another one had its ultimate its
liquidator, named as a fraudster who was previously convicted of
fraud. Genaros, who claimed he had
stepped down as CEO, was still listed as the CEO on annual
reports filed in Florida. Was the sole director of Wire
Payments Proprietary Limited, its entity in Australia, I.
And I just want to reiterate again, one of the entities they
were still directing customers towards was in liquidation and
it's liquidator was a convicted fraudster just to make sure
people hear that. And we discovered this, pulled
these corporate documents, verified this information and
then we sent out emails to Binance, US wire etcetera asking
them, hey, are you aware of this information?
Do you have any extra context you can provide us things like
that and so? We finally published this piece
on June 5th discussing these vast corporate disarray at wire.
And then on June 16th, 11 days later, we enter the final era of
wire, the wind down era you mentioned where supposedly they
shut down all operations and started returning all these
funds to customers two weeks after the final balance had been
transferred from. For finance US over to wire,
this information about wire is published and then Wire needs to
shut down. This makes me think of two
things, which is 1. The I know the Tai Chi documents
were different than this. This isn't what the Tai Chi
documents were necessarily about, but it does remind me of
them in that it's like we're watching this weird game of
hopscotch transpire in crypto, where like, companies and people
spin up payment processors or buy parts of banks or whatever
to ensure that they can move real Fiat around.
Because they do. Turns out that Fiat is like
quite useful for paying your bills and living your life.
And so they need a way to access the the Fiat monetary system.
And so they do these weird tricks.
And then it also makes me think of not just like Crypto Capital
Corp, but like other payment processors that we've discussed,
evolve a bunch in Europe that end up, you know, getting used
up and spit out real quick. It doesn't seem like there's a
mechanism in place to stop this. The mechanism in place here.
As we've kind of discussed is in theory regulators and the
problem is that regulators are not incentivized to do the kind
of regulation that would actually stop this kind of thing
from happening. You mentioned Evolve Bank and
Trust and they are an annoying little wrinkle in some of my
side. Sometimes cryptocurrency thing
called Juno entered into a contract with Evolve Bank and
Trust for a digital currency custody account agreement.
And what was strange about this agreement is that after the
collapse of FTX, Evolve Bank and Trust came out and made their
statement that we do not offer crypto custodial services.
But here we go. There's a digital currency
custody account agreement that states that a digital currency
custody account will be made available to eligible consumers
by Evolve Bank and Trust. So this is a bank seemingly
confused on what services they offer instead of a payment
processor, but broadly similar. And I believe, though could not
get evolved to admit to the fact that I believe their custody
services were eventually contracted out to like Wire, who
was contracting with Synapse for their custody of crypto assets
or something like that. But again, we're talking about
some of these same firms. I saw your face move when I said
one of those names. We're talking about some of
these same firms who are embroiled in some of this, like
they're providing financial services to shady businesses and
doing it by creating a variety of different entities.
In which responsibilities are moved around contractually to
hide who is providing what services?
I guess the best example that I can always mention that everyone
or most people recall is EOS, the cryptocurrency that through
Block .1 raised $4 billion and got given a, I don't know what
it was like a $20 million fine or something from the SEC.
And so when you think about that, when you go, oh, the fine
that they had to pay for raising billions of dollars was nothing.
It always is worth it to break the law if that's going to be
the end result, right. And so I look at these payment
processors that you're talking about, whether it's wire,
whether we're talking about banks like Evolve or we're
talking about payment processors like Synapse, Like it seems like
it's worth it for them always to take the risk of onboarding
customers who might not be the most honest actors in the world.
The end result at worst is, oh, we have to wind down.
And the best result is being like, oh, we gave them their
money back and we're just going to keep going.
So the worst result is Reggie Fowler being sentenced to
prison, right? I think what he was doing very
clearly is a like a definitive line of difference between what
we're talking about here and what happened back in
20/17/2018. I think you're right.
We've talked about some of this before, right?
Regulators, if they lack the political will and if broadly
there's not kind of a societal political will to go after this
type of thing, it doesn't happen.
And you and I have pointed to in the past like the 2008 great
financial crisis. And the utter unwillingness for
prosecutors to really bring meaningful criminal charges
against anyone, and for regulators to even really
seriously engage with meaningful civil penalties against most of
the worst actors kind of set a tone that has persisted for the
next 15 years that has prevented any serious engagement with
white collar crime and especially white collar
misbehavior. Right.
Like white collar things that aren't legal but maybe aren't
going to actually get you sent to prison.
We're not even willing to like grapple with that stuff, you
know. And so I think that is broadly a
failure of our kind of white collar regulatory system.
Yeah, it's unfortunate because the the people who got punished
the most, I don't know, sex workers in Nevada or something
where it's actually even totally legal to be doing what they're
doing. But it becomes increasingly
difficult to have a bank account or to process payments or
whatever. Only fans has issues with this,
right? There's like, there's legitimate
businesses doing real stuff and working with people who maybe
struggle to get banking or struggle to find places where
they can keep their money. Meanwhile, these white collar
criminals are doing stuff like spinning up their own payment
processors, buying parts of banks and then they end up
getting away with it. They end up not having to do
time, except for Reggie Fowler, except for like, you know, and I
say Ravid and and Oz Yosef. But they're not going to do time
either because they're in Israel.
So they're never going to, they're never going to face, you
know, they're never going to pay the piper.
They're going to just be out there, you know, Never, never
having to come back to the US and never getting shipped back
to the US. It's really unfortunate because
on one hand, the people who I do want to see get helped are like
they're the ones getting the most punished.
And the people who deserve to get punished just keep spinning
up their bullshit for the worst people around.
Yeah, I I think there's definitely a bit to that and the
other point I want to emphasize. Is like that.
It was not incredibly difficult to determine that like these
entities Wire was using like that one entity had already been
liquidated, another was in liquidation with the liquidator
being a fraudster that, like the person who claimed he was no
longer CEO, was still listed as CEO on multiple annual reports.
This was all known, and what that means is that everyone who
was still choosing to work with Wire reasonably could have
determined that and many of these entities that were still
working with Wire, at least ostensibly.
Have compliance departments and things whose job, at least on
paper, is to make sure they're not working with that kind of
partner. And So what it really emphasizes
to me is how thin the veneer of something like Binance US is,
Compliance department really is. Right.
They'll bring in whatever names they want from whatever former
Regulatory agency has someone leaving out the revolving door,
right? They'll hire whatever biggest
name they can, but their ability to actually interface with
making sure their partners, their vendors, whatever are
compliant is nonexistent. I think that though we've talked
a lot about payment processors today, it's important to
remember that technically Cast Coins Send is not a payment
processor because we're not actually licensed in any
jurisdictions. What we consider ourselves as is
a payment manager. You intend to make a payment and
we just manage it until it's done and that's it.
That's why we don't have any licenses in any jurisdiction
also to protect ourselves and to protect our customers really.
So I just want to make sure that everybody understands that that
this is in your best interest as well as ours.
And if you look at our terms of service, there is a pinky swear
that we're not going to take your take your funds and we take
that very seriously. And we promise none of our
entities are currently in liquidation controlled by a
convicted fraudster. Wait, we do?